Block, the parent company of Cash App, has agreed to pay an
$80 million fine as part of a settlement with 48 state financial regulators
over violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML)
regulations.

The state regulators found that Block failed to meet certain
customer due diligence requirements, potentially allowing its services to be
used for money laundering or terrorism financing.

Block to Refund $120 Million, Pay Penalties

As part of the settlement, Block will also hire an
independent consultant to review its BSA/AML program and submit a report to the
states within nine months. The company will have 12 months to address any
deficiencies identified in the review.

In a separate action, the Consumer Financial Protection
Bureau (CFPB) has ordered Block to refund up to $120 million to consumers and
pay a $55 million penalty to the CFPB’s victims relief fund. The CFPB found
that Cash App, Block’s mobile payment service, had weak security protocols and
allowed fraudulent activity to proliferate.

“Cash App created the conditions for fraud to
proliferate on its popular payment platform,” said CFPB Director Rohit
Chopra. “When things went wrong, Cash App flouted its responsibilities and
even burdened local banks with problems that the company caused.”

Commenting on the matter, Block Investor Relations stated on
X: “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 team added: “We don’t expect these resolutions
to affect our ability to serve our customers or execute on our business or
product strategy.”

We have reached agreements with the CFPB and state money transmission regulators on previously disclosed matters principally related to certain aspects of Cash App’s historical customer service and regulatory compliance programs. The final settlement amounts are a penalty of $55M…

— Block Investor Relations (@BlockIR) January 16, 2025

CFPB Orders Block to Improve Dispute Resolution

The investigation revealed that Block’s process for handling
unauthorized transaction disputes was inadequate. Block directed users to their
banks for transaction reversals, but the company would deny these requests. The
CFPB also found that Block employed tactics to suppress users from seeking
help, reducing the company’s costs.

In addition to the financial penalties, the CFPB has ordered
Block to implement 24-hour live customer service, fully investigate
unauthorized transactions, and provide timely refunds where appropriate.

This article was written by Tareq Sikder at www.financemagnates.com.