Things are not looking too great for Robinhood and its crypto arm. More specifically, the outfit has been hammered with a $30 million fine by the NYDFS. Apparently, RHC failed to adhere to money laundering requirements, cybersecurity practices and violated consumer protection.
Robinhood Crypto Is In The Hot Seat
When Robinhood entered the cryptocurrency space, people for excited. The company even set up a dedicated cryptocurrency outfit, dubbed Robinhood Crypto, or RHC. Unfortunately, the outfit has seemingly violated various guidelines and requirements.. Such practices are unacceptable and warrant a $30 million fine by the New York State Department of Financial Services.
Even though RHC conducted self-reporting compliance, an investigation by the NYDFS highlighted various shortcomings. Part of these issues stem from the growing demand for exposure to cryptocurrencies and the company being unable to keep up. Even so, that is not an excuse for an inadequate BSA/AML implementation, improperly addressing risks, and failure to step up its transaction monitoring system.
NYDFS Superintendent Adrienne Harris adds:
“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.”
Paying the $30 million fine is only the first step for Robinhood Crypto. The outfit will need to retain an independent consultant to perform ongoing evaluations of regulatory compliance and remediation efforts. As RHC failed to comply with various requirements and consumer protection guidelines, the company has much to make up for. Adding a dedicated phone number for consumer complaints is another requirement.