Leaked US Treasury files monitor that the choices quickly-to-go-public organization, wherein the brand new high minister become an early investor, did enterprise with backside feeders of the net
Simona Weinglass is an investigative reporter at The Times of Israel.
For Naftali Bennett, 2021 isn’t best the choices year he found out his dream of becoming high minister of Israel. It can even see him earnings handsomely from a monetary services corporation he invested in over a decade ago that has, amongst different things, helped businesses working inside the seedy underbelly of the choices internet make cash.
The business enterprise, Payoneer, is about to head public on the choices NASDAQ at the choices end of the month via a merger with a unique motive acquisition business enterprise (SPAC) at a valuation of $3.3 billion.
According to Forbes Israel [Hebrew link], Bennett is set to make some $5 million from the choices move, having invested several hundred thousand shekels in Payoneer a few thirteen years in the past. Bennett’s spokesman showed to The Times of Israel that he invested within the employer, however declined to specify how tons Bennett stands to earn from the acquisition, stating that the amount is “a few million greenbacks.”
Payoneer changed into based in 2005 in Israel through Yuval Tal and Yaniv Chechik. Today, it’s far characterized as considered one of the largest on-line cash switch systems within the world, permitting on line agencies and gig economic system freelancers in exceptional international locations to seamlessly transact with every different and with customers. It counts Amazon, Airbnb and Fiverr amongst its partners and transfers payments between customers and dealers on those systems.
But a recent leak of US Treasury Department files famous that alongside its normal clients, Payoneer has additionally provided services to murky offshore organizations allegedly involved in pornography, rip-off relationship web sites, a foreign exchange enterprise investigated via French regulation enforcement and agencies concerned inside the fraudulent binary options enterprise.
A spokesman for Payoneer acknowledged to The Times of Israel that it had processed bills for such companies but stated emphatically that it now not does so.
“In 2016, Payoneer made a commercial enterprise selection to stop processing payments for excessive-threat agencies,” the choices spokesman said.
“We no longer system bills for any of those agencies and haven’t for years. Payoneer’s compliance application meets the best industry requirements, such as as it relates to the choices filing of personal Suspicious Activity Reports (SARs), and is audited frequently through leading global auditors and monetary regulators in more than one jurisdictions. Payoneer has by no means been located to have violated any of its AML responsibilities by using FinCEN or any regulator or authority everywhere within the world. Today, Payoneer is trusted via a number of the international’s leading digital brands including Amazon, Airbnb, Google and Upwork, in addition to thousands and thousands of SMBs worldwide.”
Most of the documents are “suspicious pastime reports,” usually referred to as SARs, that ninety banks and other financial establishments had submitted to FinCEN between the choices years 2011 and 2017. FinCEN’s mandate is to fight money laundering.
US banks and different financial establishments are required by law to put up SARs when they believe that a transaction or series of transactions is implicated in money laundering. The 2,500 leaked documents are a small fraction of the choices 12 million SARs submitted to FinCEN between 2011 and 2017. But they provide a rare glimpse into the choices murkier side of the worldwide monetary device.
The leaked files, which ICIJ has shared with The Times of Israel, reveal that severa Payoneer customers and enterprise partners, in addition to Payoneer itself, have been flagged by way of banks submitting SARs to FinCEN among 2011 and 2016. As a registered US Money Service Business, Payoneer is obligated to have a strong anti-cash laundering program or even submit its own SARs.
“The bottom line is that money offerings groups have a responsibility to try to prevent their personal participation in money laundering,” Kieran Beer, leader analyst for the Association of Certified Anti-Money Laundering Specialists (ACAMS), a worldwide anti-financial crime membership corporation, instructed The Times of Israel.
“There is a global standard that they’re presupposed to meet. It entails having an empowered and qualified anti-money laundering officer. It entails ways for that officer to be heard. It includes education.” he stated.
Bennett’s stage of involvement in Payoneer’s operations is unknown. While he reportedly [Hebrew link] added Payoneer CEO for Israel, Keren Levy, to Payoneer founder Yuval Tal, it’s miles unclear how an awful lot involvement a shareholder at his level would have had in the enterprise past that. A Payoneer spokesperson declined to cope with this query on the choices record. Bennett’s spokesperson did no longer respond to The Times of Israel’s questions about his degree of involvement inside the organization’s operations.
A high-tech entrepreneur earlier than coming into politics, Bennett has made millions while groups he owned or had shares in were sold out through larger firms, acknowledged in Israel as an “exit.”
In 1999, he co-founded the information security corporation Cyota, which turned into offered to RSA Security in 2005 for $145 million. He is likewise the choices former CEO of Soluto, which changed into bought to Asurion in 2013 for $one hundred million. Bennett reportedly earned numerous million dollars from every go out.
