How Square Secures Their Ecosystem Against AML

Getting To Know AML & Square (NYSE: SQ)

Square (NYSE: SQ) is a technology-infused financial services company that works with small businesses and individuals through their ecosystem of products and services to match their needs.

Since Square processes millions of payments per day, they strive to be the experts when it comes to payments through their hardware and software products such as Cash App, eCommerce, and small business terminals. They moderate all of the transactions throughout their payment platforms for businesses to continue to construct their secure and reliable services. They do this via their Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements for small businesses.

What Is Anti-Money Laundering or AML

AML relates to the procedures under the law and regulations to prevent criminals from illegally obtaining funds and making it seem as though it was legitimate income.

These laws and regulations for AML are for targeting criminal activities such as market manipulation, trading illegal goods and services, tax evasion, and many other methods to conceal the income from criminal activity. Financial institutions are the ones responsible to continue to monitor and maintain AML procedures through customer transactions.

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This is why Square authenticates, secures, and protects all of their data from the time the customer uses a credit card on their payment terminals, to when the business owner receives the payment. By manufacturing their products they also indirectly added another step of security to their hardware devices. They engineer security into every product that comes out of the factory with end-to-end encryption and protection with zero configuration required.

Malicious programs are not a match for Square’s security teams with back-end data management. They are protecting their businesses and their customers through their secure platforms on a daily basis.

Square’s Cash App Ecosystem and Security.

As you may know, Square owns Cash App. It is primarily used as a peer-to-peer network, however, you can also invest in stocks and Bitcoin as well. It has effectively become a digital bank for many as they even offer some advantages that others simply can’t compete with.

Features like investing in stocks for as little as $1, a Cash Card that gives you Boosts which are essentially discounts at stores, and their own unique Cashtags that you can scan through QR codes to send money to anyone on the Cash App platform.

All of these features however are backed by a variety of safety measures, however this time it’s primarily for individuals. This includes fraud protection to prevent AML and the ability to pause debit card spending whenever necessary.

More recently, cryptocurrency has faced backlash because of the potential AML use cases. The reason primarily stems from unregulated crypto exchanges due to the anonymity a user can hold. Since cryptocurrencies are becoming more popular, it’s become increasingly more difficult for exchanges to validify customers’ identities due to the industry’s lack of regulation and oversight.

However, Square’s Cash App is different because they use KYC. This allows them to be aware of when and what their customers are using their Bitcoin for to prevent AML.

The Key Takeaway

Square has done a fantastic job when it comes to financial service security on their hardware and software products, this is why so many small business owners use Square for their business needs.

They have also grown their financial ecosystem to new heights as big portions of the world were forced to shift to digital-based banks and financial institutions during 2020. It will be exciting to see where Square will be in the next decade as they continue to take market share from the traditional banking industry through increased security-driven data management platforms.

Square will be a nice tech stock addition to any portfolio. Leave a comment if you think its growth will outpace its competitors in its industry!

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Tim Rolle
Investor of 6 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.
Articles: 117

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