US arts and crafts retailer Hobby Lobby has agreed to forfeit thousands of ancient Iraqi artifacts and pay $3 million to settle a civil suit brought by the US government, prosecutors announced Wednesday.

The Department of Justice says thousands of cuneiform tablets and clay bullae, originally from Iraq, were smuggled into the United States via the United Arab Emirates and Israel in packages shipped to the Oklahoma-based company.

Hobby Lobby said that in 2009 it began acquiring artifacts "consistent with the company's mission and passion for the Bible" with the goal of preserving them for future generations and sharing them with public institutions and museums.

In July 2010, the firm's president and a consultant traveled to the UAE to inspect antiquities up for sale.

US prosecutors said the company was warned against the risk of such items being looted from archaeological sites in Iraq and that improper declaration of country of origin could lead to forfeiture.

But in December 2010, Hobby Lobby agreed to pay $1.6 million for more than 5,500 artifacts, including cuneiform tablets, clay bullae and cylinder seals.

The company did not communicate with the dealer who purportedly owned the artifacts and instead wired payment to personal bank accounts held in the names of other people, federal prosecutors said.

Around 10 packages were shipped to the firm, five intercepted by customs which had shipping labels falsely declaring that the artifacts came from Turkey.

In 2011, the firm also received a package of 1,000 clay bullae shipped by an Israeli dealer and accompanied by a false declaration stating that the contents originated in Israel.

"American collectors and importers must ensure compliance with laws and regulations that require truthful declarations to US Customs and Border Protection," said acting US attorney in Brooklyn, Bridget Rohde.

Hobby Lobby agreed to forfeit the artifacts, as well as 144 cylinder seals and an additional sum of $3 million to settle the civil action, prosecutors said.

"The company was new to the world of acquiring these items, and did not fully appreciate the complexities of the acquisitions process. This resulted in some regrettable mistakes," Hobby Lobby said in a statement.

"We should have exercised more oversight and carefully questioned how the acquisitions were handled," said company president Steve Green.

Hobby Lobby calls itself the largest privately owned arts-and-crafts retailer in the world with approximately 32,000 employees and operating in 47 states.

In 2014 the US Supreme Court ruled in favor of Hobby Lobby and another corporation, allowing them to refuse contraceptive coverage to female employees on religious grounds.