IN THE UNITED STATES
DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA 

	UNITED STATES OF AMERICA,		:            	
	 		:	
	 Plaintiff		:

:	

CRIMINAL No.
	 	 	:	
	v.		:	
	 		:	(Judge                    
      )
	 		:	
	THE WESTERN UNION COMPANY,		:	
	 		:	
	Defendant		:	



DEFERRED PROSECUTION
AGREEMENT

Defendant THE WESTERN UNION
COMPANY (“Western Union” or the “Company”), by its undersigned representatives,
pursuant to authority granted by the Company’s Board of Directors, and the
United States Department of Justice, Criminal Division, Money Laundering and
Asset Recovery Section, the United States Attorney’s Offices for the Middle
District of Pennsylvania, the Central District of California, the Eastern
District of Pennsylvania, and the Southern District of Florida (collectively,
the “Offices”), enter into this Deferred Prosecution Agreement (the
“Agreement”), the terms and conditions of which are as follows: 

Criminal Information
and Acceptance of
Responsibility

1. The Company acknowledges and
agrees that the Offices will file the attached two count criminal Information in
the United States District Court for the Middle District of Pennsylvania
charging the Company with (1) willfully failing to implement an effective
anti-money laundering program, in violation of Title 31, United States Code,
Sections 5318(h) and 5322 and regulations issued thereunder; and (2) aiding and
abetting wire fraud, in violation of Title
18, United States Code, Sections 1343 and 2. In so doing, the Company: (a)
knowingly waives its right to indictment on these charges, as well as all rights
to a speedy trial pursuant to the Sixth Amendment to the United States
Constitution, Title 18, United States Code, Section 3161, and Federal Rule of
Criminal Procedure 48(b); and (b) knowingly waives for the purposes of this
Agreement and for the purposes of any charges by the United States arising out
of the conduct described in the attached Statement of Facts any objection with
respect to venue and consents to the filing of the Information, as provided
under the terms of this Agreement, in the United States District Court for the
Middle District of Pennsylvania. The Offices agree to defer prosecution of the
Company pursuant to the terms and conditions described below. 


1







2. “Western Union Agent” or
“Agents” are generally individuals or entities that own and/or operate
businesses that have a contractual relationship with Western Union and, by
virtue of that contractual relationship are authorized to offer Western Union’s
money transfers to consumers. Western Union Agents may have multiple locations
where Western Union services are offered. In the U.S., Western Union directly
contracts with both network agents and independent agents. Network agents are
retail chains that have one contract with Western Union through which the
retailer offers Western Union services at multiple locations. Independent agents
are small independent businesses such as convenience stores that contract
directly with Western Union to offer Western Union services at their locations.
In some countries outside the U.S., Western Union may operate through master
agents, which are generally independent businesses that in turn subcontract with
generally small independent stores who offer Western Union services at their
locations. All Western Union Agent locations have access to the Money Transfer
System and must send all Western Union transfers by wire via the Money Transfer
System. “Western Union Agent” or “Agents”
include, but are not limited to, network, independent, master, or subagents. The
Company admits, accepts, and acknowledges that it is responsible under United
States law for the acts of its officers, directors, and employees, as well as for
certain conduct of its Agents, such as use of Western Union’s money transfer
system, as charged in the Information, and as set forth in the Statement of
Facts attached hereto as Attachment A and incorporated by reference into this
Agreement, and that the allegations described in the Information and the facts
described in Attachment A are true and accurate. Should the Offices pursue the
prosecution that is deferred by this Agreement, the Company stipulates to the
admissibility of the Statement of Facts in any proceeding, including any trial,
guilty plea, or sentencing proceeding, and will not contradict anything in the
Statement of Facts at any such proceeding. 

2







Term of the
Agreement 

3. This
Agreement is effective  for a period beginning on the date on which the Information
is filed and ending three (3) years  from the later of the date on which the Information is filed or the date on  which the
Court enters the Agreement. However, the Company agrees that in the  event that the Offices determine, in their sole
discretion, subject to the  notice and opportunity to respond provisions in Paragraph 16, that the Company has  knowingly
violated any provision of this Agreement, an extension or extensions  of the Term of the Agreement may be imposed by the
Offices, in their sole  discretion, for up to a total additional time period of one year, without  prejudice to the
Offices’ right to proceed as provided in Paragraphs 15 through  18 below. Any extension of the Agreement extends all
terms of this Agreement.  Conversely, in the event the Offices find, in their sole discretion, that the  provisions of this
Agreement have been  satisfied, the Term of the Agreement may be terminated early. If the Court  rejects the Agreement, all
the provisions of the Agreement, including all  attachments to and representations in this Agreement, shall be deemed null
and  void, and the Term shall be deemed to have not begun. 

3







Relevant
Considerations 

4. The
Offices enter into this  Agreement based on the individual facts and circumstances presented by this case  and the Company.
Among the factors considered were the following: 

a. the seriousness of the
conduct described in the Statement of Facts including the high-dollar amount of
fraud-related and structured funds that the Company transmitted, and misconduct
that spanned multiple jurisdictions and was known throughout the Company;


b. the Company’s willingness to
acknowledge and accept responsibility for its conduct; 

c. the Company’s significant
compliance enhancements since at least 2012 designed to improve its anti-money
laundering and anti-fraud compliance programs, which demonstrate the Company’s
commitment to maintaining and enhancing the effectiveness of its compliance
program; 

d. the Company’s commitment to
continue to enhance its anti-money laundering and anti-fraud compliance
programs, including implementing and complying with the Enhanced Compliance
Undertaking in Attachment C; 

e. the Company’s cooperation
with law enforcement; 

f. the Company’s agreement to
provide the Offices with access to and reports by the independent auditor
retained pursuant the Federal Trade Commission (“FTC”) stipulated Order;


g. the
Company’s agreement to  cooperate with the Offices as described in Paragraph 5 below; and 

h. the Company’s willingness to
settle any and all civil and criminal claims currently held by the Offices for
any act within the scope of the Statement of Facts. 

4








Future Cooperation and
Disclosure Requirements


5. The
Company shall cooperate  fully with the Offices in any and all matters relating to the conduct described  in this Agreement
and the Statement of Facts and other conduct under  investigation by the Offices or any other component of the Department of
Justice  at any time during the Term of the Agreement, subject to applicable law and  regulations, until the later of the
date upon which all investigations and  prosecutions arising out of such conduct are concluded, or the end of the Term of
the Agreement. At the request of the Offices, the Company shall also cooperate  fully with other federal law enforcement and
regulatory authorities and  agencies, in any investigation of the Company, its subsidiaries or affiliates, or any of its
present or former officers, directors, employees, Agents, Agent employees, consultants,  or any other party, in any and all matters relating to
the conduct described in  this Agreement and the Statement of Facts and other conduct under investigation  by the Offices or
any component of the Department of Justice at any time during  the Term of the Agreement. The Company agrees that its
cooperation shall  include, but not be limited to, the following: 


a. The Company shall truthfully
disclose all factual information relating to the conduct described in this
Agreement and the Statement of Facts and other conduct under investigation by the
Offices or any other component of the Department of Justice at any time during
the Term of the Agreement in the possession of the Company or its subsidiaries
not protected by a valid claim of attorney-client privilege or work product doctrine, with
respect to its activities, those of its subsidiaries and affiliates, and those of
its present or former directors, officers, employees, Agents, Agent
employees, and consultants, including any evidence or allegations and internal or external
investigations, or information learned from the FTC Auditor, about which the
Company has any knowledge or about which the Offices may inquire. This obligation
of truthful disclosure includes, but is not limited to, the obligation of the
Company to provide to the Offices, upon request, any document, record or other
tangible evidence about which the Offices may inquire of the Company, subject to
applicable law and regulations; 

b. Upon request of the Offices,
the Company shall designate knowledgeable employees, agents or attorneys to
provide the Offices the information and materials described in Paragraph 5(a)
above on behalf of the Company. It is further understood that the Company must
at all times provide complete, truthful, and accurate information; 

c. The Company shall use its
best efforts to make available for interviews or testimony, as requested by the
Offices, present or former officers, directors, employees, Agents, Agent
employees, and consultants of the Company, concerning the matters set forth in
Paragraph 5(a). This obligation includes, but is not limited to, sworn testimony
before a federal grand jury or in federal trials, as well as interviews with
federal law enforcement and regulatory authorities, concerning the matters set
forth in Paragraph 5(a). Cooperation under this Paragraph shall include identification of witnesses who, to the
knowledge of the Company, may have material information regarding the matters
under investigation;  

5







d. With respect to any
information, testimony, documents, records or other tangible evidence provided
to the Offices pursuant to this Agreement, the Company consents to any and all
disclosures, subject to applicable law and regulations, to other governmental
authorities, including United States authorities and those of a foreign
government, of such materials as the Offices, in their sole discretion, shall
deem appropriate; and 

e. If the Company cannot
cooperate with the obligations in Paragraph 5 due to applicable law,
regulations, or a valid claim of privilege, the Company will provide a log
listing a general description of the information withheld, the applicable law,
regulation, or privilege that prevents disclosure of the information requested,
and a detailed statement explaining why the applicable law, regulation, or
privilege prevents disclosure. 

6. In addition to the
obligations in Paragraph 5 above, during the Term of the Agreement, should the Company learn of credible
evidence or allegations of criminal violations of U.S. federal law by the Company
or its subsidiaries or affiliates, or any of its present or former officers,
directors, employees, Agents, Agent employees, or consultants, the Company shall promptly
report such evidence or allegations to the Offices. 

6







Forfeiture
Amount 

7. As a result of Western
Union’s conduct, including the conduct set forth in the Statement of Facts, the
parties agree that each of the Offices could institute a civil and/or criminal
forfeiture action against certain funds held by Western Union and that such funds
would be forfeitable pursuant to Title 18, United States Code, Sections 981 and
982 and Title 28, United States Code, Section 2461(c). Western Union
hereby acknowledges that at least $586 million in consumer fraud proceeds are
traceable to transactions in violation of Title 18, United States Code, Sections
1343 and 2, as described in the Statement of Facts. Western Union hereby agrees
to forfeit to the United States the sum of $586 million (the “Forfeiture
Amount”). The Offices are collecting the Forfeiture Amount in this manner to
make the funds available to compensate victims of the fraud scheme described in
the Statement of Facts, pursuant to 18 U.S.C. § 981(e)(6), under the Petition for
Remission and/or Mitigation procedures of the United States Department of
Justice or any other manner within the United States Attorney General’s
discretion. The Company hereby agrees that, in the event the funds used to pay
the Forfeiture Amount are not directly traceable to the transactions, the monies
used to pay the Forfeiture Amount shall be considered substitute res for the purpose of forfeiture to the United States pursuant to Title 18,
United States Code, Sections 981, 982 or Title 28, United States Code, Section
2461(c), and the Company releases any and all claims it may have to such funds.
The Company shall pay $146.5 million of the Forfeiture Amount plus any associated
transfer fees within five (5) business days of the date on which this Agreement
is signed, pursuant to payment instructions provided by the Offices in their sole
discretion. The Company shall pay the remaining sum of $439.5 million plus any
associated transfer fees within ninety (90) business days of the date this
Agreement is signed, pursuant to payment instructions provided by the Offices in
their sole discretion. The Company agrees to sign any additional documents
necessary to complete forfeiture of the funds.

7







8. The Forfeiture Amount paid is
final and shall not be refunded should the Government later determine that the Company has breached this Agreement
and commences a prosecution against the Company. In the event of a breach
of this Agreement and subsequent prosecution, the Offices are not limited to the
Forfeiture Amount. The Offices agree that in the event of a subsequent breach and
prosecution, it will recommend to the Court that the amounts paid pursuant to
this Agreement be offset against whatever forfeiture the Court shall impose as
part of its judgment. The Company understands that such a recommendation will
not be binding on the Court. 

Conditional Release
from Liability 

9. Subject to Paragraphs 15
through 18 below, the Offices agree, except as provided herein, that they will
not bring any criminal or civil case against the Company or any of its wholly
owned or controlled subsidiaries relating to any of the conduct described in the
Statement of Facts, attached hereto as Attachment A, the criminal Information
filed pursuant to this Agreement, or information that the Company disclosed to
the Offices prior to the date of the Agreement. The Offices, however, may use
any information related to the conduct described in the attached Statement of
Facts against the Company in a: (a) prosecution for perjury or obstruction of
justice; (b) prosecution for making a false statement; or (c) prosecution or other
proceeding relating to a violation of any provision of Title 26 of the United
States Code. 

a. This Agreement does not
provide any protection against prosecution for any future conduct by the
Company. 

b. In addition, this Agreement
does not provide any protection against prosecution of any present or former
officer, director, employee, shareholder, Agent, Agent employee, consultant,
contractor, or subcontractor of the Company for any violations committed by
them.

8







Corporate Compliance
Program 

10. The Company represents that
it has implemented and will continue to implement a compliance program
reasonably designed to prevent and detect violations of the Bank Secrecy
Act (“BSA”), money laundering statutes, and other specified unlawful activity
throughout its operations, including those of its affiliates, Agents, and joint
ventures, and those of its contractors and subcontractors whose responsibilities
include providing money transfer services as required by law or regulation,
Attachment C, or the FTC order. 

11. In order to address any
deficiencies in its anti-money laundering and anti-fraud programs, the Company
represents that it has undertaken, and will continue to undertake in the future,
in a manner consistent with all of its obligations under this Agreement, review
and enhancement of its anti-money laundering and anti-fraud program, policies,
procedures, and controls. If necessary and appropriate, the Company will adopt
new or modify existing programs, reasonably designed policies, procedures, and
controls in order to ensure that the company maintains: (a) effective anti-money
laundering and anti-fraud programs; and (b) Agent oversight policies,
including reasonably designed procedures and controls designed to detect, deter,
and discipline violations of the BSA, money laundering, fraud and gambling
statutes by Agents and their owners, employees, officers, directors,
consultants, contractors, or subcontractors. The reasonably designed anti-money
laundering and anti-fraud programs, policies, procedures and controls will
include, but not be limited to, the minimum elements set forth in Attachment C,
which is incorporated by reference into this Agreement. 

12. The Company shall comply with
the FTC Auditor Agreement and provide the FTC auditor reports to the Offices at
the same time as provided to the FTC.

9







Deferred
Prosecution 

13. In consideration of: (a) the
past and future cooperation of the Company described in Paragraph 5 above; (b)
the Company’s agreement to forfeiture of $586 million; and (c) the Company’s
implementation and maintenance of compliance enhancements as described in
Paragraphs 10 through 12 above and Attachment C, the Offices agree that any
prosecution of the Company for the conduct set forth in the Statement of Facts be
and hereby is deferred for the Term of this Agreement. 

14. The
Offices further agree that  if the Company fully complies with all of its obligations under this Agreement,  the Offices will
not continue the criminal prosecution against the  Company described in Paragraph 1 and, at the conclusion of the Term, this
Agreement shall expire. Within three (3) months of the Agreement’s expiration, the  Offices shall seek dismissal with
prejudice of the criminal Information filed  against the Company described in Paragraph 1 above, and agrees not to file
charges in the future against the Company based on the conduct described in this  Agreement and Attachment A. 

