Document:

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. 

C-1

	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.

C-2

	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;

C-3

		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;

C-4

	        	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.

C-5

	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.

C-6IN THE UNITED STATES
DISTRICT COURT 
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

	 	)	
	FEDERAL
      TRADE COMMISSION,	)	
		)	
	Plaintiff,	)	
		)	             Civil
      Action No.
	                 v.	)	
		)	
	THE WESTERN
      UNION COMPANY,	)	
	a
      corporation, also doing business as	)	
	Western
      Union Financial Services, Inc.,	)	
	and through
      other subsidiaries and affiliates,  	)	
		)	
	Defendant.	)	
	 	)	

STIPULATED ORDER FOR
PERMANENT INJUNCTION
AND FINAL JUDGMENT

Plaintiff, the Federal Trade
Commission (“Commission” or “FTC”), filed its Complaint for Permanent Injunctive
and Other Equitable Relief (“Complaint”), pursuant to Section 13(b) of the
Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), and the
Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”),
15 U.S.C. §§ 6101-6108.
The Commission and Defendant The
Western Union Company (“Western Union”) stipulate to the entry of this
Stipulated Order for Permanent Injunction and Final Judgment (“Order”) to
resolve all matters in dispute in this action between them. 

1

THEREFORE, IT IS ORDERED as
follows: 

FINDINGS

1. This Court has jurisdiction over this matter. 

2. The Complaint charges
Defendant with engaging in deceptive and unfair acts or practices in violation
of Section 5 of the FTC Act, 15 U.S.C. § 45, the Telemarketing Act, 15 U.S.C. §§
6101-6108, and the Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, in the
course of providing money transfer services through its worldwide money transfer
network. 

3. Defendant neither admits
nor denies any of the allegations in the Complaint, except as specifically stated in this Order. Only for purposes
of this action, Defendant admits the
facts necessary to establish jurisdiction. 

4. Defendant waives any claim
that it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412,
concerning the prosecution of this action through the date of this Order, and
agrees to bear its own costs and attorney fees. 

5. Defendant and the
Commission waive all rights to appeal or otherwise challenge or contest the
validity of this Order. 

DEFINITIONS

For purposes of this Order,
the following definitions apply: 

A. “Cash-to-cash money transfer” means the transfer of the value of cash from one
person in one location to a recipient (payee) in another location that is
received in the form of cash. 

2

B. “Cash reload money transfer” means the transfer of the value of cash from one
person in one location to a recipient (payee) in another location that is
received in a form that makes it possible for a person to convert the cash into
an electronic form that can be used to add funds to a general-use prepaid card
or an account with a payment intermediary. 

C. “Consumer” means any person, worldwide, who initiates or sends a money transfer. 

D. “Defendant” means The Western Union Company, also doing
business as Western Union Financial Services, Inc., and through its other
subsidiaries and affiliates, and its successors and assigns. 

E. “Elevated fraud countries” means any country in which the principal amount of
money transfers that are the subject of fraud complaints, received by Defendant
from any source, represents one (1) percent or more of the principal amount of
fraud complaints worldwide received by Defendant, for either money transfers
sent or received in that country, determined on a quarterly basis,
provided that once a country is determined to be one of the
elevated fraud countries, it shall continue to be treated as such for purposes
of this Order. 

3

F. “Elevated fraud risk agent location”
means any Western Union agent
location that has processed payouts of money transfers associated with:

		1.	Five (5)
      or more fraud complaints for such agent location, received by Defendant
      from any source, during the previous sixty (60) day period, based on a
      review of complaints on a monthly basis; and fraud complaints, received by
      Defendant from any source, totaling five (5) percent or more of the total
      payouts for such agent location in numbers or dollars in a sixty (60) day
      period, calculated on a monthly basis; or
	     	       	
		2.	Fifteen
      (15) or more fraud complaints for such agent location, received by
      Defendant from any source, during the previous sixty (60) day period,
      based on a review of complaints on a monthly
basis.

G. “Fraud-induced money transfer” includes any money transfer that was induced by,
initiated, or sent as a result of, unfair or deceptive acts or practices and/or
deceptive or abusive telemarketing acts or practices. 

H. “Front line associate” means the employee of the Western Union agent
responsible for handling a transaction at the point of sale for a consumer or a
recipient (payee) of a money transfer, including by initiating, sending, or
paying out the money transfer. 

I. “Money transfer” means the sending of money (in cash or any other
form, unless otherwise stated) between a consumer in one location to a recipient
(payee) in another location using Defendant’s money transfer service, and shall
include transfers initiated or sent in person, online, over the telephone, using
a mobile app, or through whatever platform or means made available. The term
“money transfer” does not include Defendant’s bill or loan payment services, or
purchases of foreign currency conversions or options contracts from
Defendant. 

