Global: Block Fined $40M for AML and Compliance Failures on Cash App Platform

Digital payments firm Block Inc. has agreed to pay a $40 million penalty following regulatory action by the New York Department of Financial Services (NYDFS) over what the authority described as “significant failures” in its anti-money laundering (AML) controls and virtual currency compliance framework linked to its popular Cash App platform.

Licensed to operate as a money transmitter in New York since 2013 and to conduct virtual currency transactions through Cash App since 2018, Block came under scrutiny for its inadequate Bank Secrecy Act/Anti-Money Laundering (BSA/AML) programme, which was found to have substantial weaknesses in customer due diligence, risk assessment, and transaction monitoring systems.

According to findings from NYDFS, Block’s compliance deficiencies included poor implementation of risk-based controls, failure to effectively monitor transactions in a timely manner, and a “lax treatment” of high-risk Bitcoin transfers, allowing largely anonymous cryptocurrency transactions to bypass appropriate compliance checks.

The regulator noted that a surge in user growth between 2019 and 2020 exacerbated internal weaknesses, resulting in a backlog of unreviewed transaction alerts—a gap that Block failed to address promptly.

In addition to the $40 million penalty, Block will now be required to engage an independent compliance monitor to assess its adherence to NYDFS regulations and oversee its remediation efforts.

Adrienne Harris, Superintendent of Financial Services, emphasized the importance of scaling compliance with business growth:

“Compliance functions must keep pace with company growth or expansion. The rapid growth of Block’s Cash App, absent a robust compliance function, created risks and vulnerabilities that violated the rules financial services companies operating in New York must adhere to.”

This enforcement action reinforces the growing regulatory emphasis on compliance management systems, regulatory risk mitigation, and financial crime prevention in the digital finance space. The case highlights the urgent need for fintechs and virtual asset providers to invest in regulatory technology solutions, including AML software, compliance automation, and real-time monitoring tools to meet the evolving demands of regulatory enforcement.

As regulatory scrutiny intensifies globally, Block’s case serves as a critical reminder of the operational and reputational risks associated with inadequate compliance frameworks in high-growth digital payment ecosystems.