Block Agrees in Principle to $764 Million DoJ Settlement Over Anti-Money Laundering Failures at Cash App
Block Agrees in Principle to $764 Million DoJ Settlement Over Anti-Money Laundering Failures at Cash App #
Jack Dorsey’s payments company Block has agreed in principle to pay $764 million to resolve a US Department of Justice investigation into deficiencies in its anti-money laundering compliance programme. The proposed settlement was disclosed in a regulatory filing with the US Securities and Exchange Commission on 3 November, alongside the company’s third-quarter earnings report.
According to the filing, the agreement in principle was reached with the DOJ in October and centres on allegations that Block failed to maintain an effective AML programme as required under the Bank Secrecy Act. Under the proposed terms, the DOJ would defer a criminal charge for three years and would dismiss that charge with prejudice if Block meets its obligations under the agreement.
The gross monetary component of the deal totals approximately $964 million. That figure is reduced to $764 million after the application of around $200 million in credits tied to previous regulatory settlements. Block has already recorded a provision for the $764 million expected payment, though the company acknowledged in its filing that it cannot predict the final terms and that losses could ultimately exceed that amount.
The settlement comes amid sustained regulatory pressure Block has faced over compliance shortcomings at Cash App, its peer-to-peer payments platform. In 2022, a Hindenburg Research report alleged the company had exhibited a pattern of disregard for AML and know-your-customer requirements, based on interviews with former employees. The scrutiny that followed led the DOJ and SEC to open investigations into Block’s compliance practices and related disclosures in 2023.
Block has faced several other regulatory actions in recent years. Last year the company agreed to pay $255 million in a settlement with the Consumer Financial Protection Bureau and 48 states over weak security protocols at Cash App that contributed to consumer fraud losses. It also paid $40 million to the New York Department of Financial Services in a separate civil enforcement action after regulators found that a backlog of suspicious-activity alerts had grown from roughly 18,000 in 2018 to more than 169,000 by 2020.
The proposed DOJ settlement also coincides with a weaker quarter for Block’s bitcoin business. Cash App’s bitcoin gross profit fell approximately 50% year-on-year to $52 million in the third quarter, though Block’s broader payments and lending operations continued to grow. The settlement amount exceeds the quarter’s total net profit.
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