Block (XYZ) will pay a $40 million penalty for major failures in its anti-money laundering compliance program on the Cash App platform, the New York State Department of Financial Services said on Thursday.
Superintendent Adrienne Harris said the company violated rules related to money transmission and virtual currency. Block is also required to hire an independent monitor to review its compliance and improvement efforts.
Block has been licensed in New York to offer money transfer services since 2013 and virtual currency services since 2018. The Department's investigation found "critical" flaws in Block's Bank Secrecy Act/Anti-Money Laundering, or BSA/AML program, Harris said, adding that the company also failed to properly review high-risk Bitcoin activity.
"Block's rapid growth, coupled with inadequate BSA/AML controls, created an environment vulnerable to criminal exploitation," Harris said.
Block told MT Newswires that it has reached a final settlement with the regulator, resolving all outstanding state money transmission license matters related to Cash App's past compliance issues. "Block did not admit to any of the department's findings, and we are pleased to put this matter behind us," it said.
Shares of the company were down 3.3% in recent trading.
Price: 54.15, Change: -1.84, Percent Change: -3.29
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