"Underworld" was submitted to the British Board of Film Censors three times:
- The first submission, under the original title, was rejected because of the sympathetic portrayal of a criminal.
- The second submission, under the title "The Penalty" and with cuts, was rejected.
- The third submission, under the title "Paying the Penalty" to give the movie a more moral stance, and with additional cuts, was passed with an "A" certificate.
The film was predicted to be a flop, was shelved by Paramount and eventually released in only one theater in New York. Screenwriter Ben Hecht demanded that his name was taken off the credits. As a result of strong word-of-mouth the movie became an enormous hit and won Hecht the first of his two Academy Awards.