OFAC is a Treasury Department unit that enforces U.S. economic and trade sanctions prohibiting financial organizations from transacting with certain foreign countries and regimes, terrorists, and international narcotics and weapons traffickers.
The New York-based Payoneer said that it acknowledges 2,241 payments processed for sanctioned parties, including those in Crimea, Iran, Sudan, and Syria. The company also processed 19 payments for sanctioned individuals on OFAC’s List of Specially Designated Nationals and Blocked Persons.
“Payoneer failed to exercise a minimal degree of caution or care for its sanctions compliance obligations when it allowed persons on the SDN List and persons in sanctioned locations to open accounts and transact as a result of deficient sanctions compliance processes that persisted for a number of years,” the agency said in a statement.
In failing to properly screen, test, audit, and keep up with transaction review procedures, Payoneer enabled over $800,000 in transactions among sanctioned individuals or entities between 2013 and 2018, according to OFAC. The settlement amount, reduced from a base penalty of nearly $4 million, reflects OFAC’s determination that even though 2,241 of Payoneer’s apparent violations were not voluntarily self-disclosed—19 violations were—all transactions were still “non-egregious,” said OFAC.
“Upon discovering potential sanctions compliance issues, senior management acted quickly to self-disclose the violations related to blocked persons and provided substantial cooperation throughout the investigation,” OFAC noted.
Remediation
In remediating the OFAC violations, Payoneer has agreed to:
- Replace its Chief Compliance Officer and retrain all compliance employees, as well as hiring new compliance positions focused specifically on sanctions testing
- Enhance its screening software to include financial institution alias names and BIC codes and automatically triggering a manual review of payments or accounts that match persons on the SDN List
- Enable the screening of names, shipping and billing addresses, and IP information associated with account holders to identify jurisdictions and regions subject to sanctions;
- Flag for review pending transactions identified by its filter instead of just authorizing them when a backlog occurred;
- Conduct a daily review of identification documents uploaded to Payoneer
- Establish a rule engine that stops payments when identifications indicate jurisdictions and regions subject to OFAC sanctions
“Payoneer’s mission is to bring financial empowerment to businesses and entrepreneurs around the world through participation in the digital economy,” a spokesperson for Payoneer said. “We will continue to make investments to ensure that we accomplish this mission in a secure and compliant way.” 
Danny Flynn is assistant editor at Compliance Chief 360°.