July 15, 2024

Lithuanian Financial Authorities Impose Record $10 Million Fine on Crypto Payment Firm Payeer

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In a landmark decision, the Lithuanian Financial Crime Investigation Service (FNTT) has levied fines totaling 9.29 million euros (approximately $10 million) on crypto payment company Payeer. The July 7 announcement cites severe breaches of Anti-Money Laundering (AML) regulations and allegations that Payeer permitted transactions with sanctioned banks.

The fines represent the largest ever imposed on a virtual asset service provider in Lithuania. Payeer, known for its crypto exchange and e-commerce payment services, facilitates currency exchanges between euros, U.S. dollars, and Russian rubles, as well as various cryptocurrencies. It also offers withdrawals via debit cards and an API for merchants to accept cryptocurrency payments for goods and services.

FNTT’s investigation into Payeer began in 2023. The agency discovered that Payeer, originally registered and licensed in Estonia, had its license revoked on January 17. Following the revocation, Payeer continued operations from its Lithuanian headquarters. The investigation revealed that Payeer failed to adequately verify customer identities and permitted transfers in Russian rubles through sanctioned Russian banks, allegedly for over 1.5 years.

The FNTT reported that Payeer served at least 213,000 customers during this period, generating revenue exceeding 164 million euros. Despite repeated attempts by the agency to contact Payeer and halt the sanctioned transactions, the company reportedly “did not cooperate, did not provide clarification.”

The fines imposed on Payeer are divided into two parts: an 8.23 million euro ($8.91 million) fine for “violations of international sanctions,” and a 1.06 million euro ($1.15 million) fine for “violations of the Law on the Prevention of Money Laundering and Terrorist Financing (PPTFP).”

Payeer has the right to appeal the decision. Cointelegraph reached out to Payeer for comment but did not receive a response by the time of publication.

This enforcement action is part of a broader global crackdown on crypto exchanges that fail to comply with AML regulations. In November, Binance settled with the U.S. Justice Department for $4.3 billion following accusations of insufficient customer identification and allowing sanctioned transactions. Similarly, in March, the DOJ charged KuCoin with failing to prevent money laundering, to which KuCoin responded by asserting its strict adherence to compliance standards.

The case against Payeer underscores the increasing scrutiny and regulatory pressure facing the cryptocurrency industry, highlighting the need for robust compliance measures to prevent illicit activities and ensure the integrity of financial systems.

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