As part of a deal with the United States, US financial services firm Western Union Co. has agreed to pay a federal fine of $586 million (or €545.2 million) after admitting that it allowed the processing of online gaming transactions which turned out to be illegal. Simply put, it aided and allowed wire fraud and failed to maintain an effective anti-money laundering program.
Failure to exercise the company's anti-money laundering protocols led to the processing of illegal transactions worth hundreds of millions of dollars, enabling the increase of incidence of illegal gambling activities and scams that fooled/defrauded tens of thousands of victims.
Over the recent years, the company has admitted to processing thousands of transactions linked to worldwide fraud schemes, and illegal online gambling transactions are the latest addition to their list.
Authorities said that Western Union employees allowed or even aided and abetted fraudsters in processing illicit transactions, and that the company knew about it. Rather than firing them, the company allowed these employees to continue working for them and they even paid them bonuses.
Western Union permitted people to send money to illegal Internet gambling operations in Costa Rica, therefore violating the US laws in relation to anti-money laundering.
Also, it was found that undocumented immigrants from China made use of Western Union to send money from California and New York to their human smugglers.
Acting Assistant Attorney General David Bitkower said, "Wiring money can be the fastest way to send it -- directly into the pockets of criminals and scam artists. Western Union is now paying the price for placing profits ahead of its own customers.
The forfeiture of $586M shall be used to reimburse the victims of fraud from 2004 to 2012. This federal penalty amount imposed by the Justice Department and Federal Trade Commission is considered to be the highest ever against a financial services company. It is part of a group of settlements in the final days of Obama's administration that have charged companies billions of dollars to resolve probes into foreign bribery, auto-emissions cheating and toxic debt.
To help ease any pressing concerns over its business practices, the company also consented to have its money transactions monitored by an independent compliance editor for the next three years.
Chief communications officer at Western Union Bill Chandler said that the company has "worked hard to put these investigations behind us".
Because of the fine, Western Union expects losses worth $570M for the 12 months to December 31, 2016.
Shares of Western Union which are up 25% in the last 12 months, fell 4% to $21 on the afternoon of last Thursday, January 21.
Source: http://www.igamingbusiness.com/news/western-union-fined-586m-over-illegal-online-gaming-transactions
