By Maya Patel

In re Commissioner of Financial Protection and Innovation v. Block, Inc.: On January 16, 2025, the Department of Financial Protection and Innovation (DFPI), in coordination with 47 state financial regulatory agencies, executed a settlement agreement with Block, Inc. (f/k/a Square, Inc.) (Block), parent company of the mobile payment platform Cash App. The settlement resolves allegations that Block failed to implement adequate measures required under the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws, exposing its platform to financial crimes, including potential money laundering and terrorism financing.

Block operates Cash App, a widely used digital financial service that facilitates sending, storing, and investing money for over 50 million consumers across the United States. The BSA imposes strict obligations on financial institutions, including money service businesses like Block, to detect and prevent financial crimes. Under federal AML regulations, Block is required to establish an effective risk-based AML program; conduct identity verification and due diligence on customers, particularly those in high-risk categories; monitor transactions and promptly report any suspicious activity through Suspicious Activity Reports; file Currency Transaction Reports for cash transactions exceeding $10,000; and ensure ongoing compliance with AML policies and procedures through audits and staff training.

A multistate examination conducted by the DFPI and state regulators from Arkansas, Massachusetts, Florida, Maine, Texas, and Washington (hereinafter Money Transmission Regulators) revealed that Block’s deficiencies in these areas posed a significant risk to the integrity of the financial system and necessitated enforcement action. The Money Transmission Regulators determined that, from at least January 2021 to March 2023, Block failed to develop and maintain a sufficient compliance program, significantly increasing the risk of exploiting its platform for illicit transactions. Moreover, the multistate examination found that Block did not properly conduct customer due diligence, failed to monitor suspicious activity, and neglected to file required reports with regulatory authorities.

Block agreed to a Settlement Agreement and Consent Order without admitting or denying the findings. Under the terms of the Settlement Agreement, Block has agreed to pay an $80 million penalty to participating state agencies, including $1.9 million to California; engage an independent consultant to conduct a comprehensive review of its BSA/AML program; submit a report within nine months outlining compliance deficiencies and recommendations for corrective action; and implement necessary reforms and remediate compliance gaps within 12 months of the report’s filing. The Consent Order requires that Block establish and maintain a compliance framework that meets federal and state regulatory expectations, ensuring that its payment platform is not used to facilitate illicit financial activity.