Block,Inc. Settles With NYDFS For $40 Million Over Anti-Money Laundering Failures

Block, Inc. has reached a $40 million settlement with the New York Department of Financial Services (NYDFS) due to significant failures in its anti-money laundering compliance program. The agreement was announced on Thursday, highlighting the company's shortcomings in adhering to regulatory standards.

The NYDFS found that Block's compliance program was inadequate, particularly in customer due diligence and implementing systems to prevent money laundering and illicit activities. The regulator noted that Block's services were vulnerable to criminal exploitation, with its lax treatment of Bitcoin transactions allowing largely anonymous transactions to evade scrutiny.

As part of the settlement, Block has agreed to retain an independent monitor to oversee its compliance efforts. This move comes after the company violated the Department’s money transmitter and virtual currency rules. The NYDFS emphasized the importance of compliance functions keeping pace with company growth or expansion, underscoring the need for robust regulatory measures.

Block's Cash App, which has been regulated under the NYDFS as a virtual currency business since 2018, has faced scrutiny over its handling of Bitcoin transactions. Last year, Cash App discontinued its support for free peer-to-peer (P2P) Bitcoin payments, shifting its focus towards other cryptocurrency services that have gained user traction.

This settlement serves as a reminder to financial institutions about the critical importance of maintaining strong compliance programs. The NYDFS's actions highlight the regulatory body's commitment to ensuring that companies adhere to anti-money laundering standards, protecting the financial system from illicit activities.