4

J. “Person” includes a natural person, an organization or other legal entity,
including a corporation, partnership, sole proprietorship, limited liability
company, association, cooperative, or any other group or combination acting as
an entity. 

K. “Seller”
means any person who, in
connection with a telemarketing transaction, provides, offers to provide, or
arranges for others to provide goods or services in exchange for consideration.

L. “Telemarketer” means any person who, in connection with
telemarketing, initiates or receives
telephone calls to or from a customer. 

M. “Telemarketing” means any plan, program, or campaign which is
conducted to induce the purchase of goods or services by use of one or more
telephones, and which involves a telephone call, whether or not covered by the
TSR.

N. “Western Union agent” means any network agent, master agent,
representative, authorized delegate, independent agent, super-agent, national
account agent, key account agent, strategic account agent, sub-representative,
subagent, or any location, worldwide, authorized by Defendant to offer or
provide any of its money transfer products or services. 

5

I.

PROHIBITED BUSINESS
ACTIVITIES

IT IS FURTHER ORDERED that
Defendant, Defendant’s officers, agents, and employees, and all other persons in
active concert or participation with any of them, who receive actual notice of
this Order, whether acting directly or indirectly, in connection with promoting,
offering for sale, or providing money transfer services, are permanently
restrained and enjoined from: 

	A.	Transmitting a money transfer that Defendant knows or reasonably
      should know is a fraud-induced money transfer, or paying out a money
      transfer to any person that Defendant knows or reasonably should know is
      using its system to obtain funds from a consumer, directly or indirectly,
      as a result of fraud;
	        	
	B.	Providing
      substantial assistance or support to any seller or telemarketer that
      Defendant knows or reasonably should know is accepting from a U.S.
      consumer, directly or indirectly, a money transfer as payment for goods or
      services offered or sold through telemarketing;
	 

6

	C.	Failing to
      do any of the following in connection with money transfers initiated by
      consumers:
	        	 

		1.	Interdict recipients that have been the subject of any complaints
      about fraud-induced money transfers based on information provided to, or
      that becomes known by, Defendant;
	        	        	
		2.	Identify, prevent, and stop cash-to-cash money transfers and cash
      reload money transfers initiated or received in the U.S. from being used
      as a form of payment by sellers or telemarketers, including, but not
      limited to, by:
		 
			a.	Asking all
      U.S. consumers whether the money transfer is a payment for goods or
      services offered or sold through telemarketing;
			        	
			b.	Declining
      to process money transfers from U.S. consumers where the money transfer is
      a payment for goods or services offered or sold through telemarketing;
      and
		 
			c.	Interdicting known sellers and telemarketers accepting money
      transfers as payments for goods or services offered through
      telemarketing;

7

		3.	Provide a
      clear, concise, conspicuous and uncontradicted consumer fraud warning on
      the front page of all money transfer forms, paper or electronic, utilized
      by consumers in elevated fraud countries (based on money transfers sent
      from those countries) to initiate money transfers using Defendant’s system
      that includes, but is not limited to:
		 		
	        		a.	A list of
      the most common types of scams that utilize Defendant’s money transfer
      system;
		        	        	
			b.	A warning
      that it is illegal for any seller or telemarketer to accept payments from
      U.S. consumers through money transfers for goods or services offered or
      sold through telemarketing;
		 
			c.	A notice
      to consumers that the money transfer can be paid out to the recipient
      within a short time, and that after the money is paid out, consumers may
      not be able to obtain a refund from Defendant, even if the transfer was
      the result of fraud, except under limited circumstances; and
		 
			d.	A
      toll-free or local number and a website for Defendant, subject to the
      timing requirements set forth in Subsection C.4, that consumers may call
      or visit to obtain assistance and file a complaint if their money transfer
      was procured through fraud;
		 
		4.	Make available in all countries in which Defendant offers money
      transfer services a website that consumers may visit to obtain assistance
      and file a complaint if they claim their money transfer was procured
      through fraud, provided that
      websites that are not yet
      available shall be made available in accordance with the following
      schedule: (i) for countries determined to be elevated fraud countries,
      within six (6) months of entry of this Order; and (ii) for all other
      countries, within two (2) years of entry of this Order.
  

8

	        	5.	Provide
      consumers who initiate or send money transfers via the Internet,
      telephone, mobile app, or any other platform that is not in- person, with
      substantially the same clear, concise, conspicuous and uncontradicted
      fraud warning required by Subsection C.3, provided that the warning may be abbreviated to
      accommodate the specific characteristics of the media or
    platform;
		       	
		6.	Provide
      the required warning to consumers in the language used on the send form or
      other media type or platform used for the money transfer, in a form
      appropriate for the media or platform;
		 
		7.	Review and
      update the consumer warning as necessary to ensure its effectiveness in
      preventing fraud-induced money transfers; and
		 
