Despite all the cognitive capabilities at their disposal, human beings have retained a strong tendency to make mistakes. This has been proven quite a few times throughout our history, with each testimony practically forcing us to look for a defensive cover of some sort. We will, on our part, find that exact cover only when we bring dedicated regulatory bodies into the fold. While it took a bit of time for us to find it, the dedicated regulation concept, once it did arrive, altered the picture beyond recognition. Talk about how it managed to do so, the idea, for instance, wasted no time in concealing a lot of our shortcomings. However, the strong start didn’t keep up at all, and if we are being honest, it was all technology’s fault. You see, the moment technology and its layered nature took over the scene; it gave people an unprecedented chance to fulfil their ulterior motives at the expense of others. The sheer scale on which it begin to happen expectantly overwhelmed our governing forces, thus sending us back to square one. Fortunately, though, the horizons are reshaping once again, and the same has been wholly evident over the recent past. In fact, one development involving Robinhood should only reinforce that dynamic even further.
The New York Department of Financial Services has formally handed Robinhood a $30 million fine in relation to a case that centered upon anti-money laundering and cybersecurity violations. According to NYDFS, Robinhood’s crypto cybersecurity program blatantly failed to fully address the company’s operational risks. Furthermore, the agency’s claims went ahead and talked to much more “significant deficiencies” that seemingly surround Robinhood’s crypto arm. These deficiencies are mainly associated with the company’s anti-money laundering compliance program. Nevertheless, that’s not where the allegations end, as NYFDS also sheds the light on how Robinhood violated consumer protection laws by not having a phone number on its website just for fielding customer complaints.
“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance — a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations,” said Adrienne Harris, the superintendent of NYDFS.
Interestingly enough, this is not the first time Robinhood has fallen on the wrong side of regulators’ books. Back in 2020, SEC charged the company a whopping $65 miillion for misleading customers about how it makes money. This was followed by another $70 million penalty by FINRA that stemmed from the company’s failure to protect customers on its trading platform. In case the stated stuff wasn’t enough, Robinhood was also involved in the whole GameStop saga. Nevertheless, going by the latest word, the company seems to feel good about its progress.
“We are pleased the settlement in principle reached last year and previously disclosed in our public filings is now final,” said Cheryl Crumpton, Robinhood’s associate general counsel of litigation and regulatory enforcement. “We have made significant progress building industry-leading legal, compliance, and cybersecurity programs, and will continue to prioritize this work to best serve our customers.”