In a major bank fraud and sanctions violations case, British American Tobacco (BAT) and its subsidiary, BAT Marketing Singapore (BATMS), have agreed to pay a staggering $629 million in penalties to settle charges with U.S. authorities. The charges stem from BAT’s unlawful business dealings with North Korea, conducted through a third-party company in Singapore, in violation of the bank fraud statute and the International Emergency Economic Powers Act. BATMS has pleaded guilty to conspiracy charges, while BAT has entered into a deferred prosecution agreement. Between 2007 and 2017, approximately $418 million in transactions were processed for tobacco sales to North Korea. The U.S. Department of Treasury has also initiated a civil enforcement action against BAT and BATMS, and the U.S. Department of State is offering rewards for the capture of the defendants. These high-profile cases reflect the government’s unwavering commitment to combat the financing of the North Korean nuclear program and address nation-state threats.
British American Tobacco and Its Subsidiary Agree to $629 Million Penalty in Bank Fraud and Sanctions Violations Case
British American Tobacco (BAT) and its subsidiary, BAT Marketing Singapore (BATMS), have reached an agreement to pay a total of $629 million in penalties to resolve charges of bank fraud and sanctions violations with U.S. authorities. These charges stem from BAT’s involvement in illegal business activities in North Korea, which violated the bank fraud statute and the International Emergency Economic Powers Act (IEEPA).
Charges against BAT and BATMS
The charges brought against BAT and BATMS include bank fraud and sanctions violations. These charges were a result of BAT’s scheme to conduct business in North Korea through a third-party company based in Singapore. By doing so, BAT and BATMS violated the bank fraud statute and IEEPA, which regulate international business transactions.
BATMS Pleads Guilty to Conspiracy Charges
BATMS, a subsidiary of BAT, has pleaded guilty to charges of conspiracy to commit bank fraud and conspiracy to violate IEEPA. By entering a guilty plea, BATMS acknowledges its involvement in the illegal activities related to the bank fraud scheme and the violations of IEEPA.
BAT Enters Deferred Prosecution Agreement
BAT, on the other hand, has entered into a deferred prosecution agreement (DPA) in relation to the same charges. A deferred prosecution agreement allows the company to avoid criminal prosecution by meeting certain conditions, such as paying penalties, cooperating with authorities, and implementing internal compliance measures.
Illegal Business in North Korea
BAT and BATMS engaged in an illegal scheme to conduct business in North Korea through a third-party company based in Singapore. This illegal business activity violated the bank fraud statute and IEEPA, as it involved illicit financial transactions and the evasion of international sanctions imposed on North Korea.
Transactions and Payments
Between 2007 and 2017, BAT and BATMS facilitated payments for tobacco sales to North Korea through the third-party company. These transactions amounted to approximately $418 million. The illegal nature of these transactions and the involvement of BAT and BATMS in facilitating them were discovered through law enforcement investigations.
Separate Case on Illicit Sale of Tobacco Products
In addition to the charges against BAT and BATMS, a separate case has been unsealed involving the illicit sale of tobacco products in North Korea. Charges were filed against a North Korean banker and Chinese facilitators who played roles in facilitating these illicit sales. This case further highlights the illicit nature of BAT’s operations in North Korea.
Civil Enforcement Action by U.S. Department of Treasury
The U.S. Department of Treasury has taken civil enforcement action against BAT and BATMS in response to their involvement in the bank fraud and sanctions violations. This action is aimed at holding the companies accountable for their illegal activities and imposing appropriate penalties and consequences.
Rewards Offered by U.S. Department of State
The U.S. Department of State has announced rewards for the capture of the charged defendants involved in the illegal business activities of BAT and BATMS. These rewards serve as an incentive for individuals to come forward with information that can aid in the prosecution and conviction of those responsible for the crimes.
U.S. Government’s Efforts to Combat Funding of North Korean Nuclear Program
These cases against BAT and BATMS are part of the U.S. government’s broader efforts to combat the funding of the North Korean nuclear program and address the threats posed by nation-states. The illegal business activities and financial transactions carried out by BAT and BATMS contribute to the funding of illicit activities, including the development of nuclear weapons in North Korea.
Background of British American Tobacco
British American Tobacco is a multinational tobacco and cigarette manufacturing company headquartered in London, United Kingdom. With a presence in over 180 countries, BAT is one of the largest tobacco companies in the world. The company operates a diverse portfolio of tobacco products, including popular brands such as Lucky Strike, Dunhill, and Pall Mall.
In order to resolve the charges of bank fraud and sanctions violations, BAT and its subsidiary, BAT Marketing Singapore, have agreed to pay a total of $629 million in penalties. This substantial penalty reflects the seriousness of the illegal activities conducted by the companies.
Reasons for Penalties
The penalties imposed on BAT and BATMS are a result of their involvement in the illegal business activities in North Korea. By evading international sanctions and engaging in illicit financial transactions, BAT and BATMS violated both U.S. and international laws. These penalties are intended to deter other companies from engaging in similar illicit activities and to ensure compliance with regulations and sanctions measures.
Resolution of Charges
With the agreement to pay the penalties, BAT and BATMS have taken steps to resolve the charges brought against them. By pleading guilty to conspiracy charges and entering into a deferred prosecution agreement, the companies are acknowledging their wrongdoing and committing to cooperate with authorities. This resolution provides a framework for holding BAT and BATMS accountable for their actions while allowing them the opportunity to reform their practices and prevent future misconduct.