US DOJ Fines Western Union $586M

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January 23rd, 2017
Back US DOJ Fines Western Union $586M

The U.S. Department of Justice strikes again, this time cracking down on the largest money transfer company in the world, Western Union. Its customers can send cash to more than 200 countries within minutes, a service that criminals managed to exploit. WU is guilty of "aiding and abetting wire fraud" and will pay a huge $586 million fine.

The DOJ and Federal Trade Commission investigated transactions involving hundreds of millions of dollars sent to China. Wiring the money was the method of choice because transactions could be structured in such a way as to avoid US reporting requirements.

At some point, WU agents became aware of the activity but turned a blind eye. Why? They made good money on the hefty fees charged on those transactions. For example, say you’re sending $500 to the US and you use your credit/debit card, as most of us would. Your fee would be approximately $49.99 if you want it available to pick up at an agent location within minutes. Customers may opt to have the money sent to a bank account within 2 days, which would drop the fee to around $20.

“Our investigation uncovered hundreds of millions of dollars being sent to China in structured transactions designed to avoid the reporting requirements of the Bank Secrecy Act, and much of the money was sent to China by illegal immigrants to pay their human smugglers,” said U.S. Attorney Eileen M. Decker.

Illegal online gambling transactions were also at the core of the case. The DOJ report revealed, “Western Union has been on notice since at least December 1997, that individuals use its money transfer system to send illegal gambling transactions from Florida to offshore sportsbooks. Western Union knew that gambling transactions presented a heightened risk of money laundering and that through at least 2012, certain procedures it implemented were not effective at limiting transactions with characteristics indicative of illegal gaming from the United States to other countries.”

Source:

‘Western Union Admits Anti-Money Laundering and Consumer Fraud Violations, Forfeits $586 Million in Settlement with Justice Department and Federal Trade Commission’, justice.gov, January 19, 2017

“Illegal online gambling transactions were also at the core of the case.”

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