After violating federal anti-money laundering laws, Western Union is slated to pay a $586 million as a penalty to the federal government. The laws were violated in the process of the global financial transaction company sending money from the United States to unregulated online casinos located in Costa Rica.
Western Union began as a telegraph company in the mid 19th century, and grew to hold a monopoly in the communications industry by the early 20th century, due to such innovations as the very first charge card and the teletypewriter. In the 1970’s, Western Union would become the first United States Corporate entity to own its own fleet of geosynchronous satellites, which paved the way for our modern payment processors by popularizing international electronic wire payments.
The violations which Western Union has pleaded guilty to are “failure to maintain an effective anti-money laundering campaign” and “aiding and abetting wire fraud”. This vast amount of the violations occurred during the processing of hundreds of thousands of transactions that spanned a whole array of fraudulent exchanges over the past twelve years, and it was a smaller percentage of those transactions that involved unregulated online gambling. The most egregious of the offending transaction types dealt with a human trafficking which had been operating out of China between the years of 2004 and 2012.
Western Union was previously under investigation for similar violations of money laundering in 2005 in 48 different jurisdictions, but the company was spared prosecution by making an agreement with 48 Attorney Generals, including Washington DC’s Attorney General. David Bitkower, the Principal Deputy Assistant Attorney General for the US Department of Justice, revealed that criminals prefer the ease with which they can transfer money with electronic wire transfers, and have long used it as they preferred method to move their money around the globe. Bitkower said, “As this case shows, wiring money can be the fastest way to send it; directly into the pockets of criminals and scam artists.” He stress that given that this information if common knowledge, Western Union needs to be doing more to prevent and deter such transactions.
Western Union‘s chief communications officer, Bill Chandler, has since told the Financial Times that his company “worked hard to put these investigations behind us”, by agreeing to have its financial transactions monitored by an independent compliance auditor these next three years. This auditor monitoring may actually have been initiated by a previously undisclosed probe launched by FinCEN, the U.S. Department Of The Treasury’s Financial Crimes Enforcement Network. Regardless, Western Union has designed a “fraud risk management unit” in order to conduct internal investigations of transactions, and also plans to double its compliance staff over the past 5 years.