Federal prosecutors are examining financial transactions at Block, owner of Cash App and Square

cnbc.com:

In this article

Federal prosecutors are digging into internal practices at Block, the financial technology firm launched by Twitter co-founder Jack Dorsey, discussing with a former employee alleged widespread and yearslong compliance lapses at the company's two main units, Square and Cash App, two people with direct knowledge of the contacts say.

During the discussions, the former employee provided prosecutors from the Southern District of New York documents that they say show that insufficient information is collected from Square and Cash App customers to assess their risks, that Square processed thousands of transactions involving countries subject to economic sanctions and that Block processed multiple cryptocurrency transactions for terrorist groups.

Most of the transactions discussed with prosecutors, involving credit card transactions, dollar transfers and Bitcoin, were not reported to the government as required, the former employee said. Block did not correct company processes when it was alerted to the breaches, the former employee told prosecutors and NBC News.

Roughly 100 pages of documents the former employee provided to NBC News identify transactions, many in small dollar amounts, involving entities in countries subject to U.S. sanctions restrictions — Cuba, Iran, Russia and Venezuela — as recently as last year.

«From the ground up, everything in the compliance section was flawed,» the former employee told NBC News. «It is led by people who should not be in charge of a regulated compliance program.» 

A second person with direct knowledge of Block's monitoring programs and practices echoed that assessment; NBC News granted the former employee and the second person anonymity to guard against potential