Oregon, along with 47 other state financial regulatory agencies, has taken decisive action against Block Inc., the parent company of the popular payment service CashApp. This enforcement stems from violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws. According to an announcement by the Department of Consumer and Business Services, the settlement agreement calls for Block to pay an $80 million penalty to these state agencies.
The agreement, reached earlier this week, does not only involve the monetary penalty. Block has also agreed to hire an independent consultant to assess the effectiveness of its BSA/AML program. The company must then submit a comprehensive report to the states within nine months. Following the report, Block will have 12 months to rectify any deficiencies identified, as per the Department of Consumer and Business Services. This settlement is particularly relevant given that CashApp is utilized by more than 50 million consumers in the U.S. for managing their finances.
As part of the settlement, TK Keen—the DFR administrator—emphasized the importance of upholding the integrity of the financial system. "Oregon continues to work alongside other states to protect consumers and hold companies accountable," said Keen. "This settlement reinforces our commitment to safeguarding the financial system and ensuring compliance with laws designed to prevent illicit activitym" as stated by the Department of Consumer and Business Services. Their coordinated efforts underscore a broader commitment to hold financial services accountable for their regulatory obligations.
The importance of following BSA/AML rules cannot be understated. Financial institutions are required to conduct due diligence on their customers, which includes steps such as verifying identities, reporting suspicious activities, and implementing controls for high-risk accounts. Despite these regulations, state regulators discovered that Block was not in full compliance with certain aspects of the law, posing a potential risk that its services could be exploited for money laundering or supporting terrorism. The action taken by these regulatory bodies underscores their key role in maintaining a robust financial oversight system within the United States.
