The US security firm formally known as Blackwater is to pay a fine of $7.5m to avoid legal proceedings over charges including arms trafficking.

The US Justice Department issued a statement on Tuesday to confirm that the company, now known as Academi, would pay the sum, along with a previously agreed $42m settlement with the US State Department, over violations of the country's Arms Export Control Act.

Documents unsealed in a US District Court in North Carolina said the company had agreed to pay the fine as part of a deferred prosecution agreement to settle 17 violations.

The list of violations includes possessing automatic weapons in the US without registration, lying to federal firearms regulators about weapons provided to the king of Jordan, passing secret plans for armoured personnel carriers to Sweden and Denmark without US government approval and illegally shipping body armour overseas.

Federal prosecutors and law enforcement agents said the company, which has held billions in US security contracts in Iraq and Afghanistan, repeatedly flouted US laws.

The decision comes after a five-year, multi-agency federal investigation in which the company admitted "certain facts", according to Thomas Walker, a prosecutor in North Carolina.

Walker said the probe revealed "an array of criminal allegations" with some "involving the manufacture and shipment of short-barrelled rifles, fully automatic weapons, armoured helicopters, and armoured personnel carriers".

The organisation also faced charges under the Foreign Corrupt Practices Act for unlicenced training of foreign nationals and firearms violations during its assignments in Iraq and Sudan.

Blackwater, one of the largest private security firm's employed by the US in Iraq, came under intense international criticism after an incident on September 16, 2007, when five of its guards protecting a US diplomatic convoy, opened fire in Baghdad's busy Nisur Square, killing at least 14 Iraqi civilians.

The company increasingly became a source of strained relations between the US and Iraq and pulled out of the country in May 2009 after the US State Department refused to renew its contracts.

Erik Prince, Blackwater's former owner, had close ties with the administration of George W Bush, the former US president, before selling his stake in December 2010.

Source: Agencies