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"Anyone Else Fallen Foul of OFAC?" Topic


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1,581 hits since 27 Dec 2012
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Patient Zero Sponsoring Member of TMP Inactive Member27 Dec 2012 8:40 a.m. PST

PayPal decided that the Christmas period would be a good time to suspend my account because:

"PayPal's Compliance Department has reviewed your account and identified activity that may be in violation of United States regulations administered by the Department of the Treasury's Office of Foreign Assets Control (OFAC).

PayPal is committed to complying with and meeting its regulatory obligations. One obligation is to ensure that our customers, merchants, and partners are also in compliance with applicable laws and regulations,
including those set forth by OFAC, in their use of PayPal.

To ensure that activity and transactions comply with current regulations, PayPal is requesting that you remove the following countries from your checkout:

Cuba, Iran, Myanmar, Sudan, Syria, and Korea, Democratic People's Republic of."

My web guy judged it to be authentic and when the offending countries were removed from my checkout the service was restored quite promptly.

Anyone else experienced this – or, if you haven't, look out for it.

Chief Lackey Rich Supporting Member of TMP Fezian27 Dec 2012 8:48 a.m. PST

That's a new one on me.

GildasFacit Sponsoring Member of TMP27 Dec 2012 9:35 a.m. PST

Why should a company based in the EU have to make a customer from the UK comply with laws in the USA ?

My response would be to remove the USA from my list so that I could not possibly offend their stupid laws.

mgdavey27 Dec 2012 9:42 a.m. PST

First, I suppose because Paypal is a US company they need to comply with US banking laws, even when they do business overseas. Second, I don't think it's a stupid law the prohibit transactions to those places listed. Perhaps Cuba is arguable. Third, do you really think your commerce from the Sudan would make up for what you'd lose from US customers? Or would you be just putting yourself out of business on principle?

GarrisonMiniatures Supporting Member of TMP27 Dec 2012 9:44 a.m. PST

My response would be a complaint to the Office of Fair Trading or similar.

Personal logo elsyrsyn Supporting Member of TMP27 Dec 2012 10:16 a.m. PST

My response would be to remove the USA from my list so that I could not possibly offend their stupid laws.

My response would be a complaint to the Office of Fair Trading or similar.

What mgdavey said – PayPal is a US company, and therefore subject to US financial regulations, under which transactions with those countries (or individuals in those countries) are prohibited. Simple. If you don't agree with the law, then you are of course free to use a payment processor not based in the US, and therefore not subject to OFAC oversight.

Doug

79thPA Supporting Member of TMP27 Dec 2012 10:19 a.m. PST

So much for that miniatures order I was going to place to Cuba…

But no, I have never heard of such a message from PP.

Dark Knights And Bloody Dawns27 Dec 2012 10:19 a.m. PST

Erm… Seeing as Paypal is a US based company, isn't it required to block transactions with contries that have trade embargoes?

By merely allowing potential transactions I thought this was a breach of the US/UN regulations.

I could of course, be wrong…

Personal logo richarDISNEY of the RDGC Supporting Member of TMP27 Dec 2012 10:32 a.m. PST

Oh man… There goes my huge minis order from Syria… wink*
eggnog

GarrisonMiniatures Supporting Member of TMP27 Dec 2012 10:34 a.m. PST

EBay also has foreign subsidiaries that have to obey the laws and regulations of the countries it operates in. In the UK, they have to obey UK law, not US law.

The following is the trading policy of EBay UK (NOTE COUNTRY OF SELLER AND COUNTRY OF BUYER, NOT COUNTRY OF BUYER , SELLER AND US):

Policy overview

Listing items globally can be a fun and rewarding experience and is one of the unique benefits of using eBay. At the same time, it's important that all listings and transactions comply with applicable laws. Members are responsible for making sure their transactions are lawful in both the country of the seller and the country of the buyer.

We strongly encourage all members to learn about the laws in their own country as well as the countries where they plan to do business. If you are posting worldwide, please be aware that your item may not appear in the search results in countries where the item is not allowed.

You can exclude countries you don't want to post to by selecting buyer requirements.

Make sure your listings follow our guidelines. If they don't, they may be removed or removed from search results on sites where the item is not allowed, and your buying and selling privileges could be restricted.
Some examples

Here are some examples of items that may be legally prohibited or restricted, or that breach our policies:

eBay Germany (please note especially the Youth protection policy): auction

eBay United States: auction

eBay Australia: auction

eBay France: auction

eBay Italy: auction

eBay Canada: auction

eBay Netherlands: auction

eBay Spain: auction

David Manley27 Dec 2012 10:49 a.m. PST

You would have thought the easiest solution would be for Paypal to block transactions to those countries, or remove them from customers checkout lists rather than letting people mistakenly flout the law. It may be just me, but I would have thought that taking this simple step to help their customers would earn them some brownie points rather than this approach, which does the opposite.

