The New York Department of Financial Services, often known as the NYDFS, has stated that it will levy a fine of $30 million against the cryptocurrency trading division of Robinhood for suspected violations of laws about consumer protection, anti-money laundering, and cybersecurity.
In an announcement made on Tuesday, the superintendent of the New York Department of Financial Services (NYDFS), Adrienne Harris, stated that Robinhood Crypto would pay the penalty to the state of $30 million “for significant failures in the areas of bank secrecy act/anti-money laundering obligations” as well as cybersecurity failures that allegedly violated New York regulations.
According to Harris, the cryptocurrency division of Robinhood would also be obliged to engage the services of an independent consultant to assess the company’s activities regarding compliance and rectification.
Harris says, “As its business grew, Robinhood Crypto failed to commit the appropriate resources and attention to build and sustain a culture of compliance.” Traditional financial services organizations, including those that are regulated in the state of New York, are subject to the same anti-money laundering, consumer protection, and cybersecurity requirements. This applies to all licensed virtual currency companies in the state.
#ICYMI: DFS Superintendent Harris Announces $30 Million Penalty on Robinhood Crypto for Significant Anti- Money Laundering, Cybersecurity & Consumer Protection Violations. Read more: https://t.co/TUD2SwmOcw
— NYDFS (@NYDFS) August 2, 2022
“#ICYMI: DFS Superintendent Harris Announces $30 Million Penalty on Robinhood Crypto for Significant Anti- Money Laundering, Cybersecurity & Consumer Protection Violation”
By the consent agreement issued by the NYDFS, the department allegedly investigated Robinhood Crypto during January and September 2019. During that time, it asserted that it “discovered substantial weaknesses in RHC’s compliance function across many categories.”
The New York Department of Financial Services (NYDFS) subsequently launched an inquiry into the possible violations of the Bank Secrecy Act (also known as the BSA) and the Anti-Money Laundering Regulations (also known as the AML).
The Charges Against Robinhood
Among these infractions is the charge that Robinhood Crypto did not make the necessary transition to a transaction monitoring system that was sufficiently large or “dedicate sufficient resources to manage risks appropriately.”
In addition, the financial authority that oversees the stock market stated that Robinhood violated a supervisory agreement by “failing to maintain on its website a telephone number for the acceptance of user complaints.”
Cheryl Crumpton, associate general counsel of legal and enforcement mechanisms for Robinhood, provided a statement to Cointelegraph in which she stated that the company had reached an agreement in principle with NYDFS in 2021 and that it had disclosed the subject in its public filings. Robinhood allegedly made “substantial progress creating industry-leading legal, compliance, and cybersecurity programs,” as stated by Crumpton.
Robinhood was fined approximately $70 million by the United States Financial Industry Regulatory Authority in June 2021 for allegedly causing “widespread and significant harm” to thousands of users and exhibiting “systemic supervisory failures” beginning as early as September 2016.
FINRA made the allegations against Robinhood. Shares of HOOD were trading at $9 at the time this article was written, reflecting a decline of around 0.3 percent in the previous twenty-four hours.
More Stories: Concerns Raised on Labeling of Transactions Due to the Opensea NFT Gifting Feature