Jan. 16—The parent company of the popular product Cash App agreed to pay $80 million, including a $1.6 million payment to New Mexico, for violating the Bank Secrecy Act and anti-money laundering laws, officials said this week.
Block Inc., Cash App's owner, is led by Twitter founder Jack Dorsey, and the American technology company also owns other popular products such as Square, Spiral, Tidal and Afterpay.
Under those laws, financial services firms like Block and Cash App are required to perform "due diligence on customers," like verifying identities of individuals and reporting suspicious activity, the Conference of State Bank Supervisors wrote in a news release. State regulators found the company was not in compliance with certain aspects of those laws and was allowing Cash App's services to support money laundering, terrorism financing and other illegal activities.
The New Mexico Financial Institutions Division and 47 state financial regulatory agencies were part of the enforcement effort, which was led by regulators in Arkansas, California, Massachusetts, Florida, Maine, Texas and Washington.
Block said in a statement that Cash App experienced unprecedented growth during the COVID-19 pandemic, which stressed the company's customer service systems. It said it has significantly invested to improve those systems.
"The historical issues raised in this agreement do not reflect the Cash App experience today," the company said. "We are committed to continually investing to ensure we uphold industry leading standards."
The $80 million settlement by Block comes as part of a larger payout by the company, which will also dole out up to $120 million to fraud victims and $55 million to the Consumer Financial Protection Bureau's victims relief fund, the government agency announced.
Block quickly cooperated, and in addition to paying out money, the company also plans to hire an independent consultant to review the comprehensiveness and effectiveness of its Bank Secrecy Act and anti-money laundering programs, submit a report to the states within nine months, and correct any deficiencies found in the review over a 12-month period.
For New Mexico, officials expect the $1.6 million settlement proceeds to arrive next month. The money will go toward the Financial Institutions Division's Settlement Proceeds Fund, wrote spokesperson Andrea Brown. She said it is at the "discretion of the Legislature to determine where the money in the fund goes."
The payout by Block follows another $20 million multistate settlement New Mexico officials and other state regulators reached this month. The mortgage company Bayview Asset Management paid New Mexico $133,660 following a 2021 data breach that compromised the data of 38,800 New Mexicans.
The money received in the latest settlement and the actions that preceded it against Block demonstrate "the power and effectiveness of networked state supervision in the licensing, regulation, and examination of non-bank money transmitters," New Mexico Financial Institutions Division Director Mark Sadowski said in a statement.