Grelber Supporting Member of TMP27 Dec 2012 11:18 a.m. PST

Sending a polite warning message first would have been more appropriate than just suspending your account. Especially since changes to the status of Myanmar or Sudan don't really make the news here in the USA (and since I do Colonials, I do pay a little attention to things in Sudan).
I would have thought they'd have told you this when you signed up with them, and you'd have cut these countries out from the beginning. I suppose the countries are retained on the list in case their status changes. I suspect Libya, for one, used to be on that list, and there is some hope of Syria coming off in the next year or so.
Grelber

Personal logo Parzival Supporting Member of TMP27 Dec 2012 11:45 a.m. PST

Cuba, Iran, Myanmar, Sudan, Syria, and Korea, Democratic People's Republic of.

Big potential sales losses there— not. Tempest in a teacup. But the appropriate step by Paypal would have been to alert customers that they cannot legally handle financial transactions involving trade to or from these nations and have removed them from their systems. End of problem, nobody seriously affected at least as far as our hobby is likely to be concerned.

As to whether or not you agree that the above nations should be embargoed, or that an embargo has or will have any significant effect as a motivator for positive change, I'll leave that discussion for those who populate the Blue Fez.

Personal logo StoneMtnMinis Supporting Member of TMP27 Dec 2012 11:45 a.m. PST

PayPal and eBay are two different business models. PayPal is a financial entity and is regulated by the Treasury and eBay by the FTC. Different regulators different regulations.

Dave

David Manley27 Dec 2012 11:57 a.m. PST

True, but Ebay requires you to include Paypal as an option for payment, so they should be able to get their Bleeped text in one sock and sort this out in such a way as to make it transparent for the user.

John Leahy Sponsoring Member of TMP27 Dec 2012 12:38 p.m. PST

Wow GildasFacit, you may want to practice a little tact since rants rarely encourage sales.

Thanks,

John

GildasFacit Sponsoring Member of TMP27 Dec 2012 1:31 p.m. PST

From the PayPal website

PayPal (Europe) S.à r.l. et Cie, S.C.A. is duly licenced as a Luxembourg credit institution in the sense of Article 2 of the law of 5 April 1993 on the financial sector as amended and is under the prudential supervision of the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier, with registered office in L-1150 Luxembourg.

As I said – a European institution, not subject to US law.


As far as tact is concerned I doubt very much if US citizens would appreciate a foreign government interfering with their ability to trade as they thought fit simply because they had a hissy fit back in the 60's.

As it happens my trade with the USA is fairly small, I value my US customers as individuals but that does not require me to agree with their government's actions or their laws. I hardly think they would expect that of anyone outside their own country.

Personal logo elsyrsyn Supporting Member of TMP27 Dec 2012 2:05 p.m. PST

PayPal Europe is, as far as I know, still a wholly owned subsidiary of eBay, which is a US corporation. As such, it would still, to the best of my knowledge, be subject to US regulations. Governments tend to look askance at the "yeah, we own it, and we're here, but it's over THERE, so your rules don't apply to it" argument. Were it an independent organization, things would be different.

Doug

Cincinnatus Supporting Member of TMP27 Dec 2012 3:26 p.m. PST

If I do business with a foreign bank (Switzerland for example), of course I expect the bank to obey the laws of the country that regulates them. It would be kind of silly to expect them to only obey the laws of the US just because that's where I live.

John Leahy Sponsoring Member of TMP27 Dec 2012 4:17 p.m. PST

Hi, G it also doesn't mean that you should sound snarky and potentially alienate one of the largest potential customer base around either. Saying you'd remove the USA from your customer base due to its 'stupid laws' is tactless at best and certainly doesn't endear you to potential customers in the US.

Oh, foreign governments do impact some of us in the USA. We pay VAT to some companies in the UK. I don't like it but I don't bash the UK either.

Thanks,

John

Khusrau Supporting Member of TMP27 Dec 2012 5:13 p.m. PST

Sorry John, and trying not to be too provocative, I think that G is just frustrated that there seems to be a prevalent attitude in some circles that one country should be able to apply its rules globally.

So (naming no names) – if one country (A) seeks to purchase Item X from country (B), why should country (C) have the right to prevent it?

