US federal prosecutors are investigating the financial transactions of Block, the firm co-founded by Jack Dorsey, according to NBC News. Findings from internal documents reportedly indicate compliance issues at Square and Cash App. A document provided by a former employee highlighted inadequate collection of customer information and processing of transactions involving sanctioned countries.

Alleged Compliance Failures

The employee alleged that despite being alerted to compliance breaches, Block did not rectify its processes. Thousands of transactions, including credit card transactions, dollar transfers, and Bitcoin transactions, went unreported to the government. The documents point to transactions with countries like Cuba, Iran, Russia, and Venezuela, raising concerns about regulatory compliance.

According to the sources cited by NBC News, Block's compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term section faced significant flaws, such as a lack of leadership capable of overseeing a regulated compliance program. An external consultant identified nearly 50 deficiencies in the systems for monitoring suspicious activities and screening for sanctions violations.

The Block’s board and senior management were reportedly aware of the lapses in compliance. The recent departures of Directors Lawrence Summers and Sharon Rothstein raised questions about governance and oversight within the company. The audit committee, overseen by Lord Paul Deighton, was responsible for reviewing the company's risk assessment and management policies.

Regulatory Scrutiny

In 2021, its European version of Cash App was fined for violating money laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term and terrorism financing regulations. Regulators were concerned about mobile payment platforms like Cash App.

However, Block responded that it has a robust compliance program and regularly updates its practices to meet regulatory requirements. It acknowledged deficiencies identified by the former employee but disputed their interpretation, emphasizing its commitment to compliance and ongoing efforts to improve its systems.

This latest development followed the sentencing of Binance's former CEO, Changpeng Zhao, to a four-month prison sentence over similar concerns. Last year, Zhao pleaded guilty to charges of failing to implement anti-money laundering programs and allowing unlawful transactions on Binance.

His sentencing followed a long-standing legal investigation into Binance's operations. In November, Zhao struck a deal with U.S. authorities to settle the investigation, agreeing to step down as CEO. Additionally, Binance is facing separate charges from the Securities and Exchange Commission and the Commodity Futures Trading Commission.