UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY
FINANCIAL CRIMES ENFORCEMENT NETWORK 

	IN
      THE MATTER OF:	)	
		)	 
		)	Number 2017-01
	Western Union Financial Services, Inc.	)	
	Englewood, Colorado	)	



CONSENT TO THE
ASSESSMENT OF CIVIL MONEY PENALTY 

I. INTRODUCTION


The Financial Crimes
Enforcement Network (FinCEN) has determined that grounds exist to assess a civil
money penalty against Western Union Financial Services, Inc. (WUFSI or the
Company) pursuant to the Bank Secrecy Act (BSA) and regulations issued pursuant
to that Act.1 

WUFSI admits
to the facts set forth below and that its conduct violated the BSA. In order to
resolve this matter, WUFSI consents to the assessment of a civil money penalty
and enters this CONSENT TO THE ASSESSMENT OF CIVIL MONEY PENALTY (CONSENT) with
FinCEN. 

FinCEN has authority to
investigate financial institutions, including money services businesses (MSBs),
for compliance with and violation of the BSA pursuant to 31 C.F.R. § 1010.810,
which grants FinCEN “[o]verall authority for enforcement and compliance,
including coordination and direction of procedures and activities of all other
agencies exercising delegated authority under this chapter. . . .” 

____________________


1 The Bank
Secrecy Act is codified at 12 U.S.C. §§ 1829b, 1951–1959
and 31 U.S.C. §§ 5311–5314, 5316–5332. Regulations
implementing the Bank Secrecy Act appear at 31 C.F.R. Chapter X.







WUFSI is a wholly owned
subsidiary of The Western Union Company (Western Union). WUFSI offers consumer
to consumer remittance services through the branded payment services of Western
Union, Vigo, and Orlandi Valuta, which comprise a network of approximately
500,000 agent locations in approximately 200 countries and territories
worldwide. WUFSI operated as a “financial institution” and a “money services
business” within the meaning of the BSA and its implementing regulations during
the time relevant to this action.2

Resolution with the
United States Department of Justice 

On the same date as this
CONSENT, Western Union entered into a Deferred Prosecution Agreement (DPA) with
the United States Department of Justice, Criminal Division, Money Laundering and
Asset Recovery Section, and the U.S. Attorney’s Offices for the Middle District
of Pennsylvania, Central District of California, Eastern District of
Pennsylvania, and Southern District of Florida.3 The DPA stems from
allegations that during the period of 2004 through 2012, Western Union: failed
to implement and maintain an effective anti-money laundering (AML) program in
violation of the BSA and its regulations; and aided and abetted wire
fraud.4 As part of the
DPA, the Department of Justice acknowledged that since at least September 2012,
Western Union implemented compliance enhancements to continuously improve its
anti-fraud and anti-money laundering programs. Further, Western Union agreed to
continue to enhance its AML and anti-fraud programs, and to pay to the United
States the sum of $586 million for restitution to the victims of the fraud.


____________________


2 31 U.S.C. § 5312(a)(2); 31 C.F.R. § 1010.100(t)(3).
3 United States
v. The Western Union Company, et al., CR-17-__ (M.D. Pa. 2017). This CONSENT is expressly conditioned on the
U.S. District Court for the Middle District of Pennsylvania’s acceptance of the
DPA. If the DPA does not become effective, this CONSENT shall be deemed null and
void.
4 31 U.S.C. §§
5318(h), 5322; 18 U.S.C. §§ 1342, 1343. 

2 







Resolution with the
Federal Trade Commission

On the same date as this
CONSENT, the Federal Trade Commission (FTC) entered into a Stipulated Order for
Permanent Injunction and Final Judgement (Order) with Western Union. The Order
is in resolution of the FTC’s allegations that Western Union failed to take
timely, appropriate, and effective measures to mitigate fraud in the processing
of money transfers sent by consumers. Western Union has neither admitted nor
denied the FTC’s allegations. As part of the Order, Western Union has agreed to
the appointment of an independent compliance auditor to ensure, among other
things, that thorough due diligence is conducted on all prospective and existing
Western Union agents, and that necessary steps are taken to monitor and
investigate agent activity. Western Union has also agreed to a monetary judgment
in the amount of $586 million which will be satisfied by complying with the
payment requirements of its DPA with the United States Department of Justice, as
referenced above in this CONSENT. 

II. DETERMINATIONS


Prior to 2012, WUFSI
willfully violated the BSA’s program, recordkeeping and reporting
requirements.5 As described below, WUFSI failed to adequately
implement and maintain an effective, risk-based AML program by failing to
implement or execute effective policies, procedures, and internal controls
reasonably designed to assure ongoing compliance (in particular, failures to
suspend or terminate certain agent locations in a timely manner); and failing to
conduct adequate due diligence on certain
foreign agents and subagents in Latin America. WUFSI also failed to file timely suspicious activity reports
(SARs).6

____________________


5 In civil
enforcement of the BSA under 31 U.S.C. § 5321(a)(1), to establish that a
financial institution or individual acted willfully, the government need only
show that the financial institution or individual acted with either reckless
disregard or willful blindness. The government need not show that the entity or
individual had knowledge that the conduct violated the BSA, or that the entity
or individual otherwise acted with an improper motive or bad purpose. WUFSI
admits to “willfulness” here only as the term is used in civil enforcement of
the BSA under 31 U.S.C. § 5321(a)(1).
6 Pursuant to WUFSI’s agreement with the states of Arizona,
California, New Mexico and Texas, a court appointed monitor previously
identified recommended program enhancements such as determinations made in this
Section. At all times since the commencement of such agreement, WUFSI has been
working to remediate the recommended program enhancements made pursuant to the
agreement with the states of Arizona, California, New Mexico and Texas, many of
which are reiterated in this CONSENT. WUFSI’s court appointed monitor has
certified that such remediation has been successfully
completed.

