The Financial Intelligence Analysis Unit has fined Phoenix Payments an online financial institution €435,576 over various money-laundering breaches.
Phoenix Payments, also known as Paytah, has been at the center of regulatory and criminal investigations in several European jurisdictions, apart from facing claims from victims who made deposits through Paytah and its affiliates.
The European Fund Recovery Initiative (EFRI) is represented the interests of victims at other hearings on Paytah and Phoenix Payments at Arbiter for Financial Services.
Paytah is owned and controlled by Italian national Marco Lavanna.
According to the hearings before the financial ombudsman, the company has been accused of working with illegal payment providers and crypto-payment processors, which facilitate scam operators, mainly Estonian entities, who use Paytah as a bank account. Deposits from victims of the scams are systematically processed through these Paytah bank accounts.
EFRI is representing 12 clients claiming damages of €350,000 in alleged scam payments to Paytah bank accounts.
Following an investigation, the MFSA fined Paytah €32,000 and restricted the payment processor’s license. The latter appealed against the MFSA measures and filed a lawsuit against the MFSA.
In its investigation, the FIAU said Phoenix Payments had failed to apply enhanced due diligence on clients posing a high or medium-high risk. All of these customers were linked to cryptocurrency, either by being a cryptocurrency service provider or as providers of crypto exchange services, and in one instance, linked to a high-risk jurisdiction.