Currency conversion company activated thousands of Iranian accounts, Treasury Department says

Florida company fined $3M for Iranian transactions

WASHINGTON — A Florida company has been fined nearly $3 million for activating thousands of electronic currency accounts for customers in Iran, the Treasury Department said Thursday.

Gold & Silver Reserve Inc., of Melbourne exported financial services without a license, violating federal regulations governing transactions with Iran, the department said.

Between September 2003 and December 2006, more than 56,700 of the company’s e-currency accounts were opened by persons located in Iran, according to the announcement, and Gold & Silver Reserve did not voluntarily disclose the violations to the department’s Office of Foreign Assets Control.

Carol Van Cleef, an attorney representing the company, said her client has overhauled its internal procedures to be in compliance with Treasury’s regulations. “This deals with past issues and the company has put it behind them,” she said.

With a Gold & Silver Reserve account, U.S. dollars or other currencies can be converted into digital cash that is backed by gold bullion, according to the company’s web site. That allows for international transactions of goods and services at set rates among customers from different countries.

The company has temporarily suspended the creation of new accounts, the web site indicates.

In a separate case, the owners of Gold & Silver Reserve, who also own E-Gold Ltd., were indicted by a federal grand jury in April 2007 on charges of money laundering, conspiracy and operating an unlicensed money transmitting business.

The Justice Department said people who wanted to use the company’s gold payment system were required to provide only a valid e-mail address to open an account. Customers could access their account through the Internet and conduct anonymous transactions anywhere in the world.

The indictment alleged that E-Gold was a favored method of payment by operators of investment scams, credit card and identity fraud, and sellers of online child pornography.

The owners initially denied the allegations, but eventually pleaded guilty.

The Treasury Department said it could have fined Gold & Silver Reserve $5 million, but reduced the amount because of the forfeitures and penalties the company paid in the criminal case.

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On the Net:

Office of Foreign Assets Control: tinyurl.com/m6qdz4