Payeer's Record Fine: A Landmark in Crypto Regulation

Understanding Payeer's Record Fine and Its Implications for Crypto Com

Lithuania's financial regulatory authorities have levied an unprecedented penalty of 9.3 Million euros (approximately $10.1 Million) against the cryptocurrency firm Payeer for breaching sanctions and anti-money laundering regulations.

According to an announcement made on Tuesday by Lithuania's Bureau for Financial Crime Investigation, Payeer facilitated transactions in rubles for Russian clients, involving transfers from Russian financial institutions that are on the EU's sanctions list. 

The bureau's release also highlighted that Russian nationals and companies were permitted to acquire services related to cryptocurrency wallets, including their management and custody.

What’s the Case?

In 2023, Financial Crimes Investigation Service (FNTT) authorities initiated a thorough examination of a company engaged in virtual currency exchange operator services (VASP) operations. This scrutiny led to the discovery that UAB "Payeer" had been officially incorporated in Lithuania on October 20, 2022. However, its operational commencement wasn't until January 17, 2023. 

This was after the revocation of the VASP activity license of its Estonian predecessor, also named "Payeer." The establishment of the Lithuanian entity is believed to be an attempt to perpetuate the activities previously conducted by the Estonian firm, which were deemed non-compliant with global sanctions.

Over a span exceeding 18 months, UAB "Payeer" was found to be in breach of international sanctions regulations. Records indicate that during this time, the company served a customer base of over 213,000 and generated revenues surpassing 164 Million euros.

Upon evaluating the severity and character of the infractions against the Prevention of Money Laundering and Terrorist Financing (PPTFPĮ), the platform was fined 8.24 Million euros for violations of international sanctions and 1.06 Million euros for violations of anti-money laundering laws.

The Rising Crypto Money Laundering Activities 

According to Chainalysis, in 2023, the amount of crypto transferred from unlawful sources to various services amounted to $22.2 Billion, marking a notable drop from the $31.5 Billion recorded in 2022. This decline could partly be due to a general reduction in the volume of crypto transactions, including both legal and illegal activities. 

Source: Chainalysis

Notably, the decrease in transactions associated with money laundering was more pronounced, registering at 29.5%, which is significantly higher than the 14.9% fall observed in the overall transaction volume.

Conclusion

Lithuania's imposition of a 9.3 million euro fine on Payeer marks a significant enforcement action against sanctions and anti-money laundering violations within the cryptocurrency industry. The case of Payeer underscores the increasing regulatory scrutiny on crypto firms, especially regarding adherence to international sanctions and AML laws. 

Also Read: Regulatory Support: Hong Kong's Crackdown on Crypto