U.S. government ordered PayPal to pay $7.7 million in fines for allowing illegal payments to and from Iran, Cuba and Sudan, thus violating sanctions set against these countries. The money transferred during this period was allegedly used for production of weapons of mass destruction. One of the cases involved Kursad Zafer Cire, who was proclaimed by the US State Department in 2009 as a person linked to illegal programmes involving weapons. PayPal reportedly processed 136 transactions to or from an account registered in his name. There were also payments involving goods and services going to and from Cuba, Sudan and Iran.
In a statement, PayPal revealed that they had “voluntarily” reported to the Treasury's Office of Foreign Assets Control (Ofac) certain payments between 2009 and 2013, explaining that the delays in scanning from that period, allowed some prohibited payments to slip through the cracks.
"Since then, we've taken additional steps to support compliance with Ofac regulations with the introduction of real-time scanning of payments and improved processes," a PayPal representative revealed in an interview with BBC.
Treasury Department stated there were nearly 500 PayPal transactions worth almost $44,000 which directly violated sanctions that ban US companies from doing business with individuals or organizations from Cuba, Sudan and Iran. PayPal did not admit or deny it had violated the sanctions, they agreed to pay the fine, claiming that the real-time scanning of payments has been improved in the meantime.