http://www.paypal.com/cgi-bin/webscr?cmd=_ir-filings-outside

Click on the link to continue viewing SEC filings. Then click on the filing dated 6/21/02 (S-1/A)

Quote:
We are subject to money laundering laws and regulations that prohibit, among other things, our involvement in transferring the proceeds of criminal activities. These laws and regulations require us to operate an anti-money laundering program that contains at least the following elements: written
(page 15)

policies and procedures (including those relating to customer identification), training for employees, designation of a compliance officer, and regular independent review of the program. Such a program must be in place by July 24, 2002. We have adopted a program to comply with these regulations, but any errors or failure to implement the program properly could lead to a lawsuits, administrative action, fine and/or prosecution by the government. We are also subject to regulations that require us to report suspicious activities involving transactions of $2,000 or more and to obtain and keep more detailed records on the senders and recipients in transfers of $3,000 or more. The interpretation of suspicious activities in this context is uncertain. Future regulations under the USA Patriot Act, may require us to revise the procedures we take to verify the identity of our customers and to monitor more closely international transactions. These regulations could impose significant costs on us or make it more difficult for new customers to join our network. We could be required to learn more about our customers before opening an account, to obtain additional verification of international customers, or to monitor our customers' activities more closely. These requirements could raise our costs significantly and reduce the attractiveness of our product. Failure to comply with federal and state money laundering laws could result in significant criminal and civil lawsuits, penalties and forfeiture of significant assets.
(page 16)

So why have they not already put these laws into effect in their company? Below you will find only a small number of sites that either ARE or could potentially be violating these laws.

QUOTE:

Don't this scare you.
Again from their SEC filing: We could incur substantial losses from employee fraud and, as a result, our business would suffer.
The large volume of payments that we handle for our customers makes us vulnerable to employee fraud or other internal security breaches. We cannot assure you that our internal security systems will prevent material losses from employee fraud. Remember these employees their talking about have all your credit card and banking information and your Social Security number.  

For those of you that have been here before you can see that we have made an impression. All the gambling sites are gone and that cost Paypal over $10,200,000.00. Most of the porn sites are gone, some still are getting away with doing business with Paypal.