10







Breach of the
Agreement 

15. If,
during the Term of the  Agreement, the Company (a) commits any felony under U.S. federal law; (b) provides in connection
with this Agreement deliberately false, incomplete, or misleading  information; (c) fails to cooperate as set forth in
Paragraphs 5 and 6 of this  Agreement; (d) fails to put into effect or operation, implement, and maintain a  compliance
program as set forth in Paragraphs 10 through 12 of this Agreement  and Attachment C; or (e) otherwise fails to specifically
perform or to fulfill completely each of the Company’s obligations under the Agreement, regardless of whether the  Offices become
aware of such a breach after the Term of the Agreement is  complete, the Company shall thereafter be subject to prosecution
for any federal criminal violation of which the Offices have knowledge, including, but not  limited to, the charges in the
Information described in Paragraph 1 and charges  that arise from the conduct set forth in the Statement of Facts, which may
be  pursued by the Offices in the U.S. District Courts for the Middle District of  Pennsylvania, the Central District of
California, the Eastern District of  Pennsylvania, or the Southern District of Florida, or any other appropriate  venue.
Determination of whether the Company has breached the Agreement and  whether to pursue prosecution of the Company shall be in
the Offices’ sole discretion, subject to the notice and opportunity to respond provisions in  Paragraph 16. Any such
prosecution may be premised on information provided by  the Company or its personnel, Agents, or Agent employees. Any such
prosecution  relating to the conduct described in the Statement of Facts or relating to  conduct known to the Offices prior
to the date on which this Agreement was signed  that is not time-barred by the applicable statute of limitations on the date
of the signing of this Agreement may be commenced against the  Company notwithstanding the expiration of the statute of
limitations between the signing of this Agreement and the expiration of the Term of the Agreement plus  one year. Thus, by
signing this Agreement, the Company agrees that the statute  of limitations with respect to any such prosecution that is not
time-barred on  the date of the signing of this Agreement shall be tolled for the Term of the  Agreement plus six months. In
addition, the Company agrees that the statute of  limitations as to any violation of federal law that occurs during the Term
of  the Agreement will be tolled from the date upon which the violation occurs for  the duration of the Term of the
Agreement plus six months, and that this period  shall be excluded from any calculation of
time for purposes of the application of the statute of limitations. 

11










16. In the event that the Offices  determine that the
Company  has breached this Agreement, the Offices  agree to provide the Company  with
written notice of such breach prior to instituting any prosecution resulting
from such breach. Within thirty (30) days of receipt of such notice, the Company
shall have the opportunity to respond to the Offices     in writing to explain the
nature and circumstances of such breach, as well as the actions the Company  has
taken to address and remediate the situation, which explanation the Offices shall
consider in determining whether to institute a prosecution.

17. In the event that the Offices determine that the
Company has breached this Agreement: (a) all statements  made by or on behalf of
the Company to the Offices  or to the Court, including the attached Statement of
Facts, and any testimony given by the Company  before a grand jury, a court, or
any tribunal, or at any legislative hearings, whether prior or subsequent to
this Agreement, and any leads derived from such statements  or testimony, shall be
admissible in evidence in any and all criminal proceedings brought by the
Offices  against the Company; and (b) the Company shall not assert any claim under
the United States Constitution, Rule 11(f) of the Federal Rules of Criminal
Procedure, Rule 410 of the Federal Rules of Evidence, or any other federal rule
that any such statements or testimony made by or on behalf of the Company prior or
subsequent to this Agreement, or any leads derived therefrom, should be
suppressed or are otherwise inadmissible. The decision whether conduct or
statements  of any current director, officer, or employee, or any person acting
on behalf of, or at the direction of, the Company will be imputed to the
Company for the purpose of determining whether the Company  has violated any
provision of this Agreement shall be in the sole discretion of the Offices.
 

12 







18. The
Company  acknowledges that the Offices have made no  representations, assurances, or promises concerning what sentence may
be imposed  by the Court if the Company  breaches this Agreement and this matter proceeds to  judgment. The Company
further acknowledges that any such sentence is solely  within the discretion of the Court and that nothing in this Agreement
binds or restricts the Court in the exercise of such discretion. 

19. Thirty (30) days after the expiration of the period of
deferred prosecution specified in this Agreement, the Company, by the Chief
Executive Officer and the Chief Compliance Officer of the Company, after
conducting a reasonable inquiry within the Company, will certify to the
Offices that, in good faith reliance on information provided to the Chief
Executive Officer and Chief Compliance  Officer by third parties within the
Company, and based on their best information and belief, the Company  has met its
disclosure obligations pursuant to Paragraph 6 of this Agreement.
Such certification will be deemed a material statement and representation by the
Company  to the executive branch of the United States for purposes of Title 18,
United States Code Section 1001, and it will be deemed to have been made in the
judicial district in which this Agreement is filed. 

Sale, Merger, or Other Change
in Corporate Form of Company 


20. Except as may otherwise be agreed by the parties hereto
in connection with a particular transaction, the Company agrees that in the event
that, during the Term of the Agreement, it undertakes any change in corporate form,
including if it sells, merges, or transfers a substantial portion of its
business operations as they exist as of the date of this Agreement, whether such
sale is structured as a sale, asset sale, merger, transfer, or other change in corporate
form, it shall include in any contract for sale, merger, transfer, or other
change in corporate form a provision binding the purchaser, or any successor in
interest thereto, to the obligations described in this Agreement. The Company
shall provide the Offices at least thirty (30) days’ notice prior to undertaking
any such sale, merger, transfer, or other change in corporate form, including
dissolution, in order to give the Offices an opportunity to determine if such
change in corporate form would impact the terms or obligations of the
Agreement. 

13







Public Statements  by
Company  

21. The Company  expressly agrees that it shall not, through
present or future attorneys, officers, directors, employees, agents or any other
person authorized to speak for the Company  make any public statement, in
litigation or otherwise, contradicting the acceptance of responsibility by the
Company  set forth above or the facts described in the Statement of Facts. Any
such contradictory statement shall, subject to cure rights of the Company
described below, constitute a breach of this Agreement and the Company thereafter
shall be subject to prosecution as set forth in Paragraphs 15 through 18 of this
Agreement. The decision whether any public statement by any such person
contradicting a fact contained in the Statement of Facts will be imputed to the
Company  for the purpose of determining whether it has breached this Agreement
shall be at the sole discretion of the Offices, subject to the notice and
opportunity to respond provisions in Paragraph 16. If the Offices determine that
a public statement by any such person contradicts in whole or in part
information contained in the Statement of Facts, the Offices shall so notify the
Company, and the Company  may avoid a breach of this Agreement by publicly
repudiating such statement(s) within five (5) business days after notification.
The Company  shall be permitted to raise defenses and to assert affirmative
claims in other proceedings relating to the matters set forth in the Statement
of Facts provided that such defenses and claims do not contradict, in whole or
in part, a statement contained in the Statement of Facts. This Paragraph does
not apply to any statement made by any present or former officer, director,
employee, or agent of the Company  in the course of any criminal, regulatory, or
civil case initiated against such individual, unless such individual is speaking
on behalf of the Company. 

14







22. The Company  agrees that if it or any of its direct or
indirect subsidiaries or affiliates issues a press release or holds any press
conference in connection with this Agreement, the Company  shall first consult
the Offices to determine (a) whether the text of the release or proposed
statements  at the press conference are true and accurate with respect to matters
between the Offices and the Company; and (b) whether the Offices have any objection to the release. 

23. The Offices agree, if requested to do so, to bring to the
attention of law enforcement and regulatory authorities the facts and
circumstances relating to the nature of the conduct underlying this Agreement,
including the nature and quality of the Company’s cooperation and remediation.
By agreeing to provide this information to other authorities, the Offices  are not
agreeing to advocate on behalf of the Company, but rather are agreeing to provide
facts to be evaluated independently by such authorities. 

Limitations on Binding Effect
of Agreement 

24. This Agreement is binding on the Company and the
Offices but specifically does not bind any other component of the Department of
Justice, other federal agencies, or any state, local or foreign law enforcement
or regulatory agencies, or any other authorities, although the Offices  will, as
described in Paragraph 23, discuss the Company’s compliance  and cooperation with
such agencies and authorities if requested to do so by the Company. 

15







Notice 

25. Any notice to the Offices under this Agreement shall be
given by personal delivery, overnight delivery by a recognized delivery service,
or registered or certified mail, addressed to Chief, Money Laundering and Asset
Recovery Section, Criminal Division, United States Department of Justice, 1400
New York Avenue, Washington, D.C. 20005; the United States Attorney, United
States Attorney’s Office, Middle District of Pennsylvania, Harrisburg Federal
Building and Courthouse, 228 Walnut Street, Suite 220, P.O. Box 11754,
Harrisburg, PA 17108-1754; the United States Attorney, United States Attorney’s
Office, Central District of California, 411 West Fourth Street, Santa Ana, CA
92701; the United States Attorney, United States Attorney’s Office, Eastern
District of Pennsylvania, 615 Chestnut Street, Suite 1250, Philadelphia, PA
19106; the United States Attorney, United States Attorney’s Office, Southern
District of Florida, 500 E. Broward Blvd., Ft. Lauderdale, FL, 33394. Any notice
to the Company  under this Agreement shall be given by personal delivery,
overnight delivery by a recognized delivery service, or registered or certified
mail, addressed to Western Union, Office of the General Counsel, 12500 East
Belford Avenue, Englewood, CO 80112. Notice shall be effective upon actual
receipt by the Offices or the Company. 

Complete
Agreement 

26. This Agreement, including its attachments, sets forth all
the terms of the agreement between the Company  and the Offices. No amendments,
modifications, or additions to this Agreement shall be valid unless they are in writing and
signed by the Offices, the attorneys for the Company, and a duly authorized
representative of the Company.

16








AGREED:

FOR THE WESTERN UNION COMPANY:



	/s/ John R. Dye	     	/s/ Alice S. Fisher
	John R. Dye	     	Alice S. Fisher
	Executive Vice President and	     	Latham & Watkins LLP
	General Counsel	     	Counsel to the Company
	The Western Union Company	     	



17









FOR THE U.S. DEPARTMENT OF
JUSTICE: 

	BRUCE D.
    BRANDLER	      	M. KENDALL
  DAY
	United States
      Attorney		Chief, Money Laundering
      and
	Middle District of
      Pennsylvania	 	         
      Asset Recovery Section
	 		Criminal Division, U.S.
      Department of Justice
	  
	 
	/s/ Kim Douglas
    Daniel		/s/ Margaret A. Moeser
	Kim Douglas
    Daniel		Margaret A.
    Moeser
	Assistant United States
      Attorney		Trial
  Attorney
	  
	  
	EILEEN M.
    DECKER		
	United States
      Attorney		
	Central District of
      California		
	 
	 
	/s/ Gregory W. Staples		
	Gregory W.
    Staples		
	Assistant United States
      Attorney		
	 
	 
	WIFREDO A.
    FERRER		
	United States
      Attorney		
	Southern District of
      Florida		
	 
	/s/ Randall D. Katz		
	Randall D.
Katz		
	Assistant United States
      Attorney		
	 
	LOUIS D.
LAPPEN		
	United States
      Attorney		
	Eastern District of
      Pennsylvania		
	 
	 
	/s/ Judy Smith		
	Judy Smith		
	Assistant United States
      Attorney		
	 
	Date:  	January 19, 2017 		











COMPANY OFFICER’S CERTIFICATE


I have read
this Agreement and carefully reviewed every part of it with outside counsel for
the Western Union Company (the “Company”). I understand the terms of this
Agreement and voluntarily agree, on behalf of the Company, to each of its terms.
Before signing this Agreement, I consulted outside counsel for the Company.
Counsel fully advised me of the rights of the Company, of possible defenses, and
of the consequences of entering into this Agreement.

I have carefully reviewed
the terms of this Agreement with the Board of Directors of the Company. I have
advised and caused outside counsel for the Company to advise the Board of
Directors fully of the rights of the Company, of possible defenses, the
Sentencing Guidelines’ provisions, and of the consequences of entering into the
Agreement. 

No promises
or inducements have been made other than those contained in this Agreement.
Furthermore, no one has threatened or forced me, or to my knowledge any person
authorizing this Agreement on behalf of the Company, in any way to enter into
this Agreement. I am also satisfied with outside counsel’s representation in
this matter. I certify that I am the Executive Vice President and General
Counsel for the Company and that I have been duly authorized by the Company to
execute this Agreement on behalf of the Company. 

Date: January 18, 2017



		THE WESTERN
      UNION COMPANY
	  
	  
	By:     	/s/ John R. Dye
		John R. Dye
		Executive Vice President
      and General Counsel











CERTIFICATE OF COUNSEL


I am
counsel for the Western Union Company (the “Company”) in the matter covered by
this Agreement. In connection with such representation, I have examined relevant
Company documents and have discussed the terms of this Agreement with the
Company Board of Directors. Based on our review of the foregoing materials and
discussions, I am of the opinion that the representative of the Company has been
duly authorized to enter into this Agreement on behalf of the Company and that
this Agreement has been duly and validly authorized, executed, and delivered on
behalf of the Company and is a valid and binding obligation of the Company.
Further, I have carefully reviewed the terms of this Agreement with the Board of
Directors and the Chief Executive Officer of the Company. I have fully advised
them of the rights of the Company, of possible defenses, and of the consequences
of entering into this Agreement. To my knowledge, the decision of the Company to
enter into this Agreement, based on the authorization of the Board of Directors,
is an informed and voluntary one. 

Date: 01/18/17                     


	By:  	/s/ Alice S. Fisher
	 	Alice S.
  Fisher
		Counsel for the Western
      Union Company










ATTACHMENT A 

STATEMENT OF
FACTS 

The
following Statement of Facts is incorporated by reference as part of the
Deferred Prosecution Agreement (the “Agreement”) between the United
States Department of Justice Criminal Division’s Money Laundering and Asset
Recovery Section, the United States Attorney’s Offices  for the Middle District of
Pennsylvania, the Central District of California, the Eastern District of
Pennsylvania, and the Southern District of Florida (collectively, the
“Department” or the “United States”) and The Western Union Company, (“Western
Union” or the “Company”). Certain of the facts herein are based on information
obtained from third parties by the United States through their investigation and
described to Western Union. The parties stipulate that the allegations in Count
One and Two of the Information and the following facts are true and correct, and
that were the matter to proceed to trial, the United States would prove them
beyond a reasonable doubt, by admissible evidence: 

	1.	Starting in 2004 and ending
      in December 2012, Western Union violated U.S. laws by (1) willfully
      failing to implement and maintain an effective anti-money laundering
      (“AML”) program that was designed to detect, report, and prevent criminals
      from using Western Union to facilitate their fraud, money laundering, and
      structuring schemes, and (2) aiding and abetting fraudsters in their
      unlawful schemes by remaining in business with Agent locations that
      facilitated the unlawful fraud scheme.
	        	
	2.	Western Union’s conduct        included employees (1)
    repeatedly identifying Western Union Agent locations involved in or facilitating fraud-related transactions but knowingly
    failing to take effective corrective action; (2) repeatedly identifying        Western Union Agents involved in or
    facilitating unlawful structuring but        knowingly failing to take effective corrective action; (3) failing to
    adequately implement and maintain effective policies and procedures to        discipline, suspend, terminate or take
    effective     corrective action        against Western Union Agent locations that repeatedly violated the Bank
    Secrecy     Act and other     statutes or Western Union anti-money laundering or        anti-fraud policies; (4) modifying
    compliance     reviews or results     so that        Agents with severe compliance  failures would not face disciplinary
    action        such     as suspension or     termination as required by Western Union policies or        practices; (5)
    failing to take effective     action to control     transactions        with characteristics indicative of illegal gaming; or
    (6) failing to file     Suspicious Activity     Reports (“SARs”) identifying Western Union Agents as
    suspicious actors.
	 
