The settlement is tentative and still needs final approval from regulators and the company's board of directors, the New York-based company said.
Avon's legal woes stem from a 2008 internal investigation looking into whether bribes were paid to Chinese government officials by the company's management in China to gain favors. Federal regulators began their investigation into the alleged bribery shortly after Avon's internal investigation began, according to the SEC filing.
Avon said it would pay $68 million to the U.S. Justice Department and $67 million to the SEC. Under the preliminary agreement, the company secured a deferred prosecution for three years, after which the charges against the company would be dismissed.
It has also agreed to install a government-approved compliance monitor for 18 months; after that, it will put in place its own compliance monitor and continue reporting to the government for an additional 18 months.
As part of its settlement with the Justice Department, the subsidiary operating in China will enter a guilty plea in connection with alleged violations of the Foreign Corrupt Practices Act.
A request seeking comment from Avon was not immediately returned Thursday.
Avon shares were down $1.93, or 12.63%, to $13.35 in late morning trading.