Block, Inc. to Pay $40 Million Penalty for Money Laundering Compliance Failures

The New York Department of Financial Services (DFS) has taken decisive action against Block, Inc., the parent company of Cash App, for significant failures in its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program. As a result, Block will pay a $40 million penalty and retain an independent monitor to evaluate its compliance with the Department's regulations. The DFS investigation revealed critical gaps in Block's BSA/AML program, including inadequate customer due diligence, failure to implement sufficient risk-based controls, and failure to effectively monitor transactions.

Key Takeaways:

• Block, Inc. will pay a $40 million penalty for significant failures in its BSA/AML compliance program.
• The company is required to retain an independent monitor to perform a comprehensive evaluation of its compliance with the Department's regulations.
• Block's Cash App allows users to send and receive fiat currency, and the company has been licensed by the DFS to conduct money transmission business in the State of New York since 2013.
• The DFS investigation revealed critical gaps in Block's BSA/AML program, including inadequate customer due diligence, failure to implement sufficient risk-based controls, and failure to effectively monitor transactions.
• Block's rapid growth between 2019 and 2020 contributed to a severe transaction alert backlog, which the company left unaddressed for a significant period of time.
• The Independent Monitor will ensure Block builds a successful and effective compliance program capable of identifying and preventing illicit activity.
• The DFS acknowledges Block's cooperation throughout the investigation and notes that the company has already committed significant financial and other resources to remediate the shortcomings identified in the Consent Order.

Statistics:

• $40 million: the penalty imposed on Block, Inc. for significant failures in its BSA/AML compliance program.
• 2013: the year Block's Cash App began operating in the State of New York, licensed by the DFS to conduct money transmission business.
• 2018: the year Block began operating virtual currency business through Cash App, licensed by the DFS.
• 2019-2020: the period during which Block's rapid growth led to a severe transaction alert backlog.
• Significant: the amount of time for which Block left the transaction alert backlog unaddressed.

Sources:

• New York Department of Financial Services news release dated [no date provided].
• Speech or statement by Adrienne A. Harris, Superintendent of Financial Services, dated [no date provided].