Arkansas and 47 state financial regulatory agencies have taken coordinated action against Block, Inc., for violations of Bank Secrecy Act (BSA) and anti-money laundering (AML) laws.
More than 50 million consumers in the United States use Cash App, Block’s mobile payment service, to spend, send, store and invest money.
In the settlement signed this week, Block agreed to pay an $80 million penalty to the state agencies, hire an independent consultant to review the comprehensiveness and effectiveness of its BSA/AML programs and submit a report to the states within nine months. Block then will have 12 months to correct any deficiencies found in the review after the report is filed.
Arkansas’ portion of the settlement is $1.797 million.
State regulators in Arkansas, California, Massachusetts, Florida, Maine, Texas and Washington State led the enforcement effort. A press release from the Arkansas Securities Department said Block cooperated with the states in the settlement.
Under BSA/AML rules, financial services firms are required to perform due diligence on customers, including verifying customer identities, reporting suspicious activity and applying appropriate controls for high-risk accounts. State regulators found Block was not in compliance with certain requirements, creating the potential that its services could be used to support money laundering, terrorism financing or other illegal activities.
“It is essential that nonbank financial institutions licensed in Arkansas create robust supervisory programs designed to achieve compliance with governing laws,” Securities Commissioner Susannah T. Marshall said in the release. “This collective action by state regulators demonstrates to all institutions that compliance with BSA/AML laws is of critical importance and must remain a top priority for the financial services industry.”
State financial regulators license and serve as the primary supervisor of money transmitters like Cash App. States license more than 700 money transmitters, and 99% of transmission activity through those firms is governed by the state-developed Money Transmission Modernization Act.
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