Latvia’s FNTT Imposes Record $10 Million Fine on Payeer for Breaching EU Sanctions on Russia

Latvia’s Financial Crime Investigation Service (FNTT) has made headlines with its record-breaking $10 million fine imposed on the crypto payment service provider Payeer for violating European Union sanctions on Russia. The FNTT revealed that Payeer allowed Russian customers to access its crypto wallet services, enabling them to purchase cryptocurrency using bank transfers and rubles through banks under EU sanctions.

This breach of sanctions occurred over a year and a half, indicating persistent non-compliance by Payeer. Despite registering as a company in Lithuania in October 2022 and officially commencing operations in January 2023, the FNTT uncovered Payeer’s troubled history in Estonia, where its license for crypto exchange activities was revoked.

In addition to the hefty fine for sanctions violations, Payeer faces a separate $1.15 million penalty for failing to adhere to Latvian anti-money laundering (AML) and counter-terrorism financing protocols. The FNTT accused Payeer of neglecting proper ID checks on customers to maintain its revenue stream, exacerbating its legal woes.

This crackdown on Payeer is part of a broader EU effort to curb crypto firms aiding in circumventing sanctions. The EU has implemented various measures to restrict Russian access to crypto services, including prohibiting European entities from providing services to Russians and intensifying sanctions in subsequent packages.

The EU’s stringent stance has prompted many European crypto providers to block Russian bank accounts, aiming to disrupt financial support for Russia’s military actions in Ukraine. Recent 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.

The EU’s enforcement actions against Payeer signal a growing determination to ensure compliance within the crypto industry. Stricter regulations for crypto firms, including enhanced AML measures, are set to come into effect in January, requiring firms to implement more rigorous customer scrutiny for transactions exceeding €1,000 to prevent cryptocurrency use in illegal activities or sanctions evasion.