3 







A.
Violation of the
Requirement to Implement an Effective Anti-Money Laundering
Program

The BSA and its
implementing regulations require MSBs to develop, implement, and maintain an
effective written AML program that is reasonably designed to prevent the MSB
from being used to facilitate money laundering and the financing of terrorist
activities.7 At a minimum, an MSB is required to implement a written
AML program that: (a) provides for a system of internal controls reasonably
designed to assure ongoing compliance; (b) designates an individual or
individuals responsible for assuring day to day compliance with the program and
BSA requirements; (c) provides training for appropriate personnel, including
training in the detection of suspicious transactions; and (d) provides for
independent review to monitor and maintain an adequate program.8



Prior to 2012, in certain
instances, WUFSI failed to implement or execute effective internal controls
sufficient to reasonably assure that the institution did not facilitate money
laundering transactions including illicit transactions related to fraud.
Specifically, WUFSI failed to maintain adequate policies, procedures, and
internal controls for conducting due diligence on its agents, to terminate or
suspend agent locations involved in potential money laundering and fraud
transactions, and to implement or execute internal controls reasonably designed
to prevent fraud. As a result of WUFSI’s AML failures, certain agent locations
and outlets that WUFSI suspected were
involved in fraud and money laundering were able to continue to use WUFSI’s
money transfer system to facilitate
their activity. 

MSBs that do business
through agents or counterparties located outside of the United States must
implement and maintain as part of their AML program risk-based policies,
procedures, and controls reasonably designed to identify and minimize money
laundering and other illicit financing risks associated with such business.
FinCEN guidance has stated that “[t]o the extent [MSBs] utilize relationships
with foreign agents or counterparties to facilitate the movement of funds into
or out of the United States, they 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 such
relationships.”9

____________________


7 31 U.S.C. §
5318(h); 31 C.F.R. § 1022.210(a). 
8 31 C.F.R. §§ 1022.210(c), (d).
9 FinCEN Guidance (Interpretive Release No. 2004-1),
Anti-Money Laundering Program
Requirements for Money Services Businesses with Respect to Foreign Agents or
Foreign Counterparties, 60 Fed.
Reg. 74,439 (Dec. 14, 2004).

4 







FinCEN has made clear that
the AML programs for MSBs engaged in such transactions should, among other
things, establish: (1) procedures for 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, including
reasonable procedures to evaluate, on an ongoing basis, the operations of those
foreign agents and counterparties; (2) procedures for risk-based monitoring and
review of transactions from, to, or through the United States that are conducted
through foreign agents and counterparties sufficient to enable the MSBs to
identify and, where appropriate, report as suspicious such occurrences as
instances of unusual wire activity; and (3) procedures for responding to foreign
agents or counterparties that present unreasonable risks of money laundering or
the financing of terrorism, including procedures that 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 an MSB determines poses an unacceptable risk of money
laundering.10

1. Failure to Conduct Adequate Due Diligence on Foreign
Agents/Outlets 

For certain potential and
existing agent locations within Latin America, WUFSI failed to establish
adequate procedures for conducting reasonable, risk-based due diligence to help
ensure that such foreign agent locations and counterparties are not themselves
complicit in illegal activity involving WUFSI’s products and services, including
reasonable procedures to evaluate, on an ongoing basis, the operations of those
foreign agent locations and counterparties. WUFSI’s failure to conduct adequate
due diligence on these domestic and foreign agent locations included not
conducting adequate reviews (e.g., background checks and on-site reviews) of its
higher-risk new agents, and not conducting enhanced due diligence on Latin
American-based agent locations that were at higher risk for money laundering.
Because of these failures, WUFSI did not have sufficient controls to effectively
mitigate its money laundering risks along the southwest border between the
United States and Mexico.

WUFSI’s failures to conduct
sufficient initial due diligence into certain agent locations resulted in
providing “new agent” agreements to agents owned by individuals who had
previously been terminated by WUFSI for money laundering concerns. For example,
in October 2011, with the assistance of law enforcement, WUFSI identified that
four commonly owned agent locations in Peru accounted for nearly half of the
transactions related to consumer fraud reports in Peru. After these agents
processed transactions for another six months, WUFSI suspended these locations
for this activity in April 2012. Despite these suspensions and WUFSI’s
determination that the commonly-owned locations were high risk for fraud, WUFSI
failed to identify these concerns when it allowed the common owner of these
agents to open another location in December 2012.

WUFSI failed to implement
or execute effective policies and procedures for conducting adequate due
diligence to understand the money laundering risks associated with its subagent
relationships within Mexico. WUFSI used a “master agent” or “master payee”
payment model for remittances. The master agent would in turn contract with
subagents to deliver funds to recipients. WUFSI did not have sufficient policies
and procedures in place to understand the money laundering risks of its
Mexican-based master agents and subagents and conduct ongoing due diligence of
their activity. 

For example, during the
period covered by this CONSENT, WUFSI had a number of master agents and
subagents in Mexico to provide its services along the southwest border of the
United States with Mexico. Despite its knowledge of the money laundering risks
associated with the southwest border and the use of money remittances to send
narcotics proceeds to Mexico, WUFSI did not have sufficient knowledge of the
activities of certain higher-risk subagents and did not itself conduct, or
ensure that its master agents conducted, on-site reviews of certain subagents at
higher-risk of money laundering. This failure prevented WUFSI from ensuring that
its subagents were properly identifying the identification of the person
obtaining money in Mexico. WUFSI’s ability to properly monitor these
relationships was further affected by its use of three different processing
systems for its Mexican-branded remittance services. WUFSI did not transfer the
processing of these payments to one system until August 2012. 

