U.S. federal financial regulators are investigating claims from two whistleblowers regarding Cash App, the popular mobile payment platform. The allegations suggest that Cash App and its affiliated service providers may have failed to properly vet customers, which could potentially open the door for money laundering, terrorism financing, and other illicit activities.
The whistleblowers assert that Cash App lacked effective procedures for identifying customers, which is a requirement for financial institutions to comply with anti-money laundering and other regulations. According to their complaints, which were reviewed by NBC News, Cash App transactions raised concerns related to entities under sanction by the U.S. Treasury Department’s Office of Foreign Assets Control, operations involved in illegal activities such as selling personal information, and transactions with offshore gambling sites restricted for U.S. citizens.
Cash App, which allows users to send money, purchase stocks and Bitcoin, and access funds through a prepaid Visa debit card, partners with companies such as Visa Inc. and Wells Fargo. The whistleblowers filed their complaints with the Financial Crimes Enforcement Network (FinCEN), a branch of the U.S. Treasury Department, which combats money laundering and terrorist financing. FinCEN officials have reportedly engaged with the whistleblowers and referred the matter to other federal agencies for further investigation.
While mobile payment apps like Cash App, PayPal, and Venmo have become increasingly popular—used by more than three-quarters of U.S. adults—regulators have raised concerns over the risks posed by these platforms, including their potential misuse by criminals to circumvent regulations, such as the laundering of stolen funds during the COVID-19 relief period in 2020.
As of September 2023, Cash App had 55 million active users and processed $239 billion in inflows over the previous year. Despite its popularity, some industry observers have noted that Cash App’s structure and business model, which involves various banking partners, may limit the ability of regulators to monitor transactions effectively.
In addition to FinCEN, the whistleblowers submitted their concerns to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), though neither agency has provided comment on the allegations. The scrutiny of financial platforms like Cash App has intensified amid growing concerns about compliance with anti-money laundering laws.
Cash App operates as a non-bank entity, relying on partners like Wells Fargo and Sutton Bank for various banking services. Critics argue that this arrangement makes it difficult for regulators to oversee the full scope of transactions. The whistleblowers’ complaints allege that Cash App pressed its banking partners, such as Lincoln Savings Bank, to minimize due diligence requirements, potentially bypassing federal banking regulations.
Cash App responded to inquiries about the allegations, asserting that the company has implemented due diligence processes, including employing hundreds of compliance staff. However, the company declined to address specific claims made by the whistleblowers, such as alleged pressure on Lincoln Savings Bank.
The investigation into Cash App comes as regulators, including FinCEN, propose new rules aimed at tightening controls on money laundering and terrorist financing across financial sectors. In November, the Consumer Financial Protection Bureau also suggested new oversight measures for digital payment companies.
The whistleblower complaints date back to the period between 2016 and 2022 and focus on Cash App’s due diligence practices, particularly in relation to the onboarding of customers. The allegations include claims that Cash App’s identity verification process was insufficient, allowing users to open accounts with minimal personal information.
As scrutiny of digital payment systems continues to grow, regulatory bodies are increasingly focused on ensuring these platforms adhere to strict anti-money laundering and customer verification standards to prevent illegal activities.
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