New York State Department Fines Robinhood $30m for Inadequate AML Compliance Measures

Richard Marley
August 03, 2022
2 minutes read
59

New York’s top financial regulator has fined Robinhood $30 million for failures and shortcomings in the company’s oversight of its AML compliance programs.

The New York State Department of Financial Services has taken action against the cryptocurrency trading unit of online brokerage Robinhood for alleged violations of Anti-Money Laundering (AML) and cybersecurity regulations in the department’s first crypto enforcement action.

The New York State financial regulator stated on 2 August that Robinhood has inadequate maintenance measures to ensure Anti-Money Laundering and cybersecurity compliance.

According to the consent order, Robinhood is required to retain an independent consultant to evaluate its compliance with NYDFS’s regulations and its remediation efforts. NYDFS reportedly found significant failures after a supervisory exam followed by an enforcement investigation of Robinhood.

The failures, the regulator said, resulted from shortcomings in the company’s management and oversight of its compliance programs. These include failures to ensure compliance and to assign adequate resources to the AML and cybersecurity programs, particularly as the company grew quickly.

Robinhood stated that in its latest quarterly filing, it had a total of 15.9 million monthly active users at the end of March.

This was first publicly disclosed in the investigation and settlement with the NYDFS a year ago in the paperwork filed with the Securities and Exchange Commission. The company initially expected a monetary penalty of at least $10m and later increased it to $30m.

NYDFS said Robinhood’s Bank Secrecy Act and anti-money-laundering compliance program was insufficiently staffed and failed to transition in a timely manner from a manual transaction monitoring system that was appropriate for the company’s size, transaction volumes and customer profiles.

Robinhood’s cybersecurity program also failed to address the company’s operational risks, and its policies weren’t in compliance with the regulator’s cybersecurity and virtual currency regulations, NYDFS said.

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Spotting the Signs of Recruitment Fraud

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With transforming technologies, the overall market is growing to produce more job opportunities for interested candidates. As per the surveys, this number is expected to grow in the coming years, increasing recruitment fraud risks.

Through talent acquisition scams, criminals not only defraud job seekers but also damage the reputation of established companies. So it is in their higher interest to find and implement a credible solution that efficiently mitigates the risks of stolen identity or credentials.

Shufti Pro’s identity verification services present an ideal option to counter this problem through its advanced identification features, including document authentication, facial recognition and address verification.

Want to learn more about identity verification services for eliminating recruitment fraud?

Connect with a KYC Expert

New York State Department Fines Robinhood $30m for Inadequate AML Compliance Measures

How Much Have Australians Lost to Scams?

How do Online Recruiting Scams Work?

Spotting the Signs of Recruitment Fraud

High Profile Criminal Cases of Recruitment Fraud

1. Europol Arrested a Gang Involved in €20 Million Employment Fraud

2. Hampton Gang Member Convicted for Pandemic Employment Fraud

Talent Acquisition Fraud and the Role of Law Enforcement Authorities

1. FBI Issued Instructions to Avoid Employment Scam

2. UK Government – Raising Awareness of Employment Scams

How Shufti Pro can Help

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