Western Union Slammed For Aiding Crooks, Agrees To Pay $586 Million
Money transfer giant Western Union has agreed to pay $586 million in connection with its failure to prevent criminals from moving ill-gotten money using its platform, according to federal authorities.
In a statement from the U.S. Department of Justice and Federal Trade Commission on Thursday, authorities describe insufficient or poorly enforced policies that resulted in the funneling of hundreds of millions of dollars in proceeds from illegal gambling, fraud and drug and human trafficking.
Western Union admitted to criminal violations including its willful failure to maintain an effective anti-money laundering program and aiding and abetting wire fraud.
“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,” says FTC chairwoman Edith Ramirez.
Authorities say that employees allowed or aided and abetted fraudsters in processing illicit proceeds and that the company knew about it. However, rather than firing them, Western Union allowed the employees to continue working for the company and even paid them bonuses.
In one case, illegal immigrants from China sent money back to the people who smuggled them across the border. With the help of employees, the payments were structured so that they didn’t trigger reporting requirements under the Bank Secrecy Act, say authorities.
In another example, Western Union processed hundreds of thousands of transactions for an international scam, wherein fraudsters directed people to send money in order to claim a prize or help a relative. Western Union employees often processed the payments in return for a cut of the proceeds, say authorities.
These schemes illustrate “a flawed corporate culture,” says U.S. Attorney Wifredo Ferrer of the Southern District of Florida, which “failed to provide a checks and balances approach to combat criminal practices.”
As part of the agreement with authorities, Western Union has agreed to implement stricter policies to prevent future fraud and money laundering. The forfeiture of $586 million will be used to reimburse consumers who were victims of fraud from 2004 to 2012. It is the largest forfeiture that has ever been imposed on a money services business.
“We acknowledge that in certain instances in the 2004 to 2012 period of time the company did not do as much as it should have with respect to agent oversight,” said Western Union spokesperson Bill Chandler. “We will continue raising the bar to help protect customer transactions and defend against those who would abuse our network.”
Western Union expects to record a charge of approximately $570 million in its fourth quarter for matters related to the settlement. The company says that it has increased compliance spending by more than 200% in the last five years and a fifth of its workforce now performs compliance-related functions.
Shares of Western Union, which are up 27% in the last twelve months, fell 4% to $21 on Thursday afternoon.
The USA is critical of its immigration policy and there are people on all sides of what the USA should do with global people wanting to move and live in the USA. One side of this immigration issue is to follow the money, which is paramount as it is associated with ethical immigration policy. The most harmful is the USA literally pays for the US staff to process immigrants, and the USA pays for the health care and safety of immigrants, and the USA pays to house, and the USA pays to offer job seeking services, and both public and private enterprises provide jobs that pay for immigrant labor. Then too often the money received by immigrants from USA resources goes completely out of the USA back to what can be conceived as a more desirable homeland where such funds serve for doing countless things.
Sure, we would like to believe that the funds go for clothing, shelter and food for the family members of the USA immigrant. However, the USA has no idea if such funds do not go to develop a wide variety of anti-USA campaigns including killing USA citizens. Sure, this can be said for domestics funds and USA buying weapons that destroy lives in the USA. Nonetheless, the thing is where are the ethics for companies and public agency that knowingly foster potentially corrupt behaviors to benefit their own respective profits. Western Union conceptually knows that their business model is the number one money laundering vehicle ever created. They have known this since they started, and the USA continues to apply loose oversight and controls for this very process administered by Western Union.
Consequently, there is no surprise that this aforementioned activity is taking place. Western Union will always happily pay hundreds of millions in fines because it is a drop in the bucket over the length of time that the company enjoys profits from immigrants working in the USA. Western Union has made it big on immigrants, and the company is making big now, and will make it big in the foreseeable future from foreigners sending their USA money elsewhere.