- Office of Consumer Affairs and Business Regulation
- Division of Banks
The Massachusetts Division of Banks (DOB) served on a multi-state enforcement team that led an action against Block, Inc., the entity that operates Cash App. A mobile payment service, Cash App is extremely popular with consumers — more than 50 million people use the app to transfer money, make payments, and invest dollars.
By providing examiners and several managers to participate in an investigatory and enforcement process, DOB’s leadership resulted in corrective actions against Block, Inc. pursuant to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations.
BSA/AML rules require financial services firms to perform due diligence on customers. Customer identity verification, suspicious activity reporting, and high-risk account controls fall under such requirements. State regulators from 48 states and Washington DC found that Block, Inc. was noncompliant in some areas, potentially creating opportunities for its services to be used in supporting terrorism financing, money laundering, or other illegal activities.
The resulting action against Block, Inc., includes the following monetary penalties and mandatory corrective action:
- An administrative penalty of $79,075,000 is to be distributed evenly among participating states, with Massachusetts receiving approximately $1.65 million.
- Administrative costs of $925,000 are to be distributed between the states that led the multi-state enforcement team, with Massachusetts’ share being $150,000.
- Regarding corrective action, Block, Inc. must:
- Improve internal processes and controls to align with BSA/AML regulatory compliance.
- Retain an independent consultant to review and report on the comprehensiveness and effectiveness of its BSA/AML program, which must be submitted to the lead enforcement states within nine months.
- Correct additional deficiencies identified by the independent consultant within 12 months.
- Provide periodic reports to the states.
Consumers who continue to use Cash App will benefit from the results of Block, Inc.’s corrective actions, including continued compliance with anti-money laundering laws and regulations, and all applicable consumer protection laws.
Results like this illustrate the power of collaboration and consistency. State financial regulators have primary licensing and supervisory responsibility for companies engaged in money transmission and have developed a robust nationwide framework for licensing, regulation, and supervision of the industry. This “Networked Supervision” approach produces a more collaborative regulatory framework and stronger consumer protections. This week’s Block action is an example of state regulators acting quickly to ensure compliance and protect consumers by coordinating a multi-state enforcement action. By combining the states' collective enforcement power, states are coming together to provide consumers nationwide with one common resolution.
The action against Block, Inc., is a timely win for consumers in Massachusetts who now will be safeguarded when using payment apps like Venmo, PayPal, and Cash App for domestic money transfers — earlier this month Governor Healey signed the Money Transmission Act that gives the DOB authority to regulate money transmitters regardless of geography. The DOB leadership on both the Block, Inc. enforcement action and the Money Transmission Act demonstrates the agency’s commitment to ensuring licensed entities are in compliance with safe and sound practices and consumer protection laws.
Learn more about how the Division of Banks protects consumers.
