August 12, 2022

New York State is fining the crypto branch of trading giant Robinhood for allegedly violating consumer protection and anti-money laundering laws.

According to new press release Conducted by the New York Department of Financial Services (DFS), an investigation into Robinhood revealed the company’s failure to maintain regulatory standards.

DFS found Robinhood to have “significant flaws” in the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) protocols, such as staff shortages, use of insufficient monitoring technology for the scale of its operations, and use of an inadequate cyber security system. .

Financial Services Superintendent Adrienne A. Harris announced today that Robinhood Crypto will pay a $30 million fine to the State of New York for significant failures in the areas of Bank Secrecy Act/Anti-Money Laundering Obligations and Cyber ​​Security that led to violations by the Department. [regulations]. ”

DFS also found that Robinhood failed to comply with consumer protection requirements by not providing a fixed phone number where customers could call and lodge complaints.

Furthermore, the DFS says Robinhood has been incorrectly certified as compatible despite its many shortcomings.

According to DFS observer Adrienne Harris, Robinhood’s compliance with the law has waned as the company’s size has grown.

“As its business has grown, Robinhood Crypto has failed to invest the appropriate resources and attention to develop and maintain a culture of compliance – a failure that has led to significant violations of anti-money laundering and cybersecurity management rules.

All virtual currency firms licensed in New York State are subject to the same anti-money laundering, consumer protection, and cybersecurity regulations as traditional financial services firms.

DFS will continue to investigate and take action when a licensee violates law or management regulations, which are critical to protecting consumers and ensuring the safety and integrity of organizations.”

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Featured image: Shutterstock / Mia Stendal

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