REGULATION | Jack Dorsey’s Block Inc. Hit with $40 Million Fine for Inadequate Oversight of Bitcoin Transactions

Block must revamp AML controls under year-long independent monitoring, per the New York Department of Financial Services (NYDFS) ruling.

CryptoGuru··3 min read

Block Inc., the parent company of Cash App and led by Jack Dorsey, the Founder and former CEO of X (formerly Twitter) has been fined $40 million by the New York Department of Financial Services (NYDFS) for significant deficiencies in its anti-money laundering (AML) and compliance programs related to its virtual currency operations.

The penalty, announced on April 10 2025, follows findings that Block’s systems failed to meet state AML standards, exposing vulnerabilities that could have been prevented with adequate oversight.


NYDFS Superintendent Adrienne Harris emphasized that financial institutions – whether traditional or emerging cryptocurrency platforms – must align their compliance programs with their growth:

“All financial institutions, whether traditional financial services companies or emerging cryptocurrency platforms, must adhere to rigorous standards that protect consumers and the integrity of the financial system.”

 

In addition to paying the fine within 10 days, Block will be placed under the supervision of an independent monitor for 12 months. During that time, the company must overhaul its:

  • AML protocols
  • Sanctions screening, and
  • Transaction monitoring systems

 

Lapses in Bitcoin transaction oversight

The Consent Order revealed that Block failed to comply with state standards for monitoring digital asset transactions. NYDFS found that the company’s compliance system failed to flag Bitcoin transactions tied to wallets associated with illicit or sanctioned activity – unless specific thresholds were exceeded.

In particular, transactions involving wallets with under 1% exposure to terrorist-linked wallets did not trigger alerts, and transfers to such wallets were only blocked once exposure surpassed 10%. Regulators stated that this threshold-based approach violated expectations that demand proactive, risk-based compliance.

Authorities stressed that even minimal interactions with high-risk wallets require robust justification. Without it, Block fell short of its obligations under both state and federal financial crime laws.

 

Concerns over mixers and alert backlogs

The regulator also highlighted Block’s treatment of crypto mixer transactions – tools that obscure fund origins and destinations, commonly used in illicit finance. Despite their high-risk nature, Block continued to label these transactions as only ‘medium’ risk, disregarding repeated regulatory guidance.

NYDFS further criticized Block’s inability to keep pace with transaction alert volumes. Between 2018 and 2020, the company’s backlog of unresolved alerts soared from 18,000 to more than 169,000. This spike reflected Block’s failure to scale its compliance capabilities alongside the rapid growth of Cash App.

In some instances, suspicious activity reports (SARs) were filed over a year after the initial alert, delaying investigations into potential financial crimes.

 

African Exposure

Block Inc. and Jack Dorsey undertakes various activities across Africa and has partnered or invested in various companies, most notably:

 

 

 

Follow us on X for latest posts and updates

Join and interact with our Telegram community

__________________________________

__________________________________

Related
All Rights Reserved - BitcoinKe.io
2020 © Zeen World News