MoneyGram has signed agreements with the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) to pay $125m to settle a charge against it of violating a six-year-old settlement associated with anti-money laundering (AML) controls.
MoneyGram products. (Credit: Raysonho @ Open Grid Scheduler / Grid Engine/Wikipedia.org)
The amount forfeited by MoneyGram will be used by the US government to distribute among victims of consumer fraud caused by the violation.
According to DOJ, court documents filed in 2012 show that the money transfer company was involved in consumer fraud schemes committed by corrupt agents and others.
The fraud scams at that time generally targeted senior citizens and other vulnerable groups with the perpetrators contacting them by falsely posing as their relatives in urgent need of money, falsely promising large cash prizes, or promising items for sale over the internet at huge discounts.
The perpetrators had asked the victims to send funds through the money transfer system of MoneyGram, as per the two-count felony criminal information filed about six years ago.
The Texas-based money transfer company was accused of intentionally failing to maintain an effective anti-money laundering (AML) program and in helping and abetting wire fraud.
During the course of deferred prosecution agreement (DPA), the company faced significant weaknesses in its AML and anti-fraud program, and had disclosed the weaknesses inadequately to the government, said DOJ.
Subsequently, the company was accused of failing to complete all of the DPA’s mandated enhanced compliance undertakings. Owing to this, MoneyGram processed more than $125m in additional consumer fraud transactions from April 2015 to October 2016, claimed DOJ.
The money transfer company through the latest agreements said that it will amend and extend its DPA with the DOJ for 30 months and will also alter its consent order with the FTC.
It has also committed to retain an independent compliance monitor and agreed to implement additional agent oversight as well as compliance program enhancements.
MoneyGram chairman and CEO Alex Holmes said: “Over the past several years, we have taken significant steps to improve our compliance program and have remediated many of the issues noted in the agreements.
“Currently, our consumer fraud reports are at a 7-year low and less than 0.05 percent, or 5 basis points, of all transactions conducted through MoneyGram systems are reported as fraudulent.”