Federal prosecutors are currently investigating financial transactions at Block, Inc., the parent company of the widely-used Cash App and Square payment platforms. The inquiry follows allegations of significant and prolonged compliance failures within the company’s operations.
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Allegations of Compliance Lapses
A former employee has come forward with claims that Block, Inc. has been lax in its compliance practices, particularly in relation to its two main subsidiaries, Square and Cash App. Documents provided by this whistleblower suggest that the company failed to collect adequate information from customers to properly assess risk. Furthermore, there are allegations that Square processed thousands of transactions linked to countries under U.S. economic sanctions, and that Block facilitated cryptocurrency transactions for terrorist organizations.
Transactions Under Scrutiny
The transactions in question include credit card payments, dollar transfers, and Bitcoin dealings, many of which were not reported to the government as mandated by regulations. The whistleblower alleges that despite being made aware of these breaches, Block did not take appropriate action to rectify its processes.
Internal Documents Reveal
Roughly 100 pages of internal documents reveal transactions involving entities in sanctioned countries such as Cuba, Iran, Russia, and Venezuela. These documents, dating back to the previous year, highlight the potential scale of the compliance issues.
Company Leadership Aware
Edward Siedle, a former SEC lawyer representing the whistleblower, has stated that the compliance lapses were known to the leadership at Block and its board in recent years. This raises questions about the company’s commitment to regulatory adherence and the effectiveness of its internal monitoring systems.
Ongoing Investigations
The Southern District of New York, which is handling the case, has declined to comment on the ongoing investigation. However, the implications for Block, Inc. could be significant, depending on the findings of the prosecutors.