The fintech company, known for Cash App, has reached a settlement with New York authorities over alleged AML control gaps related to Bitcoin transactions.
Block, Inc. — the financial technology firm founded by Jack Dorsey and formerly known as Square — has agreed to pay $40 million in a settlement with New York’s top financial regulator (NYDFS). The agreement follows an investigation that revealed “critical gaps” in the company’s anti-money laundering (AML) program, particularly concerning its bitcoin operations.
According to the New York Department of Financial Services (NYDFS), the AML program for bitcoin trading through the Cash App “did not adequately address the substantial risks posed to an entity of its growing size and complexity,” as stated in a consent order published on April 10.
“Compliance functions must keep pace with a company’s growth or expansion,” said NYDFS Superintendent Adrienne Harris in a statement. “The rapid growth of Cash App without a robust compliance function created risks and vulnerabilities that violated the rules financial service companies operating in New York are required to follow.”
NYDFS said Block had gaps in its AML controls, including a lack of risk-based measures to prevent money laundering and illicit activity, as well as insufficient customer due diligence. “Specifically, Block’s permissive treatment of high-risk Bitcoin transactions allowed largely anonymous activity to proceed without proper oversight,” the regulator said.
The agency acknowledged that Block cooperated throughout the investigation and has taken steps to implement corrective actions. As part of the settlement, Block will be required to engage an independent monitor, according to the official release. NYDFS has been active for years in enforcing cryptocurrency regulations within the state.
This latest agreement follows a previous $80 million settlement that Block reached with 48 state financial regulators this past January, also related to AML violations.
