Luxury Goods Sanctions
In a follow up to our recent post on Luxury Goods and Financial Crime, Dev Odedra takes a deeper look at how luxury goods still change hands in various countries despite sanctions being in place.

In the mid-80’s when famous music artist Madonna was topping the charts singing “we are living in a material world on one of her hit songs, the United States (US) was sanctioning Iran with a ban on the import of goods from the country.  In a material world, luxury goods find their way to, as well as from, sanctioned countries – both directly and through secondary markets.  Today, whilst much focus is given to sanctioned countries, entities and individuals themselves, there seems to be little focus on sanctions risks related to luxury goods.

Ghosts and Phantoms

North Korea has faced some of the strictest sanctions imposed on any nation, which includes luxury goods such as vehicles.  Yet despite this, the country’s leader Kim Jong Un made news headlines in 2018 when he attended a summit in Singapore in a Mercedes-Benz limousine.

The same year, when Kim Jong Un met with US Secretary of State at the time Mike Pompeo, the North Korean leader turned up in a Rolls Royce Phantom.  Only the previous year, Bangladesh customs officers had seized a falsely declared Rolls-Royce Ghost brought into the Bangladesh for resale by a North Korean diplomat who had been expelled from Bangladesh.

A United Nations (UN) Panel of Experts report from 2017 stated that they were investigating the Bangladesh Rolls-Royce Ghost case and a later report by the Panel in 2019 suggested investigations remained open, as did investigations into how the Rolls-Royce Phantom seen at the meeting with Pompeo had been sourced also.

With later Panel reports providing no further investigation updates concerning both the vehicles and many asking “How did North Korea get hold of these vehicles?”, investigations by Non-Profit Organisation the Center for Advanced Defense Studies (C4ADS) provides some insights into how luxury vehicles are procured by North Korea.

Investigations using publicly available information, as well as network and supply chain analysis,  looked into how North Korea may have procured two Mercedes-Maybach S600 Guard luxury vehicles – the vehicles come armoured and have a price tag upwards of $500,000 each.

The research from the investigation shows in detail how the luxury vehicles made their way from a port in Rotterdam, Netherlands to their final destination in North Korea – passing through China, Japan, South Korea and Russia.  The activity was found to involve the use of Asian fixers and merchants, where the lines between legal and illegal activity converge and can become blurred.  The findings show how commercial entities that operate across a number of countries and sectors can be involved in the procurement process, with significant freight handling capability.  The investigations show that activity is not limited to the movement of luxury vehicles but also includes other activity ranging from ship-to-ship transfers and coal exports to the arms trade.

Skyscrapers and Caviar Dreams

Large luxury goods such as vehicles are not the only items that are exposed to sanctions risk, much smaller items connected to luxury can also pose risks – one of them being food, specifically caviar.  Holding the record for the most expensive caviar in the world is ‘Almas’ from the Iranian beluga fish, typically selling for $34,000 per kilogram.

Whilst the trade ban on luxury goods imports into the US from Iran (including caviar) was relaxed under the Joint Comprehensive Plan of Action (JCPOA) of 2015, it was reinstated in 2018 under the Trump Administration. Caviar trade from Iran has been losing out on business with western markets due to sanctions on luxury goods by the US, with Iran’s main exporter and businesses cut off from the global financial system.

Despite bans from the US, Iranian caviar is so sought that it has led to mislabeling of products from other countries, such as China, that are making their way to the UK . One brand sold at luxury department store Harvey Nicholls in the UK, was accused of mislabeling the source of it’s caviar by another UK supplier of caviar products – such is the demand for caviar from countries like Iran and Russia.

Although Iran may appear as an unlikely source of the most expensive caviar in the world, many may be equally surprised to learn of a building in the middle of Manhattan, New York the US said was controlled by the Government of Iran.  ‘650 Fifth Avenue’ was owned by a foundation accused of being a front for the Government of Iran, whose owners the US said had violated the Iranian Transactions Regulations and committed money laundering offences.  The building has been the subject of a protracted court case following announcement of its seizure by the US in 2017.

Digital Luxury and the Future of Sanctions

With considerable focus shifting to virtual assets, it is not only physical real estate and luxury goods that could be exposed to sanctions risk but virtual also – especially, given the news of record virtual real estate sales – such as the purchase of land within a metaverse called Decentraland for $2.43 million by NFT-based virtual real estate company Metaverse Group.

The recent sanctions by the Office of Foreign Assets and Control (OFAC) on virtual currency exchange, Chatex, included for the first time crypto wallet addresses holding Non-Fungible Tokens (NFTs).  According to blockchain analytics investigators, the NFTs included amongst other virtual assets; plots of digital land, digital art collections and NFT gaming collectibles.  Sanctions risk may not be something those collecting luxury-based virtual assets would consider but as this case shows, the potential is there for exposure and may increase with further adoption of blockchain technology.

Obvious sanctions risks concerning named individuals and entities may be easier to mitigate but sanctions risks involving luxury goods are under-appreciated, less understood and much more challenging to spot.  If luxury armoured vehicles can make their way undetected to one of the most sanctioned countries in the world, then many other luxury goods can just as easily be imported and exported in violation of sanctions.

See also: The High Life: Luxury Goods and Financial Crime


Most Popular

The latest in AML & KYC

Subscribe: Weekly AML Round-up

The latest financial crime and compliance content that matters, direct to your inbox.

More from the Blog

Fintechs: Know your AML vulnerabilities!

As regulators increase their scrutiny of fintechs, not only does this raise the risk of regulatory action and punitive fines, it can also lead to reputational damage and even prevent an otherwise promising early-stage business from fulfilling its potential.

At RiskScreen we work with hundreds of companies around the world from a wide range of sectors – both regulated and unregulated.

Any screening technology is only as good as its underlying data. That’s why we work to find the best providers, ensuring you get screening matches you can trust.


The latest news, commentary and events from RiskScreen. For industry insight, visit our AML insight hub, KYC360.

Used by over 30,000 compliance professionals for AML news & analysis. Free CPD wallet.


RiskScreen was founded by experts in financial crime. It’s because of this unrivalled subject matter expertise that companies choose to partner with us.