Cash app parent Block to pay $40 million to settle money laundering allegations

Block Inc. , the parent company of Cash app , has agreed to pay a $40 million settlement with the New York State Department of Financial Services . The settlement comes after the regulator uncovered “serious compliance deficiencies” in Block ’s anti-money laundering program and transaction monitoring processes. In a consent order, the financial regulator stated that deficiencies at Block—some involving cryptocurrencies—“created a high-risk environment vulnerable to exploitation by criminal actors.” The order claimed that Block’s system did not trigger blocks on bitcoin transactions involving terrorism-connected wallets until that exposure exceeded 10%. The regulator added that any involvement with wallets linked to terrorism is illegal.


What the regulator revealed after investigating Block

The regulator reviewed Block’s practices from early 2021 through September 2022 and determined that the company was not keeping pace with its rapid growth.

That resulted in Block’s “inability to fully comply with its obligation to effectively monitor, and thereafter report, the transactions being conducted on its platforms for suspected money laundering and other illicit criminal activity,” the order read.

The order further stated: “As the department has acknowledged, Cash App has devoted significant financial and other resources to compliance remediation and enhancements. We share the department’s dedication to addressing industry challenges and remain committed to investing across our operations to help promote a safe and healthy financial system.”

However, Block, without admitting to the department’s findings, stated it was glad to move past the issue.

Under the settlement terms, Block must appoint an independent monitor (chosen by the regulator) for one year to review and oversee enhancements to its anti-money laundering and sanctions programs. The consent order also clarified that its stipulations do not bind any federal, state, or law enforcement agencies.


Why the regulator was investigating Block

According to a report by NBC News from last year, former Block employees alleged that the company’s compliance systems were deeply flawed. These ex-employees, including one who spoke with federal prosecutors, alleged that Block processed numerous cryptocurrency transactions for terrorist groups and neglected to fix its faulty processes despite being alerted to breaches. Block launched bitcoin transactions via Cash App in 2018.

Apart from this, Square, a Block subsidiary, also allegedly handled thousands of transactions with entities in countries under US sanctions such as Cuba, Iran, Russia, and Venezuela, with many small-dollar transactions occurring as recently as 2023.