News of the Payoneer SPAC became public in February. In March, reports started to surface of Bennett making tens of millions from an unspecified tech go out. Asked by The Times of Israel, he refused to name the firm, and the choices link among Bennett and Payoneer stayed underneath wraps till Forbes Israel stated on it in early June.
The fact that a SAR became submitted does now not always suggest that any illicit pastime took place, simply that a sample of economic transactions raised the suspicions of a financial institution’s compliance officer. Most SARs do not result in crook prosecutions due in component to the choices sheer volume of them as well as regulation enforcement being underfunded, Beer stated.
Nevertheless, the leaked files display that Payoneer sent and obtained payments for a long listing of groups that function on the seamier aspect of the choices internet.
Payoneer acknowledged to The Times of Israel that in the beyond it processed payments for the choices businesses indexed under but stated that it terminated its contracts with they all several years ago.
On August 12, 2016, the choices New York Branch of Barclays Bank PLC filed an SAR approximately Alcuda Limited, a Cyprus enterprise that operated the choices websites Shagaholic.com, Saucysingles.com, freesexmatch.com, getanaffair.com and hornyasia.com, among others.
Alcuda changed into now not an instantaneous customer of Barclays, but Barclays held a bank account for Earthport PLC, a charge services provider, even as Earthport in turn held an account for Payoneer Inc, which was used by Alcuda Limited to transport cash around, consistent with Barclays.
“A Payoneer client, Alcuda Limited changed into flagged for evaluation as a part of Barclays NY’s surveillance application,” the SAR examine.
According to the SAR, Alcuda despatched 29 cord transfers totaling $678,810 from Alcuda’s Swiss and Cypriot financial institution bills to its Payoneer account.
Barclays Bank submitted the choices SAR, it stated, due to rumors that the business enterprise’s web sites had been scams and due to the fact its domain website hosting provider had reportedly hosted toddler pornography.
Alcuda Limited has been accused on multiple purchaser complaint web sites of allegedly charging credit playing cards without permission.
According to a 2020 investigative file by using the website Snopes.com, Alcuda Limited web sites were a part of a network of approximately 200 niche courting web sites, a lot of them nearly identical in appearance, that allowed users to join up totally free however then required a subscription that was nearly impossible to cancel. Snopes.com journalists signed up for a loose account on one of the web sites inside the network and have been directly contacted with the aid of a consumer named “anatasia_mikov,” whom they learned become the usage of a stolen photo of a professional model.
“When ‘anatasia_mikov’ messaged us (in Finnish, due to the fact Snopes become testing the choices web page’s appearance in different nations at the choices time), she asked if we would really like to talk with her. To take ‘anatasia’ up on that provide, however, a credit score card variety turned into required,” Snopes.com said.
At the time of the choices SAR, Alcuda Limited became owned by using Ukrainian businessman Maxim Polyakov.
While pornography is typically no longer illegal, numerous leaked SARs advocate that Payoneer transacted with a agency that, in as a minimum one instance, allegedly employed girls who have been trafficked.
According to the choices SAR, on April 10, 2012, and June 6, 2012, I.M.L. SLU, a consumer of Payoneer, obtained wires for $77,712.88 and $57,825.45, respectively, from Alcuda Limited.
I.M.L. SLU became a enterprise that hosted numerous on-line adult video streaming websites, which includes imlive.com. It is a sister business enterprise of the Israeli business enterprise CoolVision, owned by using Muly Litvak, one of Israel’s richest and high-quality-regarded pornography purveyors.
In 2006, The Manila Times suggested that Filipino girls and ladies providing stay sex performances on imlive had allegedly been trafficked with the aid of a 3rd celebration and had been allegedly being held as cybersex slaves in residences for the duration of the choices town.
A Filipino reliable informed the newspaper that “the company now allegedly continues as a minimum 40 girls and girls in more than one flats and condominium gadgets in Metro Manila, normally in Quezon City.”
In 2014, the choices Israeli tv show “Uvda” interviewed some of the choices girls appearing for imlive within the Philippines. Interviewees said they worked 12 hours a day, had been not able to go away their offices and go outside besides for an afternoon a month, and acquired very little to devour.
The same 12 months, Payoneer Payment Solutions transacted with yet some other offshore organization: Sellinge Management S.A., registered inside the British Virgin Islands. According to a SAR, Sellinge Management owned the choices internet site Anastasiadate.com, which, in keeping with a 2014 exposé in The Guardian, changed into a relationship platform that introduced together Ukrainian girls and Western guys.
