Block faces $764 million DOJ settlement over AML deficiencies

Block Inc., parent company of Square and Cash App, reached a preliminary agreement with the U.S. Department of Justice to resolve allegations that it failed to maintain an effective anti-money laundering (AML) program. The agreement, if finalized, could require a net payment from Block of approximately $764 million, or more.

The agreement in principle, reached in October and disclosed Nov. 3, 2026, in Block's third-quarter regulatory filing, would resolve a federal investigation into the company's compliance with the Bank Secrecy Act (BSA). The proposed resolution includes a three-year deferred prosecution agreement, under which the DOJ would postpone criminal proceedings while Block fulfills specified obligations.

The financial terms include approximately $964 million in gross monetary penalties and other payments, reduced by $200 million in credits for previous regulatory resolutions. Block has accrued $764 million for the matter.

Compliance practices under scrutiny

The investigation followed allegations raised in a March 2023 report by short-selling firm Hindenburg Research concerning Block's fraud prevention, customer verification and compliance practices. Federal authorities subsequently examined the company's risk management procedures and related disclosures.

The proposed deferred prosecution agreement addresses an allegation that Block failed to maintain an effective AML program as required by the BSA. Such programs are intended to help financial institutions identify suspicious transactions, monitor potentially illicit activity and comply with federal financial crime prevention requirements.

Block previously faced regulatory actions involving Cash App. In 2025, the company reached settlements with federal and state regulators concerning deficiencies in fraud prevention and consumer protection practices, including a separate $40 million settlement with New York financial regulators over AML compliance failures.

The Securities and Exchange Commission, which also investigated allegations involving Block, informed the company in March 2026 that it had concluded its inquiry without recommending enforcement action.

Final resolution remains pending

If Block complies with the agreement's requirements during the three-year period, prosecutors would seek dismissal of the deferred charge. Failure to comply could expose the company to prosecution and additional penalties.

The settlement remains subject to final negotiations and court approval. Block cautioned that the ultimate financial impact could exceed the $764 million already accrued and that no final agreement is guaranteed.

The disclosure comes as Block continues expanding its consumer and merchant payment businesses. In the third quarter of 2026, Cash App gross profit increased 27 percent year over year, while Square gross profit rose 14 percent.

The proposed settlement underscores the regulatory scrutiny surrounding AML controls as financial technology companies expand their services and transaction volumes. The DOJ has not released a finalized resolution. Until an agreement is executed and approved, the allegations and proposed penalties remain unresolved.

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