A Million-Dollar Lesson In Sanctions Compliance: The Payoneer Case

In a significant regulatory action taken earlier this month, the New York State Department of Financial Services (NYDFS) imposed a $1.25 million fine on Payoneer, Inc., a subsidiary of the publicly traded Payoneer Global Inc., for what it termed "apparent sanctions violations." This development highlights the regulatory perils facing financial institutions in a globalized economy.

Payoneer is known for its electronic platform facilitating cross-border payments. In 2016, Payoneer learned that it had processed a payment in 2016 to a bank in Crimea, apparently contravening a sanctions program enforced by the Office of Foreign Assets Control (OFAC). In a proactive move, the company disclosed this breach to OFAC and initiated a comprehensive internal review, suspending bank transfers to Russia and examining transactions from the previous five years.