CMC – Western Union, one of the leading money transfer agencies across the Caribbean, has admitted to anti-money laundering and consumer fraud violations.
As a result, the United States Department of Justice (DOJ) said The Western Union Company (Western Union), headquartered in Englewood, Colorado, has agreed to forfeit US$586 million.
The DOJ said the money transfer agency has also agreed and enter into agreements with the Justice Department, the US Federal Trade Commission (FTC), and the US Attorney’s Offices for the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania and the Southern District of Florida.
“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 David Bitkower of the DOJ’s Criminal Division.
“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,” he added.
FTC Chairwoman Edith Ramirez said Western Union owes a responsibility to consumers to guard against fraud, “but instead the company looked the other way, and its system facilitated scammers and rip-offs.”
She said the agreements “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.”
In its agreement with the Justice Department, Western Union admits to criminal violations, including willfully failing to maintain an effective anti-money laundering (AML) program and aiding and abetting wire fraud, the DOJ said.
According to admissions contained in the deferred prosecution agreement (DPA) and the accompanying statement of facts, between 2004 and 2012, Western Union violated US laws—the Bank Secrecy Act (BSA) and anti-fraud statutes—by processing hundreds of thousands of transactions for Western Union agents and others involved in an international consumer fraud scheme.
As part of the scheme, the DOJ said fraudsters contacted victims in the US and falsely posed as family members in need or promised prizes or job opportunities.
The fraudsters directed the victims to send money through Western Union to help their relative or claim their prize, the DOJ said.
It said various Western Union agents were “complicit in these fraud schemes, often processing the fraud payments for the fraudsters in return for a cut of the fraud proceeds.
“Western Union knew of but failed to take corrective action against Western Union agents involved in or facilitating fraud-related transactions.”.
Beginning in at least 2004, it said Western Union recorded customer complaints about fraudulntly induced payments in what are known as consumer fraud reports (CFRs).
In 2004, the DOJ said Western Union’s Corporate Security Department proposed global guidelines for discipline and suspension of Western Union agents that processed a “materially-elevated number of fraud transactions.”
In these guidelines, the DOJ said the Corporate Security Department “effectively recommended automatically suspending any agent that paid 15 CFRs within 120 days.