The Wall Street Journal (WSJ) reported on Tuesday that The New York State Department of Financial Services (NYDFS) has fined the online brokerage Robinhood’s cryptocurrency trading division $30 million for alleged violations of anti-money laundering (AML) and cybersecurity standards (Aug. 2).
Before the firm went public, Robinhood revealed the investigation in a filing with the Securities and Exchange Commission, which was launched by the NYDFS in March. T
According to reports, Robinhood, “failed to maintain and certify compliant anti-money-laundering and cybersecurity programs,” as stated in the New York State finance regulator’s first crypto enforcement action. Additionally, Robinhood must hire an impartial consultant to assess its compliance.
Further according to the report, the NYDFS supervisory exam and a subsequent enforcement investigation determined that Robinhood Crypto had caused “significant failures,” which led to “shortcomings in the company’s management and oversight of its compliance programs,” including failures to uphold a culture of compliance or allocate resources to the programmes, particularly as the company expanded quickly.
Robinhood’s most recent quarterly report reveals that, as of the end of March, it had around 15.9 million monthly active customers. According to the report, the corporation revealed the NYDFS probe and payment in a Securities and Exchange Commission (SEC) filing last year.
The Bank Secrecy Act and AML compliance program for Robinhood were understaffed and unable to transition rapidly enough from its manual transaction monitoring system, according to the NYDFS inquiry. The company also disregarded consumer protection regulations by failing to post a specific phone number for client complaints on its website, according to the investigation.
“We have made significant progress building industry-leading legal, compliance, and cybersecurity programs, and will continue to prioritize this work to best serve our customers,” said Robinhood Associate General Counsel of Litigation and Regulatory Enforcement Cheryl Crumpton in a statement Tuesday.