The Lithuanian Financial Crimes Investigation Service (FCIS) has made headlines by imposing a record fine on the Payeer crypto exchange for violating international sanctions. The fine, totaling €9.3 million, marks the largest penalty ever issued by the FCIS for such offenses.
Payeer, a licensed Virtual Asset Service Provider (VASP) in Lithuania, was found to be in breach of international sanctions, resulting in a fine of €8.23 million ($10.1 million). Additionally, the company was fined €1.06 million ($1.15 million) for violating Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws.
Investigations conducted by the FCIS revealed that Payeer allowed transactions in Russian roubles and provided crypto services to Russian banks and individuals sanctioned by the European Union (EU) for over 18 months. Despite having over 213,000 customers, mostly Russian, and generating more than €164 million in revenue during this period, Payeer failed to comply with international sanctions.
Further investigations uncovered that Payeer also failed to notify the FCIS of crypto transactions of €15,000 or more and had deficiencies in internal controls, customer risk assessments, and management protocols, leading to violations of AML/CFT laws.
Payeer, founded in 2012 in Moscow by Russian national Evgenia Kosolapova, was liquidated in 2015 before operators re-registered in various countries, including Scotland and Poland. In January 2023, the company re-registered in Lithuania following the revocation of its license in Estonia.
The penalties imposed on Payeer highlight the importance of compliance with international sanctions in Lithuania. In related news, Tether announced plans to freeze wallets using its currency, USDT, to evade US sanctions on Venezuelan oil exports.
The severity of the fine serves as a warning to other crypto exchanges and companies operating in Lithuania to ensure compliance with international sanctions and AML/CFT laws. Payeer has the option to appeal the decision, but the repercussions of non-compliance are clear.
