Payoneer to pay US Treasury $1.4 million fine over sanctions violations
The US Treasury Department said that Payoneer, a fintech startup founded by Israeli entrepreneurs, has agreed to pay a fine of some $1.4 million as part of a settlement for more than 2,000 apparent sanctions violations, by processing payments for parties located in Iran, Sudan and Syria among others, the agency said in a statement.
“Payoneer processed 2,241 payments for parties located in certain jurisdictions and regions subject to sanctions including the Crimea region of Ukraine, Iran, Sudan, and Syria, and 19 payments on behalf of sanctioned persons,” on a list compiled by the Office of Foreign Assets Control (OFAC) at the Treasury Department, the statement published on Friday said.
“The settlement amount reflects OFAC’s determination that 2,241 of Payoneer’s apparent violations were not voluntarily self-disclosed, 19 were voluntarily self-disclosed, and all transactions were non-egregious,” the statement added.
The payments were made between February 4, 2013, and February 20, 2018, the statement said, and resulted in a total of over $800,000 worth of transactions made by sanctioned people and people in sanctioned jurisdictions.
“This action highlights that money services businesses—like all financial service providers—are responsible for ensuring that they do not engage in unauthorized transactions prohibited by OFAC sanctions, such as dealings with blocked persons or property, or engaging in prohibited trade-related transactions with jurisdictions and regions subject to sanctions. To mitigate such risks, money services businesses should develop a tailored, risk-based sanctions compliance program,” the Treasury said in its enforcement report.
“Payoneer’s policies and procedures dating back as far as June 2015 specified that transactions involving parties in sanctioned locations were prohibited, but the testing and auditing conducted to verify that these policies and procedures were being implemented failed to identify the compliance deficiencies that led to the Apparent Violations,” the statement said.
Aggravating factors, the statement said, were the fact that the firm “failed to exercise a minimal degree of caution or care for its sanctions compliance obligations,” and Payoneer “had reason to know the location of the users it subsequently identified as located in jurisdictions and regions subject to sanctions.”
Among the mitigating factors were that upon discovering potential sanctions compliance issues, senior management acted quickly to self-disclose the apparent violations, the statement said, and has said that it has “terminated the conduct” that led to the apparent violations and took “remedial measures” to minimize the risk of similar occurrences in the future, the statement said.
“The settlement amount reflects OFAC’s determination that 2,241 of Payoneer’s apparent violations were not voluntarily self-disclosed, 19 were voluntarily self-disclosed, and all transactions were non-egregious,” the statement added.
The payments were made between February 4, 2013, and February 20, 2018, the statement said, and resulted in a total of over $800,000 worth of transactions made by sanctioned people and people in sanctioned jurisdictions.
“This action highlights that money services businesses—like all financial service providers—are responsible for ensuring that they do not engage in unauthorized transactions prohibited by OFAC sanctions, such as dealings with blocked persons or property, or engaging in prohibited trade-related transactions with jurisdictions and regions subject to sanctions. To mitigate such risks, money services businesses should develop a tailored, risk-based sanctions compliance program,” the Treasury said in its enforcement report.
“Payoneer’s policies and procedures dating back as far as June 2015 specified that transactions involving parties in sanctioned locations were prohibited, but the testing and auditing conducted to verify that these policies and procedures were being implemented failed to identify the compliance deficiencies that led to the Apparent Violations,” the statement said.
Aggravating factors, the statement said, were the fact that the firm “failed to exercise a minimal degree of caution or care for its sanctions compliance obligations,” and Payoneer “had reason to know the location of the users it subsequently identified as located in jurisdictions and regions subject to sanctions.”
Among the mitigating factors were that upon discovering potential sanctions compliance issues, senior management acted quickly to self-disclose the apparent violations, the statement said, and has said that it has “terminated the conduct” that led to the apparent violations and took “remedial measures” to minimize the risk of similar occurrences in the future, the statement said.