		8.	Submit
      modifications to the warning, if any, to the Commission for review no less
      than ten (10) business days before any modified warning is disseminated to
      Western Union agents; provided that nothing
      herein shall prohibit Defendant from changing the nature or form of its
      service, send forms, or media or platform for offering money transfer
      services or from seeking to replace its send forms with an electronic form
      or entry system of some type in the future. In the event such changes are
      made, Defendant shall provide a consumer fraud warning substantially
      similar to that outlined in Subsection C.3 in a form appropriate to the
      media or platform;

9

	D.	Failing to 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:
	        	
		1.	The
      consumer or his or her authorized representative asks Defendant, the
      sending agent, or front line associates to reverse the transfer before the
      transferred funds have been picked up; or
		        	
		2.	Defendant, after reviewing information and data relating to the
      money transfer, determines that Defendant, its agents, or the front line
      associates failed to comply with any of Defendant’s 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 Defendant’s
      interdiction or callback programs; verify the
  recipient’s identification; or
      accurately record the recipient’s identification(s) and other required
      biographical data; 

	E.	Failing to promptly
      provide information to a consumer, or his or her authorized
      representative, who reports being a victim of fraud to Defendant, about
      the name of the recipient of the consumer’s money transfer and the
      location where it was paid out, when such information is reasonably
      requested; and
	        	
	F.	Failing to establish
      and implement, and thereafter maintain, a comprehensive anti-fraud program
      that is reasonably designed to protect consumers by detecting and
      preventing fraud-induced money transfers worldwide and to avoid installing
      and doing business with Western Union agents who appear to be involved or
      complicit in processing fraud-induced money transfers or fail to comply
      with Defendant’s policies and procedures to detect and prevent fraud
      (hereinafter referred to as “Defendant’s Anti-Fraud Program”). Such
      program, the content and implementation of which must be fully documented
      in writing, and provided to the FTC, shall contain administrative,
      technical, and physical safeguards appropriate to Defendant’s size and
      complexity and the nature and scope of Defendant’s activities, shall be
      consistent with this Order’s requirements, and shall include at least the
      following requirements:

	        	        	
		1.	Performance
      of due diligence on all prospective Western Union agents and existing
      Western Union agents whose contracts are up for renewal;

10

		2.	Designation
      of an employee or employees to coordinate and be accountable for
      Defendant’s Anti-Fraud Program;
	        	        	
		3.	Appropriate
      and adequate education and training on consumer fraud for Western Union
      agents and front line associates;
		 
		4.	Appropriate
      and adequate monitoring of Western Union agent and front line associate
      activity relevant to the prevention of fraud-induced money
      transfers;
		 
		5.	Prompt
      disciplinary action against Western Union agent locations where reasonably
      necessary to prevent fraud-induced money transfers;
		 
		6.	Adequate
      systematic controls to detect and prevent fraud-induced money transfers,
      including, but not limited to:
			        	
			a.	Imposing more
      stringent identification requirements for money transfers sent to, or paid
      out in, elevated fraud countries;
		 
			b.	Holding suspicious
      money transfers at certain dollar thresholds to elevated fraud countries
      until Defendant has confirmed with the sender that they are not
      fraud-induced or has refunded the money to the sender;
  and
		 
			c.	Ensuring that Western
      Union agent locations are recording all required information about
      recipients required by Defendant’s policies or procedures or by law,
      including, but not limited to, their names, addresses, telephone numbers,
      and identifications, before paying out money transfers; and

11

	        	7.	Periodic
      evaluation and adjustment of Defendant’s Anti-Fraud Program in light
      of:
	 	        	        	
	 		a.	The results of the
      monitoring required by Subsection F.4 of this Section and Section III of
      this Order;
	 	 
	 		b.	Any material changes
      to Defendant’s operations or business arrangements; or
	 	 
	 		c.	Any other
      circumstances that Defendant knows or reasonably should know may have a
      material impact on the effectiveness of Defendant’s Anti-Fraud Program,
      provided that
      Defendant shall notify the
      FTC in writing of the adjustments to Defendant’s Anti-Fraud Program, and
      reasons for such adjustments, no more than thirty (30) days after any
      material modification to Defendant’s Anti-Fraud Program has been
      implemented.

12

II.

DUE DILIGENCE ON
PROSPECTIVE AND EXISTING
WESTERN UNION AGENTS

IT IS FURTHER ORDERED that
Defendant, Defendant’s officers, agents, and employees, and all other persons in
active concert or participation with any of them, who receive actual notice of
this Order, whether acting directly or indirectly, in connection with promoting,
offering for sale, or providing money transfer services, are hereby restrained
and enjoined from: 

	A.	Failing to
      conduct thorough due diligence on all persons applying to become, or
      renewing their contracts as, Western Union agents, including any
      sub-representative or subagent, to avoid installing Western Union agents
      worldwide who may become elevated fraud risk agent locations, including,
      but not limited to, by:
	        	        	
