Arkansas and 47 other US states have taken action against Block, Inc., the parent company of Cash App, over alleged violations of Bank Secrecy Act (BSA) and anti-money laundering (AML) laws. The settlement, which includes a $1.797 million fine from Arkansas, comes after an investigation revealed that Block failed to properly verify customer identities, report suspicious activity, and apply controls for high-risk accounts.
As a result, Cash App users, who number over 50 million in the US, could have seen their transactions used to support money laundering, terrorism financing, or other illicit activities. The states, which led the enforcement effort, found that Block’s BSA/AML programs were not comprehensive enough.
Block has agreed to pay an $80 million penalty and hire an independent consultant to review its BSA/AML programs over the next nine months. After a report is filed, the company will have 12 months to address any deficiencies identified. The settlement aims to emphasize the importance of compliance with BSA/AML laws for non-bank financial institutions like Block.
State regulators license and oversee money transmitters, including Cash App, which handles more than 99% of its transmission activity through state-developed rules. This collective action by state regulators highlights the need for robust supervisory programs to ensure compliance with governing laws.
Source: https://www.arkansasbusiness.com/article/arkansas-joins-80-million-enforcement-action-against-cash-app-block