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PacNet’s combination of relaxed conditions and widespread access has made it easy for scammers to take advantage of the service.

On September 22nd, 2016, OFAC designated PacNet as a “significant transnational criminal organization.” The government argued that PacNet is part of an international network that steals millions of dollars from the elderly and other vulnerable parties. This designation places the payment processor on a list alongside some of the world’s most deadly criminal organizations. These criminal organizations include groups like the Los Zetas, Yakuza, and MS-13.

John E. Smith, the OFAC acting director, stated that “PacNet has knowingly facilitated the fraudulent activities of its customers for many years, and today’s designations are aimed at shielding Americans and the nation’s financial system from the large-scale, illicit money flows that are generated by these scams against vulnerable individuals. Treasury will continue to use its authorities to respond to the evolving nature of transnational organized crime.”

PacNet denied these allegations multiple times. On their Facebook page, they wrote, “We absolutely and categorically reject the allegations made against us regarding our processing for direct mail campaigns. We will vigorously defend ourselves against these unproven allegations.” Peter Ferlow, the husband of the director, manager, or company secretary of many PacNet-linked companies, added, “I find it surprising that the authorities haven’t provided any evidence to shut somebody’s company down. The company and all the principles and higher managers in the company are now listed on the U.S. Treasury site with personal home addresses and nobody’s guilty here. Like, what is going on? It’s kind of wrong.”

Because of these sanctions, US banks, businesses, and citizens cannot do business with PacNet, and their US-based assets have been frozen. OFAC, echoing the sentiment of the Treasury Department, said that the organization is a “third party payment processor of choice for perpetrators of a wide range of mail fraud schemes.” Aside from PacNet itself, the OFAC sanctions include 12 people and 24 entities across 18 different countries. Alongside a press release, OFAC published a chart of these individuals and entities.

Before the OFAC designation, US authorities warned PacNet of criminal business partners and asked that they stop dealing with them. In one 2014 case, PacNet received subpoenas from the Iowa State Attorney General for allegedly victimizing the elderly and enabling fraudsters. PacNet continued to process these controversial transactions until the fraudsters themselves were shut down by law enforcement.