Italian animation company agrees to $538,000 penalty for ‘apparent violations’ of US sanctions on North Korea

By Sean Lyngaas, CNN

(CNN) — An Italian animation company has agreed to pay the US Treasury Department $538,000 for “apparent violations” of US sanctions against North Korea by doing business with a North Korean state-owned animation studio, the department said Wednesday.

It’s the first time Treasury has levied financial penalties related to sanctions on North Korea’s movie and animation industry, which experts say has quietly done business with foreign companies for decades, bringing the isolated and nuclear-armed North Korean regime vital revenue.

The Rome-based animation firm Mondo TV, S.p.a. sent wire transfers through US financial institutions to pay North Korea’s flagship studio, known as SEK, about $538,000 for outsourced animation work between May 2019 and November 2021, Treasury said in a statement.

To process the payments, SEK used “third-party companies” in China and the US that had accounts at “several” US banks, according to Treasury. A department spokesperson declined to name the US banks.

Matteo Corradi, the CEO of Mondo TV Group, declined to comment.

Founded in 1985, Mondo has produced or distributed a number of popular cartoons in Italy, including an adventure show called “Sandokan – The Two Tigers.”

While many companies unknowingly hire North Korean workers, Mondo executives were under no illusions over who they were dealing with, according to the Treasury Department.

The outsourcing contract made explicit reference to North Korea, the department said. And the business relationship between Mondo and SEK began in the 1990s, when Mondo started subcontracting animation work to SEK “for a variety of programming, including children’s animation,” the Treasury Department investigation found. Mondo even hosted SEK animators when they took trips to Italy for training provided by the Italian company, according to Treasury.

As North Korean leader Kim Jong Un continues to flaunt his nuclear arsenal, US officials have gone to increasing lengths to track and intercept the billions of dollars they say North Korean hackers and IT workers have stolen or surreptitiously earned abroad over the past several years. Mondo’s use of the US financial system to send money to North Korea triggered the Treasury investigation and the threat of fines.

CNN has requested comment from North Korea’s diplomatic mission in London.

“It’s rather surprising that any European company would knowingly work with a North Korean company like this after 2013, much less believe transactions to designated third parties — especially in the US — would go unnoticed,” Jenny Town, director of the Korea program at the Stimson Center think tank, told CNN, referring to United Nations sanctions imposed on North Korea in 2013.

The settlement “should be a wake-up call to those who might think the sanctions regime is dead,” Town said.

Along with Russia, North Korea is among the most heavily sanctioned governments in the world. But the North Korean animation industry has provided an important source of revenue for Pyongyang, according to experts.

A trove of animation sketches that researchers found on a North Korean computer server last year suggests that North Korean graphic designers may have helped produce work for US animation studios unbeknownst to those companies. Experts who analyzed the documents told CNN that workers in China may have also been involved in the outsourcing work.

CNN’s Gianluca Mezzofiore contributed reporting. 

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