Western Union admits to aiding wire fraud, to pay $586 million

[Jonathan Fairfield]

Western Union admits to aiding wire fraud, to pay $586 million

By Joel Schectman and Diane Bartz

 

 

WASHINGTON (Reuters) - Western Union Co <WU.N>, the world's biggest money-transfer company, agreed to pay $586 million and admitted to turning a blind eye as criminals used its service for money laundering and fraud, U.S. authorities said on Thursday.

 

Western Union, which has over half a million locations in more than 200 countries, admitted "to aiding and abetting wire fraud" by allowing scammers to process transactions, even when the company realized its agents were helping scammers avoid detection, the U.S. Department of Justice and the Federal Trade Commission said in statements.

 

With the help of Western Union agents, Chinese immigrants used the service to send hundreds of millions of dollars to pay human smugglers, wiring the money in smaller increments to avoid federal reporting requirements, U.S. authorities said.

 

Fraudsters offering fake prizes and job opportunities swindled tens of thousands of U.S. consumers, giving Western Union agents a cut in return for processing the payments, authorities said.

 

Between 2004 and 2012, the Colorado-based company knew of fraudulent transactions but failed to take steps that would have resulted in disciplining of 2,000 agents, authorities said.

 

"Western Union is now paying the price for placing profits ahead of its own customers," said Acting Assistant Attorney General David Bitkower.

 

A Western Union spokesman said that the company didn't "do as much as it should have" to oversee its agents between 2004 and 2012 but is committed to improving its procedures.

 

Western Union, which helped clients move over $150 billion in 2015, said in a press release that more than one-fifth of its work force is currently devoted to compliance. It also said consumer fraud accounts for less than one-tenth of 1 percent of consumer-to-consumer transactions.

 

The settlement will fund refunds for customers who were victims of scams, authorities said. It will also implement a comprehensive anti-fraud program to train agents to identify and stop transactions that result from fraud.

 

Between 2004 and 2015 Western Union collected 550,928 complaints about fraud, with 80 percent of them coming from the United States where it has some 50,000 locations, the government complaint said. The average consumer complaint was for $1,148, the government said.

 

Western Union reported revenues of $1.4 billion for the quarter that ended on September 30, 2016, according to a government filing. The company said it spent some $200 million a year on compliance.

 

(Reporting by Joel Schectman and Diane Bartz; Editing by Cynthia Osterman and Andrew Hay)

 

 

-- © Copyright Reuters 2017-01-20

[Pib]

Bankster Rule Number 1: Fees override ethics. 

 

[impulse]

1 hour ago, Jonathan Fairfield said:

The company said it spent some $200 million a year on compliance.

 

Translation:  We spent $200 million on the perception of compliance.  In which case, they should really ask for their money back.

 

Or, maybe they did spend it on a genuine effort at compliance.  And they should still ask for their money back.  And fire every employee who had anything to do with their stockholders being hit for $$$ half a billion, and prosecute those where they can prove crimes.

 

That's the only way this kind of financial shenanigans won't take down the economy again -robbing millions of innocent people of their life savings- when "it" happens.  We just don't know for sure what "it" is and when "it' will happen.  Just that it will.

[FredNL]

WU is the biggest supporter of IS.

IS is receiving money and paying terrorist using WU. This has been known for years but still nothing has been done. There is too much money involved.

[Savilesghost]

How many members of the WU management team are going to jail for wire fraud ? 

If the answer is none, shows the hypocracy of the US legal system 

 

I believe wire fraud is a federal offence 

[Savilesghost]

34 minutes ago, FredNL said:

WU is the biggest supporter of IS.

IS is receiving money and paying terrorist using WU. This has been known for years but still nothing has been done. There is too much money involved.

Well the executives of WU should be in jail for supporting terrorism and money laundering as they would do with a man on the street 

[Belzybob]

For years they flatly refused to act on the millions of dollars passing into West African scammers hands.

[retarius]

Why do bankers and corporate fraudsters almost never go to jail. Skilling from the Enron debacle is the only American one I can remember…..there are surely others but given that these large fines almost always come with no admission of guilt, there can't be too many.

[sanukjim]

Damn it! another income source cut off.I hope that the US government don't find out about DHL.

[SOTIRIOS]

...wow....