Block Inc. has reached a settlement of $40 million to address allegations made by the New York Department of Financial Services (NYDFS) regarding its inadequacies in handling anti-money laundering measures, as stated by the regulator on Thursday.
The company, which provides Cash App for peer-to-peer transactions and was formerly known as Square Inc., is required to rectify its deficiencies and will be monitored by an external auditor as per the New York regulator’s directives. The NYDFS highlighted issues with the company’s “permissive approach to high-risk bitcoin transactions” in previous years, allowing anonymously transacted funds to pass through its systems.
“Block’s swift expansion of Cash App, without a solid compliance structure, introduced risks and vulnerabilities that breached the regulations applicable to financial services firms in New York,” remarked NYDFS Superintendent Adrienne Harris. “The department is implementing strong measures to ensure accountability, including the appointment of an independent monitor to supervise remedial actions.”
In a response from Block, the company stated that it does not concede to the findings in the New York case but is “satisfied to move forward.”
“Following our recent agreement with other state money transmission regulators, we have now settled with the New York Department of Financial Services, resolving issues primarily associated with past compliance practices of Cash App,” the company noted.
The regulator’s investigations covered the years 2021 and 2022 at the firm founded by Jack Dorsey, which revealed “significant compliance deficiencies” that led to a “high-risk environment open to misuse by criminal entities.”
Block has operated with a New York BitLicense since 2018, permitting it to engage in digital asset transactions within the state.