11-07-2024
The FCIS fines virtual currency operator a record fine of almost €9.3 million
For the determined violations of international sanctions the Financial Crime Investigation Service (the FCIS) has imposed a record fine of more than EUR 8.23 million on Payeer, a company registered in Lithuania as a depository virtual currency wallet operator and a virtual currency exchange operator (VASP) for violations of international sanctions.
Another fine of more than 1.06 million EUR was imposed on the company for breaches of the Law on the Prevention of Money Laundering and Terrorist Financing (AML/CFT law).
The company, which had been carrying out VASP activities, came to the attention of the FNTT in 2023, when the company was subject to an inspection and an analysis of information about the company.
It was found that UAB Payeer was registered in Lithuania on 20 October 2022, but actually started its activities on 17 January 2023, when its predecessor, UAB Payeer, registered in Estonia, had its licence for VASP activities revoked. In Lithuania, the company has possibly been set up to continue Payeer's activities, which are incompatible with international sanctions.
The International Sanctions Implementation Commission of the FCIS, which evaluated the material gathered, found that from the actual start of its operations, Payeer UAB owned the cryptocurrency platform “Payeer.com”, through which the company allowed its customers, mainly from Russia, to carry out transactions in Russian roubles, transferring them to and from Russian banks sanctioned by the European Union. Russian natural and legal persons were also given access to cryptocurrency wallet, account management or custody services.
Under the legislation, the company was required to carry out customer identification when providing VASP services, to ensure that services were not provided to sanctioned customers, to close existing accounts, to suspend the entities' disposition of funds or economic resources, and to inform the FCIS of the suspension.
The company was found to be in breach of international sanctions laws for more than 1.5 years. During this period, Payeer UAB was found to have had at least 213,000 customers and a revenue of more than 164 million EUR.
The FCIS found that the company had violated not only formal, but also substantive requirements of the law and the regulations; the identities of the company's clients were not properly determined and verified deliberately in order to avoid losing a significant part of the revenue.
Transactions in breach of sanctions through sanctioned Russian banks were also not terminated. The company's infringements were assessed as serious, the company itself failed to cooperate and provide explanations, resulting in a financial penalty of more than 8.236 million EUR.
In addition, breaches of the AML/CFT law have been identified. It was found that the company failed to notify the FCIS of customer operations or transactions in virtual currency equal to or exceeding EUR 15,000, deficiencies in internal policies and internal control procedures related to identification and verification of customers and beneficiaries, risk assessment, risk management, submission of reports and information to the FCIS, etc. were found.
In view of the scope and nature of the infringements of the AML/CFT law, the company was fined 1.06 million EUR.
This is the highest fine imposed by the FCIS for breaches of international sanctions to date. The company can still appeal against these decisions.
Last updated: 11-07-2024
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