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Published on January 17, 2025
Block, Inc. Settles for $80 Million Amid Nationwide Crackdown on Bank Secrecy Act ViolationsSource: Unsplash/ Giorgio Trovato

The Department of Commerce and Consumer Affairs (DCCA), in collaboration with 47 state financial regulatory agencies, has taken enforcement action against Block, Inc. for non-compliance with the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations. The action, which has been widely reported in financial news, highlights the importance of regulatory oversight in the financial industry. Block's Cash App, used by over 50 million consumers across the United States, provides a platform for various financial services, including money transfers and investments, as detailed in the DCCA's recent press release.

Under the terms of a settlement finalized earlier this week, Block has agreed to pay an $80 million penalty to the state agencies involved. In addition to the financial penalty, Block is required to hire an external consultant to assess the effectiveness and compliance of its Bank Secrecy Act (BSA) and anti-money laundering (AML) program. The consultant’s findings must be submitted to the state agencies within nine months. Following the report, Block will have 12 months to address any identified deficiencies.

Commenting on the significance of the collaborative effort, Dwight Young, the Commissioner of Financial Institutions, stated, “We are dedicated to protecting consumers and ensuring the integrity of the financial services offered in Hawai‘i.” Young emphasized the collective resolve of state regulators to maintain a watchful eye over regulatory compliance to sustain consumers' trust and confidence nationwide. Arkansas, California, Massachusetts, Florida, Maine, Texas, and Washington state were among the leaders in steering the multistate enforcement initiative, with Block showing cooperation in reaching the settlement, according to the DCAA.

In accordance with BSA/AML rules, it is incumbent upon financial service entities to conduct customer due diligence, confirming identities, tracking down suspicious activities, and implementing reinforced controls for accounts presenting a high risk. However, state regulators pinpointed that Block had been remiss in adhering to certain obligations, leaving a window open for its services to potentially bolster money laundering, terrorism financing, and other illicit pursuits. The coordination amongst state regulators, known as Networked Supervision, is touted to offer consistency and collaboration and preserves states' power to take direct action when needed. Further details can be found on the state regulatory framework for money transmission.

The oversight extends beyond Block, Inc. State financial regulators are responsible for licensing and overseeing more than 34,000 nonbank financial service companies through the Nationwide Multistate Licensing System (NMLS). This broad array includes mortgage companies, money services businesses, consumer finance providers, and debt collectors. Hawaiian residents with inquiries concerning the enforcement action against Block have been directed to reach out to the DCCA Division of Financial Institutions for clarification or visit the NMLS Consumer Access to ensure the legitimacy of companies in Hawaii and to view past enforcement actions.