World's second-largest tobacco company to pay $635 million for violating sanctions against North Korea

The world's second-largest tobacco company has agreed to pay over $635 million to the United States after its subsidiary admitted to violations of sanctions against North Korea, the company announced Tuesday.

The British American Tobacco subsidiary pleaded guilty to conspiring to commit bank fraud and violating U.S. sanctions against North Korea by selling tobacco products to the country between 2007 and 2017, according to newly unsealed court documents.

"On behalf of BAT, we deeply regret the misconduct arising from historical Business activities that led to these settlements, and acknowledge that we fell short of the highest standards rightly expected of us," Jack Bowles, chief executive of BAT, said in the Tuesday statement.

Beginning in 2007, BAT outsourced sales to North Korea to a third-party Singapore-based company, resulting in over $400 million in transactions passing through the banking system, according to the documents. North Korean buyers served as a front for the Hermit Kingdom, the documents add.

BAT says it has entered into a deferred prosecution agreement with DOJ while its Singaporean subsidiary entered into a plea agreement with the Department of Justice.

The company also entered into a settlement with the Treasury Department's Office of Foreign Assets Control, with the total amount payable to the U.S. through all three cases reaching $635.2 million plus interest.

North Korea has used the production and trafficking of counterfeit cigarettes as one of its largest sources of revenue to help advance its military and WMD programs. Smuggled tobacco products are believed to generate significant revenue, raking in as much as $20 for every $1 spent in some instances.