Verse, a European mobile payments provider owned by Jack Dorsey’s $50 billion fintech giant Block, has been told by its financial regulator to address concerns about money laundering and checks on the identities of users. If it doesn’t, it risks a penalty, including a fine, Forbes has learned.
Acquired by Block in 2020, Barcelona-based Verse is much the same as Cash App, the payments company under which it operates, providing a quick and easy way to transfer funds over a mobile device. While Cash App is only available in the U.S. and the U.K., Verse can be used across Europe and is Block’s play for more business on the continent. Such peer-to-peer payment apps have proven hugely popular with consumers, but increasingly, regulators in Europe are examining the risks that come with the technology, said Kathryn Westmore, a former PwC fraud investigator. In particular, there is “huge concern” around the verification of user identities as it pertains to fraud, she said.
On December 29, 2021, Verse received a “mandatory instruction” notice from its European financial provider, the Bank of Lithuania, which is often used by fintech companies because it offers quick access to the European market. The Vilnius institution, which provides Verse with its electronic money institution license in Europe and monitors compliance with financial legislation, said the company had until July 2022 to address concerns about guaranteeing the identities of customers. The bank said by failing to do so, Cash App’s sister business risked breaking anti-money laundering and terrorist financing laws. In the letter, the bank provided no more detail on which customers it was concerned about, or what specific updates to identity verification it required from Verse.