The AML Training Academy and Advisory LLC Logo

Our Blog

The Hindenburg Report on Block’s Cash App: Oh The Humanity!

Block Inc: Compliance Dazed and Confused

The Hindenburg report on Block Inc., formerly known as Square Inc., alleges that Block’s Cash App has been fudging its numbers resulting in predatory loans and leading investors astray.

So how did this explosive Zeppelin crash into Block Inc.’s Cash App.  According to the Hindenburg investigation:

  • Poor compliance allowed customers to, “mass-create accounts for identity fraud and other scams, then extract stolen funds quickly.”
  • When customers were caught in fraudulent activity, Cash App simply put the account on the blacklist but did not exit the relationship with the customer.
  • Statistics contained fake and duplicate accounts so investors were unaware of the  actual number of users.
  • The Department of Justice had multiple complaints about Cash App being used to facilitate crimes as heinous as sex trafficking, including sex trafficking of minors.
  • Former employees estimated that 40-75% of accounts were phony, involved in fraud, or numerous accounts attached to one particular individual.
  • Further, former employees detailed how Cash App censored internal concerns and disregarded user pleas for help as criminal activity and fraud ran rampant on its platform. 
  • Block Inc. avoided interchange fees by routing funds through smaller banks that fall under the $10 billion in assets cap, so they could charge merchants large interchange fees.

This appears to be a dubious fintech Stairway to Heaven.  Lack of Compliance, lack of quality compliance, lack of ethics, or was it just plain and simple, dirtbags doing dirtbag things?  

So many red flags were popping up, but someone somewhere decided that profit was much more important than protecting the public with a quality AML program.  A dismal AML program allows funds to go to organized crime, cartels, or terrorist financiers and fails to protect our children from the dangers of drugs, protect individuals from human trafficking including children, protect people from crimes, and protect our countrymen from terrorist attacks.  Remember – that’s why this AML stuff matters.

Ramble On

There certainly is a tendency in many fields when things go wrong to circle the wagons, admit nothing and attack the accuser.  I don’t know if Cash App was deliberate in fraud schemes or just unwitting, unknowing, and/or uncaring about implementing a quality AML program.  Perhaps they knew exactly what they were doing and it was profit at any cost.  I don’t know.  Law Enforcement investigation will dig deeper and maybe someone gets prosecuted.   If the allegations are true, there will be no good times, only bad times.

A communication breakdown involving poor compliance can permeate throughout an organization.  Compliance starts at the top and rolls downhill.  In this case, something rolled downhill, but it was not quality compliance.

    I work with AML/BSA/AFC/CTF compliance programs large and small, if you need a customized and quality anti-money laundering program, training, or advise I invite you to contact me to learn how I can help with your compliance needs.

    Kevin Sullivan, CAMS, CCI

    President of The AML Training Academy and Advisory LLC

    Additional Articles That May Interest You

    Sacrificing compliance and morals for profit
    The Biggest Dangers of Money Laundering by Kevin Sulllivan, CAMS The AML Training Academy President To Stop Human Trafficking, Stop Money Laundering
    Bulk Cash Movement Across Borders AML In A Nutshell by Kevin Sullivan CAMS President AMLtrainer.com

    About the Author

    Kevin Sullivan, CAMS, CCI is a retired New York State Police Investigator and Federal Agent who dedicated his career to AML and continues that work through his company, The AML Training Academy and Advisory LLC. Kevin coordinated AML investigations for the state of New York while being detailed to one of the worlds largest AML task forces, the NY High Intensity Financial Crime Area (HIFCA) El Dorado Task Force. He has helped develop and implement global AML guidelines and trained and advised all industries and government agencies requiring AML around the globe. He helped to write various certification programs for the Association of Certified Anti-Money Laundering Specialists’ (ACAMS) and was the co-founder and former chair of their inaugural chapter which was in NY. Follow Kevin or reserve a seat in one of his live webinars. Space is limited!

    Upcoming Live Streaming AML/BSA/AFC/CTF Webinars

     

    Join Kevin’s live streaming beginner and advanced AML/BSA/AFC/CTF compliance webinar courses at AMLtrainer.com/training/#upcoming_training.  Reserve your seat today.  Space is limited!

    For more info or to arrange Custom Compliance Training Classes and Advisory Services contact The AML Training Academy and Advisory LLC at: ☎ (855) 265-7700 | 📧 info@amltrainer.com.