A global cryptocurrency transaction platform was hit with a multi-million dollar U.S. penalty on Tuesday for enabling more than $500 million in suspicious transactions involving Iran, North Korea and Venezuela.
The U.S. Department of the Treasury’s financial crimes enforcement network lodged a $3.5 million assessment against Paxful for “willful violations” of the Bank Secrecy Act, which is meant to insulate the U.S. financial system from money laundering.
“For years, Paxful disregarded its BSA obligations and facilitated transactions associated with illicit activity and high-risk jurisdictions, such as Iran and North Korea,” stated Andrea Gacki, FinCEN’s director. “FinCEN is committed to mitigating risks to the U.S. financial system while fostering responsible innovation in the virtual asset ecosystem.”
Paxful provides for peer-to-peer trading, using a convertible virtual currency. Treasury says the company admitted to failing to register with FinCEN as a money services business; to develop, implement and maintain an effective anti-money laundering program; and to file required suspicious activity reports.
Treasury says that such anti-money laundering programs can prevent financing for terrorism. As part of its agreement with the government, Paxful commits to conducting a proper suspicious activity review.
Paxful pleaded guilty to three criminal counts as well. The U.S. Department of Justice stated that the company opened itself up to facilitating sanctions violations and other criminal activity.
