On November 2, 2023, the New York State Department of Financial Services (NYDFS) entered into a consent order with Payoneer, Inc., a wholly owned subsidiary of Payoneer Global Inc., a publicly traded financial institution based in New York.
Payoneer operates an electronic platform that enables cross-border payout services for over two million customers in nearly 200 countries and territories. In 2016, Payoneer became aware that it had processed a payment to a bank in Crimea in contravention of applicable sanctions. Payoneer voluntarily disclosed the transaction to OFAC, and undertook remedial actions, including the temporary suspension of bank transfers to Russia, and a look-back review of other transactions during the preceding five years.
At the conclusion of the review in 2018, Payoneer reported to OFAC that between 2013 and 2018, it had processed 2,220 commercial transactions totaling $793,950.70, in apparent violation of several OFAC sanctions programs. According to the consent order, the sanctions screening program used by Payoneer at the time failed to prevent these apparent violations, due to weak algorithms that allowed close matches to slip through the Specially Designated Nationals and Blocked Persons List list filter, permitted some flagged payments to be released without review, did not focus on sanctioned locations like Crimea, and did not screen for business identifier codes.
NYDFS concluded that Payoneer’s compliance deficiencies constituted unsafe and unsound business conduct in violation of New York Banking Law § 44, and that the company’s failure to maintain an effective OFAC compliance program violated 3 NYCRR § 417.2(c). NYDFS determined that these violations warranted enforcement action, including a monetary penalty, although they amounted to only a small percentage of Payoneer’s global business. At the same time, NYDFS credited the company for its cooperation in the investigation, and with the voluntary remedial efforts it had undertaken toward improved sanctions compliance. NYDFS therefore imposed a civil monetary penalty in the amount of $1,250,000.
In July 2021, Payoneer paid the US Treasury $1.4 million to settle its potential civil liability for apparent violations of US sanctions programs during the same period. The NYDFS consent order is based on the violation of New York law.