tl;dr
Block, Inc. has agreed to a $40 million settlement with the New York Department of Financial Services for anti-money laundering compliance failures. The company, led by Jack Dorsey, violated money transmitter and virtual currency rules, leading to inadequate customer due diligence and vulnerability ...
Block, Inc. has agreed to a $40 million settlement with the New York Department of Financial Services (NYDFS) for “significant failures” in its anti-money laundering compliance program, the Wall Street regulator announced on Thursday.
The company led by Jack Dorsey has agreed to retain an independent monitor after violating the Department’s money transmitter and virtual currency rules, the NYDFS added. The NYDFS found that Block’s company had “inadequate customer due diligence” and failed to implement systems sufficient for preventing money laundering and illicit activity.
Block’s services were “vulnerable to criminal exploitation,” the NYDFS said, arguing that Block’s “lax treatment” of Bitcoin transactions allowed largely anonymous transactions to evade scrutiny.
With its so-called BitLicense, Block’s Cash App had been regulated under the NYDFS as a virtual currency business since 2018. Last year, Cash App ended its support for free peer-to-peer (P2P) Bitcoin payments, while leaning into other cryptocurrency services that users have gravitated toward.
A Block spokesperson told Decrypt that the firm is committed to promoting a safe and healthy financial system and has dedicated significant resources toward compliance. "This marks the resolution of all previously pending state money transmission license matters," the spokesperson said. "Block did not admit to any of the findings in the document, and we are pleased to put this matter behind us."
In early Thursday trading, Block's share price was down 3.7%, according to Yahoo Finance data. It is off 36% year-to-date.