The United States obtained a settlement of $629 million with British American Tobacco and its subsidiary BAT Marketing Singapore to resolve charges of bank fraud and sanctions violations related to the sale of tobacco products to North Korea.
British American Tobacco and its subsidiary, BAT Marketing Singapore, one of the largest tobacco product manufacturers in the world with headquarters in the United Kingdom, have agreed to settle charges of bank fraud and sanctions violations with U.S. authorities by paying a combined fine of more than $629 million, according to an April 25 news release.
“British American Tobacco and its subsidiary engaged in an elaborate scheme to circumvent U.S. sanctions and sell tobacco products to North Korea, allowing funds to illegally flow into the coffers of the Democratic People’s Republic of Korea. Today’s action, which involves the largest North Korean sanctions penalty in the history of the Justice Department, should serve as a clear warning to companies everywhere about the costs and consequences of violating U.S. sanctions,” U.S. Department of Justice Assistant Attorney General Matthew G. Olsen said in the release.
The charges stem from the companies' scheme to conduct business in North Korea through a third-party company in Singapore in violation of the bank fraud statute and the International Emergency Economic Powers Act, the release said.
Separately, in the District of Columbia, charges were unveiled today against a North Korean banker and Chinese middlemen for their roles in enabling the smuggling of tobacco goods into North Korea, according to the release.
In accordance with court records, BATMS entered a guilty plea to the criminal information for conspiring to commit bank fraud and violate the IEEPA, the release said. Regarding the same charges, BAT engaged into a deferred prosecution arrangement.
In particular, BAT sold off its North Korea sales to a third-party company in 2007 and announced it was no longer involved in the country's tobacco sales. Actually, BAT continued to conduct business in North Korea via the third-party organization, and BATMS kept oversight of all pertinent facets of the North Korean operation, the release reported
Between 2007 and 2017, the third-party company in Singapore received $418 million in cash and correspondent banking transfers from North Korea, which were then forwarded to BAT and BATMS, according to the release. These transfers were made in connection with the tobacco that BAT and BATMS sold to North Korean entities.
North Korean buyers utilized front firms to make these payments so U.S. banks, who handled the transactions, wouldn't be aware of the connection to North Korea, the release explained. BAT and BATMS will pay $629 million in penalties and fines as part of the DPA and plea bargain.
