Over the course of several years, PayPal did not adequately screen its transactions for targets of U.S. Proliferation and Trade Sanctions Programs, and processed transactions equaling approximately $43,000 to denied parties. The company failed to properly screen transactions with OFAC-sanctioned companies and persons resulting in violations of trade sanctions against Iran, Sudan, and Cuba as well as violations of the Weapons of Mass Destruction Proliferation Sanctions Regulations and Global Terrorism Sanctions Regulations.
Some of PayPal’s violations, including payments it processed of about $7,000 for Kursud Zafer Cire, a Turkish national, violated the Weapons of Mass Destruction Proliferation Sanctions Regulations.
From late 2010 to September 2013, PayPal processed 98 transactions totaling about $19,000 that violated the Cuba trade sanctions. During about the same time, PayPal processed 33 transactions for $3,300 that violated the Sudan sanctions.
From 2009 to 2013, PayPal processed 125 transactions totaling about $8,000 in violation of the Iran sanctions, and it processed 94 transactions worth about $6,000 that violated OFAC’s Global Terrorism Sanctions.
OFAC spokesman said that the proliferation offenses were “egregious” and that PayPal “demonstrated reckless disregard for U.S. economic sanctions requirements …”
OFAC reduced the overall fine from more than $17M to $7.7 million because PayPal voluntarily self-disclosed the offenses and cooperated with the government’s investigation. PayPal also agreed to hire new management in its compliance division, improve its OFAC screening processes, and provide all of the evidence OFAC has asked for.
Just think how much money PayPal made from these $43,000 worth of transactions. More than $7.7 million? Probably not. This is just another example that violating U.S. Sanctions Programs doesn’t pay. It is also a good example of the importance of voluntarily disclosing violations – PayPal’s fine was reduced by $9.3M for doing so.