According to a recent SEC filing, Jack Dorsey's Block Inc. is negotiating with New York state regulators over compliance concerns related to its Anti-Money Laundering (AML) and Bitcoin programs.
Talks with NYDFS Regulators
Block Inc. has confirmed ongoing discussions with the New York State Department of Financial Services (NYDFS) to resolve issues involving alleged shortcomings in its compliance with the Bank Secrecy Act and AML regulations. Block states it is working towards a settlement, but details remain undisclosed. The company noted it has accounted for a liability related to the issue, although it does not consider the amount material to its 2024 financials.
AML Compliance Issues
Block has been under scrutiny from multiple US state agencies for over two years. Investigations from January 2021 to March 2023 found deficiencies in its AML compliance program, particularly in detecting and reporting suspicious transactions. In January, Block settled with several state regulators, agreeing to pay $80 million in penalties, though New York was not part of that agreement. The company is also under federal investigation for compliance practices in its cryptocurrency unit.
Other Regulatory and Tax Audits
The company also faces action from other authorities. The Consumer Financial Protection Bureau recently fined Block $55 million and required it to set aside between $75 million and $120 million for Cash App users. Additionally, Block is undergoing a tax audit by the San Francisco Treasurer and Tax Collector, which is demanding additional payments on Bitcoin-related revenue from 2020 to 2022. The investigation suggests Block processed transactions linked to sanctioned countries due to inadequate compliance checks.
Founded by Jack Dorsey, Block Inc. is under significant scrutiny by regulatory bodies for its AML programs. While the company aims to resolve current disputes, it faces rigorous examinations of its compliance with economic sanctions requirements.
