Block Fined $40 Million for Cash App's Anti-Money Laundering Failures

Core Viewpoint - Block will pay a $40 million penalty due to significant failures in its anti-money laundering compliance program related to its Cash App, as identified by the New York Department of Financial Services (NYDFS) [1][3]. Company Compliance Issues - The NYDFS found that Block's compliance functions did not keep pace with the rapid growth of Cash App, leading to vulnerabilities and violations of financial regulations in New York [3]. - Block's handling of high-risk Bitcoin transactions was notably lax, allowing largely anonymous transactions to occur without proper scrutiny [3]. - A backlog of transaction alerts was created during Block's rapid growth between 2019 and 2020, which remained unaddressed for a significant period [3]. Regulatory Actions and Company Response - In addition to the monetary penalty, Block is required to retain an independent monitor to evaluate its compliance with NYDFS regulations [3]. - Block has cooperated with the investigation and has committed significant resources to address the identified issues [3][4]. - The company stated it did not admit to any findings from the NYDFS but expressed a commitment to promoting a safe financial system and enhancing compliance efforts [4]. Industry Context - The NYDFS's action reflects broader calls for updates to federal anti-money laundering rules, as discussed in a recent House Financial Services Committee hearing [5]. - Industry representatives emphasize the need for a strategic approach to AML compliance that involves collaboration between the banking sector, government, and other stakeholders [6]. - Concerns were raised regarding the timeliness of suspicious activity reports (SARs) filed by banks, suggesting that law enforcement often receives these reports too late to act effectively [7].