Block in Talks to Settle NYDFS AML, Bitcoin Program Allegations

Block Inc., the payments firm led by Jack Dorsey, is in talks with New York state regulators to settle allegations related to its Anti-Money Laundering (AML) and Bitcoin programs. The company disclosed in a February 24 filing with the Securities and Exchange Commission that it is engaged in ongoing negotiations with the New York State Department of Financial Services (NYDFS) over various aspects of its Bank Secrecy Act/Anti-Money Laundering and Bitcoin programs.

Block stated that it is in discussions with NYDFS to determine if the matter can be settled on acceptable terms. The company is involved in multiple legal, regulatory, and tax-related matters, including settlements, ongoing negotiations, and investigations, as per the filing.

In January, NYDFS proposed settlement terms, and discussions are ongoing. Block has accrued a liability for this matter but considers the amount not material to its 2024 financials. The company was previously investigated by money transmission regulators from multiple US states between January 2021 and March 2023, with an examination allegedly finding deficiencies in the firm's AML Program, particularly concerning compliance with the Bank Secrecy Act.

A settlement agreement was made between Block and multiple state money transmission regulators in January, but New York was not among them. Block did not admit or deny any wrongdoing but agreed to settle with various state money transmission regulators over these deficiencies and agreed to pay $80 million in penalties, with payments expected to be completed by February 2025.

As part of the settlement, Block must appoint an independent consultant to review and improve its AML Program, and a Compliance Management Committee will oversee the execution of corrective measures. Additionally, the Consumer Financial Protection Bureau investigated Cash App in January over its handling of customer complaints and disputes. Block paid a $55 million civil penalty and agreed to pay $75 million to $120 million in restitution to affected Cash App customers.

Block is also involved in a dispute with the San Francisco Treasurer and Tax Collector, which audited the firm's tax receipts from 2020–2022 and claimed additional taxes were owed on Bitcoin-related revenue.