Key Points
- Latvia’s FNTT has fined crypto payment provider Payeer $10 million for violating EU sanctions on Russia.
- Payeer also received a $1.15 million penalty for breaching Latvian anti-money laundering protocols.
The Financial Crime Investigation Service in Latvia (FNTT) has issued a record-breaking fine of $10 million to Payeer, a cryptocurrency payment service provider, for violating European Union sanctions against Russia.
The FNTT stated that Payeer provided access to its crypto wallet services to both individuals and companies in Russia, which is a clear violation of EU sanctions.
Violation Details
Payeer enabled Russian clients to buy cryptocurrency using bank transfers and rubles, and these funds were funneled via banks that were subject to EU sanctions. This behavior persisted for a year and a half, indicating a pattern of non-compliance.
Payeer, which was officially registered in Lithuania on October 20, 2022, and started operating on January 17, 2023, had a previous history in Estonia where its license for cryptocurrency exchange activities was revoked.
The Lithuanian registration appears to have been an attempt to continue operations that are incompatible with international sanctions.
Additional Penalty
In addition to the $10 million fine, Payeer was also hit with a separate $1.15 million penalty for violating Latvian anti-money laundering and counter-terrorism financing regulations.
The FNTT accused Payeer of intentionally neglecting to perform appropriate ID checks on its customers in order to maintain its revenue stream, which has further complicated its legal predicament.
This incident is part of a wider EU crackdown on cryptocurrency firms that assist in evading sanctions. In October 2022, the EU banned crypto wallets operated by European entities from offering services to Russians as part of its eighth sanctions package.
Subsequent packages of sanctions have further tightened restrictions on Russian access to crypto services. Many European crypto service providers have been forced to block Russian bank accounts in an attempt to cut off financial support for Russia’s military actions in Ukraine.
These sanctions are part of a coordinated effort to target high-value sectors of the Russian economy, including energy, finance, and trade. Recent investigations have also revealed significant violations among crypto companies in Estonia and Latvia, including allegations of fraudulent schemes, money laundering, sanctions evasion, and financing of Russian organizations.
Crypto exchanges in Estonia, such as Coinsbit, have been implicated in these activities, with more than €1 billion potentially laundered through these platforms.
The EU’s crackdown on Payeer indicates a growing determination to enforce compliance within the cryptocurrency industry. This follows an agreement between the European Council and Parliament on stricter regulations for crypto companies to strengthen anti-money laundering measures.
Starting in January, crypto firms will be required to implement stricter scrutiny of their customers, especially for transactions exceeding €1,000. This is intended to prevent the use of cryptocurrencies for illegal activities or to evade sanctions.
