In this articleSQFollow your favorite stocksCREATE FREE ACCOUNTCash AppGetty Images | NurphotoFederal prosecutors are digging into internal practices at Block, the financial technology firm launched by Twitter co-founder Jack Dorsey, discussing with a former employee alleged widespread and yearslong compliance lapses at the company’s two main units, Square and Cash App, two people with direct knowledge of the contacts say.During the discussions, the former employee provided prosecutors from the Southern District of New York documents that they say show that insufficient information is collected from Square and Cash App customers to assess their risks, that Square processed thousands of transactions involving countries subject to economic sanctions and that Block processed multiple cryptocurrency transactions for terrorist groups.Most of the transactions discussed with prosecutors, involving credit card transactions, dollar transfers and Bitcoin, were not reported to the government as required, the former employee said. Block did not correct company processes when it was alerted to the breaches, the former employee told prosecutors and NBC News.Roughly 100 pages of documents the former employee provided to NBC News identify transactions, many in small dollar amounts, involving entities in countries subject to U.S. sanctions restrictions — Cuba, Iran, Russia and Venezuela — as recently as last year.”From the ground up, everything in the compliance section was flawed,” the former employee told NBC News. “It is led by people who should not be in charge of a regulated compliance program.” A second person with direct knowledge of Block’s monitoring programs and practices echoed that assessment; NBC News granted the former employee and the second person anonymity to guard against potential reprisals.The Southern District of New York did not respond to a request for comment about the inquiry.Edward Siedle, a former Securities and Exchange Commission lawyer who represents the former employee and participated in the discussions with prosecutors, said, “It’s my understanding from the documents that compliance lapses were known to Block leadership and the board in recent years.”Prosecutors met with the former employee after NBC News reported in mid-February that two other whistleblowers had told financial regulators about compliance failures at Cash App, the hugely popular mobile payment platform owned by Block. Cash App, introduced in 2013, allows users to send and receive money instantaneously among themselves and to buy stocks and Bitcoin. As of December, Cash App had 56 million active transacting accounts and $248 billion in inflows during the previous four quarters, the company said.Asked about the probe, a Block spokeswoman provided the following 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.”More from NBC Ne …
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[mwai_chat context=”Let’s have a discussion about this article:nnIn this articleSQFollow your favorite stocksCREATE FREE ACCOUNTCash AppGetty Images | NurphotoFederal prosecutors are digging into internal practices at Block, the financial technology firm launched by Twitter co-founder Jack Dorsey, discussing with a former employee alleged widespread and yearslong compliance lapses at the company’s two main units, Square and Cash App, two people with direct knowledge of the contacts say.During the discussions, the former employee provided prosecutors from the Southern District of New York documents that they say show that insufficient information is collected from Square and Cash App customers to assess their risks, that Square processed thousands of transactions involving countries subject to economic sanctions and that Block processed multiple cryptocurrency transactions for terrorist groups.Most of the transactions discussed with prosecutors, involving credit card transactions, dollar transfers and Bitcoin, were not reported to the government as required, the former employee said. Block did not correct company processes when it was alerted to the breaches, the former employee told prosecutors and NBC News.Roughly 100 pages of documents the former employee provided to NBC News identify transactions, many in small dollar amounts, involving entities in countries subject to U.S. sanctions restrictions — Cuba, Iran, Russia and Venezuela — as recently as last year.”From the ground up, everything in the compliance section was flawed,” the former employee told NBC News. “It is led by people who should not be in charge of a regulated compliance program.” A second person with direct knowledge of Block’s monitoring programs and practices echoed that assessment; NBC News granted the former employee and the second person anonymity to guard against potential reprisals.The Southern District of New York did not respond to a request for comment about the inquiry.Edward Siedle, a former Securities and Exchange Commission lawyer who represents the former employee and participated in the discussions with prosecutors, said, “It’s my understanding from the documents that compliance lapses were known to Block leadership and the board in recent years.”Prosecutors met with the former employee after NBC News reported in mid-February that two other whistleblowers had told financial regulators about compliance failures at Cash App, the hugely popular mobile payment platform owned by Block. Cash App, introduced in 2013, allows users to send and receive money instantaneously among themselves and to buy stocks and Bitcoin. As of December, Cash App had 56 million active transacting accounts and $248 billion in inflows during the previous four quarters, the company said.Asked about the probe, a Block spokeswoman provided the following 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.”More from NBC Ne …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
