On January 19, Western Union agreed to pay $586 million to settle an investigation by the Department of Justice (DOJ) and Federal Trade Commission (FTC). Western Union, the world’s biggest money-transfer company, is headquartered in Englewood, Colorado.
According to a DOJ press release, Western Union has admitted to violations of federal anti-fraud and money-laundering laws. The DOJ alleges that, between 2004 and 2012, Western Union violated the Bank Secrecy Act (BSA) and anti-fraud statutes by processing thousands of transactions for Western Union agents and others involved in an international consumer fraud scheme. Federal prosecutors claim that Western Union failed to comply with federal reporting requirements and knowingly ignored transactions involving fraudsters who contacted people posing as relatives in need, or dangling job opportunities or prizes. In fact, the DOJ stated that 29 Western Union agents and employees were complicit in those fraud schemes, often receiving a percentage of the proceeds in exchange for assisting with the transaction.
Western Union was allegedly aware of the fraudulent transactions but turned a blind eye to the scams, placing profits in front of consumer well-being and compliance. Beginning as early as 2004, customers submitted complaints about fraudulently induced payments. In 2004, Western Union’s Corporate Security Department proposed global guidelines for discipline and suspension of agents that assisted with the processing of fraudulent transactions. Had Western Union implemented those proposed guidelines, it could have prevented significant fraud losses to victims. Instead, Western Union failed to take corrective action or any steps to discipline the over 2,000 agents who facilitated the fraud-related transactions.
A Western Union spokesperson stated that the company did not “do as much as it should have” to monitor its agents during the eight-year stretch, but it is committed to improving and has tripled its annual spending on compliance since 2012.
According to the DOJ, a portion of the settlement proceeds will compensate consumers who were victims of the fraud scams.