Dive Brief:

• Block would pay $764 million under an “agreement in principle” with the Department of Justice reached last month to settle charges that the company violated the Bank Secrecy Act by having a weak program to monitor for money laundering. The DOJ would defer charges for three years if Block complies with terms of the agreement, the company said Tuesday in a regulatory filing.
• Block “cannot provide any assurance that a final agreement will be reached on the terms described above or at all, or that the DOJ will not ultimately take legal action against the Company should the parties not finalize a resolution,” the company wrote in its quarterly report. Block said it would receive $200 million in credit under the agreement “for prior regulatory resolutions.”
• A Block spokesperson had no comment Wednesday beyond its filing. In an email, a Justice Department spokesperson said the agency “looks forward to sharing more once the matter is fully resolved.” The issue was not discussed by Block’s executives during a call Tuesday with analysts regarding the company’s third-quarter financial results.

Dive Insight:

The DOJ would “dismiss with prejudice the deferred charges” if Block complies with the obligations specified in the agreement, the company said in its filing. Block said it “cannot predict the final terms of the resolution, and it is reasonably possible that those terms could result in losses” exceeding the $764 million it has accrued for the settlement.

In March 2023, a short seller firm, Hindenburg Research, raised issues about Block's fraud monitoring with the publication of a report. The report alleged that Cash App was a platform for criminal activity with lax fraud controls that resulted in duplicative accounts and fraudulent payments. 

There has been no stated connection between the regulatory action and the firm’s report. Hindenburg announced its closure in early 2025.

In May, Block disclosed that the DOJ had presented terms to resolve the issues, and that the company had made a counterproposal to the department in April.

Block had “a pattern of disregard” for anti-money laundering and “know your customer” laws, according to the Hindenburg report, which the firm said was based on more than a dozen interviews with former Block employees during its two-year investigation.

Block, based in Oakland, California, disputed the report and threatened legal action, calling it “factually inaccurate and misleading.”

The Securities and Exchange Commission told Block in March that it had ended its investigation of the matter and declined to pursue “an enforcement action,” Block said in the filing Tuesday.

In July, Block agreed to pay $45 million to settle allegations from 46 states that it had misled consumers about the safety of its peer-to-peer financial tool Cash App and didn’t offer users fraud protections.

Last year, Block agreed to pay $255 million in a settlement with state and federal regulators – including the Consumer Financial Protection Bureau and 48 states – over weak security protocols in Cash App, leading to consumer fraud losses. The company also paid $40 million to New York financial regulators last year in a separate civil enforcement action. 

Separately Tuesday, Block said that Cash App added about 1 million monthly active users over the past quarter, to reach a base of 60 million, as the company expanded its local commerce network to help Square sellers lure more users of the financial app.

Block is counting on its local merchant network to connect more small businesses and Cash App users, generating further commerce for both Square sellers and the app.

Block reported net income of $565.6 million, a 23% increase from the same quarter last year, with revenue rising about 10% to $6.72 billion. Block also boosted its income forecast for the full year and 2027, with gross profit expected to increase by 22% this year and by at least 15% in 2027.

The quarter was among Block’s “strongest recent performances,” TD Cowen analyst Bryan Bergin wrote Wednesday in a note to clients, citing results at Square, Cash App and “continued lending monetization with robust economics.”

Founder and CEO Jack Dorsey also said Block will generate its first revenue in the fourth quarter from several of the AI tools the company has released to customers. The company plans an event next week to formally introduce its new AI products ecosystem.