Block appears to be squarely in the government’s sights. Prosecutors from the Southern District of New York are reportedly probing extensive compliance lapses at the parent company of Square and Cash App. NBC News says a former Block employee has handed over documents to federal authorities, painting a picture of how the company failed to gather required risk-assessment information from customers and subsequently processed illegal transactions.
The documents allegedly show that Block greenlit multiple crypto transactions involving known terrorist organizations. Furthermore, Square reportedly processed thousands of transfers involving nations under economic sanctions. “From the ground up, everything in the compliance section was flawed,” the whistleblower allegedly told NBC News. “It is led by people who should not be in charge of a regulated compliance program.”
Most transactions allegedly involved credit cards, dollar transfers or Bitcoin and weren’t reported to the government as mandated by law. In addition, Block reportedly refused to “correct company processes” when notified of the breaches.
The investigation follows a separate report from NBC News in February highlighting two different whistleblowers who flagged the same issues at Block. They cited “questionable Cash App transactions with entities under sanction by the Treasury Department’s Office of Foreign Assets Control, operations known to sell personal information and credit card data for illegal purposes, and offshore gambling sites barred to U.S. citizens.”
The practice allegedly spanned multiple years. NBC News says it reviewed around 100 pages of documents from the whistleblower involving people or organizations in countries under US sanctions, including Russia, Iran, Venezuela and Cuba. Some of them were reportedly from as recent as 2023.
The whistleblower claims Block’s management was aware of the alleged offenses. “It’s my understanding from the documents that compliance lapses were known to Block leadership and the board in recent years,” Edward Siedle, a former SEC attorney representing the whistleblower, told NBC News.
The whistleblower says that, besides senior management, Block’s board was told about the compliance issues. Coincidentally or not, several board members made unexpected exits recently, including former US treasury secretary Lawrence Summers, who resigned in February, and Sharon Rothstein, who had been on the board since 2022. Block told…