U.S. prosecutors are reportedly probing financial transactions at Block (NYSE: SQ), asking tough questions about potential compliance lapses at the company's Square and Cash App divisions. The reports caught investors off guard, sending Block shares down about 10% as of 1:45 p.m. ET.

Block products, including Square and Cash App, have been central to the fintech revolution, offering consumers and businesses new ways to transfer money and facilitate commerce. But they also mean the company is subject to U.S. anti-money-laundering and terrorism laws.

On Wednesday, NBC News reported that Block is subject to a probe into whether the company gathered sufficient information on customers to assess risks. Prosecutors are also looking into whether Square processed transactions involving countries subject to economic sanctions and whether Block handled cryptocurrency transactions involving terrorist groups.

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Source Fool.com