Crypto Exchange Payeer fined $10M by Lithuanian Authority for Sanctions involving Russian Customers
A crypto exchange registered in Lithuania, Payeer, which provides depository virtual currency money operator services and virtual currency exchange operator services (VASP), was fined $8.23 million by the Financial Crimes Investigation Service (FNTT) for violations of international sanctions. The fine for breaking international sanctions is EUR, according to a statement on Tuesday. The company was also fined more than 1.06 million euros for breaking the Law on the Prevention of Money Laundering and Terrorist Financing (PPTFPĪ), the service said.
According to the statement by the Financial Crimes Investigation Service, when FNTT officials learned about the company that had been involved in VASP activities in 2023, an inspection of the business and an examination of its records were conducted.
It was determined that although UAB "Payeer'' was formally registered in Lithuania on October 20, 2022, it began operating on January 17, 2023, following the revocation of the license to conduct VASP activities held by its Estonian predecessor, "Payeer." The company may have been founded in Lithuania in order to carry on Payeer's operations, which are prohibited by international law. It was found that the company had been violating international sanctions laws for more than a year and a half and that UAB ``Payeer," with at least 213,000 customers, made over 164 million euros in revenue during this time.
Payeer enabled Russian clients "to execute transactions in Russian rubles through the transfer of funds from Russian banks sanctioned by the European Union." The service added that "crypto wallet, storage services, or account management" were also made available to Russian individuals and legal entities. In order to avoid losing a sizable portion of its revenue, the company purposefully neglected to properly determine and verify the identities of its customers, as discovered by FNTT, in violation of both formal and fundamental legal and regulatory requirements.
Additionally, transactions that violated sanctions and were processed through Russian banks under sanctions did not end. The company was fined more than 8.236 million euros because the infractions were deemed serious, it failed to cooperate, and it offered no justifications.
The company was found to have failed to notify FNTT of customer operations or transactions involving virtual currency valued at or exceeding fifteen thousand euros. Inadequate internal policy and control procedures were found to exist concerning client and beneficiary identification and verification, risk assessment and management, reporting, information submission to FNTT, and other related topics.
Following an evaluation of the type and severity of the PPTFPĪ violations, the company was hit with a 1.06 million euro fine. For breaches of international sanctions, this is the highest fine the FNTT has ever levied to date. These decisions remain subject to appeal to the company.
In an earlier report, Russian video tutorials showed how to use Payeer to get around sanctions. Despite being based in Estonia, Payeer was open about having millions of customers, most of whom were from Russia. However, many of them migrated to Lithuania after Estonia tightened its regulation of cryptocurrency exchanges in 2022. Lithuania, a country in the Baltic region of Europe, has emerged as a hub for financial technology startups in the last ten years. However, the authorities are currently trying to lower the number of cryptocurrency companies through a new licensing plan in an effort to stop the abuse of digital assets for money laundering or defrauding investors.
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