Block Fined $40M for Crypto AML Failures; Africa Investments Unaffected
Block Inc., led by Jack Dorsey, has been fined $40 million by the New York Department of Financial Services (NYDFS) for Anti-Money Laundering (AML) and compliance deficiencies. The penalty follows a series of failures in Block's crypto operations, including delayed investigations and inadequate transaction monitoring.
Block's activities in Africa extend beyond cryptocurrency. The company, along with Dorsey, has invested in various companies across the continent, such as Yellow Card and Gridless Compute. However, Block's crypto operations have fallen short of regulatory standards.
Suspicious activity reports (SARs) were filed over a year after initial alerts, significantly delaying investigations. Block continued to label crypto mixer transactions as only 'medium' risk, disregarding regulatory guidance. This failure to flag high-risk transactions exposed vulnerabilities in Block's systems.
Between 2018 and 2020, Block's backlog of unresolved transaction alerts soared from 18,000 to over 169,000. Despite these figures, Block failed to flag Bitcoin transactions tied to wallets associated with illicit or sanctioned activity, unless specific thresholds were exceeded.
Block must now overhaul its AML protocols, sanctions screening, and transaction monitoring systems. The company has been ordered to pay the $40 million fine within 10 days and be supervised by an independent monitor for 12 months.
Block Inc.'s involvement in Africa includes investments in energy-related projects and crypto initiatives. However, the recent fine highlights the need for robust AML measures in the cryptocurrency sector. Block must now ensure its operations meet state AML standards to prevent future compliance issues.
