People wait in line for T-shirts at online brokerage Robinhood’s Wall Street pop-up kiosk after the company went public earlier in the day on July 29, 2021 in New York City.
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The NYDFS, the government body responsible for regulating financial services and products, said Robinhood Crypto’s anti-money laundering and cybersecurity program was understaffed and under-resourced to address the risks. He also claimed that Robinhood’s crypto division was unable to timely move from a manual transaction monitoring system to one more appropriate for its user size and transaction volume.
The $30 million fine is the first application of the NYDFS by the crypto sector. Last year, Robinhood said it expected to pay $30 million in compensation to the NYDFS following a 2020 investigation into money laundering and cybersecurity issues.
The regulator said that Robinhood Crypto broke the law when, despite the perceived problems, it confirmed compliance with the agency. Robinhood Crypto also allegedly violated consumer protection requirements when it failed to maintain a separate and dedicated phone number on its website for consumer complaints.
Robinhood Crypto will have to hire an independent consultant to assess the company’s compliance with the relevant regulations.
“As its business has grown, Robinhood Crypto has not invested adequate resources and attention into developing and maintaining a culture of compliance — a failure that has led to serious violations of the Department of Money Laundering and Cybersecurity regulations,” said NYDFS Superintendent Adrienne Harris..
The fine is the latest in a string of monetary fines imposed by regulators on Robinhood. Robinhood paid $65 million in 2020. settle an SEC investigation about misleading customers. In 2021 Financial Industry Regulatory Authority (FINRA) earned Robinhood $70 million for failures and misleading customers.
“We are pleased that the principal settlement reached last year and previously disclosed in our public documents is now final,” said Sheryl Crumpton, Deputy General Counsel for Litigation and Compliance at Robinhood.
Crumpton added that the company has made “significant progress” in building its legal, compliance and cybersecurity programs.