Western Union forfeits $586M for AML violations and consumer fraud

The Federal Trade Commission has announced that the Western Union Company (Western Union), a global money services business headquartered in Englewood, Colorado, has agreed to forfeit $586 million and enter 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. In its agreement with the Justice Department, Western Union admits to criminal violations including willfully failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud. The forfeited funds will fund refunds to consumers who were harmed by the company's unlawful actions.

In a related action, FinCEN announced it has issued a consent assessment of a civil money penalty of $184 million against Western Union Financial Services, Inc. (WUFSI). WUFSI consented to FinCEN’s determination that prior to 2012, WUFSI 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 (SARs). FinCEN’s penalty is in conjunction with the actions by the U.S. Department of Justice (DOJ) and the U.S. Federal Trade Commission (FTC), and will be satisfied by Western Union's forfeiture to the U.S. Treasury.

Western Union agreed to settle charges by the FTC in a complaint filed in the U.S. District Court for the Middle District of Pennsylvania, alleging that the company’s conduct violated the FTC 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 FTC’s complaint alleges that Western Union declined to put in place effective anti-fraud policies and procedures and has failed to act promptly against problem agents. Western Union has identified many of the problem agents but has profited from their actions by not promptly suspending and terminating them.

In resolving the FTC charges, Western Union agreed to a monetary judgment of $586 million and to implement and maintain a comprehensive anti-fraud program with training for its agents and their front line associates, monitoring to detect and prevent fraud-induced money transfers, due diligence on all new and renewing company agents, and suspension or termination of noncompliant agents.
The FTC order prohibits Western Union from transmitting a money transfer that it knows or reasonably should know is fraud-induced, and requires it to:

• block money transfers sent to any person who is the subject of a fraud report;
• provide clear and conspicuous consumer fraud warnings on its paper and electronic money transfer forms;
• increase the availability of websites and telephone numbers that enable consumers to file fraud complaints; and
• refund a fraudulently induced money transfer if the company failed to comply with its anti-fraud procedures in connection with that transaction.

In addition, consistent with the telemarketing sales rule, Western Union must not process a money transfer that it knows or should know is payment for a telemarketing transaction. The company’s compliance with the order will be monitored for three years by an independent compliance auditor.

• Justice Department news release