PayPal will pay the U.S. Treasury Department $7.7 million to settle alleged violations of economic sanctions. The Treasury’s Office of Foreign Assets Control announced the settlement for what it called potential civil liability for 486 apparent violations including the Weapons of Mass Destruction Proliferators Sanctions Regulations.
In its statement, it said PayPal had failed to employ adequate screening technology and procedures to identify the potential involvement of U.S. sanctions targets in transactions that PayPal processed for several years up to and including 2013.
“As a result of this failure, PayPal did not screen in-process transactions in order to reject or block prohibited transactions pursuant to applicable U.S. economic sanctions program requirements.” The government also said PayPal processed 136 transactions totaling $7,091.77 to or from a PayPal account registered to an individual on OFAC’s List of Specially Designated Nationals and Blocked Persons.
“PayPal’s automated interdiction filter did not initially identify the account holder as a potential match to the SDN List, and when it did, PayPal Risk Operations Agents dismissed alerts on six separate occasions after failing to obtain or review documentation corroborating the identity of the SDN,” according to the announcement.
The Office of Foreign Assets Control administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals.
According to the terms of the settlement, the agreement does not constitute an admission or denial by PayPal of any allegation made or implied by OFAC in connection with the apparent violations. Interestingly the settlement dictates PayPal send the settlement payment by electronic funds transfer or by cashier’s or certified check or money order – apparently PayPal not accepted.
A PayPal spokesperson responded to our inquiry with the following statement:
Our settlement with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is a result of us voluntarily reporting to OFAC certain payments we processed in possible violation of sanctions regulations from 2009 to 2013. Since then, we’ve taken additional steps to support compliance with OFAC regulations with the introduction of real-time scanning of payments and improved processes.