Key takeaways:
- Block (formerly Square) will pay a $40 million civil fine to New York’s financial services regulator.
- The fine settles charges that Block failed to adequately police and stop money laundering on its Cash App mobile payment service.
- Block will also hire an independent monitor to oversee improvements to its anti-money laundering and compliance programs.
- The settlement highlights the increasing regulatory scrutiny on digital payment platforms and virtual currency businesses.
Introduction
Block Inc., the digital payments company led by Twitter co-founder Jack Dorsey, has agreed to pay a $40 million civil penalty and hire an independent monitor to settle charges by New York’s financial services regulator. The charges allege that Block failed to adequately implement anti-money laundering (AML) and compliance measures on its popular Cash App mobile payment service, allowing potentially illicit transactions to go unchecked.
Detailed Analysis
According to the New York Department of Financial Services (NYDFS), an investigation revealed “critical gaps” in Block’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program, including inadequate customer due diligence, failure to implement sufficient risk-based controls, and failure to effectively monitor transactions.
“All financial institutions, whether traditional financial services companies or emerging cryptocurrency platforms, must adhere to rigorous standards that protect consumers and the integrity of the financial system,” said NYDFS Superintendent Adrienne Harris. 1
The NYDFS cited Block’s “lax treatment of high-risk Bitcoin transactions,” which allowed largely anonymous transactions to proceed without proper scrutiny. Additionally, the regulator noted that Block’s rapid growth between 2019 and 2020 contributed to a severe transaction alert backlog, which Block left unaddressed for a significant period.
Under the terms of the consent order, Block will retain an independent monitor to carry out a comprehensive evaluation of its compliance with NYDFS regulations. The company has already committed resources to remediate the identified issues, according to the NYDFS. 2
The settlement comes amid increased regulatory attention on digital payment platforms and virtual currency businesses. Earlier this month, New York Attorney General Letitia James urged Congress to pass federal legislation regulating cryptocurrency companies, citing the need to protect investors from scams and fraud. 3
Industry experts have also called for updates to federal anti-money laundering rules. In a recent House Financial Services Committee hearing, Darrin McLaughlin, executive vice president and chief AML and sanctions officer for Flagstar Bank, testified on behalf of the American Bankers Association, stating, “We need a strategic approach” that includes the banking sector, the government, and other stakeholders. 4
Conclusion
The $40 million settlement with Block underscores the increasing regulatory scrutiny on digital payment platforms and virtual currency businesses. As these technologies continue to evolve and gain mainstream adoption, regulators are focused on ensuring robust compliance programs are in place to prevent money laundering, illicit financing, and other illegal activities.
For retail investors, the settlement serves as a reminder to consider regulatory risks when evaluating investment opportunities in the fintech and cryptocurrency spaces. While innovative payment solutions and digital assets offer potential returns, companies operating in these industries must navigate a complex regulatory landscape and prioritize compliance to mitigate risks and maintain consumer trust.
References
1 New York Department of Financial Services (2025, April 10). “Superintendent Adrienne A. Harris Secures $40 Million Settlement with Block, Inc. for Inadequate Anti-Money Laundering Program and Virtual Currency Compliance Failures on Cash App Platform.” Retrieved April 10, 2025.
2 New York Department of Financial Services (2025, April 10). “In the Matter of Block, Inc.” Retrieved April 10, 2025.
3 Office of the New York Attorney General (2025, April 8). “Attorney General James Urges Congress to Pass Federal Legislation to Regulate Cryptocurrency Industry.” Retrieved April 10, 2025.
4 PYMNTS.com (2025, April 10). “Congress Urged to Reform AML Rules, Repeal Corporate Transparency Act Amid Rising Fraud Costs.” Retrieved April 10, 2025.
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