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Wednesday, January 10, 2018

Western Union forfeits $60 million to NYDFS

Following an investigation by the New York Department of Financial Services set forth in Western Union Co.'s January 2017 deferred prosecution agreement (DPA) with the U.S. Department of Justice, its Western Union Financial Services Inc. subsidiary agreed to a consent order with NYDFS on Jan. 4, 2018. In the DPA, the company acknowledged deficiencies in its money services compliance programs from 2004 to 2012.

Under terms of the consent order, WUFSI agreed to pay $60 million to NYDFS to resolve violations of New York law arising out of facts set forth in the DPA. In its original agreement with the Justice Department, Western Union admitted to criminal violations including willfully failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud.

The NYDFS consent order specifically acknowledged that since 2012, Western Union had undertaken agreed-upon remedial measures and implemented compliance enhancements. Western Union said it now spends $200 million per year on compliance measures, which has resulted in a 60 percent reduction in fraud over the past six years.

"We share the New York Department of Financial Services' goal of protecting consumers and the integrity of our global money transfer network," stated Western Union. "We have acknowledged that certain conduct in the 2004 to 2012 period fell short of that goal, but we have made substantial improvements since then as part of our commitment to continually enhance our compliance programs."

History of lax procedures

In January 2017, Western Union Co. agreed to forfeit $586 million to compensate individuals impacted and entered into agreements with the Federal Trade Commission, the Justice Department, and the U.S. Attorneys' Offices of the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania and the Southern District of Florida.

"Western Union's failure to comply with anti-money laundering laws provided fraudsters and other criminals with a means to transfer criminal proceeds and victimize innocent people," stated Acting U.S. Attorney Louis D. Lappen in January 2017. "Western Union has agreed to forfeit $586 million, the largest forfeiture ever imposed on a money services business, and has agreed to take specific steps to ensure that it complies with the law in the future."

The U.S. Postal Inspection Service conducted the criminal fraud investigation and the FTC the civil fraud investigation. "Since 2001 our office, in conjunction with the U.S. Postal Inspection Service, has charged and convicted 26 Western Union Agents in the United States and Canada who conspired with international fraudsters to defraud tens of thousands of U.S. residents via various forms of mass marketing schemes," said U.S. Attorney Bruce B. Brandler of the Middle District of Pennsylvania.

Referencing a direct link to New York, U.S. Attorney Eileen M. Decker of the Central District of California said a Western Union agent prosecuted by her office pleaded guilty to federal charges of structuring transactions – illegal conduct the company knew about for at least five years.

"Western Union documents indicate that its employees fought to keep this agent – as well as several other high-volume independent agents in New York City – working for Western Union because of the high volume of their activity," Decker said.

Consumers who may have lost money to scammers that accepted Western Union payments between Jan. 1, 2004, and Jan. 19, 2017, may be eligible for compensation. For information, visit www.ftc.gov/enforcement/cases-proceedings/refunds/western-union-settlement-faqs . Claims must be submitted no later than Feb. 12, 2018. end of article

Editor's Note:

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