	3.	Fraudsters relied on Western
      Union’s money transfer system to receive fraud and other criminal
      proceeds worldwide from victims in the United States. Western Union’s
      conduct, including its failure to take effective corrective actions in a
      timely fashion, contributed to the success of the fraudsters’
      schemes.
	 
	4.	This conduct occurred in
      various Western Union offices  and Western Union Agent locations located in
      the United States and around the world, including, in particular, through
      wires sent from the Middle District of Pennsylvania in furtherance of the
      fraud scheme that Western Union aided and
abetted.


1 







Legal
Background 

	5.	Congress enacted the Bank Secrecy Act, Title 31,
      United States Code Section 5311 et
      seq., and its implementing
      regulations (collectively the “BSA”) to address an increase in criminal
      money laundering activity utilizing financial institutions.
	        		
	6.	Western Union is a “financial institution” as
      defined in the BSA. 31 U.S.C. § 5312(a)(2); 31 C.F.R. § 1010.100. As a
      financial institution and money services business (“MSB”) Western Union must
      establish, implement, and maintain an effective AML compliance  program
      that, at a minimum, provides for: (a) internal policies, procedures, and
      controls to guard against money laundering; (b) an individual or
      individuals to coordinate and monitor day-to-day compliance  with the BSA
      and AML requirements; (c) an ongoing employee training program; and (d)
      independent testing of programs. 31 U.S.C. § 5318(h); 31 C.F.R. §
      1022.210. Pursuant to 31 U.S.C. § 5322, it is a crime to willfully violate
      the BSA.
	 
	7.	In 2004, the U.S. Department of Treasury, Financial
      Crimes Enforcement Network (“FinCEN”), which is the administrator of the
      BSA, explained AML program requirements for MSBs with foreign agents like
      Western Union (the “2004 FinCEN Release”). FinCEN advised that MSBs that
      use foreign agents to move funds into or out of the United States “must
      take reasonable steps to guard against the flow of illicit funds, or the
      flow of funds from legitimate sources to persons seeking to use those
      funds for illicit purposes” through their foreign agents. Specifically,
      FinCEN stated that MSB anti-money laundering programs should include
      procedures for the following:
		       
	
		a. 	conducting
      reasonable risk-based due diligence on potential and existing foreign
      agents and counterparties to help ensure that such foreign agents and
      counterparties are not themselves complicit in illegal activity involving
      the MSB’s products and services;
	 
		b. 	risk-based
      monitoring and review of transactions from, to, or through the United
      States that are conducted through foreign agents and counterparties;
      and
	 
		c. 	responding to
      foreign agents or counterparties that present unreasonable risks of money
      laundering or the financing of terrorism. Such procedures should provide
      for the implementation of corrective action on the part of the foreign
      agent or counterparty or for the termination of the relationship with any
      foreign agent or counterparty that the MSB determines poses an
      unacceptable risk of money laundering or terrorist financing, or that has
      demonstrated systemic, willful, or repeated lapses in compliance  with the
      MSB’s own anti-money laundering procedures or requirements.
	 
	8.	Under the BSA, financial institutions,
      including MSBs such as Western Union, must also maintain certain records
      and file certain reports, including those listed below.
		       
	
		a. 	MSBs must
      record consumer identification information for the transmittal of funds of
      more than $3,000, 12 U.S.C. § 1829b; 31 C.F.R. §
  1010.410;


2 










		b.	MSBs must file Currency Transaction Reports
      (“CTRs”), which identify transactions or series of transactions involving
      currency of more than $10,000 in one day, 31 U.S.C. § 5313; 31 C.F.R. §§
      1010.311, 1010.313; and
	        	        	
		c.	MSBs must file SARs, which identify
      transactions of $2,000 or more that involve or are intended to hide funds
      derived from illegal activity, are designed to evade BSA requirements,
      serve no business or lawful purpose, or use the MSB to facilitate criminal
      activity, 31 U.S.C. § 5318(g); 31 C.F.R. § 1022.320.
		 


	9.	“Structuring” or breaking transactions into
      smaller amounts to avoid the BSA’s recordkeeping and reporting
      requirements is a crime in violation of 31 U.S.C. § 5324. Willfully
      failing to file SARs is a crime in violation of 31 U.S.C. §
  5322.
	        	
	10.	Title 18, United States Code Sections 1343
      and 2 make it a crime to use, or aid and abet the use of, interstate wires
      to carry out a scheme to defraud individuals of money or property by false
      promises.


Western Union
Background 

	11.	Western Union,
      headquartered in Englewood, Colorado, is a publicly traded company, a
      financial institution, and one of the largest MSBs in the world. Western
      Union employs approximately 10,000 individuals worldwide. In 2014, Western
      Union reported total revenues of $5.6 billion including more than $1.56
      billion from U.S. operations and more than $4 billion from international
      operations. As an MSB, Western Union is currently registered with FinCEN in
      order to conduct its money transfer business. See 31 U.S.C. § 5330;31 C.F.R. § 1022.380. Most states and many foreign
      jurisdictions also require financial institutions, such as Western Union,
      to register or receive a license before offering money transfer services
      to the public.
	        	
	12.	Western Union’s
      “Money Transfer System” is an electronic network operated and controlled by
      Western Union using servers in the United States. Using Western Union’s
      Money Transfer System, consumers can send money to other individuals in the
      United States and around the world. Western Union offers its money
      transfer services to consumers via approximately 550,000 Western Union
      Agent locations in more than 200 countries and territories. Approximately
      90 percent of Western Union Agent locations are located outside the United
      States. In 2014, more than 150 million individual consumers used Western
      Union’s Money Transfer System to send or receive more than $85 billion
      through Western Union’s Agent locations.
	 
	13.	Western Union earns
      revenue by charging consumers a fee based on the money transfer amount and
      the destination location. Western Union earns additional revenue on
      international transactions that are sent in one currency and received in a
      different currency.
	 
	14.	“Western Union
      Agents” or “Agents” are generally independent individuals or entities,
      including banks, post offices, and small independent shops, that own and/or
      operate businesses that have a contractual relationship with Western Union.
      By virtue of that contractual relationship, Western Union Agents are
      authorized to offer Western Union’s money transfers to consumers. In the
      U.S., Western Union directly contracts with network and independent
      Agents. Network Agents are retail chains that have one contract with
      Western Union through which the retailer offers Western Union services at
      multiple locations. Independent Agents are small independent businesses
      such as convenience stores that contract directly with Western Union to
      offer Western Union services at their locations. Many U.S. Western Union
      Agents are also MSBs that must comply with the BSA. In some countries
      outside the U.S., Western Union operates through Master Agents, which are
      generally independent businesses that in turn subcontract with small
      independent businesses who offer Western Union services at their
      locations.


3 







	15.	Western Union Agents
      may have multiple locations where Western Union services are offered. Each
      Western Union Agent location has access to the Money Transfer System and
      must send all Western Union transfers by wire via the Money Transfer
      System.
	        	
	16.	Western Union
      pays Western Union Agents a commission for the money transfers the Agents
      process. Western Union may also pay the Agents bonuses and other
      compensation based on transaction volume. Western Union can unilaterally
      terminate or suspend any Agent or Agent location anywhere in the world for
      a variety of reasons, including compliance reasons.
	 
	17.	To send money through
      Western Union, consumers may go to a Western Union Agent location and
      give the Agent location information, generally including (1) the sender and
      payee names, (2) the transfer amount and (3) the state or province and
      country where the money is to be sent. Sometimes the sender’s
      identification document is required. Consumers give the
      Western Union Agent location funds to cover the transfer amount and the
      fee. The Agent enters the transaction into the Money Transfer System and
      gives the consumer the Money Transfer Control Number (“MTCN”), a ten-digit
      Western Union reference number for the transaction.
	 
	18.	To receive a money
      transfer, the payee typically must appear in person at a Western Union
      Agent location and provide the Agent location with personal information
      including the payee’s name, address, telephone number, and sometimes the
      payee’s identification document, and the sender’s name and location city,
      state or province, and country, and the expected transfer amount. Paying
      Western Union Agent locations typically require the payee to provide the
      MTCN. To complete the transfer to the payee, the paying Agent then
      transmits this information to the Western Union Money Transfer System via
      international or interstate wire.
	 
	19.	The payee can receive
      the money transfer within minutes after the sender sends the transaction.
      With certain limited exceptions, Western Union, at its discretion, has the
      ability to refuse the transaction, or cancel the transaction before the
      payee receives the transfer from the paying Western Union
  Agent.
	 
	20.	“Fraudsters”
      include, among other individuals involved in the fraud scheme, certain
      owners, operators and employees of Western Union
  Agents.


4 







The Scheme to Defraud
Consumers Using the Western Union Money Transfer System 

	21.	Between 2004 and 2012, Fraudsters engaged in
      a scheme to defraud consumers through the Western Union Money Transfer
      System. Certain owners, operators, or employees of Western Union Agent
      locations were complicit in the scheme (the “Complicit Western Union Agent
      Locations”). Western Union aided and abetted the Fraudsters’ scheme to
      defraud by failing to suspend and/or terminate complicit Agents and by
      allowing them to continue to process fraud induced monetary transactions.
      The scheme relied on a variety of false promises and other
      misrepresentations to defraud victims into sending money through Western
      Union. Fraudsters involved in the scheme contacted victims by phone, U.S.
      mail, interstate courier, or the Internet, and fraudulently induced them
      to send money by, among other things:
	        	


		a.	falsely promising
      victims large cash prizes, lottery winnings, fictitious loans, or other
      payments;
	        	        	
		b.	falsely offering
      various high-ticket items for sale over the Internet at deeply discounted
      prices;
		 
		c.	falsely promising
      employment opportunities as “secret shoppers” who would be paid to
      evaluate retail stores; or
		 
		d.	falsely posing as the
      victim’s relative and claiming to be in trouble and in urgent need of
      money.



	22.	The Fraudsters told
      victims that they must send the money in advance to receive the promised
      outcome. Fraudsters directed the victims to send advance payments to
      fictitious payees using Western Union’s Money Transfer
System.
	        	
	23.	After the victims
      sent the money through Western Union, the Fraudsters asked them for the
      Western Union MTCN for the transfer. The Fraudsters took the MTCN to
      Western Union Agent locations, including Complicit Western Union Agent
      Locations, who gave the Fraudsters the victims’ money transfers. At no
      time did the victims receive what the Fraudsters falsely promised
      them.
	 
	24.	Certain Complicit
      Western Union Agent Locations knowingly entered false addresses, telephone
      numbers, and personal identification document information into the Western
      Union Money Transfer System in order to pay the fraudulently induced
      transfers to the Fraudsters or retransfer the funds to other Complicit
      Western Union Agent Locations elsewhere. Through these actions, the
      Complicit Western Union Agent Locations concealed the true identities of
      the Fraudsters, as well as their involvement in the scheme. The Complicit
      Western Union Agent Locations received money, which was usually subtracted
      from the victims’ money transfers.
	 
	25.	Western Union
      maintained a 1-800 number through which some U.S. victims reported the
      fraud scheme. Western Union recorded these complaints and others it
      received in what are known as Consumer Fraud Reports (“CFRs”). The CFRs
      contain detailed information about the victims, the transactions, and the
      Western Union Agent locations that paid the transfers. Western Union
      maintained a database of all CFRs and used that information to track and
      investigate Agent locations that paid transfers reported as fraud-induced.


5 







	26.	Between 2004 and 2012, Western Union’s
      CFRs identified more than $ 500 million in reported consumer fraud
      transactions sent through Western Union Agent locations. Not every victim
      of the scheme reported the fraud to Western Union. Western Union employees
      knew that the total amount of fraud was higher than reported fraud as a
      result of their analyses and internal reports regarding particular Agent
      locations throughout Western Union’s operations.
	        	
	
      Western Union Knew
      Certain of Its Agents Were Complicit in the Scheme to Defraud
Using Western Union’s Money Transfer
      System
  



	        	
	27.	Western Union knew
      that certain of its Agent locations were complicit in the scheme to
      defraud using Western Union’s Money Transfer System because some of those
      locations were prosecuted for their criminal activity. For example, between
      2001 and 2012, twenty-eight Western Union Agent owners, operators, or
      employees were charged in the Middle District of Pennsylvania for their
      participation in fraud or money laundering using Western Union’s Money
      Transfer System.
	 
	28.	Western Union
      repeatedly identified Agent locations—particularly overseas Agent
      locations—that processed high levels of fraud transfers from U.S. victims,
      including certain Agent locations Western Union suspected were complicit in
      the fraud scheme, but it took insufficient action to stop these Complicit
      Agent Locations from facilitating consumer fraud. LJ, a 74 year old
      resident of the Middle District of Pennsylvania reported that she was the
      victim of a fraud scheme in October 2012. She attempted to report the
      fraud to Western Union and a Western Union employee told her that she was
      “wasting [her] time” reporting the fraud because “there are thousands of
      these complaints laying on the desk and nothing gets done.” Western Union
      identified Complicit Western Union Agent Locations through various means,
      including CFRs, transaction monitoring, and regular reports generated by
      Western Union analysts reviewing transactions that highlighted
      Agent locations exhibiting transaction patterns or behavior that were
      indicative of fraud-complicity.
	 
	29.	Western Union knew
      that the BSA required Western Union to monitor international Agents and
      take corrective action against Agents violating law or regulation. As a
      result of Western Union’s willful failure to implement or execute
      effective global Agent disciplinary policies or to act on its employees’
      recommendations to discipline, suspend, or terminate international Agent locations,
      Complicit Western Union Agent Locations remained open for years and
      processed additional fraud transactions.
	 
	30.	In November 2005,        Western Union entered into an agreement with
    the Attorneys General of 47        states and the District of Columbia (the “NAAG Agreement”) to resolve the
    states’ investigations into fraud transactions at Western Union. As part        of the NAAG Agreement, Western Union
    promised to terminate any        Agent—domestic or international—that was “complicit in fraud-induced
    transfers or knowingly ignore[d] such fraud, or, if certain employees of        the agent or subagent are the [sic]
    complicit or        knowingly ignoring parties, insist upon termination of such employees as a        condition to continued
    agent or subagent status.” Western Union also        agreed to suspend or terminate Agents that failed to take
    reasonable steps        to reduce fraud transactions. After entering into the NAAG Agreement,        Western Union did not
    implement or maintain effective policies or procedures        to suspend or terminate international Agents that processed
    fraud        payments.