		1.	Verifying
      government-issued identification;
	 
		2.	Conducting all
      reasonably necessary background checks (criminal, employment, or
      otherwise) where permissible under local law;
	 
		3.	Determining whether
      information or statements made during the agent application process are
      false or inconsistent with the results of Defendant’s background checks or
      other due diligence;
	 
		4.	Taking reasonable
      steps to ascertain whether the prospective agent formerly owned, operated,
      had been a front line associate of, or had a familial, beneficial, or
      straw relationship with any location of any money services business that
      was suspended or terminated for fraud-related reasons, as permitted by
      applicable laws and regulations (including foreign laws and regulations)
      and with the required cooperation from other money transfer companies;
      

13

		5.	Ascertaining whether
      the prospective agent had previously been interdicted by Defendant for
      suspicious activities or had been reported to Defendant as a recipient of
      fraud-induced money transfers;
		 
		6.	Conducting an
      individualized assessment of the particular risk factors involved with
      each Western Union agent application and conducting all reasonably
      necessary investigative steps consistent with those risks;
and
		 
		7.	Maintaining
      information about Defendant’s due diligence, including, but not limited
      to, information about the identities of the owners, their
      government-issued identifications, and the background check(s)
      conducted;
	        	        	
	B.	Failing to reject applications where
      Defendant becomes aware or reasonably should have become aware based upon
      its due diligence that the applicant, or any of the applicant’s
      sub-representatives or subagents, presents a material risk of becoming an
      elevated fraud risk;

	C.	Failing to ensure
      that the written agreements entered into with all new Western Union agents
      require them to comply with Section I.C.2 of this Order;
	        	
	D.	Failing to ensure
      that all new Western Union agents have effective policies and procedures
      in place at each of the agent’s locations to detect and prevent
      fraud-induced money transfers and other acts or practices that violate
      Section I of this Order;
		 
	E.	Failing to take
      reasonable steps to confirm that Western Union agents whose contracts are
      up for renewal are complying with the terms of their agreements with
      Defendant, including, but not limited to, by having effective policies and
      procedures in place to detect and prevent fraud- induced money transfers;
      and
	 
	F.	Failing to require
      all new Western Union agents, and existing Western Union agents, to: (i)
      disclose and update the identities of any sub- representative or subagent;
      and (ii) maintain records on the identities of any front line associates
      at their sub-representatives’ or subagents’
locations.

14

III.

MONITORING COMPLIANCE
OF WESTERN UNION AGENTS

IT IS FURTHER ORDERED that
Defendant, Defendant’s officers, agents, and employees, and all other persons in
active concert or participation with any of them, who receive actual notice of
this Order, whether acting directly or indirectly, in connection with promoting,
offering for sale, or providing money transfer services, are hereby restrained
and enjoined from: 

	A.	Failing to provide
      appropriate and adequate ongoing education and training on consumer fraud
      for all Western Union agents, and other appropriate Western Union
      personnel, including, but not limited to, education and training on
      detecting, investigating, preventing, reporting, and otherwise handling
      suspicious transactions and fraud-induced money transfers, and ensuring
      that all Western Union agents and front line associates are notified of
      their obligations to comply with Defendant’s policies and procedures and
      to implement and maintain policies and procedures to detect and prevent
      fraud-induced money transfers or other acts or practices that violate
      Section I of this Order;
	        	

	B.	
      Failing to take all reasonable
      steps necessary to monitor and investigate Western Union agent location
      activity to detect and prevent fraud-induced money transfers, including,
      but not limited to: 

	        	        	 
		1.	
      Developing, implementing,
      adequately staffing, and continuously operating and maintaining a system
      to receive and retain all complaints and data received from any source,
      anywhere in the world, involving alleged fraud-induced money transfers,
      and taking all reasonable steps to obtain, record, retain, and make easily
      accessible to Defendant and, upon reasonable request, the FTC, all
      relevant information regarding all complaints related to alleged
      fraud-induced money transfers, including, but not limited
  to:

			        	  
			a.	The
      consumer’s name, address, and telephone number;
			 
			b.	The
      substance of the complaint, including the fraud type and fraud method, and
      the name of any person referenced;

15

			c.	The
      reference number, or Money Transfer Control Number, for each money
      transfer related to the complaint;
	        	        	        	
			d.	The name,
      agent identification number, telephone number, and address of the sending
      agent(s);
			 
			e.	The date
      of each money transfer;
			 
			f.	The amount
      of each money transfer;
			 
			g.	The money
      transfer fee for each money transfer;
			 
			h.	The date
      each money transfer is received;
			 
			i.	The name,
      agent identification number, telephone number, and address of the
      receiving agent(s);
			 
			j.	The name,
      address and telephone number of the recipient, as provided by the
      recipient, of each money transfer;

