The penalties are primarily based on allegations that they violated sanctions imposed against Russia and violated Anti-Money Laundering (AML) regulations by facilitating fund transfers to and from Russian institutions.
Payeer, a cryptocurrency company that is regulated, was placed in the regulatory spotlight as a result of its purported involvement in assisting clients, primarily those based in Russia, in evading sanctions. The company allegedly permitted over 213,000 clients to transfer funds into and out of Russia clandestinely, thereby circumventing appropriate identification and anti-money laundering (AML) checks. Payeer facilitated the administration of accounts, use of crypto wallets, and custody services for Russian individuals and entities for more than a year. This activity proceeded unabated.
The FNTT has imposed a fine of €8.2 million for sanctions violations and an additional €1.1 million for transgressions in Anti-Money Laundering protocols. These sanctions emphasize Lithuania’s rigorous approach to enforcing financial regulations, with a particular emphasis on cryptocurrencies and their potential for illicit financial activities.
Payeer, which was established in January 2023, rapidly gained momentum, accumulating customers that was primarily comprised of Russian nationals who were seeking ways to circumvent international sanctions. Revenues surpassing €164 million ($177.4 million) were reportedly generated by the company’s operations, a figure that suggests the significant financial activity that its platform facilitated.
Payeer is not an isolated instance. This reflects broader concerns in the global regulatory landscape about the use of cryptocurrencies to evade financial supervision and circumvent sanctions. The revocation of Payeer’s license in Estonia prior to its establishment in Lithuania emphasizes the trend of regulatory arbitrage within the European Union, in which companies may pursue more favorable jurisdictions after experiencing regulatory scrutiny in other regions.
In March of the same year, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated numerous entities, including blockchain-based services and cryptocurrency exchanges, for their involvement in sanctions evasion against Russia. Estonian entities such as Bitfingroup OÜ and Bitpapa were among these, underscoring the importance of international cooperation in the prevention of such activities.
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