6 







	31.	Certain Western Union employees recommended
      specific actions or policies and procedures to take action against
      potentially complicit Western Union Agent locations, but Western Union
      failed to adopt those recommendations. For example:
	        	


		a.	Global Guidelines: As early as 2004, an
      employee in Western Union’s Corporate Security Department prepared a set
      of “draft” Global Guidelines for discipline and suspension of Western
      Union Agent locations worldwide that processed a materially elevated
      number of reported fraud transactions. In these guidelines, the Corporate
      Security employee proposed mandatory review of any Agent location that paid
      10 CFRs within 60 days. The Corporate Security employee further proposed
      automatically suspending any Agent location that paid five or more
      transactions reported as fraud within 60 days of a review. In other words,
      the Corporate Security employee proposed automatically suspending any
      Agent location that paid 15 CFRs within 120 days. Western Union did not
      approve or implement the proposed Global Guidelines.
	        	        	
		b.	60-Day Fraud
      Report: As early as 2005,
      Western Union’s Corporate Security Department used CFRs to generate a
      regular 60-Day Fraud Report, which identified Agent locations that
      processed five or more CFRs within 60 days. Corporate Security
      distributed the report to a broad group of Western Union employees,
      including Western Union senior employees, and cautioned that Agent
      locations that did not “drastically reduce” payments of transactions
      identified in CFRs within 60 days would be suspended. Even though Corporate
      Security threatened to suspend Agent locations, thousands of Complicit
      Western Union Agent Locations—particularly overseas—appeared on the 60-Day
      Fraud Report multiple times with increasing CFR payments without Western
      Union taking disciplinary action against them.
		 
		c.	Agent Fraud
      Complicity Programs: In
      January 2008, two Western Union departments separately proposed methods to
      discipline potentially Complicit Western Union Agent Locations. One
      proposal specifically warned against the influence of sales employees on
      any Agent location disciplinary process because sales employees’
      “compensation is often based on agent performance—so they ... see no reason
      good enough to hold their agent responsible” for fraud transactions. A
      Western Union senior vice president said she was “coordinating the many
      functions in the company that look at ... data which might indicate an
      agent, a location, or an agent employee is engaged in illegal activities.”
      She was “focused on ... analysis of the consumer fraud complaints ... from a
      risk-based approach, separating out agent locations ... that are complicit
      and need to be suspended.... [And] the need to enhance processes” at
      Western Union. Western Union’s then-Chief Compliance Officer wrote, “I am
      in favor of this proposal with two caveats: The necessary resource
      commitment -the more we look [for Agent involvement in fraud schemes] the
      more we find... and I’d like this communicated in the appropriate way so
      that everyone understands their roles and responsibilities.” Western Union
      did not implement either of the proposed disciplinary
  programs.


7 







	32.	Had Western Union implemented the proposed
      Global Guidelines or the other proposed policies listed above, it could
      have prevented significant fraud losses to victims. Specifically, the proposed Global
      Guidelines would have resulted in potential suspensions and
      terminations against more than 2,000 Agents locations worldwide. Had
      Western Union implemented the proposed Global Guidelines it would have
      stopped these same Agent locations from processing more than $174 million
      in reported fraud losses. Because few victims reported fraud to Western
      Union, total fraud-related losses— including reported and unreported
      fraud—incurred through these Agent locations is likely higher. Examples
      of the fraud conduct in the United Kingdom, Spain, Mexico, and Peru are
      below.
	        	
	
      The Scheme to
      Defraud in the United Kingdom 



	        	
	33.	Through its CFRs and
      internal reporting, Western Union was aware of dozens of Complicit Agent
      Locations in the United Kingdom that would have been suspended under the
      proposed Global Guidelines. Western Union continued to engage in business
      with these Agent locations and profit from their fraud transactions by,
      among other things, collecting fees and other revenues on each fraudulent
      transaction certain Complicit Western Union Agent Locations
      processed.
	 
	34.	In 2008, Western
      Union owned a portion of some of the Master Agents of some of the Complicit
      Agent Locations. Western Union operated through Master Agent FEXCO in the
      United Kingdom, Spain, and other countries. Western Union owned 25% of
      FEXCO. FEXCO contracted with smaller independent businesses that offered
      Western Union money transfer services as Agent locations. Though the
      Agent locations in these countries did not contract directly with Western
      Union, Western Union could “terminate or suspend Money Transfer Services
      at any [Subagent location] at any time upon notice [to the Master Agent]
      if Western Union determine[d] in its sole discretion that operation of the
      Money Transfer Services at such Location(s) creates legal, regulatory,
      reputational, or financial risk for Western Union.” In 2008, FEXCO was
      Western Union’s largest Master Agent. FEXCO oversaw 10,000 Western Union
      Agent locations worldwide, processed more than $4 billion in Western Union
      money transfer principal, and generated $353 million in gross revenue for
      Western Union. Western Union Agent locations operating through FEXCO
      processed 89% of all Western Union transactions in the United Kingdom in
      2008. As a Master Agent, FEXCO commanded commissions approximately 10 to
      25 percent higher than small independent businesses that contracted directly
      with Western Union.
	 
	35.	Western Union London
      Agents UK Western Union Agent 1 and UK Western Union Agent 2, which both
      offered Western Union money transfers in London as subagents under FEXCO’s
      Master Agent arrangement with Western Union, were two examples of Western
      Union’s fraud conduct.


8 







	36.	Between 2004 and 2012, UK Western Union
      Agent 2 appeared on more than 73 Western Union 60-Day Fraud Reports and
      numerous other transaction reports (e.g., the Fraud Risk Index Report).
      Similarly, UK Western Union Agent 1 appeared on 63 Western Union 60-Day
      Fraud Reports and numerous other transaction reports. Western Union
      received approximately 2,342 CFRs identifying more than $3.6 million in
      losses to victims through fraud transactions paid by UK Western Union
      Agent 2 and its three related Agent locations between 2004 and 2012.
      During this same time period, Western Union received approximately 2,856
      CFRs identifying more than $3.6 million in losses to victims through fraud
      transactions paid by UK Western Union Agent 1 and its related
      Agent location. For years, Western Union failed to take sufficient
      corrective action against these high-fraud Agents.
	        	


		a.	In November 2005,
      Western Union’s Corporate Security Department first identified UK Western
      Union Agents 1 and 2 in 60-Day Fraud Reports as Agents that processed a
      materially excessive amount of transactions reported in CFRs. Both UK Western Union
      Agents 1 and 2 each processed well over 15 CFRs in 120 days in 2005. UK
      Western Union Agents 1 and 2 appeared on every 60-Day Fraud Report in
      2006.
	        	        	
		b.	Between January 2006
      and May 2008, UK Western Union Agents 1 and 2 each appeared on the 60-Day
      Fraud Report repeatedly. During that time period, a Western Union
      Compliance analyst conducted multiple reviews of UK Western Union Agents 1
      and 2 and identified suspicious activity at both Agents, which were
      respectively the sixth and ninth highest fraud payout Agents in the entire
      Europe, Middle East, and Africa region in February 2007. The analyst’s
      findings were escalated within Western Union, but Western Union took no
      corrective action and instead continued business with UK Western Union
      Agents 1 and 2 while the Agent locations continued to process excessive
      amounts of reported fraud transactions.
		 
		c.	In May 2008, a
      Compliance employee conducted another analysis of certain FEXCO Agents,
      including UK Western Union Agent 2 because “[p]revious analysis on FEXCO
      agents has yielded numerous compliance and fraud issues. [And t]hese
      issues have not been properly addressed and there is increasing interest
      in remediating these issues.” Western Union continued to monitor these
      Agents, but did not terminate them as a result of the
analysis.
		 
		d.	Western Union’s Board
      of Directors authorized Western Union to acquire the remainder of FEXCO’s
      money transfer business for up to $224 million in July 2008. Through the
      FEXCO acquisition, Western Union planned to cut commissions costs, grow
      its international Agent network, and increase business and
    revenue.


9 







		e.	At the time of the FEXCO acquisition in July
      2008, certain Western Union employees including senior employees, knew that
      FEXCO’s United Kingdom Agents had paid high levels of fraud transactions
      and engaged in suspicious activity since at least 2005. By July 2008,
      consumer fraud victims had filed 25,643 CFRs, totaling more than $40
      million in losses to victims, involving fraud paid by FEXCO Agents in the
      United Kingdom and Spain. This is nearly 20 percent of all fraud losses
      reported to Western Union from 2004—when Western Union began collecting
      CFRs—through July 2008. Between the time when UK Agents 1 and 2 paid 15
      CFRs within 120 days and July 2008, UK Agent 2 alone paid more than $1
      million in reported fraud transactions, while UK Agent 1 paid more than $2
      million in reported fraud transactions.
	        	        	
		f.	In advance of the FEXCO acquisition,
      high-level Western Union employees knew that FEXCO lowered its Agent due
      diligence in 2007 “because of competition they faced in the market” and
      that Western Union would acquire Agents “with some of the largest fraud
      payouts in our network” including UK Western Union Agents 1 and 2. Western
      Union’s then-Vice President for Compliance in Europe cautioned senior
      Compliance employees that after acquiring FEXCO, Western Union would need
      to “create, almost from scratch an Agent Oversight policy and culture” at
      FEXCO Agents.
		 
		g.	In February 2009, Western Union acquired the
      remainder of FEXCO’s money transfer business for a net cash purchase price
      of $157.1 million. Following the acquisition, FEXCO was renamed Western
      Union Retail Services (“WURS”). By acquiring FEXCO, Western Union
      “directly manage[d]” more than 10,000 FEXCO Agent locations, including UK
      Western Union Agents 1 and 2. Western Union contracted directly with the
      former FEXCO Agents, now WURS Agents. After the acquisition and knowing that FEXCO
      had an ineffective AML/anti-fraud compliance program, Western Union did
      not suspend or terminate UK Western Union Agents 1 or 2, or other Agents
      that processed excessive amounts of fraud-related transfers.
		 
		h.	In November 2009, a Corporate Security
      employee identified high levels of fraudulent transactions paid by UK
      Western Union Agents 1 and 2 and other former FEXCO Agents in the United
      Kingdom. A Western Union Corporate Security analyst recommended to
      Compliance and Corporate Security employees the immediate suspension of
      UK Western Union Agents 1 and 2 and further warned senior employees that
      Agents acquired from FEXCO accounted for almost half of the fraud reports
      and advised that these problems “become[] our problem since we own them
      now.” Western Union, however, did not suspend UK Western Union Agents 1 or
      2 at that time nor did it attempt to remediate the Agents.
		 
		i.	
      On January 15, 2010, a
      Compliance Analyst reviewed activity at UK Western Union Agent 1 and found
      “potential agent complicity in relation to fraud” that posed “significant
      risk to Western Union.” Despite these warnings and evidence that UK
      Western Union Agent 1 was complicit in fraud, Western Union took no
      corrective action against UK Western Union Agent
  1.



10 







		j.	On January 18, 2010, in a review of United
      Kingdom Agent operations, Compliance employees stated that fraud activity
      in the United Kingdom was on the rise and a number of Agent locations were
      “directly facilitating or assisting in the facilitation of fraud-related
      activity.” Compliance employees recommended mitigating the risk from United
      Kingdom Agent locations engaged in fraud “by terminating problem agents
      displaying common fraud patterns.”
	        	        	
		k.	On April 29, 2010, Western Union Compliance
      personnel again identified activity at UK Western Union Agents 1 and 2
      that “demonstrate[d] indicators of Agent complicity” in consumer fraud
      transactions and recommended “suspension/termination of the agent
      locations.” A United Kingdom employee noted that UK Western Union Agents 1
      or 2 were “very high transacting locations and if they were to be deleted,
      there would be a huge financial loss” to Western Union. Despite U.S.
      Compliance’s recommendation, Western Union did not suspend or terminate UK
      Western Union Agents 1 or 2.


	        	        	
		l.	
      About a month later,
      Western Union’s then-Compliance director told the then-Chief Compliance
      Officer and then-Deputy Chief Compliance Officer that UK Western Union
      Agents 1 and 2 and two related WURS Agents were four of the “six ...highest [Agents] on the fraud report for the UK.” Sales employees continued
      to resist full suspension or termination. In lieu of a full suspension or
      termination, the Compliance director reached “an agreement ... with the
      Business” to temporarily suspend the ability of these six Agents to pay
      transactions from the U.S.—though the Agents continued to
      process transactions, including fraud transactions, sent from outside of
      the U.S.—while Western Union employees had a “discussion” with the Agent
      owners.

		 
		m.	After a follow-up review showed that UK
      Western Union Agent 2 “has seen a slight decrease” in fraud complaints
      since the network review, Western Union lifted the suspensions after
      roughly three weeks and continued to conduct business with UK Western Union
      Agents 1 and 2 and the other Agent locations under review.
		 
		n.	Consumer fraud at UK Western Union Agents 1
      and 2 returned almost immediately. On June 16, 2010, a Compliance Analyst
      identified UK Western Union Agent 2 as the number one paying Agent location
      of reported fraud in the world; that is, UK Western Union Agent 2 paid
      more transactions reported in CFRs between January 1 and June 15, 2010
      than any other Western Union Agent. UK Western Union Agent 1 was the fifth
      highest CFR paying Agent during that same time period. On June 24, 2010, the
      United Kingdom Compliance Officer recommended terminating UK Western
      Union Agent 1. A senior Sales executive responded “Let’s be careful here.”
      Western Union did not terminate UK Western Union Agents 1 or
  2.


11 







		o.	On August 13, 2010, Western Union’s
      then-Director of Global Consumer and Agent Protection Program reviewed UK
      Western Union Agents 1 and 2, and other Agent locations due to a “worrysome increase” in consumer fraud payouts reported throughout the
      relevant region. He identified UK Western Union Agents 1 and 2, and UK
      Western Union Agent 2’s related Agent location as “3 top bad guys” and
      noted that their fraud payouts were “significantly lower.” Regarding some
      of the Agent locations, he told the then-United Kingdom Fraud Director,
      “You knew they were bad but not how bad! You will be surprised at how
      large these [consumer fraud]percentages are!” Despite the findings,
      Western Union did not discipline or terminate any of the three WURS Agent
      locations.
	        	        	
		p.	On October 25, 2010, a Compliance manager        sent the United Kingdom
    Compliance director and then-Regional Vice        President for AML Compliance for Europe a report titled “United
    Kingdom        Agent Complicity Review: Fraud.” In his cover email with a subject of “United Kingdom –
    Fraud,” the Compliance manager stated “things are        trending up ... [Compliance] has been experiencing an
    increase in referrals        for UK and while we have been relatively successful in keeping up with        these referrals,
    it appears that our impact while, can be viewed as a good        from a risk mitigation perspective, can also be seen as
    having an adverse        impact on the business goals in UK....we have outlined a shift in our        investigative
    tactics ... for UK Agents that have activity that represents        likely complicity in fraud related activity. Since we
    have deployed these        tactics, we are beginning to see that the Agents are having a hard time        providing a
    reasonable explanation for their activity and therefore, we        are seeing a number of these cases resulting in
    terminations.”
		 
		q.	The report noted that there was “an
      increasing number of Western Union Agent locations [in the United Kingdom]
      that are either directly facilitating or assisting in the facilitation of
      fraud-related activity.” The report stated that “a surge in UK Agent
      terminations due to fraud related activity in the early months of 2010”
      did not “permanently eliminate[]” fraud-related activity, “rather the
      activity had simply shifted to other locations in the same geographic
      areas.” The report found that “locations escalated to [Western Union
      United Kingdom Compliance employees]were no longer being suspended and/ or
      terminated.” The report noted that an “example of this shift is the [WURS]
      Network” that Western Union operated directly. “WURS has agreed to the
      termination of only one location based on [Compliance] analysis, even
      though some of the most egregious levels of fraud complaints and evidence
      of Agent complicity have been identified at [those Agents].”
		 
		r.	In November 2010, a Compliance analyst conducted another review of UK
    Western Union Agent 2, and three        other high-fraud United Kingdom Agent locations. The analyst again found
    “significant levels of questionable activity indicating Agent [or Agent        employee] complicity” in consumer
    fraud schemes. Compliance again        recommended suspension or termination of UK Western Union Agent 2 and the
    other     Agent locations. A United Kingdom Compliance director told United        Kingdom senior sales executives that
    “evidence     of criminal or suspicious        activities from these agents seem to be rather vivid. I know some of them
    are the top     performance [sic]. I
    will keep           you posted before any action is taken.”


