Western Union is facing a $586-million settlement, after admitting to aiding criminals in money laundering and fraud.
The global money services business, with headquarters in Englewood, Colorado, has entered into agreements with U.S. authorities, admitting criminal violations including willfully failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud. Western Union will forfeit $586 million in its settlement with the Federal Trade Commission (FTC) and U.S. Justice Department.
Western Union has agreed to implement and maintain an anti-fraud program with training for its agents and associates, monitoring to detect and prevent fraud-induced money transfers, due diligence on all new and renewing company agents, and suspension or termination, where appropriate, of noncompliant agents.
Edith Ramirez, FTC Chairwoman, censured Western Union's conduct, stating, "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". She went on to say that the agreements made between the money services business and the FTC were made to ensure Western Union changes the way it conducts its business, and to provide some financial relief to consumers victimized by the company's criminal acts.
The investigation that led to this settlement uncovered hundreds of millions of dollars being sent to China through Western Union in transactions specifically structured to avoid the reporting requirements of the U.S. Bank Secrecy Act. The failure of Western Union to stay on side of the requisite anti-money laundering laws provided fraudsters with a vehicle to transfer criminal proceeds. One particular type of criminal funds identified by U.S. authorities being transferred through this service, were funds sent by Chinese immigrants to pay human smugglers, wiring the money in smaller increments to avoid federal requirement.
Other criminal activity involved fraudsters contacting victims in the U.S. and falsely posing 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. Various Western Union agents were complicit in these fraud schemes, often processing the payments for the criminals in return for a cut of the proceeds.
U.S. attorney, Wifredo A. Ferrer, severely denounced the company, saying, "Western Union's failure to implement proper controls and discipline agents that violated compliances policies enabled the proliferation of illegal gambling, money laundering and fraud-related schemes."
$586 million marks the largest forfeiture ever imposed on a money services business.