Cash App Owner Block Must Pay $40 Million Settlement for ‘Compliance Deficiencies’

Cash App owner Block Inc. is paying $40 million to settle “serious compliance deficiencies.” An investigation into the company’s activities found flaws in Block’s anti-money laundering program and transaction monitoring processes.

The New York State Department of Financial Services began looking into Block’s practices in 2021. Upon concluding the examination in 2022, the agency determined the fintech was growing faster than its compliance procedures, leading to the inability to properly monitor and report suspicious transactions and potentially illegal activity.

The deficiencies noted by the New York department “created a high-risk environment” that could easily be manipulated by criminals. For instance, bitcoin is tradeable on Cash App, but all crypto transactions involving suspected terrorism-connected accounts must be stopped. Yet, the app purportedly did not halt these transactions until exposure exceeded 10%. According to the government watchdog, any transfers to terrorism-connected wallets are illegal.

Cash App Responds to Settlement

Block did not admit any wrongdoing. However, it seemingly accepted the consequences and promised to improve its compliance procedures.

“As the department has acknowledged, Cash App has devoted significant financial and other resources to compliance remediation and enhancements,” Block said in a statement, per NBC News. “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.” 

In addition to the $40 million settlement, Block’s anti-money laundering and compliance programs will be continually reviewed by an independent monitor, selected by New York state, for another year. The monitor will adjust procedures as needed and report findings to regulators.

In a separate investigation conducted by NBC News, employees of Square, another Block company, allegedly allowed numerous transactions with entities in countries subject to economic sanctions. The transactions, which mostly involved small amounts, went to countries such as Cuba, Iran, Venezuela, and Russia, all of which were under U.S. sanctions at the time.

Late last year, Cash App’s rival Dave Inc. was accused of violating federal law. The Federal Trade Commission accused the fintech of failing to fulfill an advertised promise. To promote the app, Dave offered $500 to new users, but reportedly, the money was never sent, and the cancellation process was overly complicated.