12 







		s.	Western Union suspended but did not terminate
      UK Western Union Agent 2 in November 2010. Western Union’s
      then-Compliance Director warned the then- Deputy Chief Compliance Officer
      that UK Western Union Agent 2 had been reviewed at least ten times without
      major disciplinary action demonstrating that “somewhere along the line,
      someone is losing touch with risk and is willing to absorb it.” Though
      Western Union temporarily suspended UK Western Union Agent 2 in November
      2010, Western Union later allowed it to continue to process transactions,
      but temporarily restricted its ability to pay transactions of more than
      £350 from the United States and to send any transactions to Romania and
      Nigeria. While these restrictions limited the number of fraud transactions
      UK Western Union Agent 2 could process from U.S. victims, they did not
      prevent UK Western Union Agent 2 from paying fraud transfers from victims
      in other countries.
	        	        	
		t.	On December 2, 2010, a Compliance employee
      in the United Kingdom recommended terminating two UK Western Union Agent 2
      employees but allowed UK Western Union Agent 2 to remain in operation and
      continue to process Western Union transactions. The Compliance
      employee cautioned that UK Western Union Agent 2 would be terminated if it
      ever appeared on Western Union’s 60-Day Fraud Report again. A few months
      later, UK Western Union Agent 2 appeared on Western Union’s 60-Day Fraud
      Report again but Western Union did not terminate UK Western Union Agent
      2.
		 
		u.	On February 2, 2011, the London Metropolitan
      Police contacted Western Union regarding various fraud transactions paid at
      UK Western Union Agent 1 and other Agents. The Compliance Director asked an
      employee “is [UK Western Union Agent 1] a liability?” The employee replied
      “it’s the same deal as [UK Western Union Agent 2] ... very high volume
      [Western Union Agent] that [Sales] always fights for.... it was one of six
      locations suspended by [the then-Compliance Director] in May 2010 due to a
      high number of fraud complaints but reactivated based on negotiations with
      [Sales].”


	        	
	37.	Western Union terminated UK Western Union
      Agent 1 in October 2012; UK Western Union Agent 2 still operates as a
      Western Union Agent.
		 
	
      The FTC Discussions
      Regarding Consumer Fraud Complicit Agents




	        	
	38.	In December 2009—as fraud payouts were
      rising at certain Western Union Agents in the United Kingdom—the Federal
      Trade Commission (“FTC”) met with Western Union regarding Western Union’s
      antifraud efforts and the antifraud standards imposed on MoneyGram as part
      of the FTC’s 2009 settlement with MoneyGram. The FTC raised concerns
      regarding U.S. and international Western Union Agents that paid reported
      fraud transactions. Western Union did not adopt the standards imposed on
      MoneyGram.


13 







	39.	After negotiating with the FTC through 2010,
      Western Union agreed to use an Enhanced Fraud Monitoring Process known as
      the “FTC Matrix” with Agents in the U.S., Canada, the United Kingdom,
      Jamaica, and Nigeria in April 2011. Under the FTC Matrix, Western Union
      told the FTC it would immediately suspend and investigate any Agent in the
      United Kingdom, Jamaica, or Nigeria that, within a 30-day period,
      processed CFR transactions comprising five percent or more of total
      transaction payouts.
	        	
	40.	Western Union’s United Kingdom Country
      Director told senior Compliance and Sales employees that he was “strongly
      opposed to the direct suspension/termination of locations [pursuant to the
      FTC Matrix] without any communication to the appropriate Master Agent, or
      the opportunity for the Master Agent to attempt to remedy the situation
      with the location. This could prove to be seriously detrimental to our
      relationship with the Master Agents. The Country Director said that the
      FTC Matrix would “dramatically effect [sic] the UK network location plan.” On April 13, 2011, a Compliance
      employee reported that the FTC Matrix in the “UK [was put] on
    hold.”
	 
	41.	After discussions between Western Union
      Compliance Department and Sales, it was agreed that instead of suspending
      Agents per the FTC Matrix, Western Union would restrict certain Agents in
      the United Kingdom from paying transactions sent from the United States.
      Because most CFRs were made by U.S. consumers, transactions identified in
      CFRs almost always originated from the U.S. As a result, restricting
      certain United Kingdom Agents from paying transactions originating in the
      U.S. meant that those Agents could not process transactions identified in
      CFRs and therefore would not hit the FTC Matrix.
	 
	42.	The U.S. transaction restriction was not
      effective at combating fraud. As one Western Union employee explained
      to Western Union’s United Kingdom Compliance Officer on June 8, 2011,
      “Problem is, we agreed in writing with the FTC on how to handle this stuff
      ... Suspend pending was in the agreement. Also what I don’t like about just
      blocking US to UK is that we aren’t addressing potential bad Agents that
      way. People around the world are being defrauded but we only have data on
      the sends from the US though.”
	 
	43.	Western Union told the FTC about its
      restriction of certain Agent locations in the United Kingdom in summer
      2012.
	 
	
      The Scheme to
      Defraud in Spain



	        	
	44.	As with the United
      Kingdom, Western Union operated in Spain through Master Agent FEXCO. FEXCO
      contracted with subagents in Spain to process transactions, with FEXCO
      subagents processing 40% of all Western Union transactions in Spain in
      2008. When Western Union acquired FEXCO’s money transfer business in
      February 2009, it entered into direct relationships with all of FEXCO’s
      subagents in Spain.
	 
	45.	In 2010 and 2011,
      Compliance employees identified Agent locations in Spain processing
      increasing numbers of reported fraud transactions. Between 2008 and 2010,
      reported fraud activity in Spain increased by a factor of eight. In 2008,
      victims filed 252 CFRs with Western Union regarding fraud transactions
      paid by Western Union Agent locations in Spain totaling $379,986 in losses to
      victims. In 2010, victims filed 2,192 CFRs with Western Union regarding
      fraud transactions paid by Western Union Agent locations in Spain totaling
      $5,127,420 in losses to victims.


14 











	46.	On January 21, 2011, Western Union
      Compliance employees conducted a “Spain Fraud Review” for “Agent
      Complicity.” Compliance employees found that CFR transactions paid in Spain
      drastically increased throughout 2010 and the estimated levels of total
      fraud paid by Agent locations with questionable activity “were often more
      than five times that of [CFR] figures associated with each” Agent location.
      Agents Western Union directly managed after it bought FEXCO were the
      “majority” of the Agents that demonstrated “complicity related to
      fraudulent activity.” A then-Compliance manager recommended to Compliance
      and Fraud Department vice presidents that Western Union take action against
      certain Agents.
	        	
	47.	The report continued “in addition to
      suspending or terminating several locations, [Western Union Regional
      Compliance has] also worked with Agent Networks to address issues
      identified by [Compliance]. Some of the actions taken include temporarily
      routing Pay transactions through Agent CSCs for screening prior to payout.
      Additionally, Agents have in some cases limited the amount of Pay
      transactions particular locations can process in a given time period.” The
      report stated that “these controls have in some instances helped to reduce
      the amount of fraudulent activity occurring at locations in Spain.” The
      report concluded that Compliance “investigations continue[d] to identify
      levels of potential fraud that far surpass figures demonstrated by formal
      fraud complaints suggest[ing] high levels of risk related to Agent
      Complicity and fraudulent activity in the country. Additionally, the
      increasing trend of fraud complaints throughout 2010 indicates that the
      number of Agents appearing on the FRI will continue to increase and the
      number of Agent locations identified that display indicators of Agent
      complicity will likely surpass the number discovered in 2010, thus further
      heightening the risk exposure to Western Union.”
	 
	48.	On August 18, 2011, the Compliance Director
      and Compliance Managers recommended to the Director of Global Consumer and
      Agent Protection Program that Western Union address rising fraud in Spain
      by adding Spain to the FTC Matrix. Western Union did not follow
      Compliance’s recommendation. Fraud transactions continued to increase in
      Spain throughout 2011. In 2011, victims filed 3,710 CFRs with Western
      Union regarding fraud transactions paid by Western Union Agents in Spain
      totaling $7,593,352 in losses to victims.
	 
	49.	In 2011 and 2012, SEPBLAC, Spain’s
      Anti-Money Laundering and Countering Financing of Terrorism Supervisory
      Authority, conducted an audit of Western Union’s Agents in Spain that
      revealed money laundering and fraud activity at certain Western Union
      Agent locations in Spain. In a report dated October 9, 2012, SEPBLAC
      informed Western Union that its work “reveals extremely serious facts.”
      SEPBLAC noted that, for a percentage of certain Western Union Agent
      locations, Western Union “itself has reported in suspicious transaction
      reports ... [that] there were clear signs that [certain Agent locations] carried out money laundering activities.” SEPBLAC found that the money
      laundering activity was “particularly remarkable in overseas
      remittance transactions to Spain.” SEPBLAC determined
      that certain Agent locations “feign[ed] the involvement of beneficiaries
      who do not really exist, that is to say, the payments are not collected by
      clients, but by [A]gents who use an identity invented for that purpose.”
      SEPBLAC found that Western Union “reported to the Executive Service a
      significant numbers of [Agents] and cancelled the corresponding agency
      contracts.” Nevertheless, SEPBLAC concluded that Western Union’s “money
      laundering and terrorism financing prevention systems [were] ineffective”
      and due diligence was deficient.


15 






	        	
	50.	In a report dated December 20, 2012, SEPBLAC
      concluded that Western Union had not “fully accepted” the seriousness of
      the conduct SEPBLAC identified in its October 9, 2012 report, and that
      Western Union’s response to the October 9 findings, which stated that the
      report “indicated some needs for improvement in the agent oversight
      program” minimized what was an “absolute lack of control over the
      [A]gents’ activity which has made it possible for truly scandalous figures
      of fraud and money laundering related payments and remittances to be
      recorded.” On December 20, 2012, SEPBLAC found Western Union’s AML system
      in Spain “totally ineffective in preventing money laundering, related to
      fraud and other offenses, which has taken place on a large
    scale.”


The Scheme to Defraud
Elsewhere 

	51.	Western Union knew
      that Complicit Western Union Agent locations were not limited to the United
      Kingdom and Spain, but failed to implement or execute effective world-wide
      fraud policies until September 2012, eight years after employees first
      recommended adopting global policies.
	        	
	52.	As early as March
      2011 and continuing through 2012, certain Complicit Western Union Agent
      Locations in Mexico conspired to launder fraud proceeds using Western
      Union’s Money Transfer System. In these schemes, Complicit Agent locations
      in Mexico received the initial fraudulent transactions from victims in the
      United States via Western Union’s Money Transfer System. Minutes later,
      after taking a commission, the Complicit Agent Locations in Mexico would
      use the Western Union Money Transfer System to send the remaining money to
      Western Union Agent locations in Canada and other destinations. This
      two-step process was designed to conceal the ultimate destination of the
      fraud proceeds. Despite identifying certain Agent locations potentially
      involved in this activity as early as April 2011, Western Union allowed
      the Agent locations to remain open and the activity continued through
      2012.
	 
	53.	In October 2011,
      Western Union learned from U.S. law enforcement and its own review of
      transaction data that certain Agent locations in Peru were participating
      in an emergency need fraud scam. Western Union reviewed four related
      Agent locations in Peru and found that those four Agent locations paid
      nearly half of all CFR transactions paid in Peru. Western Union did not
      terminate the Agent locations in October 2011, but instead allowed them to
      continue processing transactions. In the next six months, one of the four
      Agent locations paid 250 more CFR transactions totaling more than
      $600,000. Western Union suspended the four Agent locations in April 2012,
      but allowed the Agent locations’ owner to open another Western Union
      Agent location nine months later.


16 







Victims of the Scheme to
Defraud 

	54.	Below are examples of victims of the consumer
      fraud scheme perpetrated via Western Union’s Money Transfer System. Each
      of these victims was defrauded through Agents that had already paid 15
      CFRs in 120 days.
	        	


	        	a.	MV, a 60-year-old
      resident of the Middle District of Pennsylvania reported that in February
      2006, a Fraudster contacted MV and falsely promised him that if he paid
      legal fees up front, he would receive a $1 million prize. On February 2,
      2006, MV visited a Western Union Agent location in the Middle District of
      Pennsylvania and sent a $4,500 money transfer to claim his prize. UK
      Western Union Agent 2 in London, United Kingdom paid MV’s transfer on
      February 3, 2006. MV never received the prize he was
promised.
		        	
		b.	AI, a resident of the
      Middle District of Pennsylvania reported in July 2006, a Fraudster
      contacted AI and falsely promised her that if she paid money up front she
      would receive a sweepstakes prize. On July 8, 2006 and July 14, 2006, AI
      visited Western Union Agent locations in the Middle District of
      Pennsylvania and sent transactions of $1,500 and $1,750 to claim her
      prize. On July 10, 2006 and July 15, 2006, UK Western Union Agent 2 in
      London, United Kingdom, paid out AI’s transfers. AI never received the
      prize she was promised. AI reported the fraud to Western
  Union.
	 	
		c.	TD, a resident of the
      Middle District of Pennsylvania reported in May 2008, a Fraudster
      contacted TD and falsely promised him a motorcycle in exchange for an
      advance payment. On May 29, 2008, TD visited a Western Union Agent location
      in the Middle District of Pennsylvania and sent a $1,300 money transfer in
      exchange for the motorcycle. On May 31, 2008, UK Agent Western Union 2 in
      London, United Kingdom, paid out TD’s transfer. TD never received the
      motorcycle he was promised. TD reported the fraud to Western
    Union.
	 	
		d.	FS, a resident of the
      Middle District of Pennsylvania reported in May 2010, a Fraudster
      contacted FS and falsely promised to pay him for cashing checks provided
      FS paid the Fraudster the value of the checks in advance. On May 19, 2010,
      FS visited a Western Union Agent location in the Middle District of
      Pennsylvania and sent a $2,000 money transfer to receive the checks.
      UK Western Union Agent 1
      in London, United Kingdom paid FS’s transfer on May 20, 2010. The checks FS
      received were counterfeit and FS never received the payment he was
      promised. FS reported the fraud to federal investigators.
	 	
		e.	PM, a 65-year-old
      resident of the Middle District of Pennsylvania reported that in May 2010,
      a Fraudster contacted PM and falsely promised her that if she paid fees up
      front she would receive prize money from a sweepstakes. Between May 1,
      2010 and September 15, 2010, PM visited a Western Union Agent location in
      the Middle District of Pennsylvania and sent seven Western Union
      transactions totaling $9,550 to claim the prize. A Western Union Agent in
      London, United Kingdom, paid three of PM’s transfers totaling $3,450. PM
      never received the sweepstakes prize she was promised. PM reported the
      fraud to federal investigators.


