The group no longer offers payment services effective 22nd September 2016
PacNet Services Ltd.
Cutting-edge international payment processing company
PacNet Services was created in 1994 to serve a growing need among catalogue sales companies and international publishers to accept payment in their customers' home currencies.
In 1994, "globalization" was a buzz word, and many companies within the US and around the world were wondering how best to tap into opportunities to sell their products internationally.
The internet was in its infancy; direct mail was the primary vehicle for international sales and cheques were the preferred method of payment. PacNet, one of the world's first international fintech companies, provided a way for companies to accept cheques in their customers' home currency, yet receive funds in their company-designated bank account quickly and without high fees.
As globalization continued apace and more and more companies recognized the opportunities presented by international markets, PacNet added payment services such as multi-currency card processing, bank transfers and cheque issuing to facilitate international e-commerce and consumer refunds.
PacNet Services was a well-respected, cutting-edge, fully licensed and compliant international payment processing company, among the first to recognize the importance of providing consumers and businesses with convenient local-currency payment options. The company ceased doing business on 22 September, 2016.
September 22, 2016
On 22nd September 2016, the United States Government, Department of Treasury’s Office of Foreign Assets Control designated PacNet Services, approximately 33 group companies and subsidiaries, and 12 individuals as a “Transnational Criminal Organization” and added their names to its list of Specially Designated Nationals. As a result, it was impossible to continue business and the Group commenced an orderly shut-down of all its business activities.
The designations were based on an allegation that PacNet Services conspired in fraudulent activities of “Direct Mail” marketers active in the United States and elsewhere. PacNet and its officers vigorously deny the allegation and have presented factual evidence to OFAC that the action was unjust and undeserved. No accusations or allegations whatsoever were made against Chexx Inc or Counting House. They were, nevertheless, included in OFAC's actions.
Prior to September 22, 2016, neither PacNet nor its affiliates, directors, or officers had ever been accused—much less charged and convicted—of any criminal offense arising from its business activities. To the contrary, PacNet's history of compliance and cooperation with law enforcement agencies and anti-money laundering initiatives was publicly recognized and appreciated.
Sanctions Lifted
On 19th September 2017, OFAC and the PacNet Group signed an agreement under which OFAC would remove all remaining entities and individuals from the SDN list. There was no fine, no penalty, and no agreement by the companies that any wrongdoing had occurred. However, on the insistence of OFAC, the agreement did include a clause which prevents the PacNet Services Group of Companies from suing OFAC for damages.
The PacNet Group is in the process of dissolving the companies in an orderly manner. Any client funds in which the US Government claimed a law enforcement interest were paid under an Interpleader action into the District Court for the Eastern District of New York.
Incredibly, after PacNet filed the interpleader in compliance with its agreement with OFAC, the US government attempted to seize client funds. PacNet received court permission to file a complaint and request censure of the US Government's actions and some of the individual lawyers involved. A former Chexx Inc client, i-Payout, joined the court action in support of PacNet's complaint. Click here to read PacNet's reply brief to the District Court of New York.
On 26 October 2017, OFAC announced removal of the entire PacNet Group of Companies from its sanctions list. However, the announcement lacked the sensationalized media coverage dedicated to the original designations. There has been a disappointing lack of media curiosity and discussion regarding OFAC's unprecedented and outrageous actions in designating PacNet, a reputable organization with no criminal history, as a Transnational Criminal Organization and its subsequent speedy removal of all associated individuals and companies from its list.
Exonerations Relevant to PacNet's History
Judge Rules in PacNet's Favour
From 2010, PacNet was engaged in litigation with the Irish government over a particular delivery of cash. In a resounding High Court judgment delivered after nine years on January 25, 2019, Mr. Justice Simons ruled that the preceding four years of proceedings were unnecessary and disposed of the case entirely in favour of PacNet.
Click here to read about this ruling in the Irish Times.
Click here to read the full judgment.
Mr. Justice Simons also ordered the Director of Public Prosecutions to pay the full costs of the applicant parties, which are substantial.
Click here to read the costs order.
Click here to read about this repayment order in the Irish Times.
No Connection to Illegal Activity
As a knock-on effect of the OFAC sanctions and inaccurate press reports, freezing orders were placed on company assets in three jurisdictions: Ireland, the Isle of Man and the United States. The American orders were lifted with the removal of OFAC sanctions. On 3 September 2018, the IOM Court lifted its freezing order, ruling that there was no demonstrated connection with any illegal activity whatsoever.
Click here to read the full judgment in the Isle of Man.