Block fined for AML lapses | PaymentsSource

Block has had a difficult 2025 with risk regulators, with the latest ding being a $40 million fine in New York over shortcomings in customer and transaction vetting. 

The New York State Department of Financial Services’ consent order said an investigation found “significant failures” in Block’s Bank Secrecy Act and anti-money-laundering compliance. These failures violated New York’s money transmitter and virtual currency rules. Block has faced other recent fines over similar issues. The Consumer Financial Protection Bureau and the Conference of State Bank Supervisors in January fined Block a total of $255 million over fraud protection and AML violations.   

State and federal regulations require financial service providers to perform due diligence on customers, such as verifying identities, reporting suspicious activity and applying controls for risky users. New York regulators said violations were linked to Cash App, Block’s money transfer app. Cash is a major part of both the consumer and merchant-facing side of Block’s business, serving as a portal to the company’s payment and value-added services. Cash also provides a funding source for Block’s crypto trading and it’s marketed within Afterpay, Block’s buy now/pay later unit. 

New York’s investigation found gaps in Block’s compliance, including inadequate customer due diligence, failure to implement sufficient risk-based controls designed to prevent money laundering and illicit activity. It also failed to effectively and timely monitor transactions. 

Block’s lax treatment of high-risk bitcoin transactions allowed largely anonymous transactions to proceed without proper scrutiny, New York regulators said, adding that Block’s rapid growth between 2019 and 2020 contributed to a severe transaction alert backlog, which Block left unaddressed for a significant period of time.

“The rapid growth of Block’s Cash App absent a robust compliance function created risk and vulnerabilities that violated the rules financial services companies operating in New York must adhere to. The Department is taking decisive steps to ensure accountability, including the appointment of an independent monitor to oversee corrective measures,” said Adrienne A. Harris, superintendent of New York State’s Department of Financial Services, in a release.

The CFPB’s earlier investigation found that Block did not provide live customer service agents for Cash, which prevented fraud issues from being addressed. In some cases, consumers were led to sites run by crooks pretending to be Cash App customer service representatives. The CFPB also said Block engaged in deception by misrepresenting that it protected consumers from unauthorized transfers.

In an email, Block’s public relations department told American Banker “following our recent settlement with our other state money transmission regulators, we have now reached an agreement with the final remaining state money transmission regulator, New York Department of Financial Services, to resolve a matter principally related to Cash App’s past compliance program. This marks the resolution of all previously pending state money transmission license matters.”

Block said it did not admit to any of the department’s findings, and Cash App has devoted “significant financial” and other resources to compliance remediation and enhancements. Analysts say the fines have already been baked into Block’s performance. Block put new compliance controls in place in 2023, and the fines’ impact on Block’s monthly active user growth has already been felt, according to a research note from Jeffries. 

Block is the second large payment company to face AML fines this week. The Bank of Lithuania fined U.K. fintech Revolut about $3.8 million for violating the country’s AML rules.