Federal prosecutors are investigating internal operations at Block, the fintech company founded by Twitter co-creator Jack Dorsey. According to two individuals familiar with the matter, authorities have been in discussions with a former employee regarding allegations of widespread and long-standing compliance failures within the firm’s primary divisions, Square and Cash App.
During these meetings, the former staffer provided prosecutors from the Southern District of New York with documentation purportedly showing that Square and Cash App failed to collect sufficient customer information to properly assess risk. The documents also suggest that Square processed thousands of transactions linked to nations under Exchange Commission attorney who represents the whistleblower and participated in the meetings with prosecutors, stated, “It’s my understanding from the documents that compliance lapses were known to Block leadership and the board in recent years.”
Prosecutors initiated these meetings after NBC News reported in mid-February that two other whistleblowers had alerted financial regulators to compliance issues at Cash App, the popular mobile payment platform under the Block umbrella. Launched in 2013, Cash App allows users to buy Bitcoin and stocks, as well as send and receive money instantly. As of December, the company reported 56 million active transacting accounts and $248 billion in inflows over the previous four quarters.
In response to inquiries regarding the investigation, a Block spokesperson issued this statement: “Block has a responsible and extensive compliance program and we regularly adapt our practices to meet emerging threats and an evolving sanctions regulatory environment. Our compliance program includes systems, tools, and processes for sanctions screening, as well as investigating and reporting on sanctions issues in accordance with our regulatory obligations. Continually improving the safety and security of our ecosystem is a top priority for Block. We have been and remain committed to building upon this work, as well as continuing to invest significantly in our compliance program.”
The company maintained that it believed it had voluntarily disclosed the “thousands of transactions” mentioned by the former employee to the Office of Foreign Assets Control (OFAC), a Treasury Department agency that enforces economic sanctions. However, the former employee challenged this claim, asserting that thousands of other transactions were never reported.
