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Western Union to pay $586M fine due to processing illegal online gambling transactions

Tags: Bill Chandler, David Bitkower, Western Union.
Posted on 27 January 2017 by "T".

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.



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12 comments on "Western Union to pay $586M fine due to processing illegal online gambling transactions"

 Robbo199027/01/2017 11:24:31 GMT
I wonder if 'money gram' is also being fined. it and western union are the two that scammers use in this country, although its not exactly a simple process and here I have never seen nor heard of anyone using this money transfer system and if they did id presume it was illegal. maybe in europe and asia its common to use for legit reasons?
 dule-vu27/01/2017 14:16:01 GMT
you cant hide anything from usa government and their laws!people who are working at tax department will find everything and every illegal move of money,especially for gambling,they will track!so wester union will pay this!
 pajalnick27/01/2017 20:30:38 GMT
when in a country that prohibits online poker people are looking for opportunities to continue to play their favorite games .. and in this case I think the US government is not very true .. enters US promotes freedom, and people can not play your favorite games.
 Mober27/01/2017 23:27:58 GMT
A company like that, knowing all this for so long and not doing nothing...
They should have done more against them.
Not to mention that their fees are ridiculous.
used their service once and never again.
 pochui28/01/2017 09:12:55 GMT
can't say that i am shocked or actually even surprised by a tiny bit in hearing that western union was involved in money laundering activities or helping out to process illegal transfer... that's why they have been set up in the first place... ok ok maybe a bit harsh, but WU have always been a heaven for all kinds of fraudsters and it's an openly known secret.
 doubletop77728/01/2017 09:13:17 GMT
This has got to be one of the biggest fines i have ever read about and they cannot be too happy about it. $586,000,000 is an astronomical amount of money and lots of people will have questions to answer
 Gerimantas28/01/2017 13:37:51 GMT
$586000000 is a lot of zeros this is amount of money that i can hardly imagine, so I wonder how much money must this company have to be able to pay thus fine and still continue business as normal. I didn't think that such fines can be possible at all, how is it calcucated I wonder?
 dirkemans28/01/2017 20:23:23 GMT
wow..just wow...indeed begs the question what other money merchants will be next?
 carluimaca29/01/2017 13:14:53 GMT
Incredible that a company like WU has not validated data
 Mober29/01/2017 20:09:49 GMT
If they were doing all these of transactions, dont you think that they might even have
more earnings than the official papers show. under taxes etc? Smile
Even the fine being that big, they must have earned more than that.
A big drawback at the moment. Smile
 bowie198429/01/2017 20:17:10 GMT
Posted by carluimaca:
Incredible that a company like WU has not validated data

They kinda did. But person to person transactions has no special liner notes sections where you could write up that this 5k is actually going to a drug lord/pimp/smuggler and when it comes to their employee hirings they could only x-ray to a certain amount of your backstory. They probably won't know right away that you aiding and embedding criminals if you don't have prior convictions or been busted on a drug test...
 Robbo199030/01/2017 00:38:03 GMT
plus they even said they got greedy and turned a blind eye - hence why the fine was big

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