Cash App’s Barcelona-based business fined for anti-money laundering and terrorist financing failures, while Hindenburg Research shorts owner Block, citing ‘Wild West’ approach to compliance.
The European arm of Jack Dorsey’s hugely popular Cash App payment software has been slammed by its banking license provider for “serious and systematic infringements of the prevention of money laundering and terrorist financing.”
The reprimand, which came with a $250,000 fine, landed last week from the Bank of Lithuania, which provides a license to Verse, a Cash App company founded in Barcelona, Spain. On Thursday, Hindenburg Research, an activist short seller and investment firm, said it was taking a short position on Block, the owner of Cash App, because of the company’s alleged compliance weaknesses. “Core to the issue is that Block has embraced one traditionally very ‘underbanked’ segment of the population: criminals,” Hindenburg wrote. “The company’s ‘Wild West’ approach to compliance made it easy for bad actors to mass-create accounts for identity fraud and other scams, then extract stolen funds quickly."
On Hindenburg, in a public statement, Block said it was intending “to work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today. Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price.”
A Verse spokesperson said it had a program designed to address the “deficiencies” outlined by the bank. “We have implemented significant changes across our technology, processes, and people and bolstered our critically important business-wide culture of compliance.”
“The company’s ‘Wild West’ approach to compliance made it easy for bad actors to mass-create accounts for identity fraud and other scams.”
The Bank of Lithuania’s own investigation into Verse’s compliance with its rules on anti-money laundering was launched last year. It found that Verse was failing to sufficiently check the identities of its users, leaving it open to criminal use, with multiple examples of fictitious identities used to open accounts. The company had also “failed to ensure that customers at high risk of money laundering and terrorist financing were subjected to enhanced customer due diligence procedures,” according to the bank’s complaint. Similar criticisms have been leveled at Cash App, as detailed in an investigation by Forbes last year into its anti-fraud mechanisms and abuse by child sex traffickers.
Bernardo Hernandez, the former CEO of Verse who oversaw its acquisition by Block in 2020, was also fined €75,000 for failing to address the money laundering concerns, “despite the fact that he had been aware of the irregularities committed by the institution for a long time,” the bank said. Hernandez, who left Block in early 2022, hadn’t provided comment at the time of publication.
The Lithuania bank also noted the Cash App subsidiary didn’t have adequate procedures in place to enforce international financial sanctions. Such failures are of particular concern during a time when multiple sanctions have been filed by the U.S., the U.K. and Europe against Russian individuals and entities following the Ukraine invasion. The bank said Cash App’s company would have to address the issues by April 30 and organize an independent audit to ensure changes have been made. That review will have to be submitted to the bank by October 1, or Block will face further punishments.
Closer to home, Cash App is being investigated by the Consumer Financial Protection Bureau over concerns it was not adequately responding to users’ complaints about fraud and app usability. After launching the case in August last year, the CFPB claimed Block was “slow-walking” its response to requests for documentation.
Hindenburg’s two-year investigation into Block included claims from former employees who estimated that “40%-75% of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.” Amongst the fakes were accounts for Jack Dorsey, Elon Musk and Donald Trump, many of which appeared to be tied to scams, according to the researchers. Public records requests also showed Cash App was regularly used in pandemic relief fraud, with Massachusetts attempting to get back 69,000 fraudulent unemployment payments sent to Cash App accounts four months into the pandemic, Hindenburg reported.
Despite its troubles, Cash App overtook Square to become the biggest part of Block’s business, generating $850 million gross profit in the fourth quarter of 2022. But on Hindenburg’s release this morning, Block’s shares took a dive falling 20% on the New York Stock Exchange.
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It's important to be vigilant and take steps to protect yourself when using online payment platforms. Conclusion ! In conclusion, while Cash App at +1 866-992-9838 or (1-800-969-1940 does have measures in place to protect users from scams, there is no 100% guarantee that you will receive a refund if you are scammed.
In recent years, for example, law enforcement officials have cited criminals' use of payment apps to evade laws, such as laundering stolen Covid relief funds in 2020. Customers of Cash App, introduced in 2013, can instantly send and receive money among themselves, and buy stocks and Bitcoin.
Scammers will post fake giveaways on social media pretending to be from Cash App. Cash App will never ask for money or your login info to participate in giveaways.
The three whistleblower cases filed against Cash App differ, depending on the laws involved, with the SEC case revolving around disclosure violations, the FinCEN case related to bank compliance violations, and the CFTC case involving bitcoin, Siedle said.
If you think you are owed financial compensation, and it's Cash App's fault, you can sue them in Small Claims court. However, before filing a lawsuit, there are some steps you can take: Request a refund from the recipient. Try to cancel the payment.
The scammers solution will be to download another version of Cash App from a website they have identified. When prompted to log into the website, the scammers will steal your account credentials along with your funds.
It's no wonder that money transfer and payment apps are so popular, making transfers easy and quick. Cash App stands out from the pack by letting users pay for purchases at select merchants, invest in stocks, and even trade Bitcoin in addition to the peer-to-peer payment service it provides.
Some police officers and law enforcement agencies may use Cash App for various purposes, including receiving payments for off-duty work, donations for charity events, or even personal use.
Cash App is required to report the same information to the IRS. You should also keep in mind that not all payments that Cash App is required to report on Form 1099-K are necessarily payments that must be reported on your income tax return.
On Cash App, anyone can send a payment to anyone else, or request payment from anyone else. That open contact allows fraudsters to pull various scams. If a random person sends you money on Cash App or requests money, it's likely a scam.
Now, money flipping may sound questionable, but there's nothing illegal or shady involved. It really just means investing in an asset with the intent of holding it for a fairly short time before selling it or cashing out for a return. There are a lot of ways to do it, too.
The government has no regulations on the amount of money you can legally keep in your house or even the amount of money you can legally own overall. Just, the problem with keeping so much money in one place (likely in the form of cash) — it's very vulnerable to being lost.
The peer-to-peer (P2P) payment service is becoming more popular with the demographic, but only 18% of upper-income adults use Cash App, according to Pew Research Center.
Cash App may close your account if it is flagged as having unusual activity. This will protect you and the platform. Cash App's security measures require users to confirm their identity. Your account could be closed if you do not complete the verification process or provide incorrect information Call: +1(860) 393-0155.
If the funds were sent from a credit card, the funds will be returned to the sender's card. The refund may also return to the sender's originating card if it can't be returned to their Cash App balance. Refunds sent to a credit or debit card usually arrive within 5 business days.
It's possible that Cash App could cancel a transaction if you notify them immediately. But once you send payment, and especially if it gets to the scammer's account, it's likely gone forever. Unless you're dealing with friends and family, it's best to send money through secure channels with advanced security features.
If you believe you have been scammed on Cash App at +1-844-658-2040 or (800-969-1940), the first step is to report the incident to Cash App support. You can do this by navigating to the app's settings, selecting the transaction in question, and choosing the "Report a Problem" option.
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