Block, Inc. pays $80 million for compliance failures
- Block, Inc. agreed to an $80 million settlement with Maryland and 47 other states due to compliance violations.
- The Maryland Department of Labor found Block failed in customer due diligence and suspicious activity reporting.
- This settlement mandates Block to improve its compliance program to prevent fraud and protect consumers.
In late 2023, Maryland and 47 other states reached a significant settlement with Block, Inc., the parent company of Cash App, involving a payment of $80 million. This resolution was prompted by allegations of violations regarding bank secrecy and anti-money laundering laws related to Block's mobile payment services, which are widely used across the United States. The Maryland Department of Labor emphasized that these compliance failures potentially exposed consumers to risks associated with illegal activities, such as fraud. The inquiry uncovered several deficiencies in Block's operations, particularly concerning customer due diligence practices and the reporting of suspicious activities. Amid increasing scrutiny on technology companies in the financial sector, the Maryland Department of Labor's Office of Financial Regulation mandated actionable reforms. Officials reported that Block was found lacking in its controls over high-risk accounts and failed to adequately manage the inherent risks of operating a mobile payment application used by more than 50 million Americans. The regulations set forth by these departments are crucial to maintaining integrity in the financial marketplace, ensuring that services provided to consumers are not exploited by malicious actors. Furthermore, the settlement stipulates that Block must enlist the services of an independent consultant. This consultant will conduct a thorough evaluation of Block's compliance framework, with a detailed report expected within nine months of the settlement. Following this report, Block will have 12 months to rectify any deficiencies identified by the consultant. The firm committed to improving its compliance structure to prevent future mismanagement and safeguard user transactions. Maryland officials stressed the importance of mobile payment applications in the contemporary economy, asserting that it is critical to uphold rigorous compliance to counteract potential fraud risks. The settlement reinforces the message that regulatory bodies will not tolerate inadequate oversight, especially when consumer protections are at stake. The ramifications of this settlement may ripple across the industry, serving as a warning to other companies to prioritize compliance or face stringent regulatory consequences in a rapidly evolving digital landscape.