The agencies determined that the company had insufficient policies for money laundering through Cash App, its mobile payment service, without offering specifics about the shortcomings.
Regulators noted that Block was not fully compliant with key requirements such as customer due diligence and high-risk account management, which could lead to its services being used for money laundering, financing terrorism, or other illegal activities.
State regulators in Arkansas, California, Massachusetts, Florida, Maine, Texas, and Washington State led the multistate enforcement effort. Block cooperated with the states in the settlement.
Through a strong, nationwide regulatory framework, state financial regulators license and serve as the primary supervisors of money transmitters. States license more than 700 money transmitters, and 99% of transmission activity through those firms is governed by the state-developed Money Transmission Modernisation Act. To protect consumers and enforce safety and soundness requirements, state regulators coordinate the supervision of multistate firms and, when necessary, initiate enforcement actions.
Block did not have proper tools in place for its Cash App, such as verifying customers’ identity, reporting suspicious transactions, and applying appropriate controls on high-risk accounts, according to a settlement by the Conference of State Bank Supervisors.
The multi-statement settlement would also see the fintech firm hire an independent consultant to review its practices and report back to the states within nine months on any deficiencies. Block then will have 12 months to correct any deficiencies found in the review after the report is filed. The company agreed to take corrective actions internally, according to the Conference of State Bank Supervisors, which announced the settlement.
Block Inc representatives note that the issues were principally related to Cash App's prior compliance program, and the company has significantly increased investment in compliance and risk management. Block Inc declares that it shares its regulator’s commitment to addressing industry challenges and will continue to invest in compliance measures to promote a safe financial ecosystem.
Block's Cash App, had 56 million monthly users that spent, sent, stored, and invested money as of December 2023, and it saw over USD 248 billion in inflows in 2023.
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