Western Union To Pay $586M To Feds For Failing To Stop Fraud
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WASHINGTON (CBSMiami) – Western Union has agreed to pay $586 million to the federal government after admitting to criminal violations including willfully failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud.
The world's biggest money-transfer business enabled the proliferation of illegal gambling, money laundering and fraud-related schemes, the Justice Department and other U.S. authorities said Thursday.
"As this case shows, wiring money can be the fastest way to send it – directly into the pockets of criminals and scam artists," said Acting Assistant Attorney General Bitkower. "Western Union is now paying the price for placing profits ahead of its own customers. Together with our colleagues, the Criminal Division will both hold to account those who facilitate fraud and abuse of vulnerable populations, and also work to recoup losses and compensate victims."
The penalty, which is the biggest ever against a money-services company, is to be used to reimburse consumers who were victims of fraud between 2004 and 2012.
In one scheme, with the help of Western Union agents, Chinese immigrants used the service to send hundreds of millions of dollars to pay human smugglers, wiring the money in small increments to avoid federal reporting requirement, U.S. authorities said.
In another scheme, fraudsters offering fake prizes and job opportunities swindled tens of thousands of U.S. consumers, and gave Western Union agents a cut in return for processing the payments, authorities said.
Also, Western Union has been on notice since at least December 1997, about people using its money transfer system to send illegal gambling transactions from Florida to offshore sportsbooks. Western Union knew that gambling transactions presented a heightened risk of money laundering and that through at least 2012, certain procedures it implemented were not effective at limiting transactions with characteristics indicative of illegal gaming from the United States to other countries, according to authorities.
As part of Thursday's deal with the feds, Western Union will take steps to improve its oversight of agents and its protection of customers plus ensure the company will report suspicious or illegal activity by its agents.
Those actions will be reviewed by an independent compliance auditor for three years.
Since 2001, 29 owners or employees of Western Union have been charged and convicted for their roles in fraudulent and structured transactions.
