Western Union admits to aiding wire fraud, to pay $586 million
Western Union Co. agreed to pay $586 million and admitted to lapses in anti-money laundering controls that allowed hundred of millions of dollars in prohibited transactions to be processed by the company, the U.S. said.
The world’s biggest money-transfer business enabled the proliferation of illegal gambling, money laundering and fraud-related schemes, the Justice Department and other U.S. authorities said Thursday.
“Wiring money can be the fastest way to send it -- directly into the pockets of criminals and scam artists,” said Acting Assistant Attorney General David Bitkower. “Western Union is now paying the price for placing profits ahead of its own customers.”
The penalty imposed by the Justice Department and Federal Trade Commission is the biggest ever against a money-services company. It’s part of a wave of settlements in the final days of the Obama administration that have cost companies billions of dollars to resolve probes into toxic debt, foreign bribery and auto-emissions cheating.
Western Union said it anticipates taking a charge of $570 million in its fourth-quarter earnings, which the firm is scheduled to report on Feb. 9. Western Union is expected to post adjusted profits of $837 million in 2016, according to the average of 16 analysts’ estimates compiled by Bloomberg.
The shares fell 3.4 percent to $21.11 at 1:25 p.m. in New York after plunging as much as 6 percent earlier.
“We share the government’s goal of protecting consumers and the integrity of our global money-transfer network, and we worked hard to resolve these matters with the government,” the company said.
The U.S. said it uncovered hundreds of millions of dollars being sent to China in structured transactions designed to avoid the reporting requirements under federal bank laws. It said that much of the money was sent by illegal immigrants to human smugglers.
Western Union agents were also complicit in schemes that defrauded people in the U.S. The government said fraudsters contacted victims in the U.S. and falsely posed as family members in need or promised prizes or job opportunities. The fraudsters directed the victims to send money through Western Union, and Western Union agents processed the payments in return for a cut of the proceeds.