Western Union Pay the Price of Non-Compliance

FinExtra, Western Union to pay $586m to settle AML charges, 7th February 2017 [source].

Western Union Money Laundering
Western Union Logo @Wikimedia Commons

In recent news, Western Union has agreed to pay $586 million (£477 million) to settle US criminal and civil charges, as it admits to wilfully failing to maintain an effective anti-money laundering programme and aided and abetted wire fraud.

Western Union, the largest money-transfer company in the world, admitted “to aiding and abetting wire fraud” by allowing scammers to process illegal transactions, even when the company suspected its agents were helping scammers avoid detection.

With the support of Western Union agents, Chinese immigrants used the money-transfer service to send hundreds of millions of dollars to pay human smugglers, wiring the money in smaller increments to avoid federal reporting requirements.

Chinese fraudsters offered bogus prizes and job opportunities, defrauding tens of thousands of U.S. consumers, and then giving Western Union agents a cut in return for processing the illicit payments.

What we find astonishing about this story is two-fold:

  1. Western Union’s questionable anti-money laundering processes.
  2. Western Union is accused of knowing about the suspect agents yet refused to take action.

Between 2004 and 2012, the company knew of fraudulent transactions but failed to take required steps needed that would have culminated in the disciplining of 2,000 agents. For years the firm recorded customer complaints but failed to follow its own proposed protocol on suspending agents. As Acting Assistant Attorney General David Bitkower said “Western Union is now paying the price for placing profits ahead of its own customers,” [Source]

Here at Contego, we are on a mission to combat, both external and internal fraud, in its many guises.

Our clients use Contego’s risk scoring platform to ensure they not only comply with current Money Laundering regulations, and make compliance KYC checks and processes as frictionless as possible, but we importantly help them go beyond this and help them consider increasing and new emerging threats. Clients can enter into customer, partner and counterparty engagements, confident in our rigorous and comprehensive approach to anti-fraud detection, risk scoring and due diligence assessment.

Increasingly, it is recognised employees and suppliers can also present a potential risk. We at Contego strongly recommend to all our clients to do the same thorough due diligence on employees as they would on customers.

Contego’s comprehensive risk scoring platform can easily be plugged into recruitment screening and HR workflow systems used for employee hiring – not only whilst onboarding employees but also when monitoring them once they’re on the payroll.

All of this data is available in one system, delivered via a single API. Meaning our clients can instantly make crucial, data-driven decision on whom they employ.

The Western Union settlement will fund compensation for customers who were victims of scams. It will also implement a comprehensive anti-fraud programme to train agents to identify and stop transactions that result from fraud. However, Western Union’s lack of proactive steps to combat money laundering and internal fraud will have done irreversible damage to the company’s reputation.

The cost of compliance technology is often viewed as being a burden on your business, however not investing in compliance can be an expensive gamble.

Compliance and regulation protect the integrity and stability of society, cutting off the resources available to terrorists, and making it more difficult for those engaged in crime to profit from their criminal activities.

Embracing best practice fraud reduction and due diligence solutions will enable you to automate compliance checks, streamline operations and ultimately reduce the risks associated with meeting compliance and reporting obligations.

If you want to ensure you are doing the maximum possible today to reduce your risk, keep the regulators at bay and be ready to tackle increasing fraud threats get in touch today by calling +44 (0) 1235 375 000 or visit the Contego website to find out more and book an online demo.

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