Block, Inc. Settles AML Compliance Allegations
Block, Inc., the financial services firm spearheaded by Jack Dorsey, will pay $40 million to settle allegations of substantial shortcomings in its anti-money laundering (AML) compliance measures.
This announcement was made by the New York Department of Financial Services (NYDFS) on Thursday. The NYDFS’s investigation uncovered significant deficiencies in Block’s adherence to regulatory standards for money transmission and virtual currency operations in New York.
Settlement Terms and Regulatory Concerns
As part of the settlement terms, Block will also be appointing an independent monitor to oversee the improvement of its systems and processes to prevent money laundering and illegal transactions.
The NYDFS highlighted that Block’s operations had “inadequate customer due diligence,” allowing its services to become “vulnerable to criminal exploitation.” The regulator emphasized that the company’s lax oversight of Bitcoin transactions facilitated largely anonymous exchanges, evading proper scrutiny and risk management.
NYDFS Remarks and Future Directions
“Compliance functions must keep pace with company growth or expansion,” remarked NYDFS Superintendent Adrienne A. Harris, underscoring the importance of robust regulatory practices amidst rapid technological advancement.
Since obtaining its BitLicense in 2018, Block’s Cash App has been classified as a virtual currency business under the supervision of NYDFS.
Strategic Shift and Regulatory Compliance
Last year, Cash App made a strategic shift by discontinuing its support for free peer-to-peer (P2P) Bitcoin transactions, suggesting a move towards enhancing other cryptocurrency functionalities that appeal to its user base. This evolution reflects Block’s aim to maintain its competitive edge and ensure regulatory compliance while navigating the complex landscape of digital finance.
