Western Union pays heavy price for its role in wire fraud

February 22, 2017

Paying its due for almost a decade’s worth of crime, Western Union recently reached a settlement with the Justice Department, the Federal Trade Commission (FTC) and several U.S. Attorney’s offices. The company has agreed to pay USD $586 million for failures in its compliance program that led to thousands of people falling victim to fraud. This is the largest forfeiture any money services business (MSB) has faced to date.

The largest MSB in the world, Western Union admitted to “aiding and abetting wire fraud” and failing to enforce an effective anti-money laundering (AML) program at some of its more than half a million locations. The company processed tens of thousands of illicit transactions—even after it was made aware that some of its employees were helping the scammers and fraudsters avoid detection.

Some of the fraud committed with the help of Western Union wire transfers included hundreds of millions of dollars being sent to human smugglers from Chinese immigrants. The transactions were specifically structured in order to avoid thresholds for mandatory reporting. Other scams involved offering people fake prizes or jobs for which an upfront fee was required—and of which Western Union agents then reportedly took a share of as payment for processing the transaction.

Authorities have stated that between 2004 and 2012, the company was aware that fraudulent transactions were being processed but did not take action, due in part to the fact that approximately 2,000 agents would have faced discipline for their roles in the frauds. Despite its knowledge of the illicit activities, Western Union decided against firing these employees, keeping them on with the company and in some cases even giving them bonuses.

The $586 million being forfeited will be used to reimburse victims of the various fraud schemes. As part of the agreement, the company must also implement and adhere to stricter policies to prevent fraud and money laundering. Western Union says that over the last five years it has already begun work in this area, increasing its compliance spending by 200% to approximately $200 million per year and dedicating a fifth of its employees to compliance-related functions.

For Western Union and other MSBs working to improve their AML compliance programs, an automated solution is a necessity. The CaseWare AML Compliance solution monitors 100% of financial transactions as well as customer information, sending an alert to the appropriate employee when a suspicious or non-compliant activity is detected. To learn more about how our solution can help protect your MSB or other financial institution, watch our video now.

 

About Andrew Simpson:

Andrew Simpson has close to two decades of experience in the information systems audit and security business; specifically data analytics, interrogation and forensics. He is a regular contributor to various auditing conferences and is acknowledged as an expert on continuous controls monitoring and revenue assurance.

Connect:  Andrew Simpson

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