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Highlights
- Jack Dorsey's Block is under investigation
- The company's units Cash and Square has the specific focus
- The accusation hinges on KYC and AML violations
There is a strong insinuation that Jack Dorsey’s Block and some of its affiliated platforms may be involved in facilitating transactions for terrorist groups. Hence, Federal Prosecutors have reportedly launched an investigation into their internal practices.
Strong Evidence Against Cash App and Square
A former employee of the financial technology firm established by Twitter co-founder Jack Dorsey claimed that the company has widespread and years-long compliance lapses in two of its main units, Square and Cash App. So far, these prosecutors from the Southern District of New York have received some incriminating documents from this Block ex-employee.
Most of these documents provided proof that Square and Cash App collected insufficient information from its customers, underscoring a shortcoming in its Know-Your-Customer (KYC) procedures. This bridged information did not allow the financial platforms to effectively assess these customers’ risks.
Additionally, Square allegedly facilitated transactions for customers in countries that fall under economic sanctions. A significant percentage of these transactions, in small dollar amount, were made to U.S. sanctioned countries like Cuba, Iran, Russia and Venezuela .
Block Is Facilitating Transactions for Terrorists
Block, which recently launched Bitcoin wallet was also accused of processing several digital asset transactions for terrorist groups, per the information in the document.
“From the ground up, everything in the compliance section was flawed,” the former employee said. “It is led by people who should not be in charge of a regulated compliance program.”
The former employee stated that many of these transactions involving credit cards, dollar transfers and Bitcoin, were not reported to the government as required. Even after it was notified of the breach, Block made no attempt to adjust its processes. This suggests that the company’s leadership and its board was aware of the illegal activities happening on its platforms but failed to take any action.
It is worth acknowledging that Cash App went under probe in 2022 after the Consumer Financial Protection Bureau (CFPB) filed a petition with the United States District Court for the Northern District of California and demanded a civil investigative demand. Similarly, two people informed the authorities earlier this year of compliance lapses on the popular stocks and Bitcoin trading platform.
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