Western Union to pay $586M to US

Company enabled illegal activities

Western Union, one of the world’s largest money transfer companies, has agreed to pay $586 million to the U.S. government after admitting it allowed criminals to use its services to commit money laundering and fraud, the Justice Department announced Thursday.

To resolve the case, the Colorado-based company entered into agreements with the Justice Department, the Federal Trade Commission and U.S. attorneys in Florida, California and Pennsylvania.

The laundering offenses, which covered nearly a decade, were connected to a variety of illicit activities, including human trafficking, illegal gambling, drug smuggling and fraudulent sweepstakes programs.

In Florida, the problem focused on illicit gambling in Costa Rica, where offshore websites attracted U.S. gamblers who used the company’s services to move money, according to court documents made available by the Justice Department.

“Throughout 2011 and 2012, Western Union compliance analysts continued to identify suspicious gambling transactions sent from the U.S. to Costa Rica,” court papers said. “Western Union failed to implement a sufficiently effective control against gambling-related transactions.”

In California, authorities said Chinese immigrants, with the help of Western Union agents, used the company’s services to move hundreds of million of dollars to pay smugglers involved in human trafficking. The cash was wired in small increments to dodge federal reporting requirements designed to stop money laundering.

Abroad, the company’s services were used to help further fraud activities in the United Kingdom and Spain.

“Western Union, the largest money service business in the world, has admitted to a flawed corporate culture that failed to provide a checks and balances approach to combat criminal practices,” said Wifredo Ferrer, the U.S. attorney who oversees the Southern District of Florida.

In a statement, the company said it worked with federal authorities to plug leaks in its antimoney laundering procedures.

“We share the government’s goal of protecting consumers and the integrity of our global moneytransfer network, and we worked hard to resolve these matters with the government,” the company said.

Western Union is a publicly traded company whose shares are listed on the New York Stock Exchange. The company said it expects to take a $570 million charge against fourth quarter earnings early next month.