Media: US Attorney’s Office investigating violations of AML laws by Jack Dorsey’s Block

What’s new? US prosecutors have begun looking into the activities of Twitter founder Jack Dorsey’s fintech company Block over suspected years of AML law violations, NBC News reports, citing anonymous sources. The authorities allege that the company and its Square and Cash App divisions processed transactions related to terrorist groups and sanctions-listed entities based in Cuba, Iran, Russia, and Venezuela.

Material by NBC News

What else is known? A former employee of the company provided documents to the US Attorney’s Office for the Southern District of New York showing that Square and Cash App did not collect enough information about users to assess their risks. Square processed thousands of transactions involving countries on the sanctions list, and Block processed many crypto transactions for terrorist groups.

An anonymous former employee said the company failed to properly report credit card transactions, as well as dollar and bitcoin transfers, to regulators. It also failed to address the violations after the warning was issued. The former Block employee was represented at the meeting with prosecutors by former Securities and Exchange Commission (SEC) attorney Edward Siedle.

The meeting came after other whistleblowers reported Block’s misconduct to financial regulators in mid-February. In addition, two senior executives left the company in February and April: Lawrence Summers, who served on the audit committee, and Sharon Rothstein. Block, however, said they quit for personal reasons unrelated to disagreements over the company’s performance.

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The Cash App allows users to send and receive money instantly, as well as buy stocks and bitcoins. As of December last year, Cash App had 56 million active accounts and $248 billion in inflows over the previous four quarters. The service uses external banking partners to provide a number of services. For example, in conjunction with Sutton Bank in Ohio, Cash App issues prepaid Visa debit cards.

Square is a financial services platform used by millions of merchants. Sellers are considered Square customers, while users are considered Cash App customers.

In comments to NBC News, a Block spokesperson said that the company has an extensive compliance program that regularly adapts to changes in the sanctions regulatory environment and has invested heavily in improving the program. The company added that it has voluntarily reported thousands of illicit transactions to the US Treasury Department’s Office of Foreign Assets Control (OFAC), which oversees sanctions enforcement.

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Earlier, a US court sentenced the founder and former CEO of the largest crypto exchange Binance Changpeng Zhao to 4 months in prison for violating AML norms, prosecutors requested 3 years in prison.