In 2001, BAT UK's Singaporean subsidiary (BATS) entered into a joint venture with a company in North Korea to create and maintain a cigarette production site in North Korea and a marketing arm.

BATS owned 60% of the joint venture "and supplied it with machines, equipment, tobacco, and other material to produce cigarettes (“Kit Sets”). It also provided the Joint Venture with professional services."

In 2007, BAT UK's senior management decided that there were reputational risks with an association with North Korea and also that it was becoming difficult to remit profits out of the country. Therefore BATS's share in the joint venture was transferred to what the US Treasury calls "a Singapore-based trading group". The consideration for the sale was one euro.

But the sale was, effectively, designed to obscure the reality of the situation, says the US Treasury: "the Singapore Company understood that it would act “as a vehicle for BAT to bring out [the Joint Venture’s] money and distribute [dividends] back to BAT.” BAT UK continued to exercise control over the Joint Venture through restrictions in the sales agreement, including a provision that allowed BAT, through a subsidiary, to reacquire its stake in the Joint Venture at its discretion for one euro. As part of the scheme, BATS also continued to sell and receive payment for Kit Sets and other goods and services to the Joint Venture through the Singapore Company."

"Following the divestment, between 2009 and 2016, the North Korea Company remitted USD
payments that the Joint Venture owed to BATM via the Singapore Company through a complex,
multi-step process. This involved the North Korea Company remitting the funds from its
account with OFAC-designated Foreign Trade Bank (FTB) in North Korea through various
accounts in China that contained the interests of FTB and front companies for OFAC-designated
Korea Kwangson Banking Corporation (KKBC), the Singapore Company’s accounts in
Singapore, and ultimately BATS’ account at the foreign branch of a U.S. bank. According to
BAT, this process was meant to reduce the risk of the money being frozen “in any leg of the
transaction” process. Altogether, this scheme caused twelve U.S. banks to process 228 USD
payments from the North Korea Company to the Singapore Company, including payments that
were ultimately remitted to BATS."

A settlement with the US Treasury sees BAT UK and BATS agreeing to pay USD503,263,807

Further reading: OFAC/Treasury: https://ofac.treasury.gov/media/931666/download

But that's not all. In a co-ordinated settlement with the Department of Justice, BAT UK and BATS have agreed to pay an additional sum, bringing the total of the two settlements to more than USD629 million.

And it's still not all. "on April 25, 2023, a federal judge in the District of Columbia unsealed charges against a North Korean banker, Sim Hyon-Sop, 50, and Chinese facilitators Qin Guoming, 60, and Han Linlin, 41, both of Liaoning Province, in connection with a multi-year scheme to facilitate the sale of tobacco to North Korea." The U.S. Department of State announced a reward of USD5 million for defendant Sim and a reward of USD500,000 for defendants Qin and Han, for information leading to their capture.

Further reading: US Department of Justice - https://www.justice.gov/usao-dc/pr/british-american-tobacco-pay-629-mil…