Block, Inc. Slammed with $40M Fine for Shocking Anti-Money Laundering Lapses

Hold onto your hats, crypto fans! Jack Dorsey's Block, Inc. just got hit with a massive $40 million penalty from the New York Department of Financial Services (NYDFS). Why? Because their anti-money laundering and virtual currency compliance program was a total disaster, according to regulators who dropped the bombshell news on Thursday.

The NYDFS investigation revealed that Block's Cash App was riddled with gaping holes in customer due diligence, risk-based controls, and transaction monitoring. It's like they were practically inviting criminals to come and play!

Regulators are sounding the alarm, warning that these massive gaps left the platform wide open for exploitation, especially through those sneaky, anonymous Bitcoin transactions that slipped right past their radar.

NYDFS Superintendent Adrienne A. Harris isn't pulling any punches, stating, "Compliance functions must keep pace with company growth or expansion. The rapid growth of Block's Cash App absent a robust compliance function created risk and vulnerabilities that violated the rules financial services companies operating in New York must adhere to." In other words, Block's been playing fast and loose, and now they're paying the price.

Independent Monitor to the Rescue

But wait, there's more! On top of the hefty fine, Block's been ordered to bring in an independent monitor to whip their compliance systems into shape and make sure they're playing by the state's rules.

Now, you might be thinking, "Haven't I heard this story before?" And you'd be right! Block's been licensed to do money transmission in New York since 2013 and got their BitLicense in 2018. But just a few months ago, they were already shelling out $80 million to 48 state financial regulators for a different set of AML violations. Talk about a repeat offender!

The NYDFS probe uncovered a mountain of unresolved transaction alerts piling up between 2019 and 2020, making it even easier for shady characters to do their dirty work on the platform.

To Block's credit, they've been cooperating with the NYDFS throughout the investigation and are already pouring money into fixing their compliance mess.

But the regulator's consent order is crystal clear: all financial institutions, crypto platforms included, need to step up their game and maintain ironclad controls to keep the financial system safe and sound. No more excuses, Block - it's time to get your act together!