NEW YORK, April 10 (Reuters) -

Block will pay a $40 million civil fine and hire an

independent monitor to settle charges by New York's financial

services regulator that it failed to adequately police and stop

money laundering on its Cash App mobile payment service.

Announcing the fine on Thursday, New York's Department

of Financial Services faulted "critical gaps" in the Bank

Secrecy Act, anti-money laundering and know-your-customer

programs at Block, led by Twitter co-founder Jack Dorsey and

formerly known as Square.

Block agreed in January to pay an $80 million civil fine

to

settle

similar charges by 48 U.S. state financial regulators.

In a statement, the Oakland, California-based payments

company did not admit or deny wrongdoing, and said the New York

settlement ends "all previously pending state money transmission

license matters."

Apps such as Cash App and Venmo make it easy for people

to transmit money.

The New York regulator said Block's alleged shortfalls

included inadequate customer due diligence, and inadequate

risk-based controls to counter illegal activity such as money

laundering and terrorism financing.

It also said Block's lax oversight of bitcoin

transactions, which it began offering through Cash App in 2018,

and the company's subsequent rapid growth created "an

environment vulnerable to criminal exploitation."

The regulator cited Block's discovery in a 2022 internal

investigation of 8,359 Cash App accounts linked to a Russian

criminal network.

Adrienne Harris, New York's superintendent of financial

services, said compliance functions "must keep pace with company

growth or expansion" at both traditional financial services

companies and emerging cryptocurrency platforms.

Cash App had $283 billion of inflows in 2024, and 57

million monthly users at year end, a regulatory filing shows.

(Reporting by Jonathan Stempel in New York)