According to BlockBeats, Block, a fintech company owned by Twitter co-founder Jack Dorsey, is under investigation by federal prosecutors for compliance issues. Internal documents provided by a former employee to the prosecutor of the Southern District of New York reveal long-standing and widespread compliance failures within Block's Square and Cash App operations.
These issues include insufficient customer information collection for risk assessment, handling thousands of transactions involving economically sanctioned countries by Square, processing multiple cryptocurrency transactions for terrorist organizations by Block, and failure to accurately report most suspicious transactions involving credit cards, dollar transfers, and Bitcoin to the government.
Block has stated that it has established a comprehensive compliance program and continues to invest in addressing new threats and the ever-changing sanction regulatory environment. However, the former employee claims that the company did not take corrective measures after discovering violations. Moreover, an external consulting firm found nearly 50 deficiencies in Block's internal monitoring system last year.
Block's payment application Verse in Europe was also fined and ordered to rectify by the Bank of Lithuania last year for 'serious and systematic' violations of anti-money laundering and anti-terrorist financing laws. As one of the most popular mobile payment apps in the United States, Cash App has 56 million active users, but its banking partner Sutton Bank recently reached a settlement with the Federal Deposit Insurance Corporation (FDIC) over violations of banking secrecy laws. Financial regulators are stepping up compliance reviews of third-party payment institutions.
