Block has agreed to pay New York’s Department of Financial Services a $40m fine over alleged compliance failures related to money laundering in its Cash App service.
The company will also appoint an independent monitor to assess its Bank Secrecy Act and anti-money laundering programme.
According to the New York financial regulator, Block had significant gaps in anti-money laundering and know-your-customer programmes.
The shortcomings reportedly left the company vulnerable to illegal activities, including money laundering and terrorism financing.
Also, the regulator found inadequate customer due diligence and risk-based controls.
New York’s superintendent of financial services Adrienne Harris said: “The compliance functions must keep pace with company growth or expansion at both traditional financial services companies and emerging cryptocurrency platforms.”
In January, Block agreed to pay an $80m fine following a joint enforcement action by 48 state financial regulators over similar issues.
The agreement included hiring an independent consultant to evaluate its compliance programmes and report any deficiencies.
The Conference of State Bank Supervisors confirmed that Block has committed to implementing corrective actions internally.
Block did not admit or deny the allegations but stated that the New York settlement resolves all outstanding state money transmission licensing matters.
The company has been under scrutiny for its oversight of bitcoin transactions, which began in 2018 through Cash App, contributing to an increased vulnerability to criminal exploitation.
According to the New York regulator, Block’s internal investigation in 2022 uncovered 8,359 Cash App accounts linked to a Russian criminal network.
