Block Inc. Engages In Settlement Talks With New York Regulators Over AML Concerns

According to Cointelegraph, Block Inc., led by Jack Dorsey, is in discussions with New York state regulators to resolve allegations related to its Anti-Money Laundering (AML) and Bitcoin programs. The company disclosed in a February 24 filing with the Securities and Exchange Commission (SEC) that it is negotiating with the New York State Department of Financial Services (NYDFS) concerning aspects of its Bank Secrecy Act/AML and Bitcoin initiatives. Block stated that it is actively engaging with NYDFS to explore the possibility of settling the matter on mutually agreeable terms. The filing also highlighted that Block is involved in various legal, regulatory, and tax-related issues, including settlements, ongoing negotiations, and investigations. In January, NYDFS proposed settlement terms, and discussions have been ongoing, although specific details were not disclosed. Block has acknowledged a liability for this issue but considers it immaterial to its 2024 financial outlook. Between January 2021 and March 2023, Block was scrutinized by money transmission regulators from several U.S. states, who reportedly identified deficiencies in the company's AML Program, particularly regarding compliance with the Bank Secrecy Act. While Block reached a settlement with multiple state money transmission regulators in January, New York was not part of this agreement. The company did not admit or deny any wrongdoing but agreed to settle with various state regulators over these deficiencies, committing to pay $80 million in penalties, with payments expected to be completed by February 2025. As part of the settlement, Block is required to appoint an independent consultant to review and enhance its AML Program, with a Compliance Management Committee overseeing the implementation of corrective measures. Additionally, the Consumer Financial Protection Bureau investigated Block's Cash App in January concerning its handling of customer complaints and disputes. Block agreed to pay a $55 million civil penalty and between $75 million to $120 million in restitution to affected Cash App customers. Furthermore, Block is involved in a dispute with the San Francisco Treasurer and Tax Collector, who audited the company's tax receipts from 2020 to 2022 and claimed additional taxes were owed on Bitcoin-related revenue. The ongoing legal and regulatory challenges highlight the complexities faced by Block as it navigates compliance and operational issues in the evolving financial landscape.