Robinhood said it expects to pay a $30 million fine as part of anti-money laundering probe of its crypto business
mfox@businessinsider.com (Matthew Fox)
© JIM WATSON/AFP via Getty Images JIM WATSON/AFP via Getty Images
Robinhood said it expects to pay a $30 million penalty related to an anti-money laundering probe of its crypto business.
The penalty would be on top of a $70 million fine from FINRA, and a $65 million settlement with the SEC.
The disclosure came in an amended S-1 filed with the SEC on Monday.
Robinhood said it expects to pay a $30 million penalty in relation to an anti-money laundering probe of its cryptocurrency business, according to an amended S-1 filed with the SEC on Monday.
The online trading app said that in July of 2020, the New York Department of Financial Services said Robinhood's crypto unit had a number of "matters requiring attention," primarily focused on anti-money laundering and cybersecurity-related issues.
In March, a subsequent investigation by the Consumer Protection and Financial Enforcement division of the NYDFS found alleged violations of anti-money laundering and New York Banking Law requirements, "including the failure to maintain and certify a compliant anti-money laundering program," according to the filing.
Other violations include of cybersecurity and virtual currency requirements, "including certain deficiencies in our policies and procedures regarding risk assessment, lack of an adequate incident response and business continuity plan, and deficiencies in our application development security," the filing said.
Robinhood said its crypto business has reached "a settlement in principle with respect to these allegations, subject to final documentation." The brokerage firm expects to pay a monetary penalty of $30 million and engage a monitor, likely to prevent further violations.
This isn't Robinhood's first multi-million dollar penalty in relation to its business operations. In December, the company agreed to pay a $65 million settlement with the SEC for misleading its customers about revenue sources and failing to satisfy its duty of best execution for customer trades.
And in June, Robinhood agreed to pay a $70 million fine with FINRA to settle claims that the brokerage misled millions of customers, approved ineligible traders for risky strategies, and didn't supervise technology that locked millions out of trading, the regulator announced today.
The $165 million in total one-time fines Robinhood has been ordered to pay represent 32% of the company's first quarter revenues of $522 million.
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