Western Union will pay $586 million in customer refunds and beef up its money laundering and fraud protections after admitting to criminally violating the U.S. Bank Secrecy Act and federal anti-fraud regulations, according to the U.S. Department of Justice. The settlement also involves the Federal Trade Commission and covers conduct that took place between 2004 and 2012.
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.
The money will go toward compensating defrauded consumers. Western Union also has agreed to create policies that detail “corrective action” against agents who pose a risk of not complying with money laundering and anti-fraud laws; to make sure that all its agents around the world comply with those laws; and to report suspicious or illegal activity to authorities. An independent compliance auditor will oversee those actions for three years.
For its part, Western Union said it has increased its compliance spending by 200 percent over the last five years, to about $200 million annually, and that a fifth of its workforce now focuses on compliance issues. “The comprehensive improvements undertaken by the company have added more employees with law enforcement and regulatory expertise, strengthened its consumer education and agent training, bolstered its technology-driven controls and changed its governance structure so that its chief compliance officer is a direct report to the compliance committee of the board of directors,” Western Union said.
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.