Now sure if you trade using a company registered in country C and they have to comply with their legal obligations, no problem. But when they are a registered local entity, then this seems a tenuous grab for jurisdiction.

That attitude is one of the reasons why (for example) I won't approve business in the cloud if there is any chance at any time that the data could (for example) be held in a country subject to the Patriot Act, or some other form of Government legislation that would override the local (Australian)Privacy provisions or other legal safeguards.

The other classic example is the attempt to extend copyright to third party countries, and in some cases then extradition where no local offence has been committed. An interesting current example is en.wikipedia.org/wiki/Kim_Dotcom where it is (at least) arguable that the purported offender has committed no crime under the law in the country in which he resides. Another very interesting piece in law is the example of a defamation case brought in Australia against an American publication: link

So it goes to show that for example a case might be made, that statements under the protection of American 'Free Speech' protections might be interpeted to be subject to prosecution under another countries laws against vilification or incitement to racial hatred. I shall leave you to consider the consequences if that were to be the case.

I also wonder whether restricting trade by country not subject to a UN embargo might not be illegal under Restraint of Trade provisions in many countries. I shall leave that one to the international lawyers to consider.

(NB This is not to suggest I don't like Country C or it's citizens, just that I don't see why I am increasingly held accountable under their laws, when I don't get a vote for their Government. ("No Legal Interference Without Representation", and by corollary, why should Country C's citizens be accountable under laws they may find puzzling or unfair.))

I don't find the VAT example egregious, as I know when I do business I pay the applicable taxes at the point of sale.

It's becoming an increasing challenge as the internet makes international transactions more and more common.

John Leahy Sponsoring Member of TMP27 Dec 2012 5:30 p.m. PST

Paypal is a US Company and has to obey US law. Seems pretty straight forward. US customers are exempt from VAT, IIRC. That's different from duties or import fees. However, some companies still charge us. I don't claim the UK has terrible laws or no business should be done with the UK because of that.

Also, what you say as a Hobby business can reflect in sales gained or lost. Large Companies may be somewhat immune. Smaller ones usually are not. That was my main point.

Rants are fine. But they belong on the RANT board.

Thanks,

John

GarrisonMiniatures Supporting Member of TMP27 Dec 2012 5:55 p.m. PST

Paypal may be an American company and obey American laws, but when operating in the UK it has to obey British law!

If the two laws contradict each other – well, tough.

In fact, it may be that all the countries listed are banned by the UK anyway – though I don't think Cuba is – but that's not the point.

If you are opeating in the UK (or any other country) and break the law of that country then you deserve to be prosecuted by the law of that country. If a company doesn't accept that then it needs to clear out.

GildasFacit Sponsoring Member of TMP28 Dec 2012 7:59 a.m. PST

US customers are exempt from VAT if the supplier pays it – not all suppliers are VAT registered so cannot exempt a customer from a tax they do not pay !!!

David Manley28 Dec 2012 10:40 a.m. PST

"If the two laws contradict each other – well, tough."

Or rather, they either don't do business in that country or they break one country's law and hope no-one notices.

huascar29 Dec 2012 11:49 p.m. PST

I know I shouldn't, but….arguing that only British law should apply to, well anything, just because it occurs in the UK hasn't made sense since the end of absolute monarchies. Sure UK law applies, but so does EU law, so does a bunch of settled historical international laws, so does a large number of laws created by international treaty, plus there are legally enforceable decisions of the UN, the ICJ, the WTO..etc, etc…

In addition any nation can choose to impose legal requirements on anyone using their sovereign territory (virtual or real) or engaging in activities with any of their citizens. In this particular case we are talking about laws primarily introduced after Sept 11 to prevent the financing of crime and terrorism. If you think this is a croc I suggest you read the 911 Commission report which details how the terrorist attack was financed by the international transfers (some from Europe) of relatively small amounts of money.

While I believe no one here was planning to finance international terrorism it is awfully hard to craft laws which exclude those nice chaps who play with toy soldiers.

And if you think cutting off US customers changes anything, you are also kidding yourself. All reputable financial intuitions do business in the US or with US citizens and so follow these laws – particularly since several large UK banks recently had to pay large fines and admit criminal wrong doing under these laws. Opting out of paypal's US customer service may create a warm inner glow, but when that large order from Sudan comes though you are going to get the same message from whoever is handling your money now. The only difference is that PayPal was ham-fisted I how they made this clear.

kevanG30 Dec 2012 12:10 a.m. PST

I suspect this has a lot to do with the transaction probabley being conducted in dollars

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