21 October 2014

Moneygram pays $100m to settle wire fraud charges

20 November 2012  |  5109 views  |  0 cash

Moneygram has agreed to pay $100 million to settle US charges that it criminally aided and abetted wire fraud and failed to maintain an effective anti-money laundering programme.

The Department of Justice says that between 2004 and 2009, the firm violated the law by processing thousands of transactions for its agents "known to be involved" in a scam defrauding American citizens.

The scams - which generally targeted the elderly and other vulnerable groups - included posing as victims' relatives in urgent need of money and falsely promising victims large cash prizes.

Despite thousands of complaints by customers who lost tens of millions of dollars, MoneyGram failed to terminate agents that it knew were involved in scams, says the government, continuing to profit from them in fees.

The company's involvement in the fraud scheme "resulted from a systematic, pervasive, and wilful failure" to meet its AML obligations under the Bank Secrecy Act, says the DoJ.

Assistant Attorney General Lanny Breuer says: "MoneyGram's broken corporate culture led the company to privilege profits over everything else. MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetrate fraudulent schemes targeting the elderly and other vulnerable victims."

In signing a deferred prosecution agreement, Moneygram is forfeiting $100 million which will be used go compensate victims of its agents.

It has also agreed to create an independent compliance and ethics committee; adopt a worldwide anti-fraud and anti-money laundering standard to ensure all agents will, at a minimum, be required to adhere to US standards; and adopt a bonus system which rates all executives on success in meeting compliance obligations.

To oversee implementation and maintenance of these changes, MoneyGram will retain an independent corporate monitor who will report regularly to the DoJ.

"The conduct described in the DPA's statement of facts is unacceptable to MoneyGram and counter to everything we strive to stand for. We take compliance very seriously at MoneyGram, and nothing angers us more than when our services are used to perpetrate illegal activity," says Pamela Patsley, chairman and CEO, MoneyGram.

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