Robinhood Receives a Hefty Fine, Fails to Meet BSA/AML Standards
Robinhood, the American financial services company headquartered in Menlo Park, California, has been subject to an investigation by the Department of Financial Services (DFS) in New York State. The agency found that its crypto division violated rules in numerous areas.
Per the investigation, carried out by Superintendent Adrienne A. Harris, Robinhood Crypto (RHC) failed to maintain effective and compliant bank secrecy act/anti-money laundering (BSA/AML) and cybersecurity programs, violated critical consumer and reporting requirements, and improperly certified its compliance with the agency’s standards.
Particularly, the DFS notes that the BSA/AML program lacked employees; failed to timely transition from a manual transaction monitoring system that was inadequate for RHC’s size, customer profiles, and transaction volumes; and did not devote sufficient resources to adequately deal with pertinent risks.
Furthermore, specific policies within the program were not in full compliance with several provisions of the Department’s Cybersecurity and Virtual Currency Regulations. These shortcomings, however, did not preclude RHC from stating that it is in compliance with the Department’s Transaction Monitoring Regulation and Cybersecurity Regulation.
As a result, RHC will be forced to pay a $30 million penalty to New York State while also engaging an independent consultant who will perform “a comprehensive evaluation of RHC’s compliance with the Department’s Regulations and RHC’s remediation efforts with respect to the identified deficiencies and violations.”
As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance—a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations.said Harris.
She added that in New York State all licensed virtual currency companies are subject to the same checks when it comes to AML, consumer protection, and cybersecurity regulations as traditional financial services companies.
DFS will continue to investigate and take action when any licensee violates the law or the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions.she concluded.
Previously, Gagarin News reported that RHC gave the green light to the Grayscale investment trusts.
