Reported by Gretchen Morgenson

Federal financial regulators are exploring allegations by two whistleblowers that Cash App, the popular mobile payment platform, and entities providing transaction services to its users performed inadequate due diligence on customers, potentially opening the door to money laundering, terrorism financing and other illegal activities.

While banks are required to know the true identity of every customer, the Cash App program “had no effective procedure to establish the identity of its customers,” the whistleblowers said. In their complaints, reviewed by NBC News, the whistleblowers detail an array of questionable Cash App transactions with entities under sanction by the Treasury Department’s Office of Foreign Assets Control, operations known to sell personal information and credit card data for illegal purposes, and offshore gambling sites barred to U.S. citizens.

Among the big-name companies partnering with Cash App are Visa Inc., the giant payment processor, and Wells Fargo.

The whistleblowers filed their complaint with the Financial Crimes Enforcement Network, or FinCEN, a unit of the U.S. Treasury that administers the Bank Secrecy Act and analyzes financial transactions to combat money laundering, terrorist financing and other illicit activities.

Customers of Cash App, introduced in 2013, can instantly send and receive money among themselves, and buy stocks and Bitcoin. They can also spend or withdraw funds using Cash Card, a prepaid Visa debit card. As of September 2023, Cash App had 55 million active transacting accounts and generated $239 billion of inflows during the prior four quarters, the company said. Cash App is so popular it has been referenced in hundreds of rap songs, sometimes in connection with illegal activities.

In addition to FinCEN, the whistleblowers made submissions alleging due diligence flaws at Cash App to the Securities and Exchange Commission, the nation’s top securities cop, and the Commodities Futures Trading Commission, which combats fraud in the market for digital assets, their lawyer said.

Read full report: https://www.yahoo.com/finance/news/feds-probing-whether-cash-app-133000811.html