Western Union Pays $586 Million Fine to Federal Government
The Western Union Company reached an agreement with the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) to settle investigations focusing on the oversight of company agents and its inadequate anti-fraud program. Western Union will pay a $586 million fine, and will also enhance its oversight of agents to protect customers. Their actions will be reviewed by an independent compliance auditor for three years.
The federal government had been investigating the company to determine whether the Company’s oversight of agents, anti-fraud program and anti-money laundering controls adequately prevented misconduct by agents and third parties. The period in question ranged from 2004 to 2012, and part of the $586 million settlement will go to reimburse Western Union customers who were affected by fraud during that period due to Western Union’s alleged negligence.
“We share the government’s goal of protecting consumers and the integrity of our global money transfer network, and we worked hard to resolve these matters with the government,” Western Union said. “We are committed to enhancing our compliance programs to prevent illicit activity on our network and protect customers who transfer money to friends, family and businesses.”
Over the past five years, Western Union has increased compliance funding by more than 200%, and now spends approximately $200 million a year on compliance. The company has also added employees with law enforcement and regulatory experiences, strengthened its agent training and consumer education programs, improved technology, and changed its governance structure so the Chief Compliance Officer must report to the Compliance Committee of the Board of Directors.
These efforts seem to be paying off. In the last 10 years, fraud reports associated with Western Union money transfers are on the decline and accounted for less than one-tenth of 1% of all consumer-to-consumer transfers. In the last five years, the dollar value of these types of frauds has dropped 60%.
This recent settlement will also resolve potential claims by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). FinCEN alleges Western Union violated the Bank Secrecy Act from 2010 to 2012.