Block to Pay $40M Settlement to New York Over Faulty Money-Laundering Controls

Key Points:

• The blockchain and payments company founded by Jack Dorsey has agreed to a $40 million settlement with New York over money-laundering controls.

• The company stated that this will be the final state-based settlement related to its Cash App.

Block Inc. has agreed to pay $40 million to settle claims from the New York Department of Financial Services (DFS) regarding inadequate money-laundering controls, as stated in a Thursday announcement from the regulator.

Block, the company behind Cash App for peer-to-peer payments and formerly known as Square Inc., is required by the New York regulator to address the issues and submit to oversight from an external monitor. The regulator pointed out that the company's "lenient handling of high-risk bitcoin transactions" in previous years allowed nearly anonymous transactions to be processed on its platform.

"The swift expansion of Block’s Cash App, lacking a solid compliance framework, introduced risks and weaknesses that breached the rules financial services firms must comply with in New York," stated NYDFS Superintendent Adrienne Harris. "The department is taking decisive measures to ensure accountability, including appointing an independent monitor to oversee corrective actions."

In a statement, Block clarified that it did not admit to any of the findings in the New York case but expressed satisfaction in resolving the issue. 

"After settling with other state money transmission regulators, we have now reached an agreement with the final remaining state regulator, the New York Department of Financial Services, to address issues related to Cash App's past compliance program," the company stated.

The regulator's investigation covered the years 2021 and 2022 at Block, the company founded by Jack Dorsey. The resulting consent order highlighted "serious compliance deficiencies" that created "a high-risk environment susceptible to exploitation by criminal actors."

Since 2018, Block has held a New York BitLicense, allowing it to operate digital asset services in the state.