MoneyGram AML program found lacking again…

Department of Justice
Office of Public Affairs

MoneyGram International Inc. Agrees to Extend Deferred Prosecution Agreement, Forfeits $125 Million in Settlement with Justice Department and Federal Trade Commission

Company also Agrees to Implement Additional Anti-Fraud and Anti-Money Laundering Program Compliance Enhancements in Agreements with Federal Authorities

MoneyGram International Inc. (MoneyGram), a global money services business headquartered in Dallas, Texas, has agreed to extend its deferred prosecution agreement and forfeit $125 million due to significant weaknesses in MoneyGram’s anti-fraud and anti-money laundering (AML) program resulting in MoneyGram’s breach of its 2012 deferred prosecution agreement (DPA).  In addition to the monetary payment and extension of the deferred prosecution agreement, the company must enhance its anti-fraud and AML compliance programs.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney David J. Freed of the Middle District of Pennsylvania, Federal Trade Commission (FTC) Chairman Joseph Simons and Postal Inspector-in-Charge Daniel B. Brubaker of the U.S. Postal Inspection Service (USPIS) Philadelphia Division made the announcement.

A two-count felony criminal information was filed on Nov. 9, 2012, in the Middle District of Pennsylvania charging MoneyGram with willfully failing to maintain an effective AML program and aiding and abetting wire fraud.  The government agreed to defer prosecution on the information for five years provided MoneyGram complied with the DPA.  Today’s amendment to the agreement will extend the term of the DPA for 30 months.

According to court documents filed in 2012, MoneyGram was involved in consumer fraud schemes perpetrated by corrupt MoneyGram agents and others.  In the fraud scams, which generally targeted the elderly and other vulnerable groups, perpetrators contacted victims in the United States and falsely posed as victim’s relatives in urgent need of money, falsely promised large cash prizes, or promised items for sale over the internet at deeply discounted prices.  The perpetrators required the victims to send funds through MoneyGram’s money transfer system.

According to the joint motion filed today to extend and amend the DPA, MoneyGram breached its 2012 DPA.  During the course of the DPA, MoneyGram experienced significant weaknesses in its AML and anti-fraud program, inadequately disclosed these weaknesses to the government, and failed to complete all of the DPA’s required enhanced compliance undertakings.  As a result of its failures, MoneyGram processed at least $125 million in additional consumer fraud transactions between April 2015 and October 2016.

Today, as a result of MoneyGram’s breach of the DPA, the government filed a motion to extend all the terms of MoneyGram’s DPA and amend and enhance MoneyGram’s compliance requirements pursuant to the DPA.  In addition, MoneyGram agreed to forfeit $125 million, which the department intends to return to victims of fraud through the Justice Department’s Victim Compensation Program.  Under the terms of the extension, the government has agreed to continue to defer prosecution for a period of 30 months, after which time the government would seek to dismiss charges if MoneyGram has complied with the agreement.

As part of the amendment to and extension of the DPA, MoneyGram has agreed to additional enhanced compliance obligations, including creating policies or procedures:

  • to block certain reported fraud receivers and senders from using MoneyGram’s money transfer system within two days of receiving a complaint identifying those individuals;
  • to require individuals worldwide to provide government-issued identification to send or receive money transfers;
  • to monitor all money transfers originating in the United States in its anti-fraud program; and
  • to terminate, discipline, or restrict agents processing a high volume of transactions related to reported fraud receivers and senders.

In a related case, MoneyGram agreed to settle contempt allegations by the FTC filed today in the U.S. District Court for the Northern District of Illinois, alleging that MoneyGram violated its 2009 order with the FTC.  The FTC alleges that MoneyGram failed to implement the comprehensive fraud prevention program mandated by the 2009 order, which requires the company to promptly investigate, restrict, suspend, and terminate high-fraud agents.  According to the FTC, MoneyGram was aware for years of the high levels of fraud and suspicious activities involving certain agents, including large chain agents, but failed to promptly conduct required reviews or suspend or terminate agents, as required by the 2009 order.

In resolving the FTC allegations, MoneyGram agreed to a monetary judgment of $125 million and to an expanded and modified order that will supersede the Commission’s 2009 order and apply to money transfers worldwide.  The modified order requires, among other things, that the company block the money transfers of known perpetrators of fraud schemes and provide refunds to fraud victims in circumstances where its agents fail to comply with applicable policies and procedures.  In addition, the modified order includes enhanced due diligence, investigative, and disciplinary requirements.

The USPIS and the U.S. Attorney’s Office for the Middle District of Pennsylvania have been investigating and prosecuting consumer fraud schemes using MoneyGram’s money transfer system since 2007.  To date, the U.S. Attorney’s Office of the Middle District of Pennsylvania has charged 37 MoneyGram agent owners for conspiracy, money laundering and fraud-related violations.  Twenty-eight of those charged have been convicted.

USPIS’s Philadelphia Division’s Harrisburg, Pennsylvania Office investigated the case.  Senior Trial Attorney Margaret A. Moeser of the Criminal Division’s Money Laundering and Asset Recovery Section’s Bank Integrity Unit and Assistant U.S. Attorney Kim Douglas Daniel of the Middle District of Pennsylvania are prosecuting the case.  The department appreciates the significant cooperation and assistance provided by the FTC in this matter.

Persons who believe they were victims of the fraud scheme should visit the Department of Justice’s victim website at MoneyGramRemission.com or call 844-269-2630 for updates on how to request compensation as a result of this action.

The Victim Compensation Program, operated by the Money Laundering and Asset Recovery Section, is composed of a team of experienced professionals, including attorneys, accountants, auditors and claims analysts.  In hundreds of cases, the Victim Compensation Program has successfully used its specialized expertise to efficiently convert forfeited assets to victim recoveries.

The Bank Integrity Unit investigates and prosecutes complex, multi-district, and international criminal cases involving financial institutions.  The Unit’s prosecutions focus on banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.

Links:

Department of Justice Press Release

2012 Deferred Prosecution Agreement (DPA)

Amendment and Extension to DPA

Joint Motion to Amend and Extend DPA

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