Banking and Finance Law Daily Western Union fined over AML violations, fraud charges
Friday, January 20, 2017

Western Union fined over AML violations, fraud charges

By J. Preston Carter, J.D., LL.M.

The Financial Crimes Enforcement Network has assessed a $184 million civil money penalty against Western Union Financial Services, Inc., based on FinCEN’s determination that Western Union willfully violated the Bank Secrecy Act’s anti-money laundering (AML) requirements by failing to implement and maintain an effective, risk-based AML program and by failing to file timely suspicious activity reports. FinCEN’s release adds that Western Union also entered into agreements with the Federal Trade Commission, Justice Department, and several U.S. Attorneys’ Offices. 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.

FinCEN action. FinCEN 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.

"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: Western Union

MainStory: TopStory BankingOperations BankSecrecyAct EnforcementActions UDAAP

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