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The Financial Crimes Investigation Service (FNTT) has fined Lithuanian-registered company Payeer more than €9.3m for violations of international sanctions and anti-money laundering (AML) regulations.
The sanctions-related fine amounts to more than €8.23m, and the FNTT imposed an additional fine of more than €1.06m for breaches of the Law on the Prevention of Money Laundering and Terrorist Financing.
Payeer, which offers virtual currency depository and exchange operator services, says on its website that it is regulated by the Ministry of Economics and Finance of Paraguay and says that its main address is in the country.
Meanwhile, the address given for correspondence is in central London.
It first attracted the FNTT's attention in 2023, and a thorough inspection and analysis of its activities revealed significant regulatory violations, according to the regulatory authority.
Despite being registered in Lithuania on October 20, 2022, Payeer only began operations on January 17, 2023, having given up its virtual asset service provider (VASP) licence in Estonia to avoid revocation.
The FNTT said the timing suggests an intention to circumvent sanctions through its Lithuanian entity.
The FNTT's International Sanctions Implementation Commission found that the company facilitated transactions through its platform Payeer.com, allowing customers, predominantly from Russia, to transfer funds in Russian rubles from EU-sanctioned Russian banks.
The platform also provided services such as cryptocurrency wallet management to sanctioned Russian individuals and entities.
Under current legislation, Payeer was required to identify clients, ensure that services were not provided to sanctioned entities, close existing accounts and inform the FNTT about any suspensions.
The investigation established that Payeer had been non-compliant with international sanctions for more than a year and a half.
During this period, the company serviced at least 213,000 customers and generated revenues exceeding €164m.
The FNTT found that Payeer deliberately failed to verify its clients' identities to avoid losing substantial income, and that transactions with sanctioned Russian banks were not terminated, leading to serious breaches of international sanctions laws.
AML failings
In addition to the sanctions violations, the FNTT identified shortcomings in Payeer's compliance with AML laws.
It found that the company failed to report transactions in virtual currency equal to or exceeding €15,000 and had deficiencies in its internal policies and controls related to client identification, risk assessment and reporting.
Given the severity and extent of the violations, FNTT imposed a record fine on Payeer, which has the right to appeal.
This case marks the highest fine ever imposed by FNTT for violations of international sanctions, underscoring the agency's commitment to enforcing stringent regulatory standards in the crypto sector.
It is another signal of how serious the Baltic states are when it comes to enforcing sanctions against companies they feel are undermining the sanctions regime against Russia.