17 







		f.	MSC, a 90-year-old resident of the Middle
      District of Pennsylvania reported that in June 2011, a Fraudster contacted
      MSC and falsely told her that a family member was in trouble and needed
      monetary assistance. On June 24, 2011, MSC visited three different Western
      Union Agent locations in the Middle District of Pennsylvania and sent four
      money transfers totaling $9,600 to help her family member. On June 24,
      2011, two Western Union Agent locations in Spain paid two of MSC’s
      transfers and a Western Union Agent location in Mexico paid two of MSC’s
      transfers. MSC’s family member was never in trouble and did not need
      monetary assistance. On July 29, 2011, MC reported to Western Union that
      she had been the victim of a fraud. Western Union recorded only one of
      MSC’s four transactions in its CFR database.
	        	        	
		g.	KL, an 85-year-old resident of the Middle
      District of Pennsylvania reported that in August 2011, a Fraudster
      contacted KL and falsely told him that a family member was in trouble and
      needed money. On August 11, 2011, KL visited a Western Union Agent
      location in the Middle District of Pennsylvania and sent two money
      transfers totaling $12,000 to help his family member. On August 11, 2011,
      two Western Union Agent locations in in Mexico paid KL’s
    transfers. KL’s family member was never in trouble. KL
      reported the fraud to Western Union.
		 
			
		h.	TSD, an 82-year-old resident of the Middle
      District of Pennsylvania reported that in August 2011, a Fraudster
      contacted TSD and falsely told him that a family member was in trouble and
      needed bail money. On August 18, 2011, TD visited a Western Union Agent
      location in the Middle District of Pennsylvania and sent a $2,300 money
      transfer to help his family member. On August 18, 2011, a Western Union
      Agent location in Spain paid TSD’s transfer. TSD’s relative was never in
      trouble. TSD reported the fraud to Western Union.
		 
		i.	RK, an 80-year-old resident of the Middle
      District of Pennsylvania reported that in August 2011, a Fraudster
      contacted RK and told her that her grandson was in an accident and needed
      money. On September 6, 2011, RK visited a Western Union Agent location in
      the Middle District of Pennsylvania and sent two transfers totaling $9,800
      to help her grandson. On September 6, 2011, a Western Union Agent location
      in Mexico paid both of RK’s transfers. RK’s grandson had not been in an
      accident. RK reported the fraud to Western Union.
		 
		j.	JD, an 88-year-old resident of the Eastern
      District of Pennsylvania reported that in October 2011, a Fraudster
      contacted JD and falsely told him that his grandson was in the hospital
      and needed money. On October 4, 2011, JD visited a Western Union
      Agent location in the Eastern District of Pennsylvania and sent a $2,200
      money transfer to help his grandson. On October 4, 2011, Western Union
      Agent location in Spain paid JD’s transfer. JD’s relative was never in the
      hospital.


18 







	        	k.	MC, a resident of the
      Southern District of Florida reported that on February 15, 2012, a
      Fraudster contacted MC and falsely told him a relative was in trouble and
      needed money. Between on or about February 15, 2012 and February 17, 2012,
      MC visited five Western Union Agent locations in the Southern District of
      Florida and sent five transfers totaling over $10,000. A Western Union
      Agent location in Peru paid three of MC’s transfers on or about February
      16, 2012. MC’s relative had never been in trouble. MC reported the fraud to
      Western Union.
		        	
		l.	HH, a 96-year-old
      resident of the Middle District of Pennsylvania reported that in February
      2012, a Fraudster contacted HH and falsely told him that his grandson had
      been arrested abroad and needed bail money. On February 27, 2012, HH
      visited a Western Union Agent in the Middle District of Pennsylvania and
      sent two $2,400 money transfers to help his grandson. A Western Union
      Agent location in Peru, paid HH’s transfer on February 27, 2012. HH’s
      grandson had not been arrested and did not need bail money. HH reported
      the fraud to Western Union.


Western Union’s
Willful Failure to Prevent Structuring 

	55.	In March 2003, FinCEN
      fined Western Union $3 million, finding that the Company willfully failed
      to file SARs and “failed to establish SAR reporting procedures that would
      reasonably assure that it could identify and properly report structured
      transactions.” As part of the penalty, Western Union agreed to conduct
      further review to identify suspected structuring to avoid the CTR or
      $3,000 identification requirements and to “establish an enhanced nationwide
      due diligence policy to monitor its agents for BSA compliance [, which]
      shall include ... terminating such agents that Western Union determines to
      be in chronic violation of Western Union policies and/or a substantial
      risk for money laundering.”
	        	
	56.	Between 2004 and
      2012, Western Union failed to terminate or discipline certain Agent
      locations who sent a high volume of transactions from the U.S. to
      China (“China Corridor Agents”) and repeatedly violated the BSA and Western
      Union policy through their structuring activity.
	 
	57.	As described in more
      detail below, Western Union, through various methods, recognized that
      four China Corridor Agents were engaged in violations of Western Union
      policies regarding structuring transactions. Western Union tracked how many
      SARs it filed on its Agent locations’ transactions and knew that a high
      number of SARs on transactions at a particular Agent location was an
      indicator that the Agent location might be involved in suspicious or
      illegal activity. Western Union filed thousands of SARs identifying
      individuals who sent potentially structured transactions through the China
      Corridor Agents. Between 2003 and 2012, Western Union filed more
      than 11,000 SARs on transactions conducted at one of the China Corridor
      Agents, U.S. Shen Zhou International Company, and more than 20,000 SARs on
      transactions conducted at three other China Corridor Agents,
      collectively.


19 







	58.	Some Western Union
      employees encouraged China Corridor Agents to grow their business by
      urging Agent owners to open additional Western Union locations and paying
      the owners bonuses. Some Western Union employees also pressed Compliance
      employees to ensure that certain China Corridor Agent locations were not
      suspended or terminated.
	        	
	59.	Although Western
      Union filed thousands of SARs on customers of its Agent locations, Western
      Union rarely identified its Agent locations as suspicious actors or
      described the Agent locations’ role in the structuring conduct. Western
      Union’s practice was not to identify Agent locations as “subjects” of SARs
      unless Western Union found an Agent location “complicit” and terminated
      the Agent location as a result of the finding. Western Union typically
      only found Agent locations “complicit” if the owner or employee of an
      Agent location was arrested or identified in a public source such as “a
      news article that says the [Agent was] related to fraud, or [the Agent]
      was on ... some sort of scam website” or if its own investigation determined
      that the Agent location was complicit.
	 
	60.	Between 2004 and
      2012, customers at certain China Corridor Agents structured hundreds of
      millions of dollars in Western Union transactions to China. These China
      Corridor Agents were highly profitable and sent transactions from the U.S.
      to China between 2003 and 2012. Had Western Union’s AML program been
      effective, Western Union could have prevented these four Agent locations
      from allowing customers to structure at least $64 million of
      transactions beginning as early as April 2009.


U.S. Shen Zhou
International Company 

	61.	U.S. Shen Zhou
      International Company (“USZ”) was a vitamin and herbal supplements
      store owned by Frank Wang and located in Monterey Park, California in the
      Central District of California. On March 24, 2005, Wang became a Western
      Union Agent. USZ sent more than ninety percent of its transactions between
      2005 and 2010 to China. USZ quickly became one of the largest Independent
      Western Union Agent locations in the United States, processing more
      than 100 Western Union transactions per day. By April 26, 2006, a Western
      Union sales employee described USZ as the “#1 China account.” Between 2005
      and 2010, USZ sent more than $310 million in Western Union transactions to
      China, approximately 50 percent of which were structured.
	        	
	62.	Wang pleaded guilty
      to illegal structuring in the U.S. District Court for the Central District
      of California on October 25, 2013. According to Wang, he and his employees
      at USZ structured and aided consumers in structuring a significant volume
      of Western Union transactions from the U.S. to China. Wang said that he and
      his employees allowed and assisted consumers in structuring transactions to
      avoid the BSA requirement that financial institutions review and record
      consumer identification on transactions of $3,000 or more. In aiding
      consumers in structuring these transactions, Wang said he supplied false
      identity information for his customers and entered that false
      information into Western Union’s Money Transfer System. Wang admitted to
      the Court that he acted in part to benefit Western Union by increasing
      revenue from fees to Western Union.


20 







	63.	Western Union
      employees knew that Wang and USZ employees were potentially structuring or
      aiding consumers in structuring transactions in violation of the BSA as
      early as December 2005, but allowed USZ to continue operating and sending
      structured transactions using Western Union’s Money Transfer System until
      Wang was arrested in October 2010.
	        	
	64.	Between December 2005
      and March 2010, Western Union conducted at least nine onsite compliance
      reviews at USZ and dozens of transaction reviews. In each onsite review,
      Western Union Compliance employees found that USZ employees were failing
      to comply with elements of the BSA or certain aspects of Western Union
      policy. Western Union repeatedly found that USZ was deficient in
      monitoring transactions, was not filing CTRs on all transactions that
      should have triggered the filing of a CTR, and was processing suspicious
      transactions without filing SARs on those transactions. The suspicious
      transactions were unusual and “repetitive,” characterized by multiple
      transactions of $2,500 each sent minutes apart, indicated that consumers
      were likely structuring transactions to avoid providing identification as
      required by the BSA.
	 
	65.	Between 2005 and
      March 2010, despite finding repeated violations of Western Union policies,
      Western Union took no disciplinary action against USZ beyond one 90-day
      probation in January 2006 during which USZ continued to process
      transactions.
	 
	66.	For example, in March
      2010, Western Union conducted a compliance review of USZ that revealed
      failures to file SARs and verify customer identities. Under Western
      Union’s compliance policies, USZ’s failures should have resulted in
      Western Union placing the Agent on a 90-day Compliance Probation. Western
      Union did not place the Agent on probation, instead—contrary to its
      compliance policies—Western Union continued to monitor the Agent’s
      transactions.
	 
	67.	By 2010, Western
      Union had filed more than 11,000 SARs regarding transactions sent through
      USZ, without identifying USZ or Wang as individuals involved in suspicious
      conduct. The vast majority of the SARs Western Union filed identified the
      suspicious activity as structuring to avoid the BSA identification
      recordkeeping or CTR reporting requirements. Despite repeatedly finding
      that USZ was not complying with all elements of the BSA or all elements
      of Western Union’s AML requirements, Western Union did not identify the
      Agent’s suspicious conduct in the SARs it filed with law enforcement nor
      did it take any material action to stop USZ from assisting third parties in
      using Western Union systems to send structured transactions.
	 
	68.	On September 27,
      2010, Wang was arrested for structuring through USZ. Western Union
      terminated USZ as an Agent after Wang’s arrest. After Wang’s arrest, he
      told law enforcement that a Western Union sales employee told Wang that Wang
      could open another Western Union Agent location in the Monterey Park,
      California area. The Western Union employee cautioned Wang not to use his
      own name to open the new Agent location, but to use a relative’s
      name instead. Wang did not open another Western Union
    Agent location.


21 







Two China Corridor Agents
in New York 

	69.	New York Agent 1 and
      New York Agent 2 were phone card and phone accessories stores owned and
      operated by Owner 1 in New York, New York. In 2003, Owner 1 began operating
      New York Agent 1 as a Western Union Agent location; Owner 1 began
      operating New York Agent 2 as a Western Union Agent location in 2005. Both
      Agents were “direct deposit” Agents, which means that they banked under
      Western Union’s name and were meant to receive additional review
      under Western Union’s policies. Between 2003 and 2011, New York Agents 1 and
      2 sent more than $1.6 billion in Western Union transactions; almost all of
      those transactions were sent to China and approximately 25 to 30% of those
      transactions had characteristics indicative of structured
      transactions.
	        	
	70.	New York Agents 1 and
      2 were China Corridor Agents located in New York and both Agent locations
      became two of the largest Western Union Agent locations in the U.S., with
      New York Agent 1 processing approximately 3,000 transactions each month
      and New York Agent 2 processing approximately 5,000 transactions each
      month. One then-executive vice president noted that “any negative action
      against [New York Agent 1]will require prior notification” to Western
      Union’s then-President for the Americas and then-Executive Vice President
      for Asia Pacific “due to the heavy impact to our China
  business.”
	 
	71.	Owner 1 admitted to
      government law enforcement agents that he knew that consumers paid their
      debt to human smugglers in China through Western Union and that consumers
      would keep transactions under $2,000 in order to avoid providing
      identification.
	 
	72.	Western Union
      employees knew through compliance reviews, transactions reviews, and
      automatic reports designed to identify suspicious activity that New York
      Agent 1 and 2 employees were potentially structuring or aiding consumers
      in structuring transactions in violation of the BSA as early as 2006. For
      example, between 2004 and 2011, Western Union conducted at least a dozen
      onsite reviews of New York Agent 1 and eight onsite reviews of New York
      Agent 2. In each review Western Union found that the employees of New York
      Agents 1 and 2 were not complying with certain elements of the BSA or
      Western Union policy. Western Union repeatedly found that New York Agents 1
      and 2 did not have sufficient compliance programs, were not filing SARs in
      every instance when a SAR was required, were allowing consumers to
      allegedly structure transactions, and were, in certain instances, entering
      false data in Western Union’s Money Transfer System.
	 
	73.	Despite these
      repeated violations, Western Union continued business with New York Agents
      1 and 2 and allowed the Agent locations to continue operating and sending
      structured transactions using Western Union’s Money Transfer System until
      a bank asked Western Union for more information on the Agent locations’
      AML programs in November 2011. Instead of suspending or terminating the
      Agent locations, Western Union permitted these Agent locations to continue
      operating. For example:


22 







	        	a.	Western Union had an unwritten policy to
      suspend an Agent location from conducting transactions if that Agent
      location was placed on probation three times. The term “probation”
      referred to Western Union’s policy of engaging in enhanced reviews of an
      Agent location. On July 18, 2008, a senior Compliance Officer noted that
      New York Agent 1 had been placed on probation by Western Union on three
      occasions but was not suspended per Western Union policy. Western Union
      approved New York Agent 1’s owner to open a third Agent location and paid
      the owner a $250,000 bonus to renew New York Agents 1 and 2’s contracts
      with Western Union.
		        	
		b.	In November 2008, a Compliance employee
      recommended New York Agent 2’s third probation. Several months later a
      Western Union Sales employee stated that Sales was “encouraged to be
      proactive” with Agent locations with more than “2 ‘bad’ reviews. [Because
      i]f the agent has a third it is automatic suspension, no appeal and the
      recovery process takes about a week... Attitude seems to be a key portion of
      the process. If the agent is resistant rather than willing to adopt
      changes then they head very quickly to suspension.” A Western Union Sales
      director responded that Sales “help compliance group understand how
      important those Chinese agents are – not to shut them down automatically.
      [New York Agent 2] is #2 agent in the region and we can’t afford one week
      suspension.”
		 
		c.	On June 3, 2010, Western Union’s
      then-Compliance Director told the then-Chief Compliance Officer that
      Western Union reviewed New York Agent 1 on June 2, 2010. New York Agent
      1 “had a bunch of transactions with false data[.] The [New York Agent
      1 Compliance Officer, who was also the owner’s sister] admitted to
      accepting a bag of cash (80K) from a relative and making up transactions
      ...So, the [Compliance Officer] of one of our biggest locations knew that
      she was breaking the law. This, plus other findings (forms did not match
      what was entered into the system) puts this as a suspension [of New York
      Agent 1]. This would be the [Agent’s] third compliance suspension. If I
      don’t suspend, then it is a probation. This would be [New York Agent 1’s]
      third probation, which is also a suspension. I’ll call the [Western Union]
      Business [employees].”
		 
		d.	Sales employees raised concerns with this
      suspension. Western Union’s then-President of the Americas told
      Western Union’s Chief Executive Officer “FYI. We are trying to save [New York Agent 1] (to
      [ sic] agent NY to China).” Compliance suspended
      New York Agent 1 on June 3, 2010, but lifted the suspension 24 days later.
      New York Agent 1’s Compliance Officer continued to process transactions for
      another year despite admitting that the Compliance Officer conducted
      criminal transactions. Subsequent, Western Union compliance reviews
      continued to uncover additional BSA violations.
		 
		e.	A review of New York Agent 1 on November 12,
      2010, revealed serious compliance failures, including violations of the
      BSA’s recordkeeping and reporting requirements that caused Compliance to
      recommend the Agent location’s third probation, which should have resulted
      in the Agent location’s immediate suspension. Avoiding probation and
      suspension for the Agent location “require[d] a policy exception” from a Compliance employee. Western Union employees did not suspend New York Agent
      1 after this review.