16

			k.	The identification,
      if any, presented by the recipient, and recorded, for each money
      transfer;
			 
			l.	All transactions
      conducted by the consumer bearing any relationship to the
    complaint;
			 
			m.	To the extent there
      is any investigation concerning, and/or resolution of, the
      complaint:
	        	        	        	        	
				1.	The nature and result of any investigation
      conducted concerning the complaint;
			 
				2.	Any response to the complaint and the date
      of such response to the complaint;
			 
				3.	The final resolution of the complaint, the
      date of such resolution, and an explanation for the resolution;
    and
			 
				4.	If the resolution does not include the
      issuance of a refund, the reason for the denial of a refund;
			 

		2.	Taking all reasonable
      steps to identify Western Union agents or front line associates involved
      or complicit in fraud;
		 
		3.	Routinely reviewing
      and analyzing data regarding the activities of Western Union agent
      locations in order to identify the following:
	        	        	        	
			a.	
      Agent locations that have processed
      transactions associated with two (2) or more complaints about alleged
      fraud-induced money transfers, received by Defendant from any source,
      during a thirty (30) day period; and 

				 
			b.	
      Elevated fraud risk agent
      locations, as defined above; and

17

		4.	For agent
      locations identified pursuant to Subsection B.3 of this Section, fully
      investigate the agent location by reviewing transaction data and
      conducting analyses to determine if the agent location displayed any
      unusual or suspicious money transfer activity that cannot reasonably be
      explained or justified, including, but not limited to:
	        	        	        	
			a.	Data integrity
      issues, including, but not limited to, invalid, illegible, incomplete,
      missing, or conflicting biographical data for consumers or recipients of
      money transfers;
		 
			b.	Significant changes
      in the transaction patterns experienced at the agent
location;
		 
			c.	Significant
      differences in the transaction patterns experienced at an agent location
      relative to the patterns experienced at other agent locations in the same
      country;
		 
			d.	Unusual demographic
      activity;
		 
			e.	Irregular
      concentrations of send and/or pay activity between the agent and one or
      more other Western Union agent locations;

18

		f.	Irregular
      concentrations of send and/or pay activity between the agent and one or
      more geographical areas that have been identified as high risk for
      fraud;
	                	        	
		g.	Unusual transaction
      patterns by senders or recipients;
		 
		h.	Flipping
      patterns;
		 
		i.	Suspicious
      structuring or splitting of money transfers; or
		 
		j.	Suspicious surfing
      patterns;

	        	
	C.	Failing to take the following actions to
      prevent further fraud-induced money transfers, including, but not limited
      to, by:

	        	        	
		1.	Suspending Western Union agent locations, as
      follows, pending further investigation to determine whether the Western
      Union agent locations can continue operating consistent with this Order’s
      requirements:

	                	        	
		a.	For agent locations
      identified pursuant to Subsection B.3.a of this Section, if the
      investigation of the agent location required by Subsection B.4 of this
      Section is not completed within fourteen (14) days after the agent
      location is identified, suspending the Western Union agent location’s
      ability to conduct further money transfers until the investigation is
      completed; and

19

		b.	For elevated fraud
      risk agent locations, immediately suspending the Western Union agent’s
      ability to conduct further money transfers until the review required by
      Subsection B.4 of this Section is completed, except that, for a Western Union agent that is a bank
      or bank branch and otherwise subject to this immediate suspension
      requirement by virtue of fraud complaints about money transfers that are
      transferred directly into its account holders’ bank accounts, Defendant
      shall comply with Subsection III.C.1.a. and also permanently block, or
      request that the Western Union agent block, all further money transfers to
      bank accounts for which Defendant has received any fraud
    complaint;
	                	        	

		2.	Upon completion of the investigation,
      terminating, suspending, or restricting Western Union agent locations as
      follows:
	        	        	

		a.	Terminating or
      suspending the Western Union agent location, or restricting the agent
      location’s ability to send and/or receive certain money transfers, if the
      findings indicate that the Western Union agent location is not, or has not
      been, complying with Defendant’s Anti-Fraud Program and other policies and
      procedures relating to detecting and preventing fraud-induced money
      transfers, including, but not limited to, by failing to collect and record
      required and accurate biographical information about, and
      government-issued identifications for, the recipients of money transfers;
      and
	                	        	

		b.	Terminating the
      Western Union agent location if the findings indicate that the Western
      Union agent location or any of its front line associates is, or may be,
      complicit in the fraud-induced money transfers, has failed to comply with
      Section IV of this Order, or has repeatedly failed to comply with
      Defendant’s Anti-Fraud and other policies and procedures relating to
      detecting and preventing fraud-induced money transfers;
	                	        	

		3.	On at least a monthly
      basis, providing notice to all Western Union agents in elevated fraud
      countries the substance of any complaints Defendant received involving
      transactions processed by the agents’ locations; and
	        	        	
		4.	Ensuring that all
      Western Union agents are enforcing effective policies and procedures to
      detect and prevent fraud-induced money transfers, or other acts or
      practices that violate Section I of this Order;
and

20

	D.	Failing to establish adequate controls to
      ensure that, prior to paying out money transfers, Western Union agent
      locations are recording all required information about the recipients of
      money transfers, including, but not limited to, the recipients’ names,
      addresses, telephone numbers, and identifications, and are taking
      reasonable steps to verify the identification presented by the recipients
      or, for money transfers that are directed to bank accounts, the identities
      of the account holders.
	        	
