This is the largest North Korea-related sanctions settlement OFAC has published, and it is unusually useful as a teaching case because the penalty notice sets out the whole structure.
According to OFAC’s enforcement release, BAT’s Singapore subsidiary and a North Korean company established a joint venture in North Korea in 2001 to manufacture cigarettes. The apparent violations arose from what OFAC describes as the formation of a conspiracy to export tobacco and related products to North Korea and to receive payment for those exports through the US financial system, together with the subsidiary’s use of US financial institutions to receive US dollar payments for cigarette sales to the North Korean embassy in Singapore.
Why it belongs on the front company page
The mechanism is the one the corporate concealment literature describes. The restricted counterparty could not be named in the payment chain, so payments were routed through intermediary companies whose own business gave the transfers an ordinary appearance, and the dollar leg went through correspondent banks that saw only the intermediary.
That is the whole technique in one transaction: the goods move, the money moves, and the party the restriction is aimed at appears in neither document.
The outcome
OFAC set the settlement at the statutory maximum and recorded that the apparent violations were egregious and were not voluntarily self-disclosed — the two determinations that between them remove almost all mitigation available under the Economic Sanctions Enforcement Guidelines.