Lithuania fines crypto firm Payeer €9.3m over sanctions and AML violations

Cryptocurrency firm Payeer has been fined for violating sanctions and anti-money laundering regulations in Lithuania. The charges have been brought by the Financial Crime Investigation Service (FNTT).

According to the FNTT’s statement on July 10, Payeer repeatedly allowed its services to Russian users. Russia is currently sanctioned by the Lithuanian government, which prohibits businesses from dealing with the country.

Multiple violations

The majority of Payeer’s 213,000 clients are reportedly based in Russia. The FNTT alleges that these users had been able to transfer funds into and out of the country for over a year.

Authorities uncovered that the platform received transactions in Russian rubles from banking entities outside of Lithuania. Further, users were able to access crypto wallets, account management, and storage services, which contravenes international sanctions imposed.

The complaint also alleges that Payeer did not implement proper Know Your Customer measures, allowing sanctioned accounts to remain active. Moreover, It failed to report these activities to the FNNT.

An investigation revealed severe lapses in its internal policies and control procedures related to customer identity verification and risk management. 

The FNTT determined that Payeer’s violations were intentional, serving as a strategy to retain its revenue. The crypto firm managed to generate €164 million in profits via these sanctioned entities.

Furthermore, Payeer’s non-cooperation and failure to provide necessary explanations during the investigation highlighted the company’s disregard for legal obligations.

As such, Payeer has been fined €8.23 for sanctions violations and €1.1 million for breaching the Money Laundering and Terrorist Financing Prevention Act (PPTFPĮ). This was also the highest fine ever imposed by the regulator in such cases.

The recent actions follow a May report from the financial crimes regulator, noting that over 98,000 reported cases were recorded in 2023 alone.

Last year, a group of European media platforms reported finding video tutorials in Russian describing how users can bypass sanctions using Payeer. The actions led to the revoking of its license in Estonia.

Increased oversight in crypto

Regulators in Lithuania are looking to gain more control over the crypto sector. Back in April,  Simonas Krepsta, a member of Lithuania’s central bank, warned that companies failing to comply with the nation’s stricter licensing requirements would see their licenses revoked. 

The nation currently houses approximately 580 crypto firms. However, only a few of these entities are expected to meet the criteria for obtaining full permits.
Cryptocurrency exchange OPNX was the latest to secure a Virtual Asset Service Provider (VASP) license in the country.

The post Lithuania fines crypto firm Payeer €9.3m over sanctions and AML violations appeared first on Invezz