The Financial Crime Investigation Service (FNTT) in Latvia has imposed a significant fine of $10 million on the crypto payment service provider Payeer for violating EU sanctions on Russia. Payeer allowed individuals and companies in Russia to access its crypto wallet services, enabling them to purchase cryptocurrency using bank transfers and rubles through banks that were under EU sanctions. This breach of sanctions occurred over a year and a half, indicating persistent non-compliance.
Payeer, which recently registered as a company in Lithuania, officially started its operations in January 2023. However, it was revealed that the company had a history in Estonia, where its license for crypto exchange activities was revoked. The move to register in Lithuania seemed to be an effort to continue operations that were not in line with international sanctions.
In addition to the $10 million fine for sanctions violations, Payeer also faces a separate penalty of $1.15 million for violating Latvian anti-money laundering (AML) and counter-terrorism financing protocols. The FNTT accused Payeer of failing to conduct proper ID checks on customers intentionally, which worsened its legal issues.
This enforcement action against Payeer is part of a broader crackdown by the EU on crypto firms that assist in bypassing sanctions. In recent months, the EU has implemented stricter measures on crypto wallets operated by European entities to prevent them from providing services to Russians as part of various sanctions packages. These measures aim to restrict Russian access to crypto services and disrupt financial support for Russia’s military operations in Ukraine.
Furthermore, investigations have uncovered significant violations among crypto companies in Estonia and Latvia, with allegations of fraudulent schemes, money laundering, sanctions evasion, and financing of Russian organizations like the Wagner PMC. Estonian crypto exchanges, including Coinsbit, have been linked to potential money laundering activities involving over €1 billion.
The EU’s action against Payeer demonstrates a growing determination to ensure compliance within the crypto industry. This move follows the agreement by the European Council and Parliament to introduce stricter regulations for crypto firms to enhance AML measures. Starting in January, crypto companies will be required to implement more stringent customer scrutiny, especially for transactions exceeding €1,000, to prevent the misuse of cryptocurrencies for illegal purposes or sanctions evasion.