The State Department of Financial Services of New York has filed allegations against the crypto retail investing platform and has imposed a fine of $30 million.
Due to a failure in compliance with the cybersecurity anti-money laundering regulations, Robinhood’s crypto division is under serious scrutiny.
According to the reports, the NYDFS (New York State Department of Financial Services) found Robinhood’s crypto department guilty through enforced investigations and supervisory examination. This is one of the first crypto enforcement laws imposed by the NYDFS.
BREAKING: New York's top financial regulator has imposed a $30 million fine on Robinhood's crypto trading unit, for allegedly failing to maintain anti-money laundering and cybersecurity programs.
This is the first, but unlikely the last, crypto-sector enforcement action by NYDFS
— Mario Nawfal (@MarioNawfal) August 2, 2022
As per the statements given by the officials from NYDFS, Robinhood’s crypto department lacked proper staff or experts in designing anti-money laundering security and Bank Secrecy Act programs.
The investment company’s IT department has failed to address the operational risks encountered by its crypto division. Their policies do not meet the terms of virtual currency and cybersecurity regulations.
The reports collected by a close investigation of the regulators reveal that Robinhood hasn’t even ensured any measures to protect consumers’ requirements.
The crypto investment platform’s website doesn’t even have a contact number that the clients can contact to register their complaints.
What will be the next steps taken by the DFS to ensure the security of crypto investors?
The Department of Finance of New York State has installed safety measures that would protect consumers from making any bad investments and ensure that the financial institutions function safely and sound.
The Superintendent of NY has asked the DFS to continue their investigation into Robinhood and take whatever action is deemed best if the licensee is found to violate any of the regulations and laws imposed by the Department.
Robinhood is warned of the miscreants and loopholes in its system. The company will now have to work with an independent consultant to evaluate all the regulations imposed by the DFS and take measures for remediation.