The New York Department of Financial Services, or NYDFS, has announced a $30 million penalty on Robinhood’s cryptocurrency arm for alleged violations related to anti-money laundering, cybersecurity and consumer protection laws.

In a Tuesday announcement, NYDFS superintendent Adrienne Harris said Robinhood Crypto will pay a $30 million penalty to the state “for significant failures in the areas of bank secrecy act/anti-money laundering obligations” as well as cybersecurity failures that allegedly violated New York regulations. According to Harris, Robinhood’s crypto unit will also be required to hire an independent consultant to evaluate the firm’s compliance and remediation efforts.

“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance,” said Harris. “All virtual currency companies licensed in New York State are subject to the same anti-money laundering, consumer protection, and cybersecurity regulations as traditional financial services companies.”

#ICYMI: DFS Superintendent Harris Announces $30 Million Penalty on Robinhood Crypto for Significant Anti- Money Laundering, Cybersecurity & Consumer Protection Violations. Read more: https://t.co/TUD2SwmOcw

— NYDFS (@NYDFS) August 2, 2022

According to the NYDFS’s consent order, the department conducted an examination of Robinhood Crypto between January and September 2019, alleging that it had “found serious deficiencies in RHC’s compliance function across multiple areas.” The NYDFS then began an enforcement investigation, finding that Robinhood’s crypto arm violated aspects of the Bank Secrecy Act, or BSA, and Anti-Money Laundering, or AML, regulations.

Among these violations were allegations Robinhood Crypto did not transition to an adequately sized transaction monitoring system o “devote sufficient resources to adequately address risks.” In addition, the financial regulator alleged Robinhood failed “to maintain on its website a telephone number for the receipt of customer complaints” as part of a supervisory agreement.

In a statement to Cointelegraph, Robinhood associate general counsel of litigation and regulatory enforcement Cheryl Crumpton said the firm had reached a settlement in principle with the NYDFS in 2021 and disclosed the matter in its public filings. According to Crumpton, Robinhood made "significant progress building industry-leading legal, compliance, and cybersecurity programs." 

Related: Robinhood makes significant strides in crypto business in Q1 despite falling revenue

In June 2021, the U.S. Financial Industry Regulatory Authority penalized Robinhood for roughly $70 million for allegedly causing “widespread and significant harm” to thousands of users and exhibiting “systemic supervisory failures” starting as early as September 2016. At the time of publication, shares of HOOD were trading at $9, having fallen roughly 0.3% in the last 24 hours.