____________________


10
Id.

5









2. Failure to
Terminate High-Risk Agent Locations11

WUFSI failed to establish
or implement sufficient procedures for suspending or terminating foreign agent
locations or counterparties that presented unreasonable risks of money
laundering including procedures that 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 it
determined posed an unacceptable risk of money laundering. Specifically, WUFSI
applied disciplinary and termination actions inconsistently across its foreign
agent locations. 

For certain WUFSI agent
locations, WUFSI relied on various means to identify agent locations that were
potentially complicit in money laundering and/or fraudulent activity. WUFSI
reviewed consumer fraud reports, which were reports submitted by customers that
were victims of fraud, as well as suspicious activity reporting. WUFSI analysts
also generated “60-day fraud reports” for any agent location that had five or
more consumer fraud reports over a 60-day period. For agent locations that WUFSI
believed were potentially complicit in the activity, WUFSI could implement
remedial and disciplinary actions including temporary suspension, training,
compliance inspections, and termination. Although WUFSI did rely on these
corrective actions, it did not do so on a consistent basis and, at times,
allowed business interests to comment on appropriate corrective actions.


For example, prior to 2012,
WUFSI failed to sufficiently take corrective action against an agent location in
the United Kingdom that had over 73 60-day fraud reports and over 2,000 consumer
fraud reports sent to WUFSI. From 2005 through 2010, WUFSI identified this agent
location as a high fraud risk and potentially complicit in fraud over five
times. In each instance, WUFSI failed to
terminate the relationship and relied on corrective actions that proved
insufficient — including compliance reviews, training, and partial suspension.
In 2010, WUFSI compliance staff recommended termination or suspension of this
agent location in five separate instances as WUFSI analysts continued to
identify significant potential fraudulent activity through the agent location.
These recommendations did not result in termination of the relationship. WUFSI
only issued partial suspensions from engaging in U.S.-originated transfers and
then full reinstatement despite the continued presence of potentially fraudulent
activity. Despite over seven years of significant potential fraudulent activity,
WUFSI did not terminate this relationship until February of 2012.


In another example, WUFSI
failed to take sufficient corrective action with respect to four agent locations
that allowed customers to send remittances to China that displayed
characteristics of structuring. From 2003 to 2012, WUFSI filed over 31,000
suspicious activity reports (SARs) on remittances processed by four agent
locations that sent funds to China. For one of these agent locations, WUFSI
filed over 11,000 SARs. Between 2005 and 2010, WUFSI identified that this agent
had multiple compliance deficiencies including failure to file all currency
transaction reports (CTRs) and failure to monitor all transactions for
suspicious activity. Specifically, WUFSI repeatedly identified that this agent
location facilitated transactions of $2,500, just below the $3,000 recordkeeping
threshold, but above Western Union’s identification threshold, only minutes
apart. Despite continually identifying this activity, WUFSI implemented
insufficient corrective action and never suspended this agent location’s
relationship and this agent location continued to be one of WUFSI’s top accounts
for sending money to China. Despite the repeated identification of compliance
deficiencies, potential structuring activity, and the filing of over 11,000
SARs, WUFSI did not terminate this agent location until its owner was arrested in September of
2010. 

____________________


11 The items set
forth in this Section are contained in in the DPA with the U.S. Department of
Justice.

6











3. Failure to Implement
Sufficient Policies to Prevent Fraud

Prior to 2012, WUFSI failed to
implement a sufficient and adequately adhered to policy for disciplining agent
locations that WUFSI personnel should have known or suspected were involved in
fraud and/or money laundering. As early as 2004, WUFSI security and compliance
staff identified the need to implement additional discipline policies to take
corrective remedial action for agent locations that facilitated a high volume of
fraud and/or money laundering transactions.

In the years following
FinCEN’s Interpretative Release,12 various WUFSI compliance staff
also drafted or recommended additional policies for the company to reduce the
number of fraudulent transactions and discipline foreign agents engaged in fraud
or money laundering activity. However, WUFSI had unreasonable delays in
implementing some of the policies.

B. Violations of the Requirement to Report Suspicious
Activity

The BSA and its implementing
regulations require MSBs to report transactions that the MSB “knows, suspects,
or has reason to suspect” are suspicious, if the transaction is conducted or
attempted by, at, or through the MSB, and the transaction involves or aggregates
to at least $2,000 in funds or other assets.13 A transaction is
“suspicious” if the transaction: (a) involves funds derived from illegal
activity; (b) is intended or conducted in order to hide or disguise funds or
assets derived from illegal activity, or to disguise the ownership, nature,
source, location, or control of funds or assets derived from illegal activity;
(c) is designed, whether through structuring or other means, to evade any
requirement in the BSA or its implementing regulations; (d) serves no business
or apparent lawful purpose, and the MSB knows of no reasonable explanation for
the transaction after examining the
available facts, including the background and possible purpose of the transaction; or (e) involves use of the MSB
to facilitate criminal activity.14

Like other BSA filings,
suspicious activity reports (SARs) play an important role in detecting possible
criminal activity. FinCEN and law enforcement use SARs to, among other things,
investigate money laundering, terrorist financing and other serious criminal
activity. 

WUFSI’s failure to develop and
implement policies and procedures that could be reasonably expected to detect
and cause the reporting of suspicious transactions led to unreasonable delay in
filing thousands of SARs. Before 2012, in many cases, WUFSI took over 90 days to
investigate activity for which it had facts to constitute the basis for filing a
SAR. Additionally, although WUFSI filed thousands of SARs on customers of its
agent locations, it rarely filed SARs on its agent locations. WUFSI’s practice
was not to identify agent locations as “subjects” of SARs unless it found the
agent location to be complicit. WUFSI typically only found an agent to be
complicit if the agent was arrested, publicly identified to be implicated in
illicit transactions, or if WUFSI’s own investigation determined that the agent
location was complicit. By not filing these SARs in a timely manner, WUFSI
unnecessarily delayed reporting. 

