PayPal To Pay $7.7 Million For Sanctions Violations 68
jfruh writes PayPal may not be a bank, but it's still legally required to follow regulations on transferring money — but the company has admitted to a number of violations, including allowing transfers to an individual specifically sanctioned by the U.S. State Department for helping proliferate nuclear weapons. From Ars: "On Wednesday afternoon, PayPal reached a settlement with the US Treasury Department, agreeing that it would pay $7.7 million for allegedly processing payments to people in countries under sanction as well as to a man the US has listed as involved in the nuclear weapons black market. The company neither confirmed nor denied the allegations, but it voluntarily handed over its transaction data to the US Department of Treasury’s Office of Foreign Assets Control (OFAC)."
Using PayPal to pay for a nuke... (Score:2)
Priceless! :)
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That's MasterCard's trademark, this is about PayPal.
Re:Using PayPal to pay for a nuke... (Score:4, Insightful)
So paypay needs to do exactly what mastercard does when it comes to paying bribes and laundering money. Issue business debit cards that are not in the persons name. They give the bribe recipient the card and the bribe recipient can spend the money available, with all expenditures going against the laundering companies income tax and all purchase by the bribe recipient are hidden. So basically they give birth to fake people, as corporations and the corporate pretend person spends the money not the real individual who is actually the corporation. Why do you think they bother with all that paperwork, lie, cheat and steal, it is simply how they deal.
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It was me. (Score:1)
I support the right of all individuals to arm themselves as they see fit.
Can you really tryst your government? Of course not, that's why you need the capacity to cause devastating harm in order to make them listen.
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Tryst is the wrong word. That implies a brief romantic encounter. Whereas the government screws you for many many years.
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I support the right of all individuals to arm themselves as they see fit.
Arm themselves with nuclear weapons???
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Elon hasn't been involved with PayPal for ages. He took his money and moved on to more interesting projects.
This is like blaming Woz for anything you don't like about Apple today.
charge back for a nuclear bomb? (Score:2)
item not as described
i can see how that would go
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item not as described
Apparently what they got was just a shoddy bomb casing full of used pinball machine parts.
Luxembourg? (Score:2)
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Because it does business in America and wishes to continue doing so.
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Are you Kursad Zafer Cire?
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Paypal better pick what it wants to be... (Score:3)
PayPal doesn't seem to like to comply with laws. They don't want to be declared a "bank" yet they still act like one, and they don't respect trade sanction laws. eBay also runs into trouble before complying with a law. These companies need some repair work done.
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It's too bad no one else seems to be able to make a decent competitor to them. Citibank tried a while ago and threw in the towel, even Google tried and gave up too. It's a simple concept: make a payment-processing service which nearly anyone can sign up for, which can allow you to accept credit-card payments from others (without having to get a $$$ merchant account), which lets people send money to each other easily without gigantic wire-transfer fees, and which lets people transfer money in and out of it
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C2it wasn't from CitiBank... it was a scam that stole the logo.
c2it and Citi (Score:2)
How so? This article [ecommercebytes.com] states that Citigroup announced the closure of c2it, and not because of any trademark violation.
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Why aren't the big banks doing this? I guess because they can't tack on all kinds of horrendous fees and still get people to use it, and PayPal's business model isn't profitable enough for them.
I have a different guess. My guess is that big banks are banks and have to obey the banking regulations and so they can't afford to compete with companies like Paypal which doesn't have to obey the banking regulations even though they act as a bank.
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That really doesn't explain anything and just sounds like conspiracy theory talk. How exactly does PayPal not technically being a bank give them such an advantage? Finally, why is it such a problem for PayPal to not be a bank, but for places like authorize.net and other credit-card processors it's OK? Also, I do believe Amazon Payments is doing something pretty similar to PayPal, and I never hear anyone complain that they're not a bank, nor did I ever hear anyone complain about Google Payments (which sti
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My bank lets me send money to anyone I want... You give me your account and routing number (which are printed on your checks) and I fill out a form on my bank's website to tell them to send you the money.
No it doesn't.
The US Government has a list of "entities" that all employees, transactions, vendors, etc., etc., etc. have to be vetted against. These "entities" are people, corporations, the names of ocean-going vessels and so forth.
If the name of one of these entities comes, up, the Feds have to be notified.
Ironically, "Osama bin Ladin" was never on the list - they spelled it Fox News style ("Usama"). But God Help You if your name is Guadalupe Ortiz. Every so often someone with that name shows up on the ne
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They can [rockpapershotgun.com] randomly freeze your account and prevent you getting access to 600,000 Euros of your money, though, if you make the mistake of trusting them with large sums.
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Running into this fines repeatedly could cause PayPal to be redefined as a bank under law. States could code a list of banks and put PayPal on it.
Not a bank? (Score:5, Insightful)
1) They take deposits
2) They make payments
3) They charge fees
4) They make loans
How exactly do they differ from a bank? If it walks like a duck and talks like a duck.....
