Gold & Silver Reserve Inc., a Melbourne-based company, that also owns E-Gold Ltd., was fined about $3 million for allowing thousands of customers in Iran to activate ecurrency accounts within their payment system. The company allegedly exported its services without a license thus violating federal law that regulates transactions with Iran.

According to the statement of the Treasury Department within the period of September 2003 and December 2006 over 56,700 of the company's e-currency accounts were opened by persons located in Iran. Gold & Silver Reserve failed to voluntarily disclose the violations to the department's Office of Foreign Assets Control.

Gold & Silver Reserve allows its accountholders to convert U.S. dollars or other currencies into digital cash backed by gold bullion and then use it for making transactions on the Internet like online shopping.

As is known in a separate case the owners of Gold & Silver Reserve were indicted by the federal authorities on charges of money laundering, conspiracy and operating an unlicensed money transmitting business.

According to the Department of Justice, online users who wanted to create an account with the payment system needed just to provide valid email address. The accountholders could access their account through the Internet and conduct anonymous transactions anywhere in the world.

The company faced a $5 million fine according to the Treasury Department, but in view of the forfeitures and penalties the company paid in the criminal case the amount was trimmed.