Block Inc., developer of the popular Cash App digital wallet, agreed to pay $80 million for violating money-laundering and other regulations, the Maine Bureau of Consumer Credit Protection announced Wednesday.
The coalition of regulators found that Block violated the Bank Secrecy Act and antilaundering laws designed to protect the banking sector from illicit use, the bureau said. Those laws require financial service firms to verify customer identities, report suspicious activity on their platforms and apply certain controls for accounts considered “high-risk,” the bureau said.
Maine regulators were among agencies in seven states leading the enforcement effort, which included 48 states. The money is split into roughly $79 million in penalties and $925,000 in administrative costs, according to the settlement.
Linda Conti, superintendent of the bureau, which is within the Maine Department of Professional and Financial Regulation, said she hopes the settlement “sends a strong message to the industry to get their platforms under control.”
“Transmitting funds outside of the banking system, where the Electronic Funds Transfer Act provides consumer protections, is risky for consumers because the systems are not well-managed,” Conti said in a written statement.
The roughly $79 million in penalties will be split among the 48 states involved, Conti later said. Maine should receive around $1.5 million, and “we should have a final figure in a couple of days,” she said in an email Wednesday night.
The state will also recover $75,000 in costs associated with working the case, Conti said.
In addition to the fines, Block must hire an independent consultant to review its legal policies and submit a report to the 48 states within nine months. After that, Block will have one year to correct any issues found in the review, the bureau said.
“My biggest concern is scammers telling consumers to use Cash App to send payments. There is no way to later contest it as fraudulent like you have with your Visa card,” Conti said. “They do not have the proper controls in place to detect and stop frauds or money laundering.”
More than 50 million Americans use Cash App to spend, store and transfer money, the bureau said. Conti said she was not sure how many Mainers use the service.
A Block spokesperson said the settlement involved “Cash App’s past compliance program.”
“As Cash App has grown, we’ve significantly increased our investment in compliance and risk management, while serving millions of customers with critical, affordable financial services,” the company said in an emailed statement Wednesday night. “We share our regulators’ commitment to addressing industry challenges and will continue to invest across our operations to help promote a safe and healthy fin-tech ecosystem.”
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