United States Obtains $629 Million Settlement with British American Tobacco to Resolve Illegal Sales to North Korea, Charges Facilitators in Illicit Tobacco Trade (DOJ and OFAC Actions)
Those involved. British American Tobacco (BAT), a UK-based global manufacturer of tobacco products.
Charges with penalties. One Count of Conspiracy to Commit Bank Fraud; One Count of Conspiracy to Violate IEEPA (agreement to pay combined penalties of more than $629 million). What happened? On April 25, the DOJ announced it had settled an investigation into BAT’s potential civil liability for violations of U.S. sanctions on North Korea. BAT agreed to enter into a deferred prosecution agreement (DPA) with the DOJ. In 2007, BAT publicly announced it had agreed to sell its interest in a firm it owned alongside a state-owned North Korean company. Instead, according to the DOJ, BAT continued to run the venture in secret. BAT used a company based in Singapore as an intermediary to receive North Korean money – amounting to more than $400 million over a decade – and, in some cases, relied on “financial facilitators linked to North Korea’s weapons of mass destruction proliferation network.” BAT’s Singapore subsidiary also reportedly received payments for cigarettes sold to employees of North Korea’s embassy in Singapore.
The DOJ press release can be found here. The Treasury Department settlement agreement can be found here.
Notably. It is unusual for sanctions matters to be resolved via a DPA, which imposes significant ongoing compliance obligations for the settling party. Just recently, albeit in the context of violations of the Foreign Corrupt Practices Act, Ericsson was assessed a $200 million penalty for not complying with the stipulated conditions of its DPA. BAT is now subject to the same sort of ongoing DOJ compliance requirements in addition to the large penalty it paid. North Korean Foreign Trade Bank Representative Charged in Crypto Laundering Conspiracies (DOJ Action) Those involved. Sim Hyon Sop, a North Korean National; Wu Huihui, a Chinese National; Cheng Hung Man, a Hong Kong British National; and an unknown user of the online moniker “live:jammychen0150” referred to as Chen. Charges with penalties. One Count of Conspiracy to Launder Monetary Instruments (maximum of 20 years in prison). What happened? Sim, Wu, Cheng, and Chen were charged after allegedly conspiring to launder stolen cryptocurrency to use to purchase goods for North Korea. The conspirators used Hong Kong-based companies to hide the fact that the transactions involved North Korea. Wu, Cheng, and Chen used front companies to make payments in U.S. dollars through U.S. correspondent banks. A second indictment alleges that Sim conspired with North Korean IT workers to gain employment at U.S. cryptocurrency firms and launder their incomes for the benefit of the regime. This activity was in direct violation of OFAC’s North Korean sanctions regime. A third indictment charges Wu with “operating an unlicensed money transmitting business.” Wu allegedly worked as a trader at a U.S. cryptocurrency exchange and, though he did not possess the required license, processed over 1,500 trades for U.S. customers. According to public reports, North Korean cyber actors frequently engage in schemes to steal virtual currencies from virtual asset service providers but must convert the currency to fiat currency so that North Korean actors can use it to circumvent sanctions. Over-the-counter (OTC) traders, who trade virtual currencies for fiat currencies are reportedly a frequent mechanism by which North Koreans seek to launder stolen crypto.
6 International Trade Enforcement Roundup |
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