I'm getting the same error message, I don't think my account is being investigated for fraud because I've taken money from the account not too long before and after trying to purchase SMI through steam.
I haven't used PayPal in a long time but I think I have an idea what the problem might be... It used to be so that you could just have a site redirect you to paypal, you sign in and agree to the transaction and they'd forward the money from your bank account to whoever you were trying to pay.
From what others have said in other threads, it seems that you now have to transfer money too paypal itself and then use that money to pay for online services.
Is that right?