____________________

12 See
supra, n.9.
13 31 C.F.R. § 1010.320(a)(2).
14
Id.


7







III. CIVIL MONEY PENALTY


FinCEN has determined that
WUFSI willfully violated the program and reporting requirements of the BSA and
its implementing regulations. FinCEN has also determined that grounds exist to
assess a civil money penalty for these violations.15

FinCEN has determined that the
penalty in this matter will be $184 million based on WUFSI’s AML program
failures and violations of its SAR filing obligations during the period before 2012. The U.S. Department of Justice will
collect $586 million from WUFSI. The U.S. Department of Justice has stated that
the funds collected through civil asset forfeiture will be used for restitution
of victims of fraud. In recognition of this arrangement, FinCEN will deem its
penalty fully satisfied by WUFSI’s payment to the U.S. Department of Justice as
required by the Deferred Prosecution Agreement. 

IV. UNDERTAKINGS


By executing this CONSENT,
WUFSI agrees to provide FinCEN with any reports required by the DPA. 

V. CONSENT TO ASSESSMENT


To resolve this matter, and
only for that purpose, WUFSI consents to the assessment of a civil money penalty
in the sum of $184 million and admits that it willfully violated the BSA’s
program, recordkeeping, and reporting requirements. 

WUFSI recognizes and states
that it enters into this CONSENT freely and voluntarily and that no offers,
promises, or inducements of any nature whatsoever have been made by FinCEN or
any employee, agent, or representative of FinCEN to induce WUFSI to enter into
the CONSENT, except for those specified in the CONSENT. 

WUFSI understands and agrees
that the CONSENT embodies the entire agreement between WUFSI and FinCEN relating
to this enforcement matter, as described in Section II above. WUFSI further
understands and agrees that there are no express or implied promises,
representations, or agreements between WUFSI and FinCEN other than those
expressly set forth or referred to in this document and that nothing in this
CONSENT or in the ASSESSMENT OF CIVIL MONEY PENALTY (ASSESSMENT) is binding on
any other agency of government, whether Federal, State or local. 

____________________

15 31 U.S.C. §
5321; 31 C.F.R. § 1010.820.

8







VI. PUBLIC STATEMENTS


WUFSI expressly agrees that it
shall not, nor shall its attorneys, agents, partners, directors, officers,
employees, affiliates, or any other person authorized to speak on its behalf,
make any public statement contradicting either its acceptance of responsibility
set forth in the CONSENT or any fact in the DETERMINATIONS section of the
CONSENT. FinCEN has sole discretion to determine whether a statement is
contradictory and violates the terms of the CONSENT. If WUFSI, or anyone
claiming to speak on behalf of WUFSI, makes such a contradictory statement,
WUFSI may avoid a breach of the agreement by repudiating such statement within
48 hours of notification by FinCEN. If FinCEN determines that WUFSI did not
satisfactorily repudiate such statement(s) within 48 hours of notification,
FinCEN may void, in its sole discretion, the releases contained in the CONSENT
and reinstitute enforcement proceedings against WUFSI. WUFSI expressly agrees to
waive any statute of limitations defense to the reinstituted enforcement
proceedings and further agrees not to contest any admission or other findings
made in the CONSENT. This paragraph does not apply to any statement made by any
present or former officer, director, employee, or agent of WUFSI in the course
of any criminal, regulatory, or civil case initiated against such individual,
unless WUFSI later ratifies such claims, directly or indirectly. WUFSI further
agrees that, upon notification by FinCEN, it will repudiate such statement to
the extent it contradicts either its acceptance of responsibility or any fact in
the CONSENT. 

VII. RELEASE 

Execution of this CONSENT, and
compliance with the terms of the ASSESSMENT and this CONSENT, settles all claims
that FinCEN may have against WUFSI for the conduct described in Section II of
this CONSENT. Execution of this CONSENT, and compliance with the terms of the
ASSESSMENT and this CONSENT, does not release any claim that FinCEN may have for conduct by WUFSI other than the
conduct described in Section II of this CONSENT, or any claim that FinCEN may
have against any party other than WUFSI. Upon request, WUFSI shall truthfully
disclose to FinCEN all factual information not protected by a valid claim of
attorney-client privilege or work product doctrine with respect to the
participation of parties other than WUFSI, including employees or agents of
WUFSI, or others, regarding the conduct described in Section II of this CONSENT.


If FinCEN determines, in its
sole judgment, that WUFSI has breached any portion of this agreement, FinCEN may
void, in its sole discretion, the releases contained in this CONSENT and
reinstitute enforcement proceedings against WUFSI, subject to written notice to
WUFSI and an opportunity to cure. WUFSI expressly agrees to waive any statute of
limitations defense to the reinstituted enforcement proceedings regarding the
conduct described in Section II of this CONSENT, and further agrees not to
contest any admission or other findings made in this CONSENT. 

9







VIII. WAIVERS

Nothing in this CONSENT or the
ASSESSMENT shall preclude any proceedings brought by FinCEN to enforce the terms
of this CONSENT or the ASSESSMENT, nor shall it constitute a waiver of any
right, power, or authority of any other representatives of the United States or
agencies thereof, including but not limited to the U.S. Department of Justice.


In executing this CONSENT,
WUFSI stipulates to the terms of this CONSENT and waives: 

	       	a.	       	All defenses to this
      CONSENT and the ASSESSMENT which can be waived;
		 
		b.		Any claim of double
      jeopardy based upon the execution of this CONSENT or the ASSESSMENT, or
      the payment of any civil money penalty herein or therein;
		 


	       	c.	       	Any claim that this
      CONSENT, the ASSESSMENT or the civil money penalty is unlawful or invalid,
      or violates the Constitution of the United States of America;
    and,
		 
		d.		All rights to seek in
      any way to contest the validity of this CONSENT, the ASSESSMENT, or
      payment of the civil money penalty, on any
grounds.




