Lithuania Imposes Record Fine On Crypto Company For Violating Russia Sanctions

Lithuania recently imposed a record fine of €9.3 million on the crypto company Payeer for violating international sanctions. The specifics of the violation have not been disclosed. However, it is clear that Payeer failed to comply with the stringent regulatory requirements set forth by Lithuanian authorities.

In a statement released on 9 July 2024, the country’s Financial Crimes Investigation Service (FNTT) said that Payeer allowed Russian customers “to carry out transactions in Russian rubles by transferring them from European Union-sanctioned Russian banks.”

According to a Bloomberg report, Russian individuals and legal entities were given the opportunity to receive cryptocurrency wallet, account management or storage services by Payeer.

Lithuania fines crypto company Payeer a record €9.3 million for sanctions and money laundering violations involving Russian clients https://t.co/T5jrf88aGx

— Bloomberg Crypto (@crypto) July 10, 2024

Marking a significant move in the country’s regulatory landscape for virtual asset service providers (VASPs), this penalty underscores Lithuania’s commitment to stringent anti-money laundering (AML) and know-your-customer (KYC) regulations. 

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Payeer Had Been Breaking Lithuanian Rules For Over 1.5 years

Lithuania requires companies to identify any customer it served when providing VASP services to prevent services from being rendered to sanctioned customers.

FNTT also requires the closure of any existing accounts, the suspension of the entities’ ability to dispose of funds or other financial resources, and notification of the FNTT of the suspension.

However, it was discovered that Payeer had been breaking rules related to foreign sanctions for over 1.5 years. It was determined that the company generated more than 164 million euros in revenue during this time, with at least 213,000 customers.

The FNTT found that the sanctions-violating transactions conducted through sanctioned Russian banks were also not terminated.

“The violations committed by the company were assessed as serious, the company itself did not cooperate, did not provide explanations, and therefore was fined more than EUR 8.236 million. Euro,” explained FNTT. The company was awarded a fine of an additional million for violating AML and KYC laws.

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Implications Of Imposing Record Fine On Crypto Company

The fine imposed on Payeer may be seen as a warning to other crypto companies operating in Lithuania and the broader EU.

Is it possible that Lithuania’s regulatory landscape for crypto companies may become even more stringent with the upcoming Markets in Crypto-Assets (MiCA) Regulation?

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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