	
      IV.

REQUIREMENTS FOR
ELEVATED FRAUD RISK AGENT LOCATIONS 

IT IS FURTHER ORDERED that
Defendant, Defendant’s officers, agents, and employees, and all other persons in
active concert or participation with any of them, who receive actual notice of
this Order, whether acting directly or indirectly, in connection with promoting,
offering for sale, or providing money transfer services, shall require and
ensure that all elevated fraud risk agent locations that are still operating do
the following for one (1) year from the date that Defendant identifies the agent
as an elevated fraud risk agent location under the terms of this Order:

	A.	For money transfers that are not transferred
      directly into a recipient’s bank account, photocopy or scan the
      identification documents or biometric information presented by the
      recipient and retain the photocopies or images, along with the receive
      forms, for a period of five (5) years; and
	        	

      	B.	Demonstrate during compliance reviews or
      mystery shops, which Defendant shall conduct on at least a quarterly
      basis, that the agent location is complying with the requirements in this
      Section;
	       	
	
             Provided,
      however, that if Defendant
      reasonably believes that complying with Subsection A of this Section for money transfers received by
      an elevated fraud agent location in a particular foreign jurisdiction
      would violate that jurisdiction’s laws, Defendant may instead, upon notice
      to Commission staff, block all money transfers from the United States to
      that elevated fraud risk agent location or, with the agreement of
      Commission staff, take other appropriate action at that location to
      protect consumers from fraud. 

      21

V.

SHARING COMPLAINT
INFORMATION

IT IS FURTHER ORDERED that,
Defendant, Defendant’s officers, agents, and employees, and all other persons in
active concert or participation with any of them, who receive actual notice of
this Order, whether acting directly or indirectly, shall, in addition to, or as
a modification of, any other policy or practice that the Defendant may have,
including Defendant’s ongoing submission of information to the FTC for inclusion
in the Consumer Sentinel Network (“Consumer Sentinel”): 

	A.	Provide notice to the
      consumer, or his or her authorized representative, at the time the
      Defendant is contacted with a complaint about alleged fraudulent activity
      associated with a money transfer, that (i) Defendant’s practice is to
      share information regarding the consumer’s money transfer and complaint
      with a database used by law enforcement authorities in the United States
      and other countries; and (ii) if the consumer does not want his or her
      name, address, and identification shared with law enforcement, Defendant
      will honor that request unless applicable law permits or requires
      Defendant to provide that information; and
	        	
	B.	Regularly, but no
      more than every thirty (30) days, submit electronically to the FTC, or its
      designated agent, for inclusion in Consumer Sentinel, all relevant
      information Defendant possesses regarding complaints received from
      consumers, their authorized representatives, or any other source, anywhere
      worldwide, about alleged fraud-induced money transfers and regarding the
      underlying transfer itself, including, but not limited to, the information
      set forth in Section III.B.1.a through III.B.1.l. Provided, however, if
      Defendant receives a request from a consumer or the consumer’s authorized
      representative, which is documented by Defendant, stating that the
      consumer does not want the information shared with the database, or if
      Defendant received the complaint from a source other than the consumer or
      the consumer’s authorized representative, Defendant shall submit to the
      FTC an anonymized complaint with the consumer’s name, address, and
      telephone number redacted. Provided,
      further, that Defendant shall cooperate with the
      FTC in order to facilitate compliance with this Section.
  

22

VI.

INDEPENDENT COMPLIANCE
AUDITOR

IT IS FURTHER ORDERED THAT an
Independent Compliance Auditor (“ICA”) shall be appointed to further ensure
compliance with Sections I-V of this Order, as set forth below: 

	A.	Commission staff and
      Defendant shall select the ICA. The ICA shall be an independent third
      party, not an employee of the Commission or of Defendant. No later than
      thirty (30) days after entry of this Order, Defendant shall propose to a
      representative of the Commission three qualified, third-party candidates
      to serve as the ICA for Defendant as set forth in this Section. In the
      event that Commission staff is unable to select at least one acceptable
      ICA from the three candidates proposed by Defendant, Defendant shall
      propose another candidate within fourteen (14) days after receiving notice
      of the rejection. This process shall continue until an ICA is chosen. If
      within ninety (90) days after entry of this Order, the parties are unable
      to agree on a candidate who is willing and able to perform the ICA’s
      duties under this Order, they shall submit the matter to the Court for
      determination.
	        	 

