The New York State Department of Financial Services (NYDFS) has imposed a $30 million fine on Robinhood Crypto, the digital assets trading arm of Robinhood Markets Inc. (NASDAQ: HOOD), the regulator said in an announcement on Tuesday.
According to Superintendent Adrienne Harris of the NYDFS, the penalty is for “significant anti-money laundering, cybersecurity and consumer protection violations.” It is the regulator’s first such penalty for a crypto company.
Robinhood violated BSA/AML regulations
The regulator notes in the press release announcing the fine that its investigation had found Robinhood Crypto did not adhere to and remain compliant to Bank Secrecy Act and Anti-Money Laundering (BSA/AML). The platform also violated key consumer and reporting requirements, it added.
“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance,” Harris said, noting that these requirements apply across all financial services providers in New York State – be it virtual currency providers or traditional companies.
DFS will continue to investigate and take action when any licensee violates the law or the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions.”
As part of the settlement with the NYDFS, Robinhood is required to acquire the services of an independent consultant, who among other things, will ensure compliance and work on remediation efforts.
Robinhood first revealed the settlement with the regulator last year, highlighting a modest $10 million fine that has risen to $30 million. The company was also hit with a $70 million penalty from the US Financial Industry Regulatory Authority (FINRA) over systemic failures that exposed consumers to financial harm.