The New York State Department of Financial Services (DFS) has fined Western Union for failure to implement effective anti-money laundering compliance programs in-house and for failure to report suspicious activity – some of which could have facilitated human trafficking.
According to a press release issued by the DFS, the investigation found inadequacies in the compliance protocol of the company for more than a decade, resulting in the violation of the New York Bank Secrecy Act (BSA) and anti-money laundering (AML) laws.
This includes reported negligence on the part of Western Union senior executives and managers that willfully ignored and refused to report suspicious transaction activity between Western Union locations in China and high-volume agents in New York and around the world.
The same release quotes Financial Services Superintendent Maria T. Vullo: “Western Union executives put profits ahead of the company’s responsibilities to detect and prevent money laundering and fraud, by choosing to maintain relationships with and failing to discipline obviously suspect, but highly profitable, agents. DFS will not tolerate unlawful activity that undermines anti-money laundering laws and endangers the integrity of our financial system.”
This most recent violation is not the first time the company has been in hot water regarding compliance. As reported on previously, Western Union agreed to pay $586 million as part of a settlement with the Justice Department and the Federal Trade Commission to satisfy previous anti-money laundering and consumer violations in January of last year. At that time, the settlement was described by authorities as “the largest forfeiture ever imposed on a money services business.”
And Western Union isn’t the only company making headlines for compliance-related issues. The Comptroller of the Currency (OCC) has also recently assessed a $70 million civil money penalty against Citibank for compliance violations related to BSA and AML.
Similar to Western Union, this violation came in response to a previous warning. In 2012, the OCC cited Citibank for “BSA violations, deficiencies in its compliance program, failing to file suspicious activity reports and weaknesses in controls related to correspondent banking,” the agency said in a press release. This recent fine results from failure to comply with the original corrective actions required by the 2012 order, the OCC said.
All payments businesses are held accountable for their responsibility to uphold the integrity of our financial system and as a payment facilitator, you are required to follow certain practices to avoid facilitating criminal activity. These relate specifically to onboarding (“know your customer”), monitoring questionable transactions and responding to suspicious activity.