Jack Dorsey’s Block to pay $40m over compliance failures on Cash App

Block, Inc., the financial services company led by Jack Dorsey, will pay a penalty of $ 40 million to the New York Department of Financial Services (NYDFS) on the failures of its anti-white-white and virtual currency compliance program, regulators announced on Thursday.

THE settlement follows a NYDFS investigation which found blocks Cash application The platform had critical deficiencies in the reasonable diligence of customers, risk-based controls and transactions monitoring.

These gaps, according to regulators, have left the platform vulnerable to criminal exploitation, in particular thanks to a largely anonymous bitcoin (BTC) Transactions that have escaped an appropriate examination.

“Compliance functions must monitor the rate of business growth or expansion,” said Superintendent A. Harris, superintendent A. Harris. “The rapid growth of the application in block species in the absence of a robust compliance function has created risks and vulnerabilities that have violated the rules that financial services companies operating in New York must respect.”

Independent instructor

In addition to the fine, a block will be necessary to maintain an independent monitor to supervise the improvement of its compliance systems and ensure alignment with regulatory standards of the state.

The company has been authorized to carry out a money transmission in New York since 2013 and has had a virtual currency license as part of the state Bitlicense regime since 2018.

The application action comes a few months after the block paid 80 million dollars to 48 state financial regulators for separate LMA violations. According to the NYDFS, his latest survey revealed a backlin of unresolved transaction alerts between 2019 and 2020, which increased the risk of illegal financial activity on the platform.

Block has cooperated with the NYDFS throughout the investigation and has already started to invest in compliance sanitation.

The regulator’s consent order stresses that all financial institutions – the cryptographic platforms included – must maintain effective controls to protect the integrity of the financial system.