A Criminal Resolution Is Not A Global Conclusion

Most corporations, especially those operating globally and in challenging jurisdictions, consider government enforcement actions to be one of their most significant areas of legal risk, and rightfully so, as the US Department of Justice (DOJ), the US Treasury’s Office of Foreign Assets Control (OFAC), and other US government entities have the power to institute far-reaching investigations, impose burdensome monitorships, and extract significant monetary penalties for violations of a variety of statutes and regulations. But what many companies fail to realize is that a resolution with the US government is not global, and significant risks may lie in derivative actions in other jurisdictions or civil forums.

British American Tobacco: A Cautionary Example of Derivative Litigation

On April 25, 2023, British American Tobacco (BAT), one of the world’s largest tobacco producers headquartered in London, agreed to pay a $629 million criminal penalty, “the largest North Korean sanctions penalty in the history of DOJ,”¹ to resolve bank fraud and criminal sanctions violations arising out of its continued tobacco sales to North Korea through its Singapore subsidiary, BAT Marketing Singapore (BATMS). On the same day, OFAC announced that BAT agreed to settle its potential strict civil liability under the North Korean Sanctions Regulations for $508 million.²

Now, after paying more than $1.1 billion in combined penalties and settlements to the US government, BAT is facing litigation in the High Court in London by more than 100 former and current shareholders over allegations that the company failed to disclose said breaches of US sanctions.

This follow-on exposure is a reminder for multinational companies that resolving a government enforcement action with any admission of wrongdoing, even a successfully completed deferred prosecution agreement (DPA), may mark the end of their legal woes in one respect but mark the beginning of them in another by serving as the basis for broader civil litigation and shareholder actions across multiple jurisdictions.

The BAT US DPA

According to court filings, BAT announced in 2007 that it had agreed to sell its share in its North Korea tobacco factory and had exited the North Korean market. Nevertheless, BATMS continued to maintain control over key aspects of the North Korean business behind the scenes. Between 2007 and 2017, BAT and BATMS allegedly facilitated transactions worth more than $418 million involving North Korean entities using front companies and disguised payment structures to obscure the North Korean nexus from US financial institutions. Additionally, BAT and BATMS supplied false information to US banks so that they would unknowingly process the transactions, thereby causing US financial institutions to export financial services to North Korea.

As a result of this conduct, BAT and BATMS entered into a DPA³ with DOJ, waived indictment, and pleaded guilty to a criminal Information in the District of Columbia for conspiring to commit bank fraud and conspiring to violate the International Emergency Economic Powers Act (IEEPA).⁴ BAT and BATMS agreed to pay more than $629 million in criminal penalties and forfeiture and simultaneously resolved a parallel OFAC investigation through a civil settlement exceeding $508 million.

Under the terms of the DPA, the DOJ agreed to not bring criminal or civil actions against BAT relating to the underlying conduct, provided that the company, for three years, fully cooperated with DOJ in any ongoing investigations, actively disclosed relevant facts, and paid the agreed-upon penalty and forfeiture amount totaling $629 million.⁵ In addition, the DPA required BAT to implement and maintain a robust compliance and ethics program designed to prevent and detect future violations of the Bank Secrecy Act and US sanctions laws, and to submit annual corporate compliance certifications to DOJ. In May 2026, BAT’s executives certified to the US government that BAT had satisfied its obligations under the DPA, and the government moved by consent to dismiss the Information, representing that “BAT has fully complied with the DPA,” including satisfying its restitution and penalty obligations.⁶ The judge granted DOJ’s dismissal request the same day.

But this dismissal did not end BAT’s legal troubles.

BAT Derivative Shareholder Litigation in the UK

Section 90A and Schedule 10A of the UK Financial Services and Markets Act 2000 provides a basis to compel an issuer of securities to compensate investors for losses suffered as a result of misleading statements or dishonest omissions published to the market in the form of regulated information (e.g. annual reports) or a dishonest delay in publishing such information. Similarly, Sections 89 and 90 of the UK Financial Services Act 2012 criminalize the making of a statement, promise, or forecast known to be misleading or deceptive, or the dishonest concealment of facts to induce a sale or acquisition of securities.

On February 27, 2026, more than 100 current and former shareholders of BAT filed claims in the High Court in London under these regulations related to allegations based on information in BAT’s DPA — primarily BAT’s failure to properly publish information to the stock market about its business operations in North Korea from 2007 to 2023. Though the value of the lawsuit is not presently known, it is estimated to amount to a multibillion-pound claim.

