The New York State Department of Financial Services has fined Robinhood’s crypto shopping for and selling unit $30 million for alleged infringements of anti-money-laundering and cybersecurity regulations.
Per a WSJ report, NYDFS stated Robinhood’s Bank Secrecy Act and anti-money-laundering compliance software program was once once “insufficiently staffed” and “failed to transition in a well-timed manner” from an information transaction monitoring machine that was once fantastic for the company’s size, transaction volumes, and consumer profiles.
Alongside, Robinhood’s cybersecurity software moreover failed to address the company’s operational risks, and its insurance plan policies weren’t in accordance with the regulator’s cybersecurity and digital overseas money regulations, per NYDFS. Robinhood allegedly moreover did to comply with superb consumer-protection necessities by using no longer having a devoted smartphone extent on its Internet website to collect customer complaints.
Revealing the crux of the consent order, WSJ noted,
“During the phase of the consent order, Robinhood additionally will be required to maintain an unbiased marketing advisor to consider its compliance with NYDFS’s suggestions and its remediation efforts.“
WSJ’s document additionally posted that the regulatory physique observed sizeable screw-ups by means of way of a “supervisory exam” and via a subsequent “enforcement investigation” of the online brokerage firm. The failures have allegedly been the stop end result of the organization’s management’s oversight of its compliance programs.
By imposing this fine, the regulator has taken its first crypto-related enforcement action. This, notably, comes at a time when its new superintendent, Adrienne A. Harris, seems to furnish increased teaching for the crypto industry. Alongside, she moreover intends to extend the regulator’s digital forex team.
Not a surprise: Robinhood knew that this used to be coming
Well, even though the order has sincerely been passed, it is nicely well worth recalling that Robinhood was once as soon as already searching beforehand to this turnaround. Last July, the company’s S-1 filings added to moderate that the brokerage’s crypto division is underneath the bus for identical reasons.
Well, this is now not the first time Robinhood has been non-compliant with regulations. In December 2020, the commercial enterprise corporation paid the SEC a $65 million fee to settle allegations that it had misled customers. And in June closing year, the brokerage association was once fined $70 million with the resource of the Financial Industry Regulatory Authority for failing to defend customers.