Italy’s Mondo TV Fined $538K By U.S. Treasury For Producing Animated Shows In North Korea

Italian animation company company Mondo TV has agreed to pay $538,000 for “apparent violations” of American sanctions that prohibit using the U.S. financial system to send money to North Korea.

Between May 2019 and November 2021, Mondo sent $537,939 to the North Korean government-run animation studio Scientific Educational Korea Studio (SEK) for production services, according to a press release from the U.S. Department of the Treasury’s Office of Foreign Assets Control. By doing so, the U.S. government said, Mondo had “acted with reckless disregard for U.S. sanctions laws and regulations” and caused U.S. banks to process payments for the North Korean government.

The U.S. government said that Mondo has been subcontracting work to North Korea since the 1990s. Further, Mondo on occasion has hosted North Korean animators in Italy for animation training.

Further details from the Treasury’s investigation (download full PDF here):

Mondo accumulated approximately $1,123,120 in outstanding debt owed to SEK for several projects. In July 2019, SEK and Mondo executed an agreement whereby Mondo would pay SEK in monthly installments for work SEK completed for Mondo prior to 2016, when Mondo paused their relationship due to human rights concerns, and for new projects SEK would undertake for Mondo beginning in 2019.

Before each monthly payment, SEK would issue an invoice to Mondo that named a third-party company and its bank account details for Mondo to remit payment. Among them, SEK identified two third-party companies in China and one U.S. company, along with their respective account information at several U.S. financial institutions. Mondo then remitted the monthly payments to these intermediaries according to SEK’s instructions. Mondo appeared to believe the payments to these third-party companies were to satisfy debts SEK had to these companies.

Throughout the course of their relationship, and while remitting payments pursuant to the 2019 agreement, Mondo understood it was paying a DPRK company. Mondo’s Chief Executive Officer approved and signed the 2019 agreement, which made explicit reference to North Korea, as did two additional contracts he signed on behalf of Mondo with SEK for additional projects performed in 2019. Associated invoices, payment receipts, and emails between Mondo’s management and representatives of SEK also frequently identified SEK, North Korea, or Pyongyang. Moreover, emails between Mondo’s management and representatives of SEK directly reference specific payments to a named U.S. company and named U.S. financial institutions. Mondo’s Chief Operations Officer and Head of Legal and Corporate Affairs personally approved all the transactions. Mondo did not have a sanctions compliance policy at the time the conduct at issue occurred.

Ultimatey, Mondo initiated 18 wire transfers to Korean animation studio SEK that were processed by or settled at U.S. financial institutions.

Many questions remain about how much animation work North Korea does for Western producers. A few months ago, a report from the Stimson Center’s 38 North project found that American producers may have used production services from North Korea. Unlike the Mondo situation however, the Americans were unaware that their work was being outsourced to the heavily-sanctioned Asian country. American shows that were allegedly produced in part in North Korea include Prime Video’s Invincible and Max’s upcoming Iyanu.

The U.S. government has been increasingly vigilant about companies that use North Korean animation services. In 2022, the Treasury leveled sanctions against seven companies and two individuals who were working on behalf, or have used the services, of SEK.