US-based financial services and technology company Block has agreed to pay an $80m fine following a joint enforcement action by 48 state financial regulators.
According to the multistate settlement, Block has violated the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws, which protect the financial system from illicit use.
Its mobile payment service, Cash App, is used by more than 50 million consumers for spending, sending, storing, and investing money.
Block agreed to pay the assessed penalty to the state agencies and hire an independent consultant to review the comprehensiveness and effectiveness of its BSA/AML programme.
Also, it has agreed to submit a report to the states within nine months. Block then will have 12 months to correct any deficiencies found in the review after the report is filed.
State regulators in Arkansas, California, Massachusetts, Florida, Maine, Texas, and Washington State led the enforcement efforts, and Block cooperated with the states.
The BSA/AML rules require financial services firms to perform due diligence on customers, including verifying identities, reporting suspicious activities, and applying risk controls.
State regulators found that Block was non-compliant with certain requirements such that its services could facilitate money laundering or other illegal practices.
The financial regulators maintain a sophisticated regulatory framework and serve as primary supervisors of money transmitters.
They license more than 700 money transmitters, with 99% of transmission activity governed by the Money Transmission Modernization Act.
The regulators will supervise financial firms and initiate enforcement actions when needed.
This coordination, dubbed Networked Supervision, supports consistency and collaboration while preserving states’ authority to take direct action.
State financial regulators supervise more than 34,000 nonbank financial service companies through the Nationwide Multistate Licensing System.
The financial service providers include mortgage companies, money services businesses, consumer finance providers, and debt collectors.
