Paypal will be forced to pay $7.7 million in fines after an investigation revealed that it was guilty of failing to screen transactions sufficiently, leading to it being used by a man on the US blacklist for trading weapons of mass destruction.
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Turkish man Kursad Zafar Cire was among several PayPal users who have been blacklisted by the US for their dealings in the black market, with other illegal accounts coming from the likes of Iran, Cuba, Sudan and Pakistan. The ruling heard that PayPal had allowed payments to be made between a number of blacklisted countries along with individuals directly linked with terrorism, including an associate of Abdul Qadeer Khan, a Pakistani scientist who is reported to have offered nuclear intelligence to North Koreak, Libya and Iran.
A statement from the Office of Foreign Assets Control (OFAC) reads:
“For several years up to and including 2013, PayPal failed to employ adequate screening technology and procedures to identify the potential involvement of US sanctions targets in transactions that PayPal processed
“As a result of this failure, PayPal did not screen in-process transactions in order to reject or block prohibited transactions pursuant to applicable US economic sanctions program requirements.”
It is understood that PayPal has processed 486 illegal payments, totalling $43,934. However, as the accounts involved are considered enemies of the US, the fine the site has been charged is notably higher.
OFAC has insisted that they have been more lenient on PayPal, which is owned by eBay, due to their cooperation with the investigation and the site’s appointment of new management following the revelation of the failings of its screening department.
The illegal transactions took place over a five-year time period, until PayPal introduced a system to scan payments in real-time in 2013.
