LUCKNOW (CoinChapter.com) — Federal prosecutors are investigating Jack Dorsey’s fintech company, Block, Inc., for alleged violations involving sanctioned countries and terrorist groups. This probe, led by the U.S. Attorney’s Office for the Southern District of New York, centers on accusations that Block’s payment platforms, Square and Cash App, processed transactions in breach of U.S. economic sanctions and anti-money laundering statutes.
Whistleblower Exposes Compliance Failures
The investigation was sparked by revelations from a whistleblower, a former employee who handed over approximately 100 pages of internal documents.
These documents reportedly show that transactions were conducted for users in sanctioned nations such as Iran, Russia, Cuba, and Venezuela, using fiat, credit cards, and cryptocurrencies. Most disturbingly, the documents suggest that some of these transactions benefited terrorist organizations.
According to the whistleblower, the company largely ignored these compliance failures and failed to report most of the suspicious transactions to the appropriate authorities.
“From the ground up, everything in the compliance section was flawed,” the whistleblower remarked in an interview with NBC News, indicating that the leadership was unfit for managing a regulated compliance program.
In response to these serious allegations, a spokesperson from Block stressed the company’s dedication to compliance, highlighting ongoing efforts to enhance their systems to meet regulatory demands. Block has attempted to address these issues proactively, even voluntarily reporting some transactions to the Office of Foreign Assets Control (OFAC).
Crypto Crackdown Continues Amid Block Sanctions Violations
These allegations add to the scrutiny on Dorsey’s Block, Inc., reminiscent of past compliance issues faced by Block’s European subsidiary, which was censured for not properly identifying some clients in accordance with anti-money laundering and anti-terrorism financing regulations.
This development is part of a broader regulatory crackdown on the crypto sector, emphasizing the urgent need for all related firms to maintain stringent compliance programs to forestall potential sanctions and legal challenges.
The crypto community remains under close watch, with notable cases like Binance founder CZ’s guilty plea over anti-money laundering shortcomings and ongoing legal battles faced by Ethereum development firm ConsenSys against an SEC lawsuit.
This ongoing scrutiny underlines the critical importance of compliance within the fintech and cryptocurrency sectors to avoid severe repercussions related to Block sanctions violations.
