Macquarie acknowledged the news this morning of federal prosecutors from the Southern District of New York reportedly probing Block’s compliance practices after a whistleblower provided the U.S. government with materials allegedly documenting anti-money laundering breaches, and management’s knowledge of them. The firm says anti-money laundering challenges in the fintech space are quite pervasive and in recent years have seen related fines surge. It sees more potential for fines and/or behavioral remedies for Block, like more robust oversight teams and infrastructure, as opposed to something structural like limitations on the types of business it can do. This would add some ongoing cost though, Macquarie points out. The firm keeps an Outperform rating on Block shares with a $95 price target.
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