Internet payment facilitator PayPal recently agreed to pay to the Office of Foreign Assets Control $7,658,300 in fines and penalties to settle charges that it processed 486 financial transactions involving embargoed countries and blocked parties on OFAC’s Specially Designated Nationals and Blocked Persons List (the “SDN List”). The magnitude of this penalty becomes apparent when you consider that the 486 transactions amounted to a total of $43934.02 in transactions averaging $90.40 each.
Oh, and in case you were thinking, well that’s what they get for getting caught, you should realize that these violations were, according to the Settlement Agreement, voluntarily disclosed. Worse yet, this huge fine was imposed even though PayPal cooperated with the investigation, tolled the Statute of Limitations, and sacrificed on the altar of OFAC’s wrath its compliance division’s entire management, all of whom are now looking for new employment.
What seems to have gotten OFAC’s dander up, and led to the agency calling this an “egregious” case, pretty much the ne plus ultra of regulatory misdeeds, involved PayPal’s dealings with Kursad Zafer Cire, an A.Q. Khan crony designated by OFAC under its WMD sanctions program. Although these were only 136 transactions, totalling $7091.77 and averaging $52.15 each, PayPal processed six of these transactions after its interdiction software flagged this guy. On the sixth occasion, PayPal asked Cire to fax them his passport, which he dutifully did, and even though the passport conclusively matched the information on the SDN List, the PayPal risk officer let the transaction go through.