The Lithuanian Financial Crime Investigation Service (FNTT) has fined the cryptocurrency payment system Payeer a record 9.3 million euros for violating international sanctions and anti-money laundering and counter-terrorism financing legislation.
Violations and Fines
According to a press release, of the total amount of the fine, 8.23 million euros were imposed for violating international sanctions, while 1.06 million euros were for breaching anti-money laundering (AML) norms. The significant size of the fine is explained by the fact that the company, according to officials, refused to cooperate with the investigation and did not provide necessary clarifications.
Investigation Details
The investigation into Payeer, which is classified as a virtual asset service provider (VASP), began in 2023. The company was registered in Lithuania on October 20, 2022, but actually started its operations on January 17, 2023, after its Estonian branch lost its VASP license.
Violations by Payeer
It was noted that the platform allowed customers from Russia to conduct transactions in rubles using accounts of banks under EU sanctions. Customers from Russia could also avail services for creating cryptocurrency wallets, storing funds, and managing accounts.
Regulatory Failures
According to AML legislation requirements, a VASP company is obligated to conduct customer identification (KYC) to prevent providing services to individuals on sanction lists. However, as regulatory representatives claim, Payeer deliberately avoided implementing KYC procedures to not lose a significant portion of its revenue.
Additionally, the company failed to fulfill the obligation of notifying FNTT about transactions over €15,000, as prescribed by anti-money laundering legislation.
Ongoing Developments
In April, Lithuania announced plans to tighten regulations for cryptocurrency companies by introducing mandatory licensing from 2025. In May, it was reported that the US prosecutors are investigating AML violations related to Jack Dorsey-founded company Block. In June, Binance announced its intention to pay a $2.3 million fine for numerous AML violations in India to restore its presence in the local market.
