Federal regulatory agencies are conducting an investigation following accusations from two whistleblowers that popular mobile payment platform, Cash App, and its transaction service providers failed to exercise due diligence in identifying customers. This opens the door to money laundering, terrorism financing, and other illegal activities. The whistleblowers claim that Cash App did not have effective procedures to verify the identities of its customers.
The whistleblowers have reported numerous suspicious transactions conducted through Cash App, including dealings with entities sanctioned by the Department of the Treasury’s Office of Foreign Assets Control, operations involving the trade of personal information and credit card data for illegal purposes, and transactions with prohibited foreign gambling websites for US citizens. Major companies that collaborate with Cash App include the payment processor, Visa Inc., and Wells Fargo.
The whistleblowers have filed their complaints with the Financial Crimes Enforcement Network (FinCEN), a unit of the US Department of the Treasury that administers the Bank Secrecy Act and analyzes financial transactions to combat money laundering, terrorism financing, and other illegal activities. FinCEN declined to comment on the matter. The whistleblowers also reported the deficiencies in Cash App’s due diligence to the Securities and Exchange Commission (SEC), the primary securities market regulator, and to the Commodities Futures Trading Commission (CFTC), responsible for combating fraud in the digital asset market.
The whistleblowers believe that the lack of due diligence towards Cash App customers poses a risk to the shareholders of its parent company, Block Inc., a massive fintech firm founded by Jack Dorsey, the co-founder of Twitter. This also applies to Marqeta Inc., a fintech startup that acts as an intermediary for Cash App transactions, and Visa Inc., which issues the Cash Card. The whistleblowers argue that the shareholders of these three companies were not adequately informed about the risks associated with Cash App’s operations.
The Cash App case highlights general concerns about deficiencies in anti-money laundering systems. In response, the Financial Crimes Enforcement Network (FinCEN) has proposed regulations that would require investment advisors to implement systems to prevent money laundering and terrorism financing, as well as report suspicious transactions to the agency. Currently, investment advisors are not subject to these requirements, despite managing trillions of dollars.
The Cash App case shows that mobile payments carry risks for both users and the financial system. Regulators are concerned about the increasing use of payment apps by criminals to evade the law, such as laundering stolen funds related to the COVID-19 pandemic. Therefore, there is an urgent need to strengthen controls and regulations concerning mobile payment platforms to protect the interests of users and prevent their exploitation for illegal activities.
FAQ Section:
1. What allegations are the subject of the federal regulatory investigation?
The investigation concerns allegations from two whistleblowers who claim that popular mobile payment platform Cash App and its transaction service providers failed to exercise due diligence in identifying customers, thereby opening the door to money laundering, terrorism financing, and other illegal activities.
2. What identification issues were reported?
The whistleblowers claim that Cash App did not have effective procedures to verify the identities of its customers.
3. What transaction concerns were reported regarding Cash App?
The whistleblowers reported numerous suspicious transactions, including dealings with entities sanctioned by the Department of the Treasury’s Office of Foreign Assets Control, operations involving the trade of personal information and credit card data for illegal purposes, and transactions with prohibited foreign gambling websites for US citizens.
4. Which agencies received the whistleblowers’ complaints?
The whistleblowers filed their complaints with the Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), and the Commodities Futures Trading Commission (CFTC).
5. What risk does the lack of due diligence towards Cash App customers pose?
The whistleblowers believe that the lack of due diligence towards Cash App customers poses a risk to the shareholders of companies such as Block Inc., Marqeta Inc., and Visa Inc., who were not adequately informed about the risks associated with Cash App’s operations.
6. What recommendations did FinCEN make in response to this case?
FinCEN suggested the implementation of regulations that would require investment advisors to implement systems to prevent money laundering and terrorism financing, as well as report suspicious transactions to the agency.
7. Why is there a need to strengthen controls and regulations concerning mobile payments?
The Cash App case demonstrates that mobile payments carry risks for both users and the financial system. Criminals are increasingly using payment apps to evade the law, including laundering stolen funds related to the COVID-19 pandemic. Therefore, there is an urgent need to strengthen controls and regulations concerning mobile payment platforms to protect users’ interests and prevent illegal activities.
Key Term Definitions:
– Money laundering: The process of concealing the origins of illegally obtained funds through various transactions and activities aimed at hiding their source.
– Terrorism financing: Providing financial support for the purpose of carrying out terrorist activities.
– Financial Crimes Enforcement Network (FinCEN): A unit of the US Department of the Treasury responsible for combating money laundering and terrorism financing through the analysis of financial transactions and prosecution of participants.
– Securities and Exchange Commission (SEC): A government agency responsible for regulating the securities markets in the US.
– Commodities Futures Trading Commission (CFTC): A government agency responsible for regulating the digital asset markets.
Suggested Related Links:
– Block Inc.
– Marqeta Inc.
– Visa Inc.
– Financial Crimes Enforcement Network (FinCEN)
– Securities and Exchange Commission (SEC)
– Commodities Futures Trading Commission (CFTC)
The source of the article is from the blog trebujena.net