23 







	        	f.	After a review of New York Agent 1 in January
      2011, a Compliance employee again recommended suspension due to New York
      Agent 1’s continued compliance failures. Compliance suspended New York
      Agent 1 briefly but “after discussions with the business” placed New York
      Agent 1 on an Enhanced
      Probation Program” that
      allegedly would have included “full training initially and then monthly,
      unannounced visits by [Western Union]”.
		        	


	74.	In 2011, the bank
      that held New York Agents 1 and 2’s direct deposit accounts asked Western
      Union to provide information about the compliance programs, risks, and
      reviews related to Western Union Agent locations who used the direct
      deposit accounts, including New York Agents 1 and 2. A Western Union
      Compliance employee said that if the bank found that “the risk is high, they
      may pull some of the bank accounts for these [Agents], which effectively
      will result in suspension of services. [The bank] can also file its own
      SARs and conduct law enforcement outreach which can elevate the risk that
      Western Union has with these locations.”
	        	
	75.	The compliance
      employee also told other Compliance employees that he was communicating
      with the bank about the Agent locations, and that the other employees
      should “prepare [Sales] for this should it get to a point where [the bank]
      pulls a few bank accounts. I intend to communicate the significant amount
      of resources that Western Union puts towards maintaining these locations
      and will even demonstrate that we will terminate as we did with [another
      Agent location].” In November 2011, the bank asked for additional
      compliance information on New York Agents 1 and 2, and other Agent
      locations, including any material findings regarding the Agent locations.
      Western Union shared none of its findings regarding either New York Agents
      1 or 2 with the bank. A senior Western Union sales executive told
      colleagues that closing “[New York Agents 1 and 2]at this time will impact
      the US-China corridor BADLY. Please see if there is anything we can do
      (like verify [New York Agent 1]has done something ‘not compliant’ and we
      re-educate [New York Agent 1]to be compliant) and to re-open them in a few
      weeks to catch the Chinese New Year rush.”
	 
	76.	Following the bank’s
      requests for information, Western Union closed New York Agents 1 and 2 in
      December 2011.
	 
	77.	By 2012, Western
      Union had filed nearly 20,000 SARs regarding transactions sent by New York
      Agents 1 and 2. Despite Western Union’s earlier findings, only two of
      these SARs identified the Agent’s involvement in suspicious activity.
      Between 2005 and 2012, the vast majority of these SARs identified the
      suspicious activity as structuring to avoid the BSA identification
      recordkeeping or CTR reporting requirements.


24 






Hong Fai also known as
Yong General

	78.	Hong Fai General
      Contractors Corp., which later changed its name to Yong General
      Construction Co. Inc. (“Hong Fai”)was a construction company owned by Yong
      Quan Zheng1 located
      in Philadelphia, Pennsylvania in the Eastern District of Pennsylvania. On
      September 13, 2006, Zheng signed an agreement to operate Hong Fai as a
      Western Union Agent from the small construction company office in the
      Chinatown area of Philadelphia. Zheng’s daughter Yan Hong Zhao a/k/a Yan
      Hong Zheng a/k/a Cindy (“Cindy”) and son-in-law Ming Zhao a/k/a Larry
      (“Larry”) operated the Western Union business at Hong Fai. Hong Fai
      quickly became a successful Western Union Agent location, processing more
      than $100,000 in money transfers per day, most of which were sent to
      China, by February 2007. From December 1, 2007 through March 6, 2012, Hong
      Fai sent over $126 million in Western Union transactions.
	        	
	79.	On October 18, 2016,
      Cindy and Larry were charged in the U.S. District Court for the Eastern
      District of Pennsylvania with conspiracy to violate the BSA, including
      structuring of at least $21 million of transactions to China, and failure
      to file SARs. Sentencing for both
      defendants is scheduled for March 2017.
	 
	80.	Western Union
      employees knew that Hong Fai employees structured or aided or were
      potentially structuring or aiding consumers in structuring transactions in
      violation of the BSA and that Hong Fai was not filing SARs as required, but
      allowed Hong Fai to continue operating and sending structured transactions
      using Western Union’s Money Transfer System. As described below, through
      compliance reviews and other methods, certain Western Union employees
      identified suspicious and illegal conduct at Hong Fai for years but did
      not follow Western Union’s internal procedures to discipline or terminate
      Hong Fai.
	 
	81.	For example, between
      2007 and 2012, Western Union conducted more than a dozen onsite or
      transaction reviews of Hong Fai. In these reviews, Western Union
      repeatedly found that Hong Fai violated certain elements of the BSA or
      certain aspects of Western Union policy. These reviews resulted in Western
      Union placing Hong Fai on probation three times, which should have
      resulted in suspension per Western Union practice. Despite these
      repeated violations, Western Union continued business with Hong Fai
      without effective discipline and allowed Hong Fai to change its name to
      Yong General and receive a new Agent identification number, which made it
      appear as though it was a new Agent location. Despite continued violations
      under its new name, Western Union terminated Hong Fai in 2012 only after
      law enforcement and Hong Fai’s bank continued to raise concerns about
      illegal transactions and Hong Fai’s failure to file SARs. Western Union
      filed no SARs identifying Hong Fai as a suspicious subject until after it
      terminated Hong Fai in 2012.
	 
	82.	As early as June 2007,
      Western Union was aware of “significant” compliance failures at Hong
      Fai involving structured transactions and failure to file SARs for
      suspicious transactions, but allowed Hong Fai to continue to operate.
      During a March 2008 review, a Compliance employee determined that the
      Agent location was structuring to avoid identification and CTR
      requirements, and also had failed to file SARs on suspicious transactions.
      As early as January 2009, Hong Fai’s bank notified Western Union that Hong
      Fai was engaged in suspicious transactions based on suspicious patterns of
      Hong Fai’s deposits and reports from third parties. Western Union allowed
      Hong Fai to remain in operation.


____________________

1 Yong Quan Zhen pled guilty to unrelated charges on
May 31, 2016.

25 







	83.	On March 29, 2009, Western Union Compliance
      employees tried to suspend Hong Fai after Larry, who conducted the
      majority of transactions, told Western Union employees “he [was] not
      willing to comply with the AML Laws and Policies.” The compliance review
      also found that Hong Fai failed to file SARs on suspicious transactions,
      and Hong Fai employees were “helping customers structure transactions to
      avoid 3K [BSA] ID” requirement, a violation of the BSA.
	        	
	84.	Western Union Compliance scheduled the start
      of Hong Fai’s suspension for April 9, 2009. Sales employees requested a
      delay in suspension because Hong Fai was a “very important Agent.” Despite
      the results of the compliance review showing that Hong Fai was violating
      the BSA, including structuring, after discussions with Sales, Compliance
      suspended Hong Fai, but within a few days lifted the suspension and rather
      placed it on probation and allowed the Agent location to continue
      processing transactions.
	 
	85.	Hong Fai’s compliance failures continued in
      2010, when law enforcement contacted Western Union again about potential
      illegal payments sent through the Agent location. Compliance employees
      reviewed Hong Fai’s compliance history and found Hong Fai had multiple
      compliance failures dating back to 2007 that included structuring
      conduct and failure to file SARs, and that Hong Fai’s failures were
      continuing to take place. On June 10, 2010, Western Union’s Compliance
      Manager shared Hong Fai’s March 2009 compliance review with his team.
      A Compliance analyst responded that Hong Fai’s suspension had been changed
      to probation after Sales told Compliance that Hong Fai was the highest
      performing U.S.-to-China Agent in the Philadelphia region.
	  
	86.	In November 2010, a Compliance employee
      recommended discussing suspension of Hong Fai as “their compliance issues
      have not been resolved and the agent owner is sending transactions using
      different biographical data.” A compliance review on November 18, 2010,
      revealed that the owner was sending Western Union transactions for himself
      from the U.S. to China with false data. A Compliance employee warned “if
      this [A]gent is willing to enter different biographical information on
      transactions they are conducting for themselves, it is logical to conclude
      that they would be willing to enter fictitious biographical information
      for another consumer.” As part of this report, a Compliance employee noted
      that “Hong Fai ... pose[d] significant consumer, legal/regulatory, financial
      and reputational risk to Western Union ... evidenced by the questionable
      consumer traffic, questionable agent activity, and the Agent’s inability
      to adhere to compliance standards.” Nevertheless, Western Union did not
      suspend this Agent location.
	 
	87.	An onsite compliance review in July 2011
      revealed continued violations of the BSA and Western Union policies. During
      the review, Cindy admitted to a Western Union Compliance employee that she
      would have structured a consumer’s $14,000 transaction into two
      transactions of less than $10,000 each if the Western Union employee had
      not been present because “good customer service was more important than
      compliance.” The Western Union Compliance employee also observed Hong Fai
      employees advising consumers on how to structure transactions, charge
      extra fees for transactions, and accept transactions over the phone. Hong
      Fai consumers told the Western Union Compliance employee that they had
      been able to use false identification documents at Hong Fai in the
      past.


26 







	88.	Western Union did not        suspend or terminate Hong Fai in 2011
    though a then-Compliance        director told a then-Compliance vice president that Western Union “[has]        taken a
    huge chunk out of the US to China business this week by suspending        8 locations, 6 in the [Southwest Border] area and 2
    in New York. We should        have had another in Philly, but we’ve opted to let [Global Field        Compliance] apply
    iCop.” The employee stated “as soon as its [        sic]
    possible, we should apply RTRA controls on        all US to China transactions.” The same then-Compliance director
    explained        that though he was considering termination for Hong Fai in 2012, Sales had        always “wanted this
    [Agent] saved and I don’t think anything has changed        in their minds around the importance of the
    [A]gent.”
	        	
	89.	On March 19, 2012,
      Western Union terminated Hong Fai as an Agent. Between 2007 and 2012,
      Western Union filed more than 1,000 SARs on transactions Hong Fai
      processed.


AML
Deficiencies Involving Gambling Transactions at Western
Union 

	90.	In December 1997,
      Western Union signed an Agreement of Voluntary Cooperation with the
      Florida Attorney General regarding gambling transactions from Florida to
      offshore sportsbooks. As part of the agreement, Western Union agreed to
      advise certain Agents that interstate wagers violated Florida law and to
      implement procedures to limit certain gambling transactions.
	        	
	91.	Through transaction
      data, Agent compliance reviews, additional law enforcement investigations,
      and other investigations, Western Union employees knew that individuals
      located in the Southern District of Florida and elsewhere continued to use
      its Money Transfer System through at least 2012 to send transactions that
      exhibited characteristics Western Union associated with illegal
      gambling-related transactions from the U.S. to other countries. Western
      Union detected these transactions in its Money Transfer System and knew
      that gambling-related transactions were “particularly well-suited for the
      layering and integration stages of money laundering. As a result, gambling
      websites generate substantial money laundering concerns due primarily to
      the volume and speed of transactions, as well as the anonymity offered.
      For these reasons, internet gambling operations are vulnerable to be used,
      not only for money laundering, but also for criminal activities ranging
      from terrorist financing to tax evasion.” Western Union employees
      identified legal and regulatory risks to Western Union if U.S. law
      enforcement found that the Company had “knowingly processed transactions
      for the purpose of illegal gambling.”
	 
	92.	Although Western
      Union had some systems and controls in place to combat the use of Western
      Union’s system to transmit illegal gambling-related transactions, Western
      Union did not enact effective controls to limit transactions that displayed
      characteristics associated with gambling
      through 2012. For example, in August 2009, Western Union Compliance
      employees proposed enhanced consumer monitoring on transactions from the
      U.S. to Costa Rica to reduce transactions that exhibited characteristics
      associated with gambling. Under the proposal, any consumer who sent a
      certain number of transactions exceeding a certain amount within a certain
      period would be subject to additional review and, if warranted, blocked
      from sending further Western Union transactions. 


27 









	93.	Western Union
      implemented the enhanced consumer monitoring, but the monitoring did not
      reduce or eliminate gambling-related transactions sent by U.S. consumers to
      Costa Rica, which U.S. consumers sent “to take advantage of the many Costa
      Rican based gaming websites operating in the country.” For example,
      between January and February 2010, a Western Union analyst reviewed
      certain Agents in Costa Rica and found that “even with controls in place
      and additional requirements placed on our Agent Networks, the transaction
      patterns are indicative of Agent Complicity” in the gambling transactions.
      A Western Union analyst also found that the “enhanced consumer monitoring
      program [implemented in 2009] has not been effective in lessening the
      questionable activity (likely related to gaming) being sent from the U.S.
      to Costa Rica.” The analyst proposed additional controls on Agents in
      Costa Rica including limiting the Agents to specific but confidential
      payout thresholds.
	        	
	94.	By at least July
      2010, Western Union Compliance, Sales, and Technology employees began to
      discuss using Real Time Risk Assessment (“RTRA”) controls to limit
      transactions with characteristics associated with gambling from the U.S.
      to Costa Rica. In August 2010, Western Union concluded that the proposed
      RTRA rule would impact 18 Agents in Costa Rica and affect approximately $1
      million worth of money transfers per month. Though Compliance employees
      pressed to get RTRA implemented due to ongoing identification of
      gambling-related transactions between the U.S. and Costa Rica, by October
      2010, Western Union had not implemented this specific RTRA control
      targeting off-shore gaming.
	 
	95.	On October 14, 2010,
      Western Union Compliance analysts conducted another review of transactions
      paid by certain Agent locations in Costa Rica. The analysts interviewed
      some consumers who sent the transactions and admitted they were funding
      their online gambling accounts for the website www.pokerstars.com. The
      analysts found continued questionable Agent activity at certain
      Agent locations in Costa Rica which indicated that Agent location employees
      allowed some customers to provide incomplete or false information to
      receive suspicious transactions.
	 
	96.	On November 23, 2010,
      Compliance employees concluded that the enhanced consumer monitoring
      program was “not covering the appropriate risk and thus not as effective
      as it could be.” Compliance employees decided to suspend the
      program.
	 
	97.	On December 10, 2010,
      Compliance employees shared a plan with business employees for RTRA
      controls designed to reduce gambling-related transactions. Compliance
      employees noted that many consumers who confirmed that their transactions
      to Costa Rica were “for gambling purposes” sent multiple transactions
      within 30 days. According to Compliance employees, the enhanced consumer
      monitoring program did “not appear to be decreasing the amount of
      questionable transactions being paid out in Costa Rica.” Compliance
      proposed automatically limiting U.S. consumers to sending a specific number
      of transactions at specific thresholds to Costa Rica within a calendar
      month. Western Union implemented the RTRA program in March
  2011.


28







	98.	On April 15, 2011, a grand jury indicted the
      individuals behind www.pokerstars.com alleged bank fraud, money
      laundering, and illegal gambling offenses. Immediately after the
      indictment, Western Union transactions from the U.S. to Costa Rica dropped
      by 50 percent. Western Union employees noted the drop in transactions and
      associated it with the www.pokerstars.com indictment. As one Western Union
      employee noted, the pokerstars indictment was a “significant business
      risk” to Western Union because “[a]bout half of our transaction base
      appears to have left the system” after the indictment. Compliance
      employees found the drop in activity “not surprising given the patterns of
      activity associated with online gaming that we continue to see in Costa
      Rica.”
	        	
