The state of New York is levying a fine against the crypto branch of trading giant Robinhood for allegedly violating consumer protection and anti-money laundering laws.
According to a new press release by New York’s Department of Financial Services (DFS), an investigation into Robinhood unveiled that the company failed to maintain regulatory standards.
The DFS found that Robinhood had “significant deficiencies” in its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) protocols, such as being understaffed, using an inadequate monitoring technology for the size of its operations, and employing an insufficient cybersecurity system.
“Superintendent of Financial Services Adrienne A. Harris announced today that Robinhood Crypto will pay a $30 million penalty to New York State for significant failures in the areas of bank secrecy act/anti-money laundering obligations and cybersecurity that resulted in violations of the Department’s [regulations].”
The DFS also found that Robinhood failed to comply with consumer protection requirements by not providing a consistent phone number where customers can call and file complaints.
Furthermore, the DFS says that Robinhood was improperly certified as compliant despite its numerous shortcomings.
According to DFS Superintendent Adrienne Harris, Robinhood’s compliance with the law dwindled as the firm grew in size.
“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.
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 the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions.”
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Featured Image: Shutterstock/Mia Stendal