Key Takeaways
- Block will pay a $40 million penalty due to compliance failures in its Cash App platform.
- The investigation revealed weak anti-money laundering practices and inadequate monitoring of suspicious Bitcoin transactions.
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Block, Inc., the fintech giant led by Bitcoin advocate Jack Dorsey, has agreed to pay a $40 million penalty to the New York State Department of Financial Services (DFS) to settle an investigation into compliance failures tied to its Cash App platform, as detailed in a Thursday press release.
According to a consent order issued on April 10, the settlement addresses critical lapses in anti-money laundering (AML), cybersecurity, and consumer protection practices that exposed Block to potential criminal exploitation.
The DFS probe, which resulted from examinations in 2021 and 2022, found that Block’s compliance systems failed to match its growth. The company’s revenue hit $21.91 billion in 2023, with assets doubling from $15.02 billion in 2021 to $34.06 billion, but its compliance systems lagged.
DFS found Block had accumulated over 169,000 suspicious activity alerts by 2020, with delayed Suspicious Activity Reports (SARs) averaging 129 days. The company’s monitoring of Bitcoin transactions linked to terrorism-related wallets and mixers was inadequate, according to the order.
The investigation also uncovered that bad actors exploited weak Know Your Customer practices, including 8,359 accounts linked to a Russian criminal network in 2022.
“All financial institutions, whether traditional financial services companies or emerging cryptocurrency platforms, must adhere to rigorous standards that protect consumers and the integrity of the financial system,” said Superintendent Adrienne Harris in the release. “Compliance functions must keep pace with company growth or expansion. The rapid growth of Block’s Cash App absent a robust compliance function created risk and vulnerabilities that violated the rules financial services companies operating in New York must adhere to.
Block must pay the fine within 10 days and submit to a 12-month independent monitor selected by DFS to overhaul its AML, sanctions, and transaction monitoring programs.
The settlement follows Block’s $80 million payout to 48 state financial regulators in January over AML violations tied to its Cash App platform.
Regulators found that Block’s compliance measures were inadequate, posing risks of money laundering and other illicit activity.
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