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Block Fined $255 Million Over AML and Fraud Control Failures at Cash App

Flexi Group

Block, the U.S. financial services company founded and led by Jack Dorsey, has agreed to pay $255 million in fines and refunds following coordinated enforcement actions that uncovered weaknesses in anti-money laundering (AML) and fraud prevention controls at its Cash App platform.


Block Fined $255 Million Over AML and Fraud Control Failures at Cash App

Cash App, a widely used payment service with over 50 million American users, has faced mounting scrutiny from regulators over allegations of lax AML and fraud prevention systems. A coalition of 48 state regulators imposed an $80 million fine on Block for violations of the Bank Secrecy Act (BSA) and AML laws. As part of the settlement, Block is required to hire an independent consultant to assess its compliance program and address any deficiencies within 12 months.


In a separate action, the Consumer Financial Protection Bureau (CFPB) ordered Block to pay up to $120 million in consumer redress and a $55 million penalty due to insufficient fraud protections on Cash App.


CFPB Director Rohit Chopra strongly criticized Cash App’s approach to handling unauthorized transactions, stating, “Cash App created the conditions for fraud to proliferate. When things went wrong, it flouted its responsibilities and burdened local banks with problems the company caused.”


The CFPB found that Cash App’s investigations into disputed transactions were “woefully incomplete.” Users who reported fraud were frequently directed to pursue chargebacks with their banks, only for Block to later deny those requests.


As part of the CFPB’s order, Block must implement 24-hour live customer service, conduct thorough investigations into fraud complaints, and issue refunds when appropriate.


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In response to the enforcement actions, Block stated that the issues raised by regulators were “historical” and do not reflect the current state of the Cash App platform. “While we strongly disagree with the CFPB’s mischaracterizations, we made the decision to settle this matter in the interest of putting it behind us and focusing on what’s best for our customers and our business,” the company said.


State regulators, addressing the separate $80 million penalty, warned that Block’s failure to comply with BSA/AML requirements exposed its platform to potential misuse for money laundering, terrorism financing, and other illicit activities.


A Block spokesperson acknowledged that the concerns primarily stemmed from Cash App’s earlier compliance practices, adding that the company has since significantly increased its investment in compliance and risk management.


The crackdown on Cash App aligns with broader efforts by the CFPB to address systemic issues in the digital payments industry. In December, the regulator filed a lawsuit against Zelle’s operator, Early Warning Services, and several major banks for allegedly allowing fraud to persist on their platform.

By fLEXI tEAM


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