WASHINGTON: British American Tobacco Plc has agreed to pay more than $635 million to US authorities after a subsidiary pleaded guilty to charges that it conspired to violate US sanctions by selling tobacco products to North Korea and commit bank fraud, a US court filing and the company said on Tuesday.

The tobacco sales at the heart of Tuesday’s settlement took place from 2007 to 2017 to the isolated Communist nation, according to both the company and the Justice Department. North Korea faces an array of US sanctions to choke off funding for its nuclear and ballistic missile program.

“This case and others like it do serve as a warning shot to companies,” Matthew Olsen, assistant Attorney General of the Justice Department’s National Security Division, told a news conference.

The case represents the “single largest North Korea sanctions penalty” in Justice Department history, he said.

BAT, the world’s second-biggest tobacco group, makes Lucky Strike and Dunhill cigarettes.

Its annual report for 2019 said the group has operations in a number of nations that are subject to various sanctions, including Iran and Cuba, and that operations in these countries expose the company to the risk of “significant financial costs.”

In a statement, British American Tobacco said it has entered into a deferred prosecution agreement with the Justice Department, while one of its indirect subsidiaries in Singapore - BAT Marketing Singapore - pleaded guilty.