Payeer Fined €9.3 Million for Violating AML Regulations
Lithuania’s Financial Crime Investigation Service (FNTT) has levied a record-breaking fine of €9.3 million (around $10 million) on crypto payment company Payeer for breach of anti-money laundering regulations and facilitating transfers to sanctioned Russian banks.
Financial Crime Investigation
- The FNTT imposed a fine of €9.3 million on Payeer, marking the largest ever fine on a virtual asset service provider in Lithuania.
- Payeer operated in Lithuania despite losing its Estonian license in January 2023.
- An investigation revealed that Payeer failed to verify customer identities adequately, enabling money laundering and terrorist financing.
- The company allowed transactions in Russian rubles through EU-sanctioned banks for over 1.5 years.
Operational Violations
Payeer, known for its cryptocurrency exchange and e-commerce payment services, offers users the ability to exchange euros, US dollars, Russian rubles, and various cryptocurrencies. Additionally, it provides debit card withdrawal services and an API for merchants to accept crypto payments.
Revenue and Customer Base
- Despite the violation, Payeer boasted over 213,000 customers, mostly from Russia.
- During its operation, the company generated revenue exceeding €164 million.
- Payeer’s lax customer verification process allowed users to evade AML checks while dealing in Russian rubles.
Fine Breakdown
The €9.3 million fine on Payeer comprises two components:
- The larger portion of €8.23 million is for violations of international sanctions.
- The remaining €1.06 million is for breaching the Law on the Prevention of Money Laundering and Terrorist Financing (PPTFP).
Non-Compliance Response
The FNTT attempted to engage with Payeer to cease sanctioned transactions, but the company failed to cooperate or provide clarification, leading to the hefty fine.
Hot Take: Conclusion
Payeer’s hefty fine by Lithuania’s FNTT underscores the importance of compliance with anti-money laundering regulations in the cryptocurrency space. This regulatory crackdown serves as a warning to virtual asset service providers to ensure strict adherence to AML laws to prevent financial crimes and regulatory penalties in the future.
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