British American Tobacco Held Accused of Illegal Tobacco Trade with North Korea by US Authorities, Receives Penalties Worth Over $629 Million

Found guilty of violating sanctions and bank fraud, British American Tobacco (BAT) and BAT Marketing Singapore (BAT’s Subsidiary) recently received charges from the US authorities including combined penalties and fines of over $629 Million. On 25th April 2023, the Department of Treasury issue a civil enforcement action against the two organizations.

BAT is a UK-based company and one of the biggest tobacco products manufacturer in the world.

The entities were found guilty of violating the International Emergency Economic Powers Act (IEEPA) and bank fraud statute due to continuing an unauthorized business of tobacco sales in North Korea. Through a press release in 2007, BAT announced the transfer of its North Korean sales to a third-party company with no personal role in it. However, it was found they were continuing the business through that company with BATMS monitoring all the business activities. BATMS has pleaded guilty to the criminal case in the District of Columbia while BAT has accepted a deferred prosecution agreement for similar charges.

Charges related to the case were pressed on three more entities including a North Korean Banker and two Chinese facilitators accused of illegal assistance to the tobacco sale in North 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,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division.

The entities circumvented the sanctions and led the US financial institutions to approve approximately 310 otherwise illegal transactions. This resulted in a revenue of nearly $700 Million for the North Korean manufacturers which ultimately funded the North Korean regime’s nuclear weapon proliferation programs. Tobacco product smuggling including counterfeit cigarettes also brings much of the revenue supporting the WMD programs.

How steadfastly the US authorities including the FBI have handled this case demonstrates the seriousness of the United States in averting nation-state threats. As such cases severely impact all the entities involved, it is crucial to stay aware of the sanctions and embargoes updates and avoid business with any of them. Trademo Sanctions Screener helps you actively screen business partners against global restricted party lists.