Fintech company Block (SQ), formerly known as Square, has been slapped with a $80 million fine in a coordinated enforcement action by 48 state financial regulators for violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws through its Cash App mobile payment platform. The company has also agreed to take corrective actions under the terms of the settlement.
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In particular, state regulators in Arkansas, California, Massachusetts, Florida, Maine, Texas, and Washington State led the multistate enforcement initiative.
More on Block’s Settlement of AML Allegations
Aside from paying the penalty under the multistate settlement, Block has agreed to appoint an independent consultant to review the effectiveness of its BSA and AML programs. The review report is required to be submitted to the states within nine months. The company will be allowed a timeframe of 12 months to take corrective actions for any deficiencies that are identified in the review.
Under the BSA and AML laws, financial services companies are required to perform due diligence on customers, including verifying customer identities and monitoring and reporting any suspicious activity. State regulators found that Block was not in compliance with certain requirements, which created the possibility of using its services for money laundering, terrorism financing, or other illegal activities.
Adherence to BSA and AML laws is even more essential, given Cash App’s extensive reach. Over 50 million customers use Cash App to spend, invest, hold, or transfer money. Cash App is a key growth driver for Block. In Q3 2024, Cash App displayed a 21% growth in its gross profit, driven by higher inflows per active account and an increase in monetization rate.
Is Block a Good Buy Now?
Meanwhile, Wall Street is highly bullish on Block stock, with a Strong Buy consensus rating based on 21 Buys, four Holds, and one Sell rating. The average SQ stock price target of $102.71 implies 21.1% upside potential. Shares have risen more than 27% over the past year.
