Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS—Western Union fined over money laundering, fraud charges, (Jan 20, 2017)

By J. Preston Carter, J.D., LL.M.

The Western Union Company has agreed to forfeit $586 million and admits to criminal violations including willfully failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud as part of agreements with the FTC, DOJ, and several U.S. Attorneys’ Offices.

FinCEN action. The U.S. Department of the Treasury Financial Crimes Enforcement Network’s release stated that, as a result of Western Union’s willful AML violations, some of its money transmitter agents, which the company is said to have suspected of being involved in fraud and money laundering, were able to continue to use the company’s money transfer system to facilitate their illicit activity. This activity included the use of remittances to send narcotics proceeds to Mexico. FinCEN will deem its penalty fully satisfied by Western Union’s payment to the Justice Department pursuant to the forfeiture order of $586 million for the victims of fraud.

"This consent agreement with Western Union reflects that company’s recognition of past shortcomings and the damage that can be done when there is a failure of a culture of compliance," said FinCEN Acting Director Jamal El-Hindi. "Money transmitters, large and small, play a critical role in the movement of legitimate funds around that world, and they also are of vital assistance to FinCEN and law enforcement in thwarting illicit activity."

FTC charges. The FTC’s complaint alleges that Western Union violated the FTC Act and the Telemarketing Act. The complaint charges that for many years, "fraudsters around the world" have used Western Union’s money transfer system even though the company has long been aware of the problem, and that some Western Union agents have been complicit in fraud. The company agreed to settle FTC charges that it declined to put in place effective anti-fraud policies and procedures and has failed to act promptly against problem agents.

The U.S. Attorney’s office stated that "Our investigation uncovered hundreds of millions of dollars being sent to China in structured transactions designed to avoid the reporting requirements of the Bank Secrecy Act, and much of the money was sent to China by illegal immigrants to pay their human smugglers."

"Western Union owes a responsibility to American consumers to guard against fraud, but instead the company looked the other way, and its system facilitated scammers and rip-offs," said FTC Chairwoman Edith Ramirez. "The agreements we are announcing today will ensure Western Union changes the way it conducts its business and provides more than a half billion dollars for refunds to consumers who were harmed by the company’s unlawful behavior."

Companies: The Western Union Company

News: ConsumerProtection FederalTradeCommissionNews