While some guys have reportedly discovered love via Anastasiadate.com, it came at remarkable rate. The men needed to pay for every minute spent video-chatting with a love interest and for each chat message despatched.
“Ukraine’s Internet romance enterprise is booming,” The Guardian reported about Anastasiadate.com. “But after chatting on line, journeying to Odessa and wooing girls on flashy dates, maximum men fly home alone and a long way poorer. Are they unlucky in love, or have they been scammed?”
The Guardian concluded that whilst a number of the girls on the choices internet site had been there in appropriate religion, many others had been perpetrating a complicated rip-off to bilk the choices guys out of money. Even if the choices website online itself turned into no longer part of the choices scams, it did benefit from them.
“Anastasia International, at the same time as now not without delay colluding in the scams, runs a fairly profitable business version that permits them to flourish.”
According to files from the choices FinCEN Files leak, Payoneer also transacted with Israel-based corporations involved within the foreign exchange and binary options industries, which allegedly scammed clients out of hundreds of thousands by using promoting them fake funding bets.
In April 2014, consistent with an SAR, Payoneer sent a payment to Reliantco Investments, a Cyprus-registered organization behind the internet site UFX.com, the choices sister internet site of the binary options internet site ubinary.com.
Barclays NY filed a January 2016 SAR on ReliantCo and affiliated groups. It defined that it filed the SAR due to the businesses’ awful reputations: “One, they’re positioned and banking in high threat jurisdictions for money laundering; , they have got together received monetary services warnings from at the least twenty (20) distinctive nations for working as unauthorized, unregulated foreign exchange buying and selling businesses; and, 3, they have been the choices topics of numerous unverified court cases within the public domain alleging their business model is a scam,” consistent with the choices SAR filed by using Barclays.
The binary options enterprise flourished in Israel for a decade earlier than it turned into outlawed via Knesset rules in October 2017, in large part due to investigative reporting through The Times of Israel that commenced with a March 2016 article entitled “The wolves of Tel Aviv.” At its height, masses of corporations in Israel hired heaps of Israelis who allegedly fleeced billions out of sufferers international. The fraudulent firms could dupe sufferers into believing that they were successfully investing and creating wealth, encouraging them to deposit more and more into their debts, till the company sooner or later cut off touch with the choices investor and disappeared with all or nearly all in their money.” Many of the choices Israeli companies have for the reason that relocated foreign places and endured the choices scam.
Forex, or forex businesses, provide investors a manner to make cash off of fluctuations in the global currency marketplace, although many are also allegedly fraudulent. The enterprise remains felony in Israel while lots of its allegedly fraudulent actors move unprosecuted.
In 2016, Aston Invest changed into investigated by means of a French choose for foreign exchange fraud, with a prosecutor in the case touring Israel. Jimmy Shamal become subsequently attempted and imprisoned in France, according to French media reviews, though they did now not specify which crime he turned into imprisoned for.
A Payoneer spokesman advised The Times of Israel that the choices employer did now not do the processing of bills for foreign exchange or binary options, and the choices only connection lower back then became in supplying offerings to networks affiliated with those offerings.
He said that at the same time as Payoneer did technique payments for forex and binary options affiliate marketers, this become a small a part of the choices enterprise’s universal business.
“Even in 2016 at the choices factor when we determined to forestall processing bills for high-danger verticals, it turned into a small part of our business,” the spokesperson said.
Other SARs protected in the FinCEN trove reveal that Payoneer transferred bills to a money carrier provider whose give up beneficiaries had been unknown to the financial institution submitting the document.
One of the choices motives The Bank of New York Mellon submitted the choices SAR, it said, turned into because it couldn’t determine whom the cash sent to Moneynetint became intended for.
“The wires are mainly suspicious because lots of them do not expose the true beneficiary/ordering patron and/or some of Moneynetint’s counterparties are shell-like entities or forex/binary options investors,” the choices SAR stated.
Moneynetint become in truth a major processor of payments for Israel’s fraudulent binary options industry, in step with banking documents visible by way of The Times of Israel.
Additional FinCEN Files documents monitor that Moneynetint transacted with additional corporations speculated to be scams.
Moneynetint sent the subsequent response. “Moneynetint constantly keeps our client’s identity confidential. Like other leading and truthful financial institutions, Moneynetint gives services to superior fintech industries and customers. We are proud of our developing involvement and management in the monetary area. As consistent with the ‘former customers’ of ours, our involvement and records defined are incorrect. Moneynetint takes large satisfaction in continually maintaining our true customer’s confidentiality and protection.”
Payoneer recounted using Moneynetint as part of its infrastructure, which will make nearby payments into its customers’ financial institution money owed, but said it never obtained payments from the choices employer.
