Compliance missteps inside Cash App have resulted in a hefty fine for its parent company, Block.

New York’s Department of Financial Services imposed a $40 million penalty on the Jack Dorsey-founded fintech after identifying shortcomings in its anti-money laundering and know-your-customer protocols.

The regulator said Block failed to scale compliance as it expanded its Bitcoin buying and selling services, which rolled out to the public in early 2018.

It cited a 2022 internal investigation that found more than 8,300 Cash App accounts linked to a Russian criminal network, according to Reuters.

“This case should serve as a warning,” Adrienne Harris, New York’s superintendent of financial services, said in a statement. “Compliance functions must evolve with the complexity and size of a company’s business, especially when crypto is involved.”

While details of the 2022 review only surfaced in this week’s settlement, Block’s compliance practices had already drawn scrutiny.

In April 2022, the company disclosed in a Securities and Exchange Commission filing that a former employee had improperly accessed data from over eight million Cash App users, raising questions about oversight and internal controls.

By mid-2024, US federal prosecutors were reportedly examining whether Block’s platforms, including Square and Cash App, allowed transactions involving sanctioned countries, including Russia.

This $40 million fine follows an $80 million settlement in January with 48 US state regulators over similar compliance issues.

In a December 2024 white paper, Block said it had developed a more sophisticated risk framework for Cash App, combining machine learning, behavioural analysis, and human review to detect fraud and block suspicious transactions.

Crypto market movers

• Bitcoin has gained 0.4% in value over the last 24 hours and is trading at $82,315.
• Ethereum is down 2.8% in the same period to $1,560.

What we’re reading

Kyle Baird is Inside Solana’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.