	/s/
      John R. Dye	January
      19, 2017
	John R. Dye	Date
	General Counsel and
      Assistant Secretary
	 	
	 	
	Western Union Financial Services, Inc.
	 
	 
	 
	 
	Accepted
      by:	
	 
	/s/
      Jamal El-Hindi	1/19/17
	Jamal El-Hindi	Date
	Acting Director	
	 
	FINANCIAL CRIMES ENFORCEMENT NETWORK
	U.S.
      Department of the Treasury	




10







UNITED STATES OF
AMERICA
DEPARTMENT OF THE TREASURY 
FINANCIAL CRIMES ENFORCEMENT NETWORK


	IN
      THE MATTER OF:	)	
	 	)	
	 	)       	Number 2017-01
	Western Union Financial Services, Inc.	)	
	Englewood, Colorado	)	



ASSESSMENT OF CIVIL
MONEY PENALTY


I. INTRODUCTION


The Financial Crimes
Enforcement Network (FinCEN) has determined that grounds exist to assess a civil
money penalty against Western Union Financial Services, Inc. (WUFSI or the
Company) pursuant to the Bank Secrecy Act (BSA) and regulations issued pursuant
to that Act.1

WUFSI admits to the facts set
forth below and that its conduct violated the BSA. In order to resolve this
matter, WUFSI consents to this assessment of a civil money penalty and entered
the CONSENT TO THE ASSESSMENT OF CIVIL MONEY PENALTY (CONSENT) with FinCEN.


The CONSENT is incorporated
into this ASSESSMENT OF CIVIL MONEY PEANLTY (ASSESSMENT) by reference. 

FinCEN has authority to
investigate financial institutions, including money services businesses (MSBs),
for compliance with and violation of the BSA pursuant to 31 C.F.R. § 1010.810,
which grants FinCEN “[o]verall authority for enforcement and compliance,
including coordination and direction of
procedures and activities of all other agencies exercising delegated authority
under this chapter. . . .” 


WUFSI is a wholly owned subsidiary of The Western
Union Company (Western Union). WUFSI offers consumer to consumer remittance
services through the branded payment services of Western Union, Vigo, and
Orlandi Valuta, which comprise a network of approximately 500,000 agent
locations in approximately 200 countries and territories worldwide. WUFSI
operated as a “financial institution” and a “money services business” within the
meaning of the BSA and its implementing regulations during the time relevant to
this action.2

____________________

1 The Bank Secrecy
Act is codified at 12 U.S.C. §§ 1829b, 1951–1959 and 31 U.S.C. §§ 5311–5314,
5316–5332. Regulations implementing the Bank Secrecy Act appear at 31 C.F.R.
Chapter X.
2 31 U.S.C. §
5312(a)(2); 31 C.F.R. § 1010.100(t)(3).







Resolution with the
United States Department of Justice 

On the same date as the
CONSENT, Western Union entered into a Deferred Prosecution Agreement (DPA) with
the United States Department of Justice, Criminal Division, Money Laundering and
Asset Recovery Section, and the U.S. Attorney’s Offices for the Middle District
of Pennsylvania, Central District of California, Eastern District of
Pennsylvania, and Southern District of Florida.3 The DPA stems from
allegations that during the period of 2004 through 2012, Western Union: failed
to implement and maintain an effective anti-money laundering (AML) program in
violation of the BSA and its regulations; and aided and abetted wire
fraud.4 As part of the DPA, the Department of Justice acknowledged
that since at least September 2012, Western Union implemented compliance
enhancements to continuously improve its anti-fraud and anti-money laundering
programs. Further, Western Union agreed to continue to enhance its AML and anti-fraud programs, and to pay to the
United States the sum of $586 million for restitution to the victims of the fraud. 

Resolution with the
Federal Trade Commission

On the same date as the
CONSENT, the Federal Trade Commission (FTC) entered into a Stipulated Order for
Permanent Injunction and Final Judgement (Order) with Western Union. The Order
is in resolution of the FTC’s allegations that Western Union failed to take
timely, appropriate, and effective measures to mitigate fraud in the processing
of money transfers sent by consumers. Western Union has neither admitted nor
denied the FTC’s allegations. As part of the Order, Western Union has agreed to
the appointment of an independent compliance auditor to ensure, among other
things, that thorough due diligence is conducted on all prospective and existing
Western Union agents, and that necessary steps are taken to monitor and
investigate agent activity. Western Union has also agreed to a monetary judgment
in the amount of $586 million which will be satisfied by complying with the
payment requirements of its DPA with the United States Department of Justice, as
referenced above in this CONSENT. 

II. DETERMINATIONS


Prior to 2012, WUFSI willfully
violated the BSA’s program, recordkeeping and reporting
requirements.5 As described below, WUFSI failed to adequately
implement and maintain an effective, risk-based AML program by failing to
implement or execute effective policies, procedures, and internal controls
reasonably designed to assure ongoing compliance (in particular, failures to
suspend or terminate certain agent locations in a timely manner); and failing to
conduct adequate due diligence on certain
foreign agents and subagents in Latin America. WUFSI also failed to file timely suspicious activity reports
(SARs).6

____________________

3 United States
v. The Western Union Company, et al., CR-17-__ (M.D. Pa. 2017). The CONSENT is expressly conditioned on the
U.S. District Court for the Middle District of Pennsylvania’s acceptance of the
DPA. If the DPA does not become effective, the CONSENT shall be deemed null and
void.
4 31 U.S.C. §§
5318(h), 5322; 18 U.S.C. §§ 1342, 1343.
5 In civil enforcement of the BSA under 31 U.S.C. §
5321(a)(1), to establish that a financial institution or individual acted
willfully, the government need only show that the financial institution or
individual acted with either reckless disregard or willful blindness. The
government need not show that the entity or individual had knowledge that the
conduct violated the BSA, or that the entity or individual otherwise acted with
an improper motive or bad purpose. WUFSI admits to “willfulness” here only as
the term is used in civil enforcement of the BSA under 31 U.S.C. §
5321(a)(1).
6 Pursuant
to WUFSI’s agreement with the states of Arizona, California, New Mexico and
Texas, a court appointed monitor previously identified recommended program
enhancements such as determinations made in this Section. At all times since the
commencement of such agreement, WUFSI has been working to remediate the
recommended program enhancements made pursuant to the agreement with the states
of Arizona, California, New Mexico and Texas, many of which are reiterated in
the CONSENT. WUFSI’s court appointed monitor has certified that such remediation
has been successfully completed.

