British American Tobacco (BAT) has agreed to pay a penalty of $635 million (S$848 million) to the United States for selling cigarettes to North Korea through its Singapore-based subsidiary, BAT Marketing Singapore.
The subsidiary pleaded guilty to charges of conspiring to violate US sanctions and commit bank fraud.
BAT itself entered into a deferred prosecution agreement with the US Department of Justice and a civil settlement with the US Treasury's Office of Foreign Assets Control. The penalty is reportedly the highest ever received by a company in relation to North Korean sanctions.
BAT had partnered with a North Korean business to own a North Korean cigarette business, publicly announcing in 2007 that it would sell its share.
However, it continued to do business with North Korea through a third-party conglomerate based in Singapore, which received over $415 million (S$553 million) from North Korean clients through front companies over a decade.
BAT's Singapore subsidiary also sold cigarettes to the North Korean Embassy between 2016 and 2017 and received payment through US banks or foreign branches. BAT has since pled guilty to the offences and apologized for "misconduct arising from historical business activities".
The US Justice Department hopes the penalty will deter other companies from violating US sanctions.
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