Crypto Payment Platform Payeer Faces $10 Million Fine for AML Violations

Lithuania’s Financial Crime Investigation Service （FNTT） has fined Payeer, a crypto payment company, 9.29 million euros for breaching Anti-Money Laundering （AML） regulations. The agency found that Payeer facilitated transactions with sanctioned Russian banks.

Points

• Payeer fined 9.29 million euros for AML violations.
• Transactions involved sanctioned Russian banks.
• The company failed to adequately identify customers.
• Payeer’s operations shifted from Estonia to Lithuania after license revocation.
• FNTT’s investigation uncovered significant regulatory breaches.

In a significant regulatory move, Lithuania’s Financial Crime Investigation Service （FNTT） has imposed a hefty fine of 9.29 million euros （approximately $10 million） on Payeer, a crypto payment company. This action highlights the increasing scrutiny on cryptocurrency firms to comply with Anti-Money Laundering （AML） regulations and international sanctions.

Payeer, known for its crypto exchange and e-commerce payment services, allows users to exchange euros, US dollars, and Russian rubles, as well as various cryptocurrencies. However, an FNTT investigation revealed that the company facilitated transactions with sanctioned Russian banks, violating AML regulations.

The investigation, which began in 2023, discovered that Payeer’s operations had initially been licensed in Estonia. Following the revocation of its Estonian license on January 17, 2023, Payeer continued its activities from a headquarters registered in Lithuania. Despite regulatory warnings, Payeer failed to stop allowing transactions involving Russian rubles and sanctioned banks.

FNTT’s findings were damning. The agency reported that Payeer had inadequately identified its customers and facilitated transactions for over 213,000 clients, generating revenues exceeding 164 million euros. These transactions, occurring over more than 1.5 years, breached international sanctions and AML laws.

The fines imposed on Payeer consisted of two parts: an 8.23 million euro （$8.91 million） penalty for violations of international sanctions and a 1.06 million euro （$1.15 million） penalty for breaches of AML regulations. Despite attempts to engage with Payeer and rectify the violations, the company did not cooperate with the regulatory authorities.

Explanation

• Payeer’s Regulatory Breaches: The company’s significant fines highlight the importance of strict compliance with AML regulations and international sanctions in the cryptocurrency industry. The investigation revealed major lapses in customer identification and regulatory adherence.
• Operations Shift: After losing its Estonian license, Payeer moved its operations to Lithuania but continued to engage in non-compliant activities. This shift underscores the need for consistent regulatory oversight across jurisdictions.
• Impact on the Crypto Industry: The case of Payeer serves as a cautionary tale for other cryptocurrency firms, emphasizing the necessity of robust AML policies and adherence to international laws to avoid severe penalties and maintain trust in the market.