New York State Department of Financial Services (NYSDFS) has fined the cryptocurrency trading online platform Robinhood. A fine of 30 million USD was charged due to the violation of anti-money laundering (AML) and cybersecurity standards. On August 2nd, NY financial regulator announced that Robinhood Crypto LCC failed to comply with regulations and take proper measures to prevent money laundering and sustain proper cybersecurity for its users.
Due to a series of serious problems occurring with compliance, the applicable amount of resources for the software, and the inability to find ample resources for the programs, Robinhood is obliged to hire an external consultant to observe and review to which degree the company follows the requirements imposed by the NYSDFS.
The company’s exponential growth throughout the pandemic made it harder to implement new regulations and required more personnel to sustain its work. According to the regulating body, the company’s management and control of the compliance system were inadequate and therefore caused those failures.
Cheryl Crumpton, Robinhood’s Associate General Counsel of Litigation and Regulatory Enforcement, said in a statement Tuesday:
“We have made significant progress building industry-leading legal, compliance, and cybersecurity programs, and will continue to prioritize this work to best serve our customers.”
An investigation in 2020 on Robinhood’s cybersecurity and anti-money laundering problems concluded that Robinhood violated a number of regulatory standards. Following that, the company’s potential fine for the violation was set at 10 million USD, which later was raised up to 30 million USD.