Block Fined $40 Million for AML Failures in New York

Block, Inc., the parent company of Cash App, has been fined $40 million by the New York Department of Financial Services (NYDFS) for serious deficiencies in its anti-money laundering (AML) program. The penalty follows a regulatory investigation that uncovered multiple violations of New Yorks money transmitter and virtual currency regulations.

According to the NYDFS, Block failed to implement sufficient controls to comply with the Bank Secrecy Act (BSA) and AML standards. The investigation revealed critical shortcomings in customer due diligence procedures, risk management controls, and transaction monitoring systems.

One of the most concerning findings involved Block's handling of Bitcoin transactions. Regulators found that the company's compliance program allowed anonymous or high-risk crypto transactions to go largely unchecked, exposing the platform to potential abuse by bad actors.

The rapid expansion of Block's operations between 2019 and 2020 worsened the situation. During this period, the company experienced a significant increase in transaction volume without appropriately scaling its compliance infrastructure. As a result, a backlog of transaction alerts accumulated and remained unresolved for an extended period.

Under the terms of the settlement, Block must pay the $40 million penalty and appoint an independent monitor to review and evaluate its compliance improvements. This monitor will assess Block's efforts to strengthen its AML framework and ensure the company is better equipped to detect and prevent financial crimes.

Block has cooperated with the NYDFS throughout the investigation and has committed substantial resources toward remediation. A company spokesperson stated that Block is focused on enhancing its compliance systems and maintaining high regulatory standards moving forward.