Block Settles for $40 Million After AML Lapses in Cash App’s Bitcoin Transactions

An investigation has revealed significant deficiencies in the company's anti-money laundering (AML) compliance, particularly in relation to its Cash App, which facilitates Bitcoin transactions. The NYDFS disclosed that Block's compliance functions did not keep pace with the company's rapid expansion, making it susceptible to money laundering and illicit activities. One of the concerns raised was Block's inadequate scrutiny of high-risk Bitcoin transactions, allowing mostly anonymous transactions to be processed without proper checks. Despite these issues, NYDFS acknowledged Block's cooperation with the investigation and its subsequent corrective actions. The settlement requires Block, Inc. to hire an independent monitor to supervise compliance improvements and ensure alignment with regulatory requirements in the future. This settlement serves as a cautionary tale for other cryptocurrency companies on the importance of maintaining strong AML compliance systems as they expand and diversify their services. NYDFS has been actively regulating the crypto industry, implementing the BitLicense regime in 2015 to enforce strict rules for digital asset companies operating in New York.