TL;DR
- Block must pay a $40 million fine for deficiencies in its anti-money laundering system and transaction monitoring in Cash App.
- The company accumulated over 169,000 unprocessed alerts and allowed operations linked to criminal networks due to failures in identity verification.
- As part of the agreement, Block will bring in an independent monitor for one year to oversee improvements in its internal controls.
Block, the technology company led by Jack Dorsey, must pay a $40 million fine imposed by the New York State Department of Financial Services.
The sanction stems from serious failures in its anti-money laundering controls and transaction monitoring within its Cash App platform. Authorities found that the company’s rapid growth was not matched by a proportional improvement in its compliance mechanisms.
Were Security and Prevention Practically Nonexistent?
The official report outlines shortcomings in user identification, limited oversight of suspicious operations, and inadequate controls to manage risks associated with cryptocurrency use. Among the most severe issues was the accumulation of over 169,000 unprocessed alerts and average delays of more than four months in submitting mandatory reports. Thousands of accounts linked to criminal networks were also detected, exposing weaknesses in the identity verification process.
The regulatory agency specifically criticized the lack of monitoring over Bitcoin transactions involving wallets tied to illicit activities. Although the company has held licenses to operate in New York for over a decade, the level of oversight was not enough to prevent transactions that may be connected to terrorism financing or the use of cryptocurrency mixers.
Block Will Be Supervised for at Least One Year
As part of the agreement, Block must incorporate an independent monitor who will evaluate the effectiveness of its prevention programs over the course of a year. The goal is to establish a system capable of detecting irregular operations more quickly and to ensure that internal policies comply with the legal standards required by the state.
This is not the first time the company has had to face the consequences of similar violations. In January, Block already paid $80 million to various state regulators due to issues related to Cash App. While authorities acknowledged the company’s cooperation during the investigation, they made it clear that the scale of the omissions required a firm response.
