The Financial Intelligence Analysis Unit fined an online financial institution € 435,576 for various money laundering offenses.
Phoenix Payments, also known as Paytah, has been at the center of regulatory and criminal investigations in several European jurisdictions, in addition to dealing with claims from victims who have made deposits through Paytah and its affiliates.
The European Fund Recovery Initiative (EFRI) represents the interests of victims in other Paytah and Phoenix Payments hearings at the Arbiter for Financial Services.
Paytah is owned and controlled by Italian national Marco Lavanna.
According to hearings before the financial ombudsman, the company has been accused of working with illegal payment providers and crypto-payment processors, which facilitates scam operators, mainly Estonian entities, who use Paytah as their bank account. Deposits from victims of scams are routinely processed through these Paytah bank accounts.
EFRI represents 12 clients claiming damages of € 350,000 in connection with alleged fraudulent payments to Paytah’s bank accounts.
Next to a investigation, the MFSA fined Paytah € 32,000 and restricted the license of the payment processor. The latter appealed against the MFSA’s measures and filed a complaint against the MFSA.
In its investigation, FIAU said Phoenix Payments failed to apply enhanced due diligence to high or medium-high risk customers. All of these customers were related to cryptocurrency, either as a cryptocurrency service provider or as crypto exchange service providers and, in one case, tied to a high-risk jurisdiction.
Right of reply from Paytah founder Marco Lavanna
On October 1, 2021, the Financial Intelligence Analysis Unit (FIAU) informed Paytah that it had imposed an administrative sanction for what FIAU considered to be breaches of certain AML / CFT obligations.
The findings were noted by the FIAU during an inspection carried out in October 2020. Although the findings are administrative in nature, they did not relate to suspicion or evidence of money laundering.
The company will appeal this decision under A1.3 of the Implementation Procedures, Part I, within 20 days of October 1. The company made formal statements to FIAU on May 7, 2021, explaining and reiterating that it is fully committed to combating money laundering, terrorist financing and other financial crimes.
The company exposed to FIAU a number of significant disagreements with the apparent findings of FIAU. These include a number of instances where the FIU failed to consider all information, documentation and other actions presented by the company to the FIU during the compliance review.
The company brought these concerns to the FIAU, but it appears that they were not addressed by the FIAU. The company remains concerned about the systematic nature of the FIAU of these serious omissions which appear unwarranted, arbitrary and suggest that key aspects of the company’s AML / CFT framework have been misunderstood.
The company has worked to clarify these misconceptions about FIAU, however, with great disappointment, FIAU has once again failed to understand how the company operates and how its AML / CFT compliance framework. is implemented in accordance with applicable AML / CFT rules and regulations. .
Moreover, more worrying, not only for the company but for the whole of the financial services sector, it is extremely worrying that the body which carries out the investigations, that is to say the FIAU, is the same body who pronounced these gargantuan administrative sanctions, which undermine the right to a fair trial enshrined in the Constitution of Malta and the European Convention on Human Rights.
In this regard, the company has no choice but to appeal the FIAU’s decision and also seek constitutional redress. The Ccmpany reaffirms its zero tolerance policy even in cases which suggest the slightest suspicion of improper conduct and continues to rely on the integrity, professionalism and dedication of its staff members.