British American Tobacco is to pay $635m plus interest to US authorities after a subsidiary admitted selling cigarettes to North Korea in violation of sanctions.
The US authorities said the settlement related to BAT activity in North Korea between 2007 and 2017.
BAT’s head Jack Bowles said “we deeply regret the misconduct”.
The US has imposed severe sanctions on North Korea over its nuclear and ballistic missile activities.
Tuesday’s settlement was between BAT and America’s Department of Justice (DOJ) and the Treasury Department’s Office of Foreign Assets Control.
BAT is one of the world’s largest tobacco multinationals and one of the UK’s 10 biggest companies. It owns major cigarette brands including Lucky Strike, Dunhill and Pall Mall.
In a statement, BAT said it had entered into a “deferred prosecution agreement with DOJ and a civil settlement agreement with OFAC, and an indirect BAT subsidiary in Singapore has entered into a plea agreement with DOJ”.
The DOJ said BAT had also conspired to defraud financial institutions in order to get them to process transactions on behalf of North Korean entities.
North Korean leader Kim Jong Un is known to be a heavy smoker. Last year the US attempted to get the UN Security Council to ban tobacco exports to North Korea, but this was vetoed by Russia and China.
At a briefing on Tuesday, the DOJ’s assistant Attorney General Matthew Olsen said the settlement was the “culmination of a long-running investigation”, describing it as “the single largest North Korean sanctions penalty in the history of the Department of Justice”.
He said that BAT was engaged in an “elaborate scheme to circumvent US sanctions and sell tobacco products to North Korea” via subsidiaries. “Between 2007 and 2017 these third-party companies sold tobacco products to North Korea and received approximately $428m.”
Criminal charges were also revealed against North Korean banker Sim Hyon-Sop, 39, and Chinese facilitators Qin Guoming, 60, and Han Linlin, 41, for facilitating sales of tobacco to North Korea. A $5m bounty was put for any information leading to the arrest or conviction of Mr Sim, and $500,000 rewards for each of the other two suspects.
They were accused of buying leaf tobacco for North Korean state-owned cigarette makers and falsifying documents to trick US banks into processing transactions worth $74m. North Korean manufacturers including one owned by the military made about $700m, thanks to these deals.
Pyongyang has for years faced multiple rounds of tough sanctions in response to its ballistic missile launches and nuclear tests. However that has not deterred Mr Kim from continuing to develop the country’s weapons programme.