2







	       A.	 	Violation of the Requirement to Implement an Effective
      Anti-Money Laundering Program



The BSA and its implementing
regulations require MSBs to develop, implement, and maintain an effective
written AML program that is reasonably designed to prevent the MSB from being
used to facilitate money laundering and the financing of terrorist
activities.7 At a minimum, an MSB is required to implement a written
AML program that: (a) provides for a system of internal controls reasonably
designed to assure ongoing compliance; (b) designates an individual or
individuals responsible for assuring day to day compliance with the program and
BSA requirements; (c) provides training for appropriate personnel, including
training in the detection of suspicious transactions; and (d) provides for
independent review to monitor and maintain an adequate
program.8

Prior to 2012, in certain
instances, WUFSI failed to implement or execute effective internal controls
sufficient to reasonably assure that the institution did not facilitate money
laundering transactions including illicit transactions related to fraud.
Specifically, WUFSI failed to maintain adequate policies, procedures, and
internal controls for conducting due diligence on its agents, to terminate or
suspend agent locations involved in potential money laundering and fraud
transactions, and to implement or execute internal controls reasonably designed
to prevent fraud. As a result of
WUFSI’s AML failures, certain agent locations and outlets that WUFSI suspected
were involved in fraud and money laundering were able to continue to use WUFSI’s
money transfer system to facilitate their activity.

____________________

7 31 U.S.C. §
5318(h); 31 C.F.R. § 1022.210(a).
8 31 C.F.R. §§ 1022.210(c), (d).

3














MSBs that do business
through agents or counterparties located outside of the United States must
implement and maintain as part of their AML program risk-based policies,
procedures, and controls reasonably designed to identify and minimize money
laundering and other illicit financing risks associated with such business.
FinCEN guidance has stated that “[t]o the extent [MSBs] utilize relationships
with foreign agents or counterparties to facilitate the movement of funds into
or out of the United States, they 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 such
relationships.”9

FinCEN has made clear that
the AML programs for MSBs engaged in such transactions should, among other
things, establish: (1) procedures for 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, including
reasonable procedures to evaluate, on an ongoing basis, the operations of those
foreign agents and counterparties; (2) procedures for risk-based monitoring and
review of transactions from, to, or through the United States that are conducted
through foreign agents and counterparties sufficient to enable the MSBs to
identify and, where appropriate, report as suspicious such occurrences as
instances of unusual wire activity; and (3) procedures for responding to foreign
agents or counterparties that present unreasonable risks of money laundering or
the financing of terrorism, including procedures that 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 an MSB determines poses an unacceptable risk of money
laundering.10

____________________

9 FinCEN
Guidance (Interpretive Release No. 2004-1), Anti-Money Laundering Program Requirements for
Money Services Businesses with Respect to Foreign Agents or Foreign
Counterparties, 60 Fed. Reg.
74,439 (Dec. 14, 2004).

10 Id.

4







1. Failure to Conduct
Adequate Due Diligence on Foreign Agents/Outlets 

For certain potential and
existing agent locations within Latin America, WUFSI failed to establish
adequate procedures for conducting reasonable, risk-based due diligence to help
ensure that such foreign agent locations and counterparties are not themselves
complicit in illegal activity involving WUFSI’s products and services, including
reasonable procedures to evaluate, on an ongoing basis, the operations of those
foreign agent locations and counterparties. WUFSI’s failure to conduct adequate
due diligence on these domestic and foreign agent locations included not
conducting adequate reviews (e.g., background checks and on-site reviews) of its
higher-risk new agents, and not conducting enhanced due diligence on Latin
American-based agent locations that were at higher risk for money laundering.
Because of these failures, WUFSI did not have sufficient controls to effectively
mitigate its money laundering risks along the southwest border between the
United States and Mexico.

WUFSI’s failures to conduct
sufficient initial due diligence into certain agent locations resulted in
providing “new agent” agreements to agents owned by individuals who had
previously been terminated by WUFSI for money laundering concerns. For example,
in October 2011, with the assistance of law enforcement, WUFSI identified that
four commonly owned agent locations in Peru accounted for nearly half of the
transactions related to consumer fraud reports in Peru. After these agents
processed transactions for another six months, WUFSI suspended these locations
for this activity in April 2012. Despite these suspensions and WUFSI’s
determination that the commonly-owned locations were high risk for fraud, WUFSI
failed to identify these concerns when it allowed the common owner of these
agents to open another location in December 2012. 

5 







WUFSI failed to implement
or execute effective policies and procedures for conducting adequate due
diligence to understand the money laundering risks associated with its subagent
relationships within Mexico. WUFSI used a “master agent” or “master payee”
payment model for remittances. The master agent would in turn contract with
subagents to deliver funds to recipients. WUFSI did not have sufficient policies
and procedures in place to understand the money laundering risks of its
Mexican-based master agents and subagents and conduct ongoing due diligence of
their activity. 

