Block, Inc. Agrees to $40 Million Settlement with NYDFS
Block, Inc. has reached a $40 million settlement with the New York Department of Financial Services (NYDFS) for what the Wall Street regulator deemed as “significant failures” in its anti-money laundering compliance program. This announcement was made on Thursday.
The company, headed by Jack Dorsey, has also agreed to bring in an independent monitor following violations of the Department’s money transmitter and virtual currency regulations, as stated by the NYDFS.
According to the NYDFS, an investigation revealed that Block’s company lacked proper customer due diligence procedures and did not have adequate systems in place to prevent money laundering and illicit activities.
The NYDFS further pointed out that Block’s services were susceptible to criminal exploitation due to the “lax treatment” of Bitcoin transactions, allowing for mostly anonymous transactions to go unchecked.
NYDFS Superintendent Adrienne A. Harris emphasized the importance of compliance functions keeping pace with company growth or expansion, highlighting the need for stringent measures in place to prevent financial crimes.
Block’s Cash App, regulated under NYDFS as a virtual currency business since 2018 through its BitLicense, made changes last year by discontinuing support for free peer-to-peer (P2P) Bitcoin payments. Instead, the platform has shifted its focus towards other cryptocurrency services that have gained popularity among users.