Block Inc., the company formerly known as Square Inc. and operator of the popular Cash App, has reached an agreement to pay $40 million in settlement of allegations from the New York Department of Financial Services (NYDFS) regarding inadequacies in its anti-money laundering safeguards. This announcement was made by the regulator on Thursday.
The NYDFS pointed out that Block’s handling of high-risk bitcoin transactions had been notably lax, enabling effectively anonymous transactions to circumvent proper oversight within its systems. As part of the settlement, Block is now under mandates to rectify these compliance shortcomings and submit to scrutiny by an independent monitor.
NYDFS Superintendent Adrienne Harris emphasized the gravity of the situation, stating, “The rapid growth of Block’s Cash App absent a robust compliance function created risks and vulnerabilities that violated the rules financial services companies operating in New York must adhere to.” This statement indicates a desire for increased accountability measures following the settlement.
In its official statement, Block considered the settlement a means to move forward, asserting it does not admit to the findings laid out by the New York regulator. A spokesperson for the company expressed relief at the resolution, noting the settlement with the final state money transmission regulator following previous agreements reached with others.
The compliance concerns highlighted by the NYDFS originated from examinations spanning 2021 and 2022, revealing significant deficiencies that had contributed to a high-risk environment, potentially subject to exploitation by criminal elements. The findings were detailed in a consent order issued by the regulator.
Throughout this period, Block Inc. has operated under a New York BitLicense, which allows the company to engage in digital asset operations within the state. The recent settlement reinforces the importance of stringent compliance measures in the rapidly evolving fintech landscape.
For additional insights on Block’s future directions following this settlement, read more about Jack Dorsey’s plans to enhance investments in Bitcoin mining while scaling back other initiatives here.
