Block block took 40 million US dollars for the AML errors of the cash app

Block pays a penalty of $ 40 million for anti-money laundering defects in his cash app.

The New York Ministry of Financial Services (NYDFS) announced the punishment on Thursday (April 10) and said that the supervisory authority found “significant failure” in the Block Secrecy Act/Anti-money laundering (BSA/AML) Compliance Program (BSA/AML).

“All financial institutions, whether traditional financial services companies or aspiring cryptocurrency platforms, must adhere to strict standards that protect consumers and the integrity of the financial system,” said NYDFS superintendent Adrienne Harris in a press release.

“Compliance functions must keep up with the growth or expansion of the company. The quick growth of the Cash app from Block does not funize a robust compliance with compliance functions that cause risks and vulnerabilities that have violated the rules for financial services active in New York.”

“In particular, the lax treatment of Bitcoin transactions with high risk of block enabled it largely anonymous transactions without proper examination,” says the press release. “In addition, the quick growth of Block between 2019 and 2020 contributed to a serious gap to the transaction warning that the block was not taken into account for a significant period.”

Apart from the fine, Block must maintain an independent monitor in order to carry out a comprehensive assessment of its compliance with the NYDFS regulations. The department said that Block had worked together with the investigation and “committed significant financial and other resources” in order to fix the problems identified by the examination.

“Block has not admitted any of the results of the department and we look forward to putting this matter behind,” said the company in a statement that Pymnts presented. “We share the commitment of the department for coping with the industry challenges and are still obliged to invest in our business activities in order to promote a safe and healthy financial system.”

On Thursday, the company published an explanation on its website that the investigation of the investigation was the compliance efforts of the cash app, which included a Bitcoin monitoring program with things such as “Enhanced Due Diligence” and real-time transaction blocking.

“This is a permanent effort,” said the company. “We endeavor to continue to invest in security investments, and the complete compliance with the letter and the law if our program is constantly evolving.”

The NYDFS campaign takes place in the middle of the updates of the federal money laundering (AML), rules, the subject of a recently negotiated hearing of the financial services committee of the House Financial Services.

Darrin McLaughlin, Executive Vice President and Chief AML and sanction officers for Flagstar Bank, told the committee on behalf of the American Bankers Association.

“We need a strategic approach.”

Banks have accepted the AML compliance and anti-Frag programs to identify anomal patterns of fund currents. However, McLaughlin found a problem with the suspicious activities reports (SARS) that banks have to submit.

“It is often too late until the law enforcement receives the reports,” he said, adding that the “Federal Government has a database that breaks out with information that should be passed on with the private sector.”