	B.	The ICA shall review,
      assess, and evaluate Defendant’s compliance with Sections I-V of this
      Order;
	        	
	C.	The ICA is authorized
      to choose, engage, and employ attorneys, investigators, accountants,
      appraisers, and other independent contractors and technical specialists,
      as the ICA deems advisable or necessary in the performance of the ICA’s
      duties and responsibilities under the authority granted by this
      Order;
		 
	D.	The ICA shall have
      immediate, unfettered access to all information, documents, personnel, and
      premises in the possession, custody, or control of Defendant or any
      Western Union agent that the ICA deems necessary to carry out the ICA’s
      duties pursuant to this Order; provided that, the
      ICA shall make reasonable efforts to avoid imposing upon Defendant undue
      costs and burdens; and provided that, if
      there is a dispute about the ICA’s access to Defendant’s or any Western
      Union agents’ information, documents, personnel, and premises, after
      attempting to resolve the dispute without court action and for good cause
      shown, Defendant or the ICA may file a motion with this Court seeking
      appropriate relief;

23

	E.	Defendant shall fully cooperate with and
      assist the ICA. The cooperation and assistance shall include, but not be
      limited to, providing information to the ICA that the ICA deems necessary
      to be fully informed and discharge the responsibilities of the ICA under
      this Order, including proprietary information and trade secrets; providing
      any password required to access any computer, electronic file, or
      telephone data in any medium; and producing Defendant’s financial records.
      The parties agree that no attorney-client or other professional
      relationship shall be formed between the ICA and Defendant;
	        	
	F.	The ICA shall prepare a budget and work plan
      as follows:

	        	        	
		1.	No later than sixty
      (60) days after the date on which the ICA is retained by Defendant, the
      ICA shall, in consultation with Commission staff and Defendant, prepare
      and present to Commission staff and Defendant an annual budget and work
      plan (the “ICA Budget”) describing the scope of work to be performed and
      the fees and expenses of the ICA and any professional staff to be incurred
      during the first year following the date on which the ICA is
      retained.
		 
		2.	The scope of work,
      fees, and expenses to be incurred by the ICA and any professional staff
      shall be reasonable and not excessive, in light of the ICA’s defined
      duties, responsibilities, and powers prescribed in this
  Order.

24

		3.	The ICA shall prepare and submit to
      Defendant and to Commission staff an annual ICA Budget no later than
      ninety (90) days prior to the beginning of each subsequent year of the
      ICA’s term. If Defendant and Commission staff both approve the ICA Budget,
      the ICA shall adhere to and shall not exceed the approved ICA Budget,
      unless such deviations are authorized by agreement of the parties or order
      of the Court.
	        	        	
		4.	Within twenty-one (21) days of receipt of
      any ICA Budget, either Commission staff or Defendant may serve an
      objection to the ICA, who, within twenty-one (21) days of such objection,
      shall provide to Commission staff and Defendant a revised ICA Budget or a
      notice that no such revision will be made.
		 
		5.	Following the ICA’s response to an objection
      provided in accordance with Subsection VI.F.4 hereof, either Commission
      staff or Defendant may apply to the Court to modify the ICA
    Budget.
		 
		6.	Pending the Court’s decision concerning any
      application pursuant to Subsection VI.F.5, the ICA shall continue to
      perform its duties and implement the ICA Budget as prepared by the
      ICA.

25

	G.	Within one
      hundred eighty (180) days from the date of the engagement of the ICA, and
      annually thereafter until the end of the ICA’s term, the ICA shall issue a
      report to Commission staff setting forth the ICA’s assessment of
      Defendant’s compliance with this Order (“Report”). If, at any time, the
      ICA determines that Defendant is not in substantial compliance with this
      Order, the ICA shall notify Commission staff and consult with Defendant.
      Defendant may submit to Commission staff and to the ICA a written response
      to the ICA’s notification;
	        	
	H.	The Report
      and the contents thereof shall be treated as non-public material pursuant
      to the Commission’s Procedures and Rules of Practice. The FTC may share
      the Report and its contents with other law enforcement agencies,
      including, but not limited to, the United States Department of Justice
      (“DOJ”), as permitted by the Commission’s Procedures and Rules of
      Practice;
	 
	I.	The ICA’s
      term shall be three (3) years from the date on which the ICA is retained
      by Defendant. If the ICA resigns or is otherwise unable to fulfill his or
      her obligations as set out in this Section, the process set forth in
      Subsection N of this Section shall govern the selection of a new
      ICA;
	 
	J.	The ICA
      and all personnel hired by the ICA, including counsel to the ICA, are
      entitled to reasonable compensation for the performance of duties pursuant
      to this Order and for the cost of actual out-of-pocket expenses incurred
      by them, from Defendant’s assets. The ICA shall provide Defendant with an
      accounting and a request for payment of reasonable compensation every six
      (6) months after the ICA is appointed, or at intervals deemed appropriate
      by the ICA;

