British American Tobacco Is Fined $635 Million for Selling Cigarettes to North Korea

British American Tobacco has agreed to pay more than $635 million as a penalty for selling cigarettes to North Korea through an intermediary in Singapore, in violation of American sanctions.

A small portion of the amount, about $5 million, was part of a civil settlement with the Treasury Department. The rest, obtained and announced by the Justice Department on Tuesday, was the biggest in that department’s history related to sanctions on North Korea.

Even though British American Tobacco said publicly in 2007 that it had agreed to sell its share in a cigarette business it ran with a state-owned North Korean firm, the London-based company and its Singapore subsidiary secretly continued to operate the venture through a third party, an independent conglomerate based in Singapore, federal prosecutors said in a court filing this month.

North Korean clients paid that intermediary, which was not identified in the filing, at least $415 million through front companies over about a decade, in some cases using American banks, according to the court documents. The operation relied on “financial facilitators linked to North Korea’s weapons of mass destruction proliferation network,” Brian E. Nelson, the Treasury’s under secretary for terrorism and financial intelligence, said in the statement issued by the Justice Department.

In 2016 and 2017, British American Tobacco’s Singapore subsidiary also received payments through U.S. banks or their foreign branches for cigarettes that it sold to the North Korean Embassy in Singapore, the Treasury Department said in a settlement agreement.

On Tuesday, British American Tobacco’s Singapore subsidiary pleaded guilty in a federal court to conspiracies to commit bank fraud and to violate a 1977 law that allows the United States to confiscate foreign property under special circumstances. That law was used to impose sanctions on other countries after the attacks of Sept. 11, 2001.

The settlement “should serve as a clear warning to companies everywhere about the costs and consequences of violating U.S. sanctions,” Assistant Attorney General Matthew G. Olsen said in the Justice Department’s statement.

Jack Bowles, British American Tobacco’s chief executive, apologized in a separate statement for “misconduct arising from historical business activities that led to these settlements.” The company also said it had stopped its business activities related to North Korea by September 2017.

A call to the company’s London headquarters before business hours on Wednesday went unanswered.

Separately, the same federal court unsealed charges on Tuesday against a North Korean banker and two Chinese nationals from a province that borders North Korea and includes a city known as a smugglers’ haven. Prosecutors have said the three men were part of a nearly $700 million scheme to purchase leaf tobacco for state-owned cigarette manufacturers in North Korea, one of which was owned by its military.

All three men are wanted by the F.B.I. The charges against them include bank fraud and money laundering, and the fraud charges are punishable by up to 30 years in prison.

The British American Tobacco settlement is a victory for the Biden administration during a period of rising tensions with North Korea. The country has tested a number of missiles this year, including what it said was a solid-fuel intercontinental ballistic missile, a potentially significant advance that could make its missiles harder to target. The United States has also accused North Korea of covertly shipping artillery shells to Russia to aid that country’s war effort in Ukraine.

Last year, the Biden administration imposed sanctions on several businessmen and companies in Asia, including in Singapore, that it said were helping to support the development of North Korea’s military and weapons program.

The British American Tobacco settlement was announced during a week in which President Yoon Suk Yeol of South Korea is visiting Washington. His trip will include a state dinner and conversations with American officials in which North Korea is sure to figure prominently.