PayPal has agreed to pay a £5.2 million ($7.7 million) settlement over alleged sanctions violations including allegations that it processed payments for a man involved in the black market for nuclear weapons technology.
PayPal, which is owned by eBay, is alleged to have facilitated thousands of pounds worth of transactions involving goods and services going to and from Cuba, Sudan and Iran, according of a US Treasury disclosure. The company allowed 94 payments totalling £4000 ($6000) involving UK charity Interpal, which is blacklisted in the US because it is alleged to support Hamas.
Nearly 500 PayPal transactions worth almost £30,000 ($44,000) potentially violated US sanctions, according to the Treasury department. PayPal disclosed details of the transactions to the Treasury although it did not admit or deny the allegations under settlement.
The allegations relate to £4700 ($7000) worth of transactions involving an account in the name of Kursad Zafar Cire, a Turkish man on a US blacklist for trading weapons of mass destruction. Cire was blacklisted in 2009 for his alleged involvement in a sales network for nuclear technology operated by Pakistani scientist A.Q. Khan. This provided ‘one-stop shopping’ for countries including Iran, Libya and North Korea to develop nuclear weapons, the Treasury said.
All US companies are banned from doing business with people on the blacklist as they are considered enemies of the US. PayPal dismissed six alerts that Cire matched a person on the blacklist after the account became operational in 2009 because a staffer believed the alerts were to confirm his address. PayPal only blocked the account in April 2013, after it had processed 136 transactions.
PayPal has a screener which is supposed to catch blacklisted persons. At first this failed, but once it was working again the alerts were dismissed by staff, the Treasury said. It has since taken remedial action and fully co-operated with the investigation, the Treasury said.
PayPal chief compliance officer Gene Truono said in a statement that government compliance is a priority but that prior to 2013 PayPal didn’t have a system in place to scan payments in real time, which allowed to blacklisted persons to make transactions. There were no allegations that PayPal processed payments for a black market in weapons of mass destruction.