We learned yesterday that federal prosecutors are investigating Block for widespread compliance lapses.

NBC News broke this story after interviewing a former Block employee. This person provided roughly 100 pages of documents that showed transactions involving entities in countries subject to U.S. sanctions. 

This person lambasted Block’s compliance program, saying, “From the ground up, everything in the compliance section was flawed.” A second person was able to corroborate that statement.

Block has argued that it has reported thousands of transactions to OFAC and that the company received a no-action letter regarding this matter. 

I liked Simon Taylor’s take. He argues that we can’t have financial inclusion and frictionless experiences without some AML risk. He also said that KYC is broken and that every large-scale financial institution will eventually be fined for some kind of failing in this area.

This is a never-ending fight for fintechs and banks. It will be interesting to see what the Southern District of New York finds in their investigation. Stay tuned.

Featured

> Prosecutors are examining financial transactions at Block, owner of Cash App and Square

By Gretchen Morgenson

Internal documents indicate Block processed crypto transactions for terrorist groups and Square processed transactions involving nations subject to economic sanctions.

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• Source: https://www.fintechnexus.com/fintech-nexus-newsletter-may-2-2024-block-targeted-by-federal-prosecutors-for-aml-and-sanctions-failings/