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Behind Bennett’s Payoneer payday, a firm that profited off smut and alleged cons

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27.06.2021

For Naftali Bennett, 2021 isn’t only the year he realized his dream of becoming prime minister of Israel. It will also see him profit handsomely from a financial services firm he invested in over a decade ago that has, among other things, helped companies operating in the seedy underbelly of the internet make money.

The company, Payoneer, is set to go public on the NASDAQ at the end of the month via a merger with a special purpose acquisition company (SPAC) at a valuation of $3.3 billion.

According to Forbes Israel [Hebrew link], Bennett is set to make some $5 million from the move, having invested several hundred thousand shekels in Payoneer some 13 years ago. Bennett’s spokesman confirmed to The Times of Israel that he invested in the company, but declined to specify how much Bennett stands to earn from the acquisition, stating that the amount is “a few million dollars.”

Payoneer was founded in 2005 in Israel by Yuval Tal and Yaniv Chechik. Today, it is characterized as one of the largest online money transfer platforms in the world, allowing online businesses and gig economy freelancers in different countries to seamlessly transact with each other and with clients. It counts Amazon, Airbnb and Fiverr among its partners and transfers payments between buyers and sellers on these platforms.

But a recent leak of US Treasury Department documents reveals that alongside its regular customers, Payoneer has also provided services to murky offshore companies allegedly involved in pornography, scam dating websites, a forex company investigated by French law enforcement and companies involved in the fraudulent binary options industry.

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A spokesman for Payoneer acknowledged to The Times of Israel that it had processed payments for such companies but said emphatically that it no longer does so.

“In 2016, Payoneer made a business decision to stop processing payments for high-risk businesses,” the spokesman said.

“We no longer process payments for any of these companies and haven’t for years. Payoneer’s compliance program meets the highest industry standards, including as it relates to the filing of confidential Suspicious Activity Reports (SARs), 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 AML obligations by FinCEN or any regulator or authority anywhere in the world. Today, Payoneer is trusted by many of the world’s leading digital brands including Amazon, Airbnb, Google and Upwork, as well as millions of SMBs worldwide.”

On September 20, 2020, BuzzFeed News, together with the International Consortium of Investigative Journalists (ICIJ) and over 100 news organizations around the world, published a series of investigative reports based on a trove of over 2,500 leaked documents from the US Treasury’s Financial Crimes Enforcement Network, or FinCEN.

Most of the documents are “suspicious activity reports,” commonly called SARs, that 90 banks and other financial institutions had submitted to FinCEN between the years 2011 and 2017. FinCEN’s mandate is to combat money laundering.

US banks and other financial institutions are required by law to submit SARs when they suspect that a transaction or series of transactions is implicated in money laundering. The 2,500 leaked documents are a small fraction of the 12 million SARs submitted to FinCEN between 2011 and 2017. But they offer a rare glimpse into the murkier side of the global financial system.

The leaked documents, which ICIJ has shared with The Times of Israel, reveal that numerous Payoneer customers and business partners, as well as Payoneer itself, were flagged by banks submitting SARs to FinCEN between 2011 and 2016. As a registered US Money Service Business, Payoneer is obligated to have a robust anti-money laundering program and even submit its own SARs.

“The bottom line is that money services businesses have a responsibility to try to prevent their own participation in money laundering,” Kieran Beer, chief analyst for the Association of Certified Anti-Money Laundering Specialists (ACAMS), a global anti-financial crime membership organization, told The Times of Israel.

“There is a global standard that they’re supposed to meet. It involves having an empowered and qualified anti-money laundering officer. It involves ways for that officer to be heard. It involves training.” he said.

Bennett’s level of involvement in Payoneer’s operations is unknown. While he reportedly [Hebrew link] introduced Payoneer CEO for Israel, Keren Levy, to Payoneer founder Yuval Tal, it is unclear how much involvement a shareholder at his level would have had in the company beyond that. A Payoneer spokesperson declined to address this question on the record. Bennett’s spokesperson did not respond to The Times of Israel’s questions about his level of involvement in the company’s operations.

A high-tech entrepreneur before entering politics, Bennett has made millions when companies he owned or had shares in were bought out by larger firms, known in Israel as an “exit.”

In 1999, he co-founded the information security company Cyota, which was sold to RSA Security in 2005 for $145 million. He is also the former CEO of Soluto, which was sold to Asurion in 2013 for $100 million. Bennett reportedly earned several million dollars from each exit.

News of the Payoneer SPAC became public in February. In March, reports began to surface of Bennett making millions from an unspecified tech exit. Asked by The Times of Israel, he refused to name the firm, and the link between Bennett and Payoneer stayed under wraps until Forbes Israel reported on it in early June.

Bennett did not respond to The Times of Israel’s request for comment, beyond acknowledging that he is an investor in Payoneer.

The fact that a SAR was submitted does not necessarily mean that any illicit activity took place, merely that a pattern of financial transactions raised the suspicions of a bank’s compliance officer. Most SARs do not lead to criminal prosecutions due in part to the sheer volume of them as well as law enforcement being underfunded, Beer said.

Nevertheless, the leaked documents........

© The Times of Israel


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