Re:Not a bank? (Score:5, Insightful)
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Yeah, but you wouldn't download a car...would you?
With the proper 3D printer, why wouldn't I?
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How exactly do they differ from a bank? If it walks like a duck and talks like a duck.....
It's different because everything they do is appended with "... but on a computer".
Re:Not a bank? (Score:5, Informative)
They don't engage in fractional-reserve banking.
Whether PayPal are legally a bank, depends on the country. iirc they are a bank in Australia.
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A bank is a financial intermediary and money creator that creates money by lending money to a borrower, thereby creating a corresponding deposit on the bank's balance sheet.
Paypal is definitely a financial intermediary but they aren't a money creator. Thus they aren't a Bank.
OFAC knowledge here (Score:3)
I'm not sure if this is good or not, but it does represent a valid usage of OFAC (Office of Foreign Asset Control) regulations.
I've designed international life insurance admin systems that involved OFAC checks. Resolution requires manual verification.
OFAC provides a list of people that you cannot do business with if you are a US company (possibly if you have a US presence, I'm not sure though, I worked for a US company). It is basically a list of terrorists or otherwise sanctioned individuals that the US blocks financial transaction with.(Osama is still there as far as I know, he was our test case).
I've always considered OFAC to be a Federally mandated job program. Same for Sarbanes-Oxley (worked with that a lot as well). Just extra regulation requiring more bodies at every financial company.
I coined the never heard phrase "OFAC is to preventing terrorism as Sarbanes-Oxley is to preventing fraud" (I have an actuarial and IT background, so it's funny to me).
But in this case, initial appearances would suggest that the fine is justified. If the person on the OFAC list is justifiably on the list.
And that justification is my problem with the system. The rules are pretty secret, anyone could end up on the list and not be able to fight it. It's like the no-fly list which even impacted a Kennedy:
http://www.washingtonpost.com/... [washingtonpost.com]
Interesting for sure.
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Here are the OFAC lists:
http://www.treasury.gov/resour... [treasury.gov]
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The OFAC restrictions apply to non US companies and individuals as well. Any payment sent through a US bank will be checked against an OFAC list, this will probably include most payments in USD between non-US banks. When a payment triggers an OFAC hit, the funds are seized and impounded by the US Bank and turned over to the Feds. Folks outside the US really hate this.
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Thanks for the info. I understand and can appreciate the implications of the OFAC lists (basically a simple form of economic warfare against specific individuals and parties, preventing them from using certain global financial companies).
But, OFAC checks are supposed to be performed before any funds are transferred (prior to contract entry in my experience). So they generally can't be seized or impounded by the US financial system, because letting them in at all is illegal (I'm sure they are at least froz
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If the customer of a US bank sends a payment instruction to their bank (most likely for a wire only as most US banks don't OFAC scan ACH payments) and the payment includes text that triggers an OFAC hit, the bank will debit their account and seize the funds. That is what they are required by law to do.
If a bank outside the United State sends a payment instruction to their USD correspondent (a US bank), the US bank will scan the instruction for an OFAC hit. If a a hit occurs, the US bank will debit the accou
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At one time, at least, the OFAC list included the entire democratically-elected government of Palestine. By name.
Not because they were all confirmed terrorists. Because they were all democratically elected heads of a "terrorist state".
Democracy in action (Score:5, Insightful)
That's the nice thing about lists. The government says you're on it, and that's that. No proof required. No means to defend yourself or prove your innocence. Nope, you're on the list, and now we're going to bully everyone and cut you out of all the conveniences of modern life. Those who don't co-operate, well, you wouldn't want to be "aiding a terrorist" now would you?
The "free" world has gone insane, and I despair when I see a whole new generation growing up that doesn't seem to have a problem at all with this modus operandi.
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This is why we should avoid (near)monopolies such as Paypal (and Mastercard, Visa, Apple, Facebook, Google....). We should decentralize, for example by using Bitcoin.
Now I wonder if... (Score:2)
How do I restore Javascript based posting? (Score:2)
This is way off topic, but I have reset things and tried others. Slashdot can be difficult to navigate at times.
I attempted to but I can't figure it out, and I'm sick and tired of the pure HTML posting and moderating interface (it sucks wiffle balls).
I have enabled Slashdot.org in NoScript.
Case of government being overzelous? (Score:3, Interesting)
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Gosh. They knew about the law beforehand and ignored it. Why should the little darlings be fined? After all, if you were a kid caught with an ounce of coke, you'd be doing time and that's right! But charge a bidness a few bucks for breaking the law? Unconceivable!
$7.7 million for such companies (Score:2)
Regulate them (Score:2)
Here in the US, at least, I would like to see entities like PayPal regulated within the banking industry.
Over the years, I have heard of and even personally experienced PayPal's many abuses. Written correspondence from the company demonstrates they believe they are above the law and are in their own world. Time for that to stop. The topic of this article withstanding as an even larger concern.
I find it odd that my local State representatives will respond to other inquiries, but when I bring up PayPal