Block, the founder of Jack Dorsey, accepted a $ 40 million penalty within the scope of his agreement with the New York state’s financial regulator. The agreement came up on the grounds of lack of insufficient control and compliance in Bitcoin transactions made through the CASH App service, which provides money transfer from spouse to spouse. In the audits, serious explanations were detected in Block’s Program Prevention (AML) program. The New York Financial Services Department stressed that rapid growth has left control systems behind.
Weak audit emphasis on Bitcoin transactions
Inspections have shown that Block’s Bitcoin transactions that Block offered through Cash App from 2018 have not undergone sufficient risk analysis. Especially during the rapid growth process in 2019 and 2020, it was reported that there were serious accumulations in the system warnings of customer transactions and most of them were not evaluated. This showed that the company had difficulty in creating the necessary internal controls despite the increasing transaction volume.
The financial regulatory institution said that high -risk and anonymous Bitcoin transactions are taken without the necessary investigations. According to the statements in the report, AML program Fiat Money and Bitcoin transactions continued to be traded without adequate risks. This is thought to be directly associated with Block’s failure to improve the security infrastructure at the same rate, despite the rapid growth of Cash App.
Independent Auditor was appointed, the adaptation process has begun
Within the scope of the signed agreement, Block will not only pay a fine. An independent auditor will be appointed to ensure that the company moves in accordance with the compliance criteria in the future. This auditor’s task will be to monitor the company’s bank privacy law and whether it fulfills obligations to prevent money laundering.
Ad Adrienne A. Harris, President of the New York Financial Services Department, said, “Companies also need to strengthen the adaptation systems in parallel with the growth process. Otherwise, this brings this growth, risks and weaknesses”. Harris said that Block is an important warning for other players in the sector.
It will be closely monitored in the coming process, how the company will transform against these regulatory pressures and especially how to improve the control mechanisms in Bitcoin transactions. This process, which Block is experiencing, once again reveals that rapidly growing technology companies may be loose consequences for their loose adaptation of financial adaptation.
Responsibility Rejection: The information contained in this article does not contain investment advice. Investors should be aware that crypto currencies carry high volatility and thus risk and carry out their operations in line with their own research.
