PayPal to pay $7.7 million fine over US sanctions

The company's processing of about 500 payments from 2009 to 2013 included ones tied to weapons of mass destruction, as well as related to Iran, Sudan and Cuba.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
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PayPal says it has changed its process for screening payments. PayPal

PayPal is on the hook for $7.7 million after it allegedly processed payments for some highly questionable customers.

On Wednesday, the online payment service agreed to pay the fine after reaching a settlement with the US Treasury Department. The fine was levied against PayPal based on nearly 500 transactions totaling about $44,000 that potentially violated US sanctions, the Treasury Department said. As part of the settlement, PayPal did not admit to wrongdoing.

The US government prohibits companies from doing business with certain people or groups, based on a specific list of enemies of the country, according to Reuters. PayPal, which is owned by eBay, was accused of failing to screen its transactions against that list for several years up through 2013, the Treasury Department said.

In one instance cited in the settlement agreement, PayPal processed 136 transactions totaling more than $7,000 to or from a PayPal account registered to Kursad Zafer Cire. Such transactions would violate sanctions against "Weapons of Mass Destruction Proliferators." Another 100 transactions related to items of "Iranian origin," 33 transactions involved the country of Sudan, and 98 transactions involved Cuban goods.

PayPal noted that it has changed its process for catching potential sanctions violations.

"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," a PayPal spokeswoman said in an emailed statement. "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."

(Via The Wall Street Journal)