Latvia’s Financial Crime Investigation Service (FNTT) has levied a record $10 million fine on crypto payment service provider Payeer for breaching European Union sanctions on Russia. According to the FNTT, Payeer provided crypto wallet services to individuals and companies in Russia, violating EU sanctions.
Payeer allowed Russian customers to purchase cryptocurrency using bank transfers and rubles, routing funds through banks under EU sanctions. These activities spanned a year and a half, indicating persistent non-compliance.
Payeer, which registered in Lithuania on October 20, 2022, and began operations on January 17, 2023, has a history in Estonia, where its crypto exchange license was revoked. The Lithuanian registration appeared to be an effort to continue operations despite international sanctions.
In addition to the $10 million fine for sanctions violations, Payeer faces a $1.15 million penalty for breaching Latvian anti-money laundering (AML) and counter-terrorism financing protocols. The FNTT accused Payeer of neglecting proper ID checks on customers to maintain its income flow.
This development is part of a broader EU crackdown on crypto firms that aid in circumventing sanctions. In October 2022, the EU prohibited crypto wallets operated by European entities from providing services to Russians as part of its eighth sanctions package. Subsequent measures, including the 12th and 14th sanctions packages, have further restricted Russian access to crypto services.
The EU’s stance has compelled many European crypto providers to block Russian bank accounts, aiming to sever financial ties that support Russia’s military actions in Ukraine. These sanctions target high-value sectors of the Russian economy, including energy, finance, and trade.
Recent investigations have uncovered significant violations among crypto companies in Estonia and Latvia, involving fraudulent schemes, money laundering, sanctions evasion, and financing Russian organizations such as the Wagner PMC. Estonian crypto exchanges, including Coinsbit, have been implicated in these activities, with over €1 billion potentially laundered through these platforms.
The EU’s crackdown on Payeer underscores a growing resolve to enforce compliance within the crypto industry. This follows the European Council and Parliament’s agreement on stricter regulations for crypto firms to bolster AML measures. Starting in January, crypto firms will be required to implement stricter scrutiny of their customers, especially for transactions exceeding €1,000, to prevent the use of cryptocurrencies in illegal activities or to evade sanctions.
