Western Union to Pay $586 Million in Fraud Settlement

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Money transfer giant Western Union has agreed to pay over $580 million to settle a case with the authorities after admitting it aided and abetted wire fraud and broke anti-laundering rules.

The $586m forfeiture is the largest ever imposed on a “money services” business and will be made available to compensate the many victims of fraud that lost money as a result of Western Union scams, according to a lengthy FTC release.

The firm was accused of effectively looking the other way and allowing fraud and money laundering to continue – in many cases facilitated by its own agents – in a quest for profits.

It has now admitted that a flawed corporate culture that failed to provide the right checks and balances was to blame.

Since 2001, 26 Western Union agents in the US and Canada conspired with international criminals to defraud tens of thousands of US residents via various mass marketing schemes, the FTC claimed.

In addition, hundreds of millions of dollars were sent to China in illegal “structured transactions” – much of which was allegedly used by illegal immigrants to pay their human smugglers.

One agent alone is said to have facilitated the sending of over $310 million to China in a five year period, without any investigation by Western Union.

The money services firm is also said to have enabled illegal gambling transactions from Florida to be sent offshore.

“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.

“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.”

Alongside its massive settlement payment, Western Union has agreed to instigate a comprehensive anti-fraud program and to monitor and do due diligence on any new or renewing agents.

It will be tasked with: blocking money transfers to anyone who’s the subject of a fraud report; providing clear fraud warnings to customers; improving the fraud complaint process and refunding fraudulently induced transfers if the company failed to comply with anti-fraud measures.

Western Union will also be banned from processing any transfer which it knows is payment for a telemarketing transaction.

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