Federal prosecutors in the United States are scrutinizing Block, a significant player in the financial technology sector co-founded by Jack Dorsey, one the minds behind Twitter. This inquiry stems from a disclosure made by a former Block employee who handed in a whopping 100 pages of documentation. These papers outline what the employee alleges to be compliance deficiencies within Square and Cash App, two key entities under Block’s umbrella.
Failure to Report Transactions
The documents provided to prosecutors from the Southern District of New York reportedly shed light on the inadequate data collection practices from customers. They suggest that Block facilitated numerous transactions involving countries subject to U.S. economic sanctions, such as Cuba, Iran, Russia, and Venezuela. Additionally, the former employee claims that Block processed cryptocurrency transactions for entities associated with terrorist organizations.
The whistleblower further asserts that Block’s compliance infrastructure is fundamentally flawed, with individuals ill-suited for overseeing a regulated compliance program leading the efforts. These allegations have attracted increased attention. Edward Siedle, a former Securities and Exchange Commission lawyer representing the whistleblower, suggests that these compliance violations were known to Block’s leadership as well as the board in recent years. The former employee added,
“From the ground up, everything in the compliance section was flawed. It is led by people who should not be in charge of a regulated compliance program.”
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What is Block Saying?
In response to these accusations, a Block spokesperson reaffirmed the company’s commitment to maintaining a robust compliance program. They emphasized Block’s dedication to adapting its compliance practices to address emerging threats as well as evolving regulatory environments. She said,
“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.”
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