Sources inside the payments industry who spoke to The Times of Israel on situation of anonymity stated that fintech agencies in popular will frequently transact with different payment companies in the sort of manner that their compliance departments don’t continually recognize who the choices stop purchaser or beneficiary is.
Sources also informed The Times of Israel that scams are so not unusual in the online global of e-commerce that even a nicely-intentioned fintech business enterprise will battle to terminate its dating with all the rip-off traders.
Despite the issue of rooting out bad actors, the onus is on cash provider businesses to try to accomplish that, stated Beer, the choices anti-money laundering analyst.
Payoneer’s call shows in 24 of the two,500 files of FinCEN Files leak. In a number of these documents, the organisation’s call seems dozens of times.
“Is that damning?” said Beer. “Not always, however it truly does raise questions about whether Payoneer has a robust anti-money laundering and counter-terrorism finance program in area. Did Payoneer record SARs with FinCEN on any of these transactions which might be cited through other financial establishments?”
Payoneer did no longer suggest whether or not it had filed SARs approximately these specific customers, but did say that it documents SARs on a ordinary basis. Its spokesman instructed The Times of Israel that “Payoneer’s compliance application meets the highest enterprise requirements, which include because it relates to the submitting of personal Suspicious Activity Reports (SARs), and is audited regularly by leading international auditors and economic regulators in a couple of jurisdictions.”
The 2,500 documents that make up the FinCen Files had been firstly leaked to BuzzFeed News by former FinCEN worker Natalie Mayflower Sours Edwards. On June 3, Edwards turned into sentenced to 6 months in federal jail for unlawfully leaking the choices documents.
In her sentencing memorandum, Edwards stated she leaked the documents because she suspected corruption inside the Treasury Department, mainly that another unit become illegally gathering statistics on Americans’ financial records and that Treasury Department officers had been failing to cooperate with the Congressional investigation into Russian interference inside the 2016 presidential elections.
BuzzFeed used the leaked files to write a sequence of articles in 2017 and 2018 about president Donald Trump, his associates and their connections to Russian commercial enterprise and political figures.
Israeli people and agencies appear in at the least 450 of the 2,500 leaked documents (which represent a tiny fraction of the choices more than 12 million SARs filed among 2011 and 2017). Many of the Israelis named in those documents were suspected of being connected to the choices porn, playing, forex or binary options industries as well as to groups concerned in affiliate advertising and marketing or price processing for the ones industries. Others Israeli and Israeli organizations named in the leak are related to Israeli guns sales, to the choices diamond enterprise, and to people from the choices former Soviet Union who live in Israel or have Israeli citizenship.
Mikhail Reider-Gordon, an anti-cash laundering professional with Affiliated Monitors and a professor at the International Anti-Corruption Academy in Austria, stated she has encounter the constellation of porn, gambling, foreign exchange, binary options and other net scams in her investigations of Wirecard, the collapsed German fintech being investigated via prosecutors in a couple of countries for cash laundering.
“The porn area, the choices binary options quarter, the offshore gambling sector, numerous those tie again into organized crime and kingdom-subsidized actors who want to launder money from all manner of different illicit activities, like human trafficking, narcotics trafficking, hands trafficking and the unlawful flora and fauna trade,” she said.
According to Reider-Gordon, many of those illicit sectors of the economy, both on- and offline, are intertwined.
“If you need to easy Russian money, evade sanctions in opposition to North Korea or Iran, you’re going to run that cash thru those entities,” she said.
Israel is broadly described as a “Startup Nation.” It has the very best number of startups according to capita inside the global, ranks 6th on Bloomberg’s 2020 list of the world’s most modern economies, and ranks first in the international in undertaking capital in keeping with capita.
But as The Times of Israel has documented, there’s an underbelly to the startup economy. A large minority of Israeli startups engage in fraudulent and/or unethical interest.
These covered 4XPlace, whose CEO Yossi Herzog turned into indicted in 2019 by a US grand jury for alleged fraud, Tradologic, which is being investigated via Austrian law enforcement, and SpotOption, these days accused of massive fraud by means of the US Securities and Exchange Commission. Not only did Israeli regulation enforcement never prosecute those entities, a government-funded startup incubator in 2012 touted them as Israeli achievement stories. Spotoption become secretly given Israeli taxpayer funding to amplify its operations abroad.
The 2012 file addressed the fact that many of these excessive-revenue organizations also occurred to be shady, calling them “shadow organizations.” A next 2014 document with any luck predicted that the choices enterprise might sooner or later easy itself up via a herbal evolutionary technique.
Payoneer claims that to the choices extent that it served shady customers, it did easy up its act. But documents from the FinCEN Files endorse that for a good deal of the choices Israeli net industry, this did no longer happen.
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