Block Expects to Pay $764 Million to Settle a Justice Department Money-Laundering Probe
Block set aside nearly a billion dollars for a Justice Department probe into its money-laundering controls, even as Cash App posted its strongest quarter yet. Whether that reserve holds depends on a compliance test Block has already failed twice.
Block (NYSE:XYZ | XYZ Price Prediction), which owns Cash App and Square, disclosed on November 3, 2026, that it expects to pay about $764 million net to resolve a Justice Department investigation.
In October, Block reached an agreement in principle on a deferred prosecution agreement. Under that agreement, the DOJ would defer a charge for three years. The charge is that Block failed to maintain an effective anti-money laundering program under the Bank Secrecy Act. The filing contains no claim that Block laundered money.
Block also raised its outlook that day. Shares fell 1.45% in regular trading and then traded at $80.20 after hours, a 5.53% gain. Block did not link that gain to the DOJ news.
Block has a market value of $41.09 billion. The stock is up 16.72% year to date and sits within a 52-week range of $48.21 to $86.92. The question for shareholders is whether a known legal bill outweighs a deal that isn’t final and rising loan losses.
What Block Has Agreed To So Far
The expected agreement has a gross monetary component of approximately $964 million. The net payment is lower because Block gets credit for earlier regulatory settlements. The filing does not break down that $200 million credit.
Block set aside, or accrued, $764 million for the matter as of September 30, 2026. The deal still “remains subject to reaching a final agreement satisfactory to all parties and court approval,” and Block said losses above the reserve are “reasonably possible.”
In practice, a deferred prosecution agreement means three years of compliance under government scrutiny. If Block fully complies, the DOJ will “move to dismiss with prejudice the deferred charges.” If Block breaks the agreement, it could be prosecuted on the deferred charge.
Why the Accrual Looks Like a Floor
As of June 30, Block had accrued $526 million for the matter. The company said it “disputes the basis and methodology underlying the DOJ’s assessment of the matter.” The reserve has since risen by $238 million.
Total accrued legal liabilities rose from $173.0 million at December 31, 2025, to $674.6 million at June 30 and $980.6 million at September 30. In three months, Block went from challenging the DOJ’s numbers to setting aside more money.
Repeat compliance findings also raise the stakes.
On January 15, 2025, 48 state regulators announced an $80 million fine against Cash App over Bank Secrecy Act and anti-money laundering violations. New York’s financial regulator followed on April 10, 2025, with a $40 million penalty and an independent monitor. Because regulators keep finding problems with the same controls, the biggest risk is a breach during the three-year term.
A Stronger Quarter With Rising Credit Losses
Revenue reached $6.72 billion, up about 10% from $6.115 billion a year earlier. Gross profit rose 22% to $3.24 billion. Cash App gross profit grew 27% to $2.07 billion, and Square’s rose 14% to $1.16 billion.
Adjusted operating income jumped 92% to $923 million, so a single quarter of that profit is larger than the expected net DOJ payment. Block raised its 2026 gross profit forecast to $12.63 billion from $12.51 billion, and its early 2027 outlook calls for at least 15% gross profit growth.
Losses on transaction, loan and consumer receivables rose 65.6% to $601.7 million. Juan Hernandez, head of credit and underwriting, tied “a large growth in risk loss” to a calculated change in Cash App Borrow. Borrow loans moved from four weeks to six weeks, with a 7.5% fee.
Management also sees new revenue. Jack Dorsey said Block expects “our first monetization of our AI tools in Q4 of this year.”
What Could Change the Outlook for Block Stock
Block trades at 15 times forward earnings. That is a low multiple for a company that just raised its guidance and has already set aside money for its highest legal cost.
The agreement is still unsigned, though, and credit losses are growing much faster than revenue, and management’s forecast that loss growth will slow in the fourth quarter has to prove correct.
You can check this view against Block’s filings. A signed final agreement approved by the court at close to $764 million would confirm it, while a higher reserve in the annual report, or fourth-quarter losses that keep accelerating, would break it.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
