DOJ Accuses Western Union of Anti-Money Laundering Violations, $586M Fine Tendered

Posted on: January 23, 2017, 03:00h. 

Last updated on: January 23, 2017, 02:10h.

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Expertise: Commercial Gaming.

Western Union will pay US federal authorities $586 million for anti-money laundering (AML) violations, the largest forfeiture ever imposed on a money services business by the Department of Justice (DOJ).

David Bitkower Western Union AML procedures
David Bitkower, US Principal Deputy Assistant Attorney General for the DOJ, said Western Union had for years been processing payments for “criminals and scam artists.” The company’s forfeiture of $586 million is the largest ever imposed on a money services business. (Image: geneva.usmission.gov)

The wire service company’s transgressions ranged from facilitating illegal Costa Rica-based sports betting to the processing of hundreds of thousands of transactions for global fraudsters and even human traffickers.

In accepting the forfeiture, the Englewood, Colorado-based company admitted to criminal violations, including failure to maintain an effective AML program and aiding and abetting wire fraud. It has agreed to a deferred prosecution deal with the DOJ and a related settlement with the Federal Trade Commission (FTC).

Costa Rica Sports Books

According to prosecutors, Western Union turned a blind eye for years to gamblers in Florida who used the company’s services to move money to unlicensed sports books in Costa Rica.

The DOJ said the company had been “on notice” about such transactions from the very earliest days of online gambling back in 1997, but the Justice Department’s analysts were still identifying suspicious transactions sent from the US to Costa Rica throughout 2011 and 2012.

“Western Union failed to implement a sufficiently effective control against gambling-related transactions,” the Department concluded.

Global Fraud

Far more serious, the company failed to act to prevent transactions related to a global fraud scheme that targeted and fleeced thousands of Americans, many of them elderly.

According to prosecutors, criminals contacted their victims with the promise of lottery winnings, discounted products, or job offers, or pretended to be family members in dire need of funds. Victims were told to wire money through Western Union, while agents wilfully concealed identities using false names and addresses.

“As this case shows, wiring money can be the fastest way to send it: directly into the pockets of criminals and scam artists,” said David Bitkower, the DOJ’s Principal Deputy Assistant Attorney General for its Criminal Division.

Not Stopping Traffickers

Many illicit transactions were for funds sent by undocumented Chinese immigrants to pay off their traffickers, the DOJ said. Chief Richard Weber, a criminal investigator with the Internal Revenue Service (IRS), said the company showed “blatant disregard” for its anti-money laundering responsibilities.

“Western Union, the largest money service business in the world, has admitted to a flawed corporate culture that failed to provide a checks and balances approach to combat criminal practices,” said Wifredo Ferrer, the US attorney for the Southern District of Florida.

“Western Union’s failure to implement proper controls and discipline agents that violated compliance policies enabled the proliferation of illegal gambling, money laundering and fraud-related schemes,” he added.