Jack Dorsey’s Block Negotiates Settlement with New York Over Money Laundering Allegations

Block Inc., the payments firm led by Jack Dorsey, is in ongoing negotiations with New York state regulators over allegations related to its Anti-Money Laundering (AML) practices and its Bitcoin operations. According to a regulatory filing made by the company on February 24, Block has been engaged in discussions with the New York Department of Financial Services (NYDFS) to settle concerns over aspects of its Bank Secrecy Act (BSA)/AML compliance program and its Bitcoin-related activities.

The filing revealed that the company is seeking to reach an acceptable settlement with NYDFS, but did not provide specific details on the terms being discussed. Block acknowledged that it is negotiating with the regulators, but emphasized that no formal settlement has been reached as of yet.

In addition to the AML matters, Block is dealing with a range of legal, regulatory, and tax-related issues, including several ongoing investigations, settlements, and negotiations. The company noted that it has set aside a liability related to the matter, though it does not believe the financial impact will be material to its 2024 financial performance.

The current regulatory scrutiny of Block stems from an investigation by money transmission regulators across multiple U.S. states between January 2021 and March 2023. The probe reportedly found deficiencies in Block’s AML program, particularly regarding its compliance with the Bank Secrecy Act. While a settlement was reached with several state money transmission regulators in January, New York was not included in that agreement.

As part of the multi-state settlement, Block agreed to pay $80 million in penalties, with payments expected to be completed by February 2025. Although Block did not admit or deny wrongdoing, the company has committed to taking corrective measures, including appointing an independent consultant to review and improve its AML program. A Compliance Management Committee will also oversee the implementation of these measures.

In addition to the NYDFS negotiations, Block is facing separate regulatory challenges. The Consumer Financial Protection Bureau (CFPB) launched an investigation in January into how Block’s Cash App handled customer complaints and disputes. In response, Block paid a civil penalty of $55 million and agreed to pay restitution to affected customers, with estimates ranging between $75 million and $120 million.

The company is also embroiled in a tax dispute with the San Francisco Treasurer and Tax Collector. The office conducted an audit of Block’s tax receipts for the years 2020 to 2022 and claimed that the firm owed additional taxes on Bitcoin-related revenue.

Block's legal and regulatory battles continue to mount as the firm works to resolve these various issues, while also striving to maintain its operations in the highly scrutinized fintech and crypto space.