Italian animation studio fined $538K for outsourcing to North Korea
ROME, ITALY — Italian animation company Mondo TV has agreed to pay a $538,000 fine for violating U.S. sanctions by outsourcing work to a North Korean studio.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the settlement, highlighting 18 apparent violations of the North Korea Sanctions Regulations between May 2019 and November 2021.
Details of the sanctions violations
Mondo TV, headquartered in Rome, transferred approximately $537,939 through U.S. financial institutions to the North Korean state-owned Scientific Educational Korea Studio (SEK).
These transactions were facilitated through third-party companies in China and the U.S., which held accounts at several U.S. banks. OFAC’s statement noted that Mondo’s CEO and senior management were aware of the DPRK entity involved and still approved the transactions.
Historical context and compliance issues
Mondo TV has a long history of subcontracting animation work to SEK, dating back to the 1990s. It has produced over 2,500 television episodes and 100 feature films.
The company accumulated a debt of about $1,123,120 to SEK and resumed business with the North Korean studio in 2019 after a brief halt in 2016 due to human rights concerns.
Despite the sanctions, Mondo continued to make monthly payments to SEK for past and future projects.
OFAC determined that Mondo’s violations were “non-egregious” and noted mitigating factors such as the company’s lack of previous violations and its cooperation with the investigation.
However, the violations were not voluntarily disclosed, which was considered an aggravating factor.
Expert opinions on sanctions enforcement
Benjamin Young, an assistant professor at Virginia Commonwealth University, commented that Mondo’s case was not a strategic priority for OFAC due to the relatively small amount of money involved.
He emphasized that paying for DPRK-made animation is against U.S. sanctions but is less destructive than other North Korean illicit activities.
Jonathan Corrado, policy director at the Korea Society in New York City, highlighted the challenges of sanctions enforcement and noted the ingenuity of North Korea’s evasion techniques.
He stressed the importance of political capital, evolving regulations, and support for training firms to take proper precautions.
Broader implications for animation outsourcing
The U.S. Treasury has been vigilant in monitoring and curtailing funds obtained by North Korean entities through illicit means.
Last April, cybersecurity firm Mandiant reported that the server logs from North Korea suggest that major U.S. animation studios may have inadvertently outsourced work to North Korean illustrators and graphic designers.
The documents, found by cyber-sleuth Nick Roy, include materials for unreleased episodes of popular American cartoons, such as Amazon Prime Video’s “Invincible” and Max’s “Iyanu: Child of Wonder.”
North Korea has a history of using animation as a propaganda tool and revenue source. SEK Studio, the country’s main animation studio, has been sanctioned by the U.S. Treasury for its connections to the North Korean regime.
The Federal Bureau of Investigation (FBI) has already released guidance to help avoid inadvertently hiring North Korean agents, which includes being vigilant about threats to release proprietary source code and inconsistencies in company details.