For example, during the
period covered by the CONSENT, WUFSI had a number of master agents and subagents
in Mexico to provide its services along the southwest border of the United
States with Mexico. Despite its knowledge of the money laundering risks
associated with the southwest border and the use of money remittances to send
narcotics proceeds to Mexico, WUFSI did not have sufficient knowledge of the
activities of certain higher-risk subagents and did not itself conduct, or
ensure that its master agents conducted, on-site reviews of certain subagents at
higher-risk of money laundering. This failure prevented WUFSI from ensuring that
its subagents were properly identifying the identification of the person
obtaining money in Mexico. WUFSI’s ability to properly monitor these
relationships was further affected by its use of three different processing
systems for its Mexican-branded remittance services. WUFSI did not transfer the
processing of these payments to one system until August 2012. 

6







2. Failure to
Terminate High-Risk Agent Locations11

WUFSI failed to establish
or implement sufficient procedures for suspending or terminating foreign agent
locations or counterparties that presented unreasonable risks of money
laundering including procedures that 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 it
determined posed an unacceptable risk of money laundering. Specifically, WUFSI
applied disciplinary and termination actions inconsistently across its foreign
agent locations. 

For certain WUFSI agent
locations, WUFSI relied on various means to identify agent locations that were
potentially complicit in money laundering and/or fraudulent activity. WUFSI
reviewed consumer fraud reports, which were reports submitted by customers that
were victims of fraud, as well as suspicious activity reporting. WUFSI analysts
also generated “60-day fraud reports” for any agent location that had five or
more consumer fraud reports over a 60-day period. For agent locations that WUFSI
believed were potentially complicit in the activity, WUFSI could implement
remedial and disciplinary actions including temporary suspension, training,
compliance inspections, and termination. Although WUFSI did rely on these
corrective actions, it did not do so on a consistent basis and, at times,
allowed business interests to comment on appropriate corrective actions.


____________________

11 The items set
forth in this Section are contained in in the DPA with the U.S. Department of
Justice.

7







For example, prior to 2012,
WUFSI failed to sufficiently take corrective action against an agent location in
the United Kingdom that had over 73 60-day fraud reports and over 2,000 consumer
fraud reports sent to WUFSI. From 2005 through 2010, WUFSI identified this agent
location as a high fraud risk and potentially complicit in fraud over five
times. In each instance, WUFSI failed
to terminate the relationship and relied on corrective actions that proved
insufficient — including compliance reviews, training, and partial suspension.
In 2010, WUFSI compliance staff recommended termination or suspension of this
agent location in five separate instances as WUFSI analysts continued to
identify significant potential fraudulent activity through the agent location.
These recommendations did not result in termination of the relationship. WUFSI
only issued partial suspensions from engaging in U.S.-originated transfers and
then full reinstatement despite the continued presence of potentially fraudulent
activity. Despite over seven years of significant potential fraudulent activity,
WUFSI did not terminate this relationship until February of 2012. 

In another example, WUFSI
failed to take sufficient corrective action with respect to four agent locations
that allowed customers to send remittances to China that displayed
characteristics of structuring. From 2003 to 2012, WUFSI filed over 31,000
suspicious activity reports (SARs) on remittances processed by four agent
locations that sent funds to China. For one of these agent locations, WUFSI
filed over 11,000 SARs. Between 2005 and 2010, WUFSI identified that this agent
had multiple compliance deficiencies including failure to file all currency
transaction reports (CTRs) and failure to monitor all transactions for
suspicious activity. Specifically, WUFSI repeatedly identified that this agent
location facilitated transactions of $2,500, just below the $3,000 recordkeeping
threshold, but above Western Union’s identification threshold, only minutes
apart. Despite continually identifying this activity, WUFSI implemented
insufficient corrective action and never suspended this agent location’s
relationship and this agent location continued to be one of WUFSI’s top accounts
for sending money to China. Despite the repeated identification of compliance
deficiencies, potential structuring activity, and the filing of over 11,000
SARs, WUFSI did not terminate this agent location until its owner was arrested in September of
2010.

8







3. Failure to
Implement Sufficient Policies to Prevent Fraud

Prior to 2012, WUFSI failed
to implement a sufficient and adequately adhered to policy for disciplining
agent locations that WUFSI personnel should have known or suspected were
involved in fraud and/or money laundering. As early as 2004, WUFSI security and
compliance staff identified the need to implement additional discipline policies
to take corrective remedial action for agent locations that facilitated a high
volume of fraud and/or money laundering transactions.

In the years following
FinCEN’s Interpretative Release,12 various WUFSI compliance staff
also drafted or recommended additional policies for the company to reduce the
number of fraudulent transactions and discipline foreign agents engaged in fraud
or money laundering activity. However, WUFSI had unreasonable delays in
implementing some of the policies. 

B.
Violations of the
Requirement to Report Suspicious Activity 

The BSA and its
implementing regulations require MSBs to report transactions that the MSB
“knows, suspects, or has reason to suspect” are suspicious, if the transaction
is conducted or attempted by, at, or through the MSB, and the transaction
involves or aggregates to at least $2,000 in funds or other assets.13
A transaction is “suspicious” if the transaction: (a) involves funds derived
from illegal activity; (b) is intended or conducted in order to hide or disguise
funds or assets derived from illegal activity, or to disguise the ownership,
nature, source, location, or control of funds or assets derived from illegal
activity; (c) is designed, whether through structuring or other means, to evade
any requirement in the BSA or its implementing regulations; (d) serves no
business or apparent lawful purpose, and the MSB knows of no reasonable
explanation for the transaction after examining the available facts, including
the background and possible purpose of the transaction; or (e) involves use of
the MSB to facilitate criminal activity.14

____________________

12 See
supra, n.9.

13 31 C.F.R. §
1010.320(a)(2).

14 Id.

9







Like other BSA filings,
suspicious activity reports (SARs) play an important role in detecting possible
criminal activity. FinCEN and law enforcement use SARs to, among other things,
investigate money laundering, terrorist financing and other serious criminal
activity.

