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Block Agrees to $40M NYDFS Penalty Over Lackluster Compliance Program

Cryptocurrency exchange Block has agreed to pay a $40 million penalty to the New York Department of Financial Services (NYDFS) after the regulator found the company's compliance program to be lacking.

According to a consent order filed with the NYDFS, Block's compliance program failed to adequately detect and prevent potential violations of New York's banking law. The regulator found that the company's program was insufficient in several areas, including employee training, monitoring and reporting of suspicious activity, and maintenance of accurate records.

The NYDFS investigation was launched in 2020 after a whistleblower complaint alleged that Block had failed to properly monitor and report suspicious transactions. The regulator found that the company had not implemented adequate procedures for monitoring and reporting suspicious activity, and that its employees had not received adequate training on the company's compliance program.

As a result of the investigation, the NYDFS ordered Block to pay a $40 million penalty and to implement a comprehensive compliance program that meets the regulator's standards. The company must also provide the NYDFS with regular reports on its compliance efforts and undergo regular audits to ensure that it is meeting the regulator's requirements.

Block has agreed to the terms of the consent order and has begun implementing the necessary changes to its compliance program. The company has also agreed to cooperate fully with the NYDFS and to provide any additional information or assistance that the regulator may request.

The $40 million penalty is one of the largest ever imposed by the NYDFS on a cryptocurrency company. The regulator has been increasingly active in regulating the cryptocurrency industry, and the penalty serves as a warning to other companies that they must take compliance seriously.

In a statement, Block said that it is committed to compliance and that it has taken steps to improve its compliance program. The company said that it is working closely with the NYDFS to ensure that it is meeting the regulator's requirements.