Earlier this month, the New York State Department of Financial Services fined The Western Union Company $60 million for allegedly violating the New York Bank Secrecy Act and anti-money laundering laws.
According to DFS, Western Union was aware of improper conduct involving its “NY-China Corridor” agents – small businesses that offered services for Western Union in Manhattan, Brooklyn, and Queens which, despite their size, had some of the largest volumes of transactions in the world, and were some of the most profitable locations for the company. For instance, a small travel agency in Lower Manhattan which was a Western Union agent processed transactions totaling $1.14 billion from 2004 to 2011. It is alleged that some of the money transfers from this business and other NY-China Corridor agents were actually intended to launder money and included payments that may have aided in human trafficking.
An investigation by DFS revealed that Western Union conducted compliance investigations of several agents and had evidence that indicated there appeared to be illegal and improper activities occurring at these locations. However, when disciplinary actions against these agents were suggested, senior managers within the company allegedly intervened, going as far as to pay the owner of the Lower Manhattan location a bonus of $250,000 to renew his contract with the company, even though the agent had several compliance violations.
Maria T. Vullo, Superintendent of the DFS, said in a statement, “Western Union executives put profits ahead of the company’s responsibilities to detect and prevent money laundering and fraud by choosing to maintain relationships with, and failing to discipline, obviously suspect, but highly profitable, agents.”
As part of the consent order reached between DFS and Western Union, the company must pay the $60 million fine and must also submit to the DFS its plan to ensure that its anti-money laundering programs and anti-fraud programs are complied with in the future.