The company allowed Russian customers to purchase cryptocurrency using bank transfers and rubles, channelling funds through banks that were under EU sanctions. These activities occurred over an extended period of a year and a half, pointing out persistent non-compliance. Payeer, which registered as a company in Lithuania on October 20, 2022, officially began its operations on January 17, 2023. However, the FNTT revealed that the firm had a prior history in Estonia, where its license for crypto exchange activities was revoked.
The Lithuanian registration appeared to be an attempt to continue operations incompatible with international sanctions. In addition to the hefty $10 million fine for sanctions violations, Payeer has been slapped with a separate $1.15 million penalty for breaching Latvian anti-money laundering (AML) and counter-terrorism financing protocols. The FNTT accused Payeer of intentionally neglecting adequate ID checks on customers to maintain its income flow, further compounding its legal troubles. The EU’s stance has forced many European crypto providers to block Russian bank accounts, aiming to sever financial links supporting Russia’s military actions in Ukraine.
These sanctions are part of a concerted effort to target high-value sectors of the Russian economy, including energy, finance, and trade. Estonian crypto exchanges, including Coinsbit, have been implicated in these activities, with over €1 billion potentially laundered through these platforms. Beginning in January, crypto firms will be required to implement stricter scrutiny of their customers, particularly for transactions exceeding €1,000. It aims to prevent the use of cryptocurrencies in illegal activities or to evade sanctions.