By PAUL O’DONOGHUE, Senior Correspondent
BLOCK will pay a $40 million fine to settle accusations the payments company had significant failures in its anti-money laundering compliance program.
The penalty also relates to virtual currency compliance failures on its Cash App platform, according to New York’s financial services regulator.
The payments company, which is led by Twitter co-founder Jack Dorsey, will now hire an independent monitor to oversee improvements in compliance. Block owns and operates Cash App, which allows users to send and receive money.
Adrienne Harris, New York’s superintendent of financial servicers, said Block had “significant failures in its compliance program”.
She said these issues violated money transmitter and virtual currency regulations.
“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 Harris.
“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.”
Previous Block fine
Block agreed in January to pay an $80 million civil fine to settle similar charges by 48 U.S. state financial regulators.
In a statement, the Oakland, California-based payments company did not admit or deny wrongdoing, and said the New York settlement ends “all previously pending state money transmission license matters.”
The New York regulator said Block’s alleged shortfalls included inadequate customer due diligence, and inadequate risk-based controls to counter illegal activity such as money laundering and terrorism financing.
It also said Block’s lax oversight of bitcoin transactions, which it began offering through Cash App in 2018, and the company’s subsequent rapid growth created “an environment vulnerable to criminal exploitation.”
The regulator cited Block’s discovery in a 2022 internal investigation of 8,359 Cash App accounts linked to a Russian criminal network.
Adrienne Harris, New York’s superintendent of financial services, said compliance functions “must keep pace with company growth or expansion” at both traditional financial services companies and emerging cryptocurrency platforms.
Cash App had $283 billion of inflows in 2024, and 57 million monthly users at year end, a regulatory filing shows.
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