26

	K.	Defendant
      shall indemnify the ICA and hold the ICA harmless against all losses,
      claims, damages, liabilities, or expenses arising out of, or in connection
      with, the performance of the ICA’s duties, including all reasonable fees
      of counsel and other reasonable expenses incurred in connection with the
      preparations for, or defense of, any claim, whether or not resulting in
      any liability, except to the extent that such losses, claims, damages,
      liabilities, or expenses result from gross negligence, willful or wanton
      acts, or bad faith by the ICA;
	        	
	L.	In the
      event the ICA determines that the Defendant has failed to act consistently
      with the terms of this Section, the ICA shall notify the FTC and
      Defendant, and, for good cause shown, the ICA or the FTC may apply to the
      Court for appropriate relief, including for an extension of the ICA’s term
      set forth in Subsection I of this Section;
	 
	M.	The ICA
      may, from time to time as may be made necessary by circumstances outside
      the ICA’s control, such as by reason of the ICA’s temporary incapacity,
      family emergency, or natural disaster, appoint a temporary Acting ICA to
      act in the ICA’s stead. The rights, duties, and obligations of the ICA
      under this Section shall apply equally to any such duly appointed Acting
      ICA, provided, however, that the period during which the ICA’s role is
      filled by an Acting ICA shall not extend for longer than thirty (30)
      days;

	N.	If the ICA
      is no longer willing or able to continue to serve, or if the Court
      relieves the ICA of his duties at the request of the FTC or Defendant,
      Commission staff and Defendant shall mutually agree on a replacement ICA.
      If the parties are unable to agree on a replacement ICA within sixty (60)
      days, they shall submit the matter to the Court for determination within
      ten (10) days thereafter. The overall term of the ICA set forth in
      Subsection I of this Section shall be extended commensurate with the
      length of the absence of the ICA; and
	        	
	O.	In the
      event of the appointment of a replacement ICA, the replacement ICA shall
      have all the rights, powers, duties, and obligations of the ICA under this
      Order.

27

VII.

MONETARY
JUDGMENT

IT IS FURTHER ORDERED THAT:

	A.	Judgment
      in the amount of five hundred eighty-six million dollars ($586,000,000) is
      entered in favor of the Commission against Defendant as equitable monetary
      relief.
	        	
	B.	Defendant
      shall satisfy the judgment in Subsection A of this Section by complying
      with the payment requirements set forth in Paragraph 7 of the Deferred
      Prosecution Agreement filed in United States v. The Western Union Company, 1:17-CR-00011-CCC (M.D. Pa. Jan. 19, 2017)
      (“DPA”).
	 
	C.	Defendant
      relinquishes dominion and all legal and equitable right, title, and
      interest in all assets transferred pursuant to this Order and Paragraphs 7
      and 8 of the DPA and may not seek the return of any assets;
	 
	D.	The facts
      alleged in the Complaint will be taken as true, without further proof, in
      any subsequent civil litigation by or on behalf of the Commission,
      including in a proceeding to enforce its rights to any payment or monetary
      judgment pursuant to this Order, such as a nondischargeability complaint
      in any bankruptcy case;
	 
	E.	The facts
      alleged in the Complaint establish all elements necessary to sustain an
      action by the Commission pursuant to Section 523(a)(2)(A) of the
      Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have
      collateral estoppel effect for such purposes;

28

	F.	Defendant
      acknowledges that its Employer Identification Number, which Defendant must
      submit to the Commission, may be used for collecting and reporting on any
      delinquent amount arising out of this Order, in accordance with 31 U.S.C.
      § 7701;
	        	
	G.	All money
      paid pursuant to this Order and Paragraph 7 of the DPA shall be deposited
      into the DOJ or the Department of the Treasury Assets Forfeiture Funds.
      The FTC and DOJ intend to make the funds available to compensate the fraud
      victims described in the FTC Complaint and the DOJ Statement of Facts, as
      set forth in Paragraph 7 of the DPA. Defendant has no right to challenge
      any actions taken by DOJ, the FTC, or their representatives, pursuant to
      this Subsection; and
	 
	H.	No asset
      transfer required by this Order should be deemed, or deemed in lieu of, a
      fine, penalty, forfeiture, or punitive assessment. Defendant’s
      satisfaction of the judgment through a payment pursuant to the DPA is not
      intended to alter the remedial nature of the
judgment.

29

VIII.

ORDER
ACKNOWLEDGMENT

IT IS FURTHER ORDERED that
Defendant obtain acknowledgments of receipt of this Order: 

	A.	Defendant,
      within seven (7) days of entry of this Order, must submit to the
      Commission an acknowledgment of receipt of this Order sworn under penalty
      of perjury;
	        	
	B.	For ten
      (10) years after entry of this Order, Defendant must deliver by