The state of New York is fining the crypto subsidiary of trading giant Robinhood for allegedly violating consumer protection and anti-money laundering laws.
According to a news Press release by the New York Department of Financial Services (DFS), an investigation into Robinhood revealed that the company failed to maintain regulatory standards.
DFS found that Robinhood had “significant deficiencies” in its Bank Secrecy Act/BSA/AML protocols, including understaffing, using insufficient monitoring technology for the size of its operations, and using an inadequate cybersecurity system .
“Financial Services Commissioner Adrienne A. Harris announced today that Robinhood Crypto will pay a $30 million fine to New York State for significant failures in the areas of bank secrecy act/anti-money laundering and cybersecurity obligations which led to violations of the Ministry [regulations].”
DFS also found that Robinhood failed to comply with consumer protection requirements by failing to provide a fixed phone number where customers can call and file complaints.
Additionally, DFS says Robinhood was not properly certified as compliant despite its numerous weaknesses.
According to DFS Commissioner Adrienne Harris, Robinhood’s compliance with the law decreased as the company grew in size.
“As its business grew, Robinhood Crypto failed to invest the appropriate 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 security regulations cyberspace.
All virtual currency companies licensed in New York State are subject to the same anti-money laundering, 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 Department regulations, which are critical to protecting consumers and ensuring the safety and soundness of institutions.”
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