	99.	Western Union employees ultimately found
      that despite the RTRA program, “Western Union services continue to be used
      for gaming purposes” between the U.S. and Costa Rica. Throughout 2011 and
      2012, Western Union Compliance analysts continued to identify suspicious
      gambling transactions sent from the U.S. to Costa Rica. Western Union
      failed to implement a sufficiently effective control against
      gambling-related transactions.


Western Union’s
Remedial Actions and Compliance Enhancements 

	100.	Since at
      least September 2012, Western Union took remedial measures and implemented
      compliance enhancements to improve its anti-fraud and anti-money
      laundering programs. These remedial measures and compliance
      enhancements were taken at the direction of the Chief Executive Officer,
      the General Counsel, and the Chief Compliance Officer and reflect their
      ongoing commitment to enhancing compliance policies and procedures. These
      remedial and compliance measures included:
	        	        	
		a.	Western Union’s Fraud
      Risk Management Department—a new Department created in 2012—instituted
      global Agent oversight standards to identify and investigate any Agent
      worldwide that processed a certain number of reported fraud
      transactions.
	 
		b.	Between 2013 and
      2015, Western Union increased the number of employees in the Compliance
      Department by over 100% and increased the Compliance Department budget by
      over 60%.
	 
		c.	In 2013, Western
      Union hired a new Chief Compliance Officer and other senior compliance
      staff. The Chief Compliance Officer has a direct reporting line to the
      Chairperson of the Compliance Committee of the Western Union Board of
      Directors.


29







		d.	Western
      Union created new compliance procedures to increase compliance authority
      and accountability, including with regard to Agent oversight. In particular, Western
      Union created a new AML Oversight Committee, which meets regularly and has
      authority to take corrective action against Agents and implement automatic
      transaction controls such as RTRA rules. Western Union also empowered
      employees in eight departments to suspend Agents based on analyses,
      on-site observations, and/or investigation results. Western Union further
      implemented explicit decision procedures and timelines for Agent oversight
      actions, including corrective action.
	        	        	        	 
		e.	Western
      Union has continued to increase compliance technology related to Agent
      oversight. This includes but is not limited to enhancing RTRA rules
      related to gaming transactions; creating the Agent Complicity Index to
      identify Agents complicit in fraud; developing new compliance reporting
      systems to streamline, standardize, and automate certain compliance
      functions; and enhancing its consumer identification
abilities.
		 
		f.	Western
      Union created new teams within its Financial Intelligence Unit to work
      with law enforcement and generate internal information for Agent and
      consumer analysis, including a Global Rapid Response Team to reach out to
      law enforcement proactively with investigative results related to crisis
      events and Strategic Intelligence Units to identify emerging criminal
      typologies.
		 
		g.	Western
      Union created and expanded its Courtesy Call Back program, under which
      certain potentially fraudulent transactions are held while Western Union
      contacts the sender to determine whether transaction is
    legitimate.
		 
		h.	Western
      Union expanded fraud reporting mechanisms, including international
      hotlines, which assist consumers outside the United States in reporting
      fraud scams to Western Union.
		 
		i.	Western
      Union instituted automatic interdiction of any individual identified in a
      fraud complaint as the recipient of a fraud-induced transfer and increased
      interdiction of individuals associated with transactions that exhibited
      characteristics associated with gambling.
		 
		j.	Western
      Union terminated its relationship with China Corridor Agents that engaged
      in structuring.
		 
		k.	Pursuant to
      the FTC order, Western Union has taken or will take a number of actions
      designed to enhance Agent oversight and reduce the risk of
  fraud.
		 
		l.	In
      addition, pursuant to the FTC Order, Western Union will “reimburse the
      principal amount of a consumer’s money transfer and any associated
      transfer fees whenever a consumer or his or her authorized representative
      reasonably claims that the transfer was fraudulently induced
  and:
		 
			i.	The consumer or his
      or her authorized representative asks Defendants, the sending agent, or
      front line associates to reverse the transfer before the transferred funds
      have been picked up; or




      	                	ii.	Defendants, after
      reviewing information and data relating to the money transfer, determines
      that Defendants, their agents or the front line associated failed to
      comply with any of Defendants, policies and procedures relating to
      detecting and preventing fraud-induced money transfers when sending or
      paying out the money transfer by failing to: provide the required consumer
      fraud warnings; comply with Defendants’ interdiction or callback programs;
      verify the recipient’s identification; or accurately record the
      recipient’s identification(s) and other biographical data.”
		        	


30








ATTACHMENT B 

CERTIFICATE OF
CORPORATE RESOLUTIONS


WHEREAS, THE WESTERN UNION
COMPANY (“Western Union” or the “Company”), a financial institution and money
services business, has been engaged in discussions with the United States Department of
Justice, Criminal Division, Money Laundering and Asset Recovery Section and the
United States Attorney’s Offices for the Middle District of Pennsylvania, the
Central District of California, the Eastern District of Pennsylvania, and the
Southern District of Florida (collectively, the “Offices”) regarding
fraud-induced money transfers, money laundering, structuring, gambling-related
transfers, and the Company’s anti-money laundering program; and 

WHEREAS, in order to resolve
such discussions, it is proposed that the Company enter into a deferred
prosecution agreement with the Offices (the “Deferred Prosecution Agreement”);
and 

WHEREAS, the Company’s
Executive Vice President and General Counsel, John R. Dye, together with outside
counsel for the Company, have advised the Board of Directors of the Company of
the Company’s rights, possible defenses, the Sentencing Guidelines’ provisions,
and the consequences of entering into such agreement with the Offices;


Therefore, the Board of
Directors has RESOLVED that: 

1. The Company (a)  acknowledges the filing of
the two-count Information charging the Company with  willfully failing to implement an effective anti-money laundering
program, in  violation of Title 31, United States Code, Sections 5318(h) and 5322 and  regulations issued thereunder, and
aiding and abetting wire fraud, in violation of Title 18,  United States Code, Sections 1343 and 2; (b) waives indictment on
such charges  and enters into the Deferred Prosecution Agreement with the Offices; and (c) agrees to forfeit $ 586 million to
the United States;







2. The Company's Executive Vice President and
General Counsel, John R. Dye, is hereby authorized, empowered and directed, on behalf of the Company, to execute the Deferred
Prosecution Agreement substantially in such form as reviewed by this Board of Directors at this meeting with such changes as
the Company's Executive Vice President and General Counsel, John R. Dye, may approve;


3. The Company's Executive Vice President and
General Counsel, John R. Dye, is hereby authorized, empowered and directed to take any and all actions as may be necessary or
appropriate and to approve the forms, terms or provisions of any agreement or other documents as may be necessary or
appropriate, to carry out and effectuate the purpose and intent of the foregoing resolutions; and


4. All of the actions of the Company's
Executive Vice President and General Counsel, John R. Dye, which actions would have been authorized by the foregoing
resolutions except that such actions were taken prior to the adoption of such resolutions, are hereby severally ratified,
confirmed, approved, and adopted as actions on behalf of the Company.


	Date: 	January 18, 2017	 	By:       	/s/ John R. Dye
				
      Corporate Secretary
The Western Union
    Company












ATTACHMENT C 

ENHANCED COMPLIANCE
UNDERTAKING


In addition to the
enhancements the Western Union Company (“Western Union” or the “Company”) has
already made to the Company’s anti-fraud and anti-money laundering programs as
described in the Statement of Facts, the Company agrees that it has or will
undertake the following: 

Board of Directors


	1.	
      The Company has created
      an independent Compliance Committee of the Board of Directors with direct
      oversight of the Chief Compliance Officer and the Compliance Program,
      including anti-money laundering and anti-fraud programs. This Committee is
      responsible for overseeing the Company’s compliance with all aspects of
      this Agreement. All reports submitted as a part of this Agreement shall be
      sent under the cover of this Committee. 

	        	 
	
      Adopt a Worldwide
      Compliance and Anti-Money Laundering Standard 

	 
	2.	
      As described in Attachment A, the Statement of Facts, “Western Union Agents” or “Agents” are individuals
      or entities anywhere in the world that own and/or operate businesses that
      are contractually authorized to offer Western Union’s money transfers to
      consumers. Western Union Agents include, but are not limited to Independent
      Agents, Direct Agents, Master Agents, Network Agents or Subagents. The
      Company has required or will require all Western Union Agents around the
      world, regardless of their location, to adhere, at a minimum, to U.S.
      regulatory and anti-money laundering standards, unless in direct
      conflict with local law. 



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	3.	The Company has or
      will design and implement a risk-based Know Your Agent program to
      ensure Western Union Agents throughout the world are complying with this
      policy.
	 
	4.	The Company has or
      will create procedures for corrective action, including termination,
      against Agents—including foreign Agent locations that process transactions
      to, from, or through the United States—that the Company has determined pose
      an unacceptable risk of money laundering or the financing of terrorism, or
      have demonstrated systemic, willful, or repeated lapses in
      compliance.
	 
	5.	When the Company
      identifies Agent locations in violation of law or Western Union policy and
      procedures, unless asked to do otherwise by law enforcement, or
      inconsistent with applicable law, the Company will provide notice to the
      Agent location in writing of the nature of the violation. The Company will
      require the Agent owner to acknowledge, in writing, that the Agent owner
      received notice of the violation. The Company will document any training
      or remedial measures taken by the Company or the Agent owner or location
      with regard to the violation.
	 
	
      Executive Review
      and Bonus Structure

	        	
	6.	The Company has or
      will implement evaluation criteria related to compliance in its executive
      review and bonus system so that each Western Union executive is evaluated
      on what the executive has done to ensure that the executive’s business or
      department is in compliance with U.S. laws. A failing score in compliance,
      including anti-money laundering and anti-fraud programs, will make the
      executive ineligible for any bonus for that
year.


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	7.	The Company
      will include in its new executive review and bonus system a provision that
      allows the Company to “claw back” bonuses for executives for conduct
      occurring after the filing of the Agreement that is later determined to
      have contributed to future compliance failures, subject to applicable
      law.
	 
	
      Anti-Fraud Alert
      System 

	 
	8.	The Company
      has or will ensure that all transactions to, from, or through the United
      States, regardless of the origin or destination, are monitored to identify
      potentially fraudulent transactions.
	        	
	
      Suspicious Activity
      Reports 

		        	 
	9.	The
      Company has or will create policies and procedures to ensure that the
      Company will follow all laws and regulations concerning the filing of
      Suspicious Activity Reports (“SARs”) in the United States for any
      suspicious activity, as defined by the Bank Secrecy Act and its
      implementing regulations. This includes, but is not limited to, filing SARs
      identifying:
	 
		a.	suspicious activity
      identified by the Company related to transactions of $2,000 or more to,
      from, or through the United States, regardless of where in the world the
      suspicious transactions originate or are received;
	 
		b.	transactions of $2,000
      or more to, from, or through Agent locations in the United States that are
      reported by consumers to the Company as fraud-related, regardless of where
      in the world the suspicious transaction are
received;


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		c.	Agent location
      owners, operators or employees anywhere in the world that the Company
      identifies as engaged in or allowing suspicious activity related to
      transactions of $2,000 or more to, from, or through the United
      States.
	        	        	
		
      High Risk Countries
      

		 
	10.	
      The Company has or will
      assign anti-money laundering Compliance Officer(s) to oversee compliance
      for each country that the Company has designated as high risk for fraud or
      money laundering. By developing an expertise in their assigned high risk
      country, the Compliance Officer(s) will better enable the Company to
      detect and prevent fraud and money laundering activities in those
      countries.

	 	
		
      Requirements for
      Reporting

		 
	11.	The Company
      will identify a point of contact within the Company to respond to the
      Offices’ requests.
	 
	12.	The Company
      will provide the Offices with reports every ninety (90) days
      regarding:
	 
		a.	reported consumer
      fraud complaints, (1) listing all Western Union Agent locations worldwide
      with ten (10) or more complaints from consumers alleging transactions paid
      at the Agent location were the result of fraud; (2) for each Agent location
      on the list, the Company will identify the owner of the Agent location,
      total fraud complaints for the prior year, total number of receives for
      the prior year, total dollar value of the receives for the prior year, the
      average dollar value for receive transactions, total number of sends for
      the prior year, total dollar value of the sends for the prior year, the
      average dollar value for send transactions, total revenue earned by
      Western Union from the Agent location for the prior year (including, but
      not limited to transfer fees and currency exchange revenue), any additional
      Agent locations with the same owner, and the total consumer fraud
      complaints for each other Agent location with the same owner; (3) for each
      Agent location on the list, the Company will describe what actions, if
      any, have been taken against the Agent location and/or owner or employees of
      the Agent location and describe why such action (or lack of action) was
      deemed appropriate;


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	        	b.	SAR reporting, (1)
      listing all Western Union Agent locations in the United States who are in
      the top 5% of Agents in terms of SARS filed by the Company; (2) for each
      Agent location on the list, the Company will identify the owner of the
      Agent location, total SARS filed by the Company within the reporting
      period, total SARS filed by the Company for the prior year; and, (3) for
      each Agent location on the list, the Company will describe what actions,
      if any, have been taken with regard to the Agent location and/or owner or
      employees of the Agent location and describe why such action (or lack of
      action) was deemed appropriate;
	 	        	
	 	c.	corrective action,        listing all Western Union Agent locations
    worldwide that were terminated,        suspended or restricted in any way based on fraud, structuring, gambling, or money
    laundering concerns and whether or not a SAR was filed        identifying the Agent location as the subject;
	 	 
	 	d.	corrective action,
      listing all Agent location termination, suspension or restriction
      recommendations by the Company’s Fraud Risk Management or Compliance
      Departments that were not accepted and an explanation of why. The Company
      will also indicate whether or not a SAR was filed identifying the
      Agent location as the subject.


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	13.	The Company will
      provide the Offices with reports quarterly (1) listing any programs,
      policies, or procedures designed to detect and prevent illegal
      gambling-related transactions and (2) summarizing the effectiveness of
      those programs, policies, or procedures.
	 
	
      Compliance with the
      Federal Trade Commission Order 

	        	
	14.	The Company will
      comply with the FTC Order, including but not limited to, provisions
      regarding Agent location due diligence; Agent location investigation,
      suspension, termination, or other disciplinary standards; the Independent
      Compliance Auditor; consumer fraud reimbursement; and submission of
      relevant information regarding consumer complaints about alleged
      fraud-induced money transfers the Company possesses in its fraud database
      for inclusion in the Consumer Sentinel Network, a secure online database
      operated by the FTC and available to law enforcement.
	 
	
      Access to
      Independent Parties 

	 
	15.	The Company will
      provide the Offices with, or will not oppose access by the Offices to,
      copies of any report, not subject to a valid claim of attorney-client or other
      privilege, issued by any third party with independent oversight of the
      Company’s anti-money laundering, Bank Secrecy Act, or fraud compliance,
      appointed as a result of any agreement with U.S. federal or state law
      enforcement or regulatory agencies. This includes, but is not limited
      to, the monitor appointed as part of the Company’s Agreement with the State
      of Arizona and the Independent Compliance Auditor appointed as part of the
      Company’s Agreement with the FTC. The Offices will have direct access to
      any such third party and may communicate and meet with the third party
      without the presence of the Company.


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