Federal Authorities Examine Jack Dorsey’s Block Amid Claims of Sanctioned Transactions

ByTim Russert

May 2, 2024

U.S. federal authorities have launched an investigation into Block, Inc., the fintech company led by Jack Dorsey, following allegations of compliance breaches. The probe was initiated after a former employee provided documents suggesting that Block’s payment divisions, Square and Cash App, were engaged in numerous small-dollar transactions with entities in sanctioned countries. This disclosure has raised significant concerns about the company’s adherence to international compliance standards.

Violations of Compliance

The investigation into Block, Inc. has uncovered troubling details, as revealed in a report by NBC News. Documents provided by a whistleblower to prosecutors in the Southern District of New York illustrate how Block’s subsidiaries, Square and Cash App, processed thousands of transactions linked to users in countries under severe U.S. economic sanctions. These countries include Cuba, Venezuela, Iran, and Russia, and the transactions involved not only fiat currencies and credit cards but also Bitcoin.

The records, amounting to about 100 pages, show an extensive pattern of small-dollar transactions with organizations from these sanctioned nations. Furthermore, the whistleblower alleged that the majority of these transactions were not disclosed to the government, highlighting a significant lapse in compliance reporting by Block. This oversight could have serious legal and reputational implications for the fintech giant, as it suggests a systematic failure to adhere to international compliance regulations.

Internal Awareness and Company Response to Compliance Allegations

Additionally, the whistleblower indicated that upon reporting the compliance issues to Block’s management, the company failed to amend its operational procedures. This claim was supported by another anonymous source, as reported by NBC News, who possessed direct knowledge of Block’s internal operations and confirmed that the issues were known to Block’s leadership and board in recent years. Edward Siedle, the whistleblower’s attorney and a former SEC lawyer, asserted from the records that the compliance violations were not obscure incidents but rather well-known within the company.

Despite these serious allegations, a spokesperson from Block defended the company’s practices in an NBC News interview, stating that Block maintains a “responsible and extensive” compliance policy. According to the spokesperson, this policy is regularly updated to reflect new risks and changes in the regulatory framework regarding sanctions, suggesting a proactive approach to compliance management.

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