The New York Department of Financial Services (NYDFS) has slammed a $30 million fine on Robinhood’s cryptocurrency arm for violations of anti-money laundering, cybersecurity and consumer protection laws. NYDFS Superintendent Adrienne Harris said that as Robinhood’s business grew, they failed to invest proper resources to develop and maintain a culture of compliance with these laws.
In an announcement on Tuesday, the NYDFS announced that Robinhood will pay a $30 Million penalty to the New York state for highlighted failures in the bank secrecy act and anti-moneylaundering obligations. Superintendent Harris also stated that Robinhood has also been ordered to hire an independent consultant to audit the firm’s compliance and remediation efforts.
All licensed virtual currency companies in New York operate by the same anti-money laundering, consumer protection, and cybersecurity laws as other traditional financial service companies. Harris said that as Robinhood’s business grew, they were found wanting in the areas of investing proper resources to sustain their compliance with these laws.
The NYDFS had given an order for a thorough examination of Robinhood between January and September 2019. After the examination, an enforced investigation began which revealed that Robinhood’s cryptocurrency subsidiary had violated sections of the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations.
Among the violations, Robinhood did not maintain a telephone number on its website for receiving customer complaints. They also did not transition to an adequately sized system to monitor transactions neither did they devote any serious investments or resources to address business risks.
Robinhood’s associate general counsel of litigation and regulatory enforcement, Cheryl Crumpton, made a statement to Cointelegraph where he stated that in 2021, the company had reached an agreement in principle with the NYFDS and had publicly filed the matter. Crumpton said that Robinhood has made significant progress in building legal, compliance and security programs.
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