WUFSI’s failure to develop
and implement policies and procedures that could be reasonably expected to
detect and cause the reporting of suspicious transactions led to unreasonable
delay in filing thousands of SARs. Before 2012, in many cases, WUFSI took over
90 days to investigate activity for which it had facts to constitute the basis
for filing a SAR. Additionally, although WUFSI filed thousands of SARs on
customers of its agent locations, it rarely filed SARs on its agent locations.
WUFSI’s practice was not to identify agent locations as “subjects” of SARs
unless it found the agent location to be complicit. WUFSI typically only found
an agent to be complicit if the agent was arrested, publicly identified to be
implicated in illicit transactions, or if WUFSI’s own investigation determined
that the agent location was complicit. By not filing these SARs in a timely
manner, WUFSI unnecessarily delayed reporting.

III. CIVIL MONEY PENALTY


FinCEN has determined that
WUFSI willfully violated the program and reporting requirements of the BSA and
its implementing regulations. FinCEN has also determined that grounds exist to
assess a civil money penalty for these violations.15

____________________

15 31 U.S.C. §
5321; 31 C.F.R. § 1010.820.

10







FinCEN has determined that
the penalty in this matter will be $184 million based on WUFSI’s AML program
failures and violations of its SAR filing obligations during the period before
2012. The U.S. Department of Justice will collect $586 million from WUFSI. The
U.S. Department of Justice has stated that the funds collected through civil
asset forfeiture will be used for restitution of victims of fraud. In
recognition of this arrangement, FinCEN will deem its penalty fully satisfied by
WUFSI’s payment to the U.S. Department of Justice as required by the DPA.


IV. UNDERTAKINGS


By executing the CONSENT,
WUFSI agreed to provide FinCEN with any reports required by the DPA. 

V. CONSENT TO
ASSESSMENT 

To resolve this matter, and
only for that purpose, WUFSI consented to this ASSESSMENT of a civil money
penalty in the sum of $184 million and admits that it willfully violated the
BSA’s program, recordkeeping, and reporting requirements. 

WUFSI recognizes and states
that it entered into the CONSENT freely and voluntarily and that no offers,
promises, or inducements of any nature whatsoever have been made by FinCEN or
any employee, agent, or representative of FinCEN to induce WUFSI to enter into
the CONSENT, except for those specified in the CONSENT. 

WUFSI understands and
agrees that the CONSENT embodies the entire agreement between WUFSI and FinCEN
relating to this enforcement matter, as described in Section II above. WUFSI
further understands and agrees that there are no express or implied promises,
representations, or agreements between WUFSI and FinCEN other than those
expressly set forth or referred to in this document and that nothing in the
CONSENT or in this ASSESSMENT OF CIVIL MONEY PENALTY (ASSESSMENT) is binding on
any other agency of government, whether
Federal, State or local. 

11







VI. PUBLIC STATEMENTS


WUFSI expressly agrees that
it shall not, nor shall its attorneys, agents, partners, directors, officers,
employees, affiliates, or any other person authorized to speak on its behalf,
make any public statement contradicting either its acceptance of responsibility
set forth in the CONSENT or any fact in the DETERMINATIONS section of the
CONSENT. FinCEN has sole discretion to determine whether a statement is
contradictory and violates the terms of the CONSENT. If WUFSI, or anyone
claiming to speak on behalf of WUFSI, makes such a contradictory statement,
WUFSI may avoid a breach of the agreement by repudiating such statement within
48 hours of notification by FinCEN. If FinCEN determines that WUFSI did not
satisfactorily repudiate such statement(s) within 48 hours of notification,
FinCEN may void, in its sole discretion, the releases contained in the CONSENT
and reinstitute enforcement proceedings against WUFSI. WUFSI expressly agrees to
waive any statute of limitations defense to the reinstituted enforcement
proceedings and further agrees not to contest any admission or other findings
made in the CONSENT. This paragraph does not apply to any statement made by any
present or former officer, director, employee, or agent of WUFSI in the course
of any criminal, regulatory, or civil case initiated against such individual,
unless WUFSI later ratifies such claims, directly or indirectly. WUFSI further
agrees that, upon notification by FinCEN, it will repudiate such statement to
the extent it contradicts either its acceptance of responsibility or any fact in
the CONSENT. 


12 







VII. RELEASE


Execution of the CONSENT,
and compliance with the terms of this ASSESSMENT and the CONSENT, settles all claims that FinCEN may
have against WUFSI for the conduct described in Section II of the CONSENT. Execution of the CONSENT, and
compliance with the terms of this ASSESSMENT and the CONSENT, does not release
any claim that FinCEN may have for conduct by WUFSI other than the conduct
described in Section II of the CONSENT, or any claim that FinCEN may have
against any party other than WUFSI. Upon request, WUFSI shall truthfully
disclose to FinCEN all factual information not protected by a valid claim of
attorney-client privilege or work product doctrine with respect to the
participation of parties other than WUFSI, including employees or agents of
WUFSI, or others, regarding the conduct described in Section II of the CONSENT.


If FinCEN determines, in
its sole judgment, that WUFSI has breached any portion of this agreement, FinCEN
may void, in its sole discretion, the releases contained in the CONSENT and
reinstitute enforcement proceedings against WUFSI, subject to written notice to
WUFSI and an opportunity to cure. WUFSI expressly agrees to waive any statute of
limitations defense to the reinstituted enforcement proceedings regarding the
conduct described in Section II of the CONSENT, and further agrees not to
contest any admission or other findings made in the CONSENT.



	Accepted by:		
	  
	  
	  
	/s/ Jamal
    El-Hindi	 	January 19, 2017	 
	Jamal El-Hindi	 	Date	 
	Acting Director		
	   
	FINANCIAL CRIMES ENFORCEMENT
      NETWORK
	U.S. Department of the Treasury		




13