Bravo: Record Fines for Russian-Controlled Crypto Payment Processor Payeer for Sanctions Violations and Money Laundering Issues

Charlene Lensburg
Thu, 11 Jul 2024 09:11:45 +0000
FCIS, Money Laundering, Sanctions, ticker, Payeer

The Lithuanian Financial Crime Investigation Service (FCIS) has imposed a record fine of nearly €9.3 million on Payeer, a virtual currency operator registered in Lithuania, for violations of international sanctions and anti-money laundering (AML) regulations. This development comes after FinTelegram’s repeated warnings about Payeer‘s involvement in Russian-related transactions. The users are currently concluding the agreement with Payeer E.A.S. in Paraguay. Lithuania is no longer wanted.

Details of the Sanctions Violations

Payeer UAB, operating the cryptocurrency platform Payeer.com, was found to facilitate transactions in Russian roubles, transferring funds to and from Russian banks sanctioned by the European Union. The FCIS determined that Payeer provided cryptocurrency wallet, account management, and custody services to Russian individuals and entities despite these sanctions.

Read our Payeer reports here on FinTelegram.

From its official start on January 17, 2023, Payeer UAB had accumulated over 213,000 customers and generated more than €164 million in revenue. The company was registered in Lithuania on October 20, 2022, following the revocation of its predecessor’s VASP license in Estonia.

The International Sanctions Implementation Commission of the FCIS concluded that Payeer had been operating in breach of international sanctions for more than 1.5 years. The company failed to adhere to legal requirements, including customer identification and the cessation of transactions with sanctioned entities. As a result, Payeer was fined €8.236 million.

Money-Laundering Issued

In addition to sanctions violations, Payeer was fined €1.06 million for breaches of the Law on the Prevention of Money Laundering and Terrorist Financing (AML/CFT law). The company neglected to report customer transactions exceeding €15,000 in virtual currency to the FCIS. It also displayed significant deficiencies in internal policies and control procedures related to customer identification and verification, risk assessment, and the submission of required reports to the FCIS.

The FCIS’s findings highlighted that Payeer deliberately avoided proper customer verification to maintain its revenue stream, further compounding the severity of its infringements. Despite being given opportunities to cooperate and explain, Payeer failed to comply, resulting in substantial penalties.

Implications and Next Steps

This case marks the highest fine imposed by the FCIS for breaches of international sanctions to date. Payeer has the right to appeal these decisions, but the fines underscore the critical importance of compliance with international sanctions and AML regulations for cryptocurrency operators.

FinTelegram will continue to monitor and report on Payeer‘s activities and the broader implications for the crypto industry. The case serves as a stark reminder for all virtual asset service providers (VASPs) about the necessity of rigorous compliance with regulatory requirements to avoid severe legal repercussions.

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