BAT Terrorism-Related Litigation

Beyond shareholder litigation, another area in which the threat of collateral civil litigation arising from government enforcement actions is ripe relates to provision of support to alleged terrorist organizations.

The Anti-Terrorism Act (ATA), 18 U.S.C. §§ 2333(a) and (d), allows US nationals who are injured or killed by international terrorism to file civil lawsuits in federal court against terrorists and entities that engage in or aid and abet an act of international terrorism by providing material support or knowingly providing substantial assistance to the terrorist that perpetrated, planned or authorized the attack. 18 U.S.C. §§ 2333(b) and (c) provide that a final judgment or decree in favor of the United States or any foreign state, respectively, in specific criminal proceedings prevents the defendant from denying the essential allegations of that crime in a later civil suit under this section. 

In addition to the shareholder litigation in the United Kingdom, BAT is facing claims under this framework, with victims of the terrorist attacks in Iraq alleging that BAT aided and abetted the attacks by “knowingly providing substantial assistance” to the North Korea-IRGC-Hizballah enterprise that produced the missiles launched in the attacks.⁷ 

We are likely to see such terrorism-related lawsuits increase, as the Trump administration has escalated enforcement pressure throughout Latin America by designating numerous criminal organizations Foreign Terrorist Organizations. This designation significantly escalates the risk of doing business with these entities from sanctions exposure to the criminal offense of providing material support to terrorists under 18 U.S.C. § 2339B. Any information disclosed in connection to a resolution with the US government related to such allegations could be used to pursue civil claims under 18 U.S.C. § 2333. The potential liability is considerable, because the statute allows the victims to recover threefold — the damages sustained and the cost of the suit, including attorney’s fees. 

Key Takeaways

BAT’s situation serves as a stark reminder that, notwithstanding resolutions reached with one governmental authority, corporations — particularly those with a multijurisdictional presence — must remain cognizant of potential collateral consequences both inside and out of the initial jurisdiction that may stem from public disclosures and/or regulatory filings.

In negotiating an agreed statement of facts with the government, corporations must emphasize the collateral consequences in civil litigation — potentially extraterritorially — which the government may not fully appreciate. Corporations entering into DPAs should endeavor to limit the facts to only those necessary to satisfy the government and emphasize that a corporation cannot responsibly accept a statement of facts that amounts to extinction of the company on the basis of civil liability. DOJ in particular is bound to mitigate consequences where extinction of the company is a foreseeable risk in an agreed resolution, as DOJ policy counsels in favor of permitting corporations to remediate rather than implode.

In these negotiations, corporations should also consider any sensitivities around disclosure, particularly in relation to far-reaching jurisdictional arms and mechanisms that may be engaged. For example, 28 U.S.C. § 1782 allows litigants involved in legal proceedings outside the United States to ask a US federal district court to order the production of documents, testimony, or other evidence from a person or entity located within that district for use in the foreign action.

While pop culture has, for many, instilled the general idea that double jeopardy protects against punishment for the same conduct twice, reality is not as simple as an episode of Law and Order. Rather, criminal resolutions entered into without due care can lead to similarly existential civil exposure. Corporations must remain vigilant to both.

Footnotes

1. Press Release, United States Obtains $629 Million Settlement with British American Tobacco to Resolve Illegal Sales to North Korea, Charges Facilitators in Illicit Tobacco Trade (April 25, 2023), https://www.justice.gov/archives/opa/pr/united-states-obtains-629-million-settlement-british-american-tobacco-resolve-illegal-sales.

2. Press Release, Settlement Agreement between the U.S. Department of the Treasury’s Office of Foreign Assets Control and British American Tobacco p.l.c. (April 25, 2023), https://ofac.treasury.gov/recent-actions/20230425.

3. United States v. British American Tobacco P.L.C. et al, 1:23-cr-00118-BAH, at ECF No. 11 (D.D.C. Apr. 25, 2023).

4. Id. at ECF No. 12.

5. See Supra note 3.

6. United States v. British American Tobacco P.L.C. et al, 1:23-cr-00118-BAH, at ECF No. 22 (D.D.C. May 11, 2026).

7. Shiwa Nahadi, et al., v. British American Tobacco P.L.C., et al., 1:26-cv-00274-LMB-WEF, at ECF No. 49 (E.D. Va. Jun. 29, 2026).

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