The ongoing exposé of leaked documents from FinCEN (the enforcement branch of the US Department of Treasury), and allegations of money laundering, continues to ripple through the media. A story shared by NBC News today covers the collapse of Choice Bank, based in Belize, and the impact it had on certain Payoneer customers.
Choice Bank was forced into liquidation by the Central Bank of Belize back in the summer of 2018. The failure of the bank was described as a “nightmare” for account holders. The report states that fees for prepaid cards made up the bulk of Choice Bank’s revenue.
The report says that most of the Payoneer transactions occurred from 2014 to 2016. In mid-2015, Deutsche Bank apparently highlighted $38 million in transactions because it was “unable to confirm the commercial purpose of any of these transactions through independent research.”
Around the same time period, Citibank apparently flagged $20.6 million in pertaining to Payoneer from an “online adult video streaming site linked in news reports to human trafficking.”
Reportedly, some US citizens were account holders at the bank – including customers of Payoneer that had no idea they were connected to the bank. The report indicates the holders of pre-paid debit cards found themselves with worthless plastic. Choice Bank is still in the midst of a liquidation process.
A spokesman for Payoneer is quoted saying its compliance practices are vigorous.
“Payoneer’s compliance program meets the highest industry standards and is audited regularly by leading global auditors and financial regulators in multiple jurisdictions. Payoneer has never been found to have violated any of its anti-money laundering obligations by FinCEN or any regulator or authority anywhere in the world. Any implication to the contrary is misleading and mischaracterizes the facts.”
Apparently, the IRS audited Payoneer in 2018 and gave the Fintech a clean bill of health.
NBC also claims that Payoneer’s founder Yuval Tal, an Israeli entrepreneur, was at one time a shareholder in Choice Bank – a position he exited in 2012.
NBC adds that it heard from impacted Payoneer users having as much as $50,000 in Choice Bank when it imploded.
The report claims that pre-paid cards are a prime target for money laundering. The industry is said to be worth $7 trillion in annual spending.
The critical reports of a well-known Fintech come at a time when another once high-flying payments firm – Wirecard (WDI:DE) – has become synonymous with fraud. Wirecard, once an important member of the German Dax, saw the value of its shares implode when the company announced it had misplaced around €1.9 billion. The company’s former COO remains on the run to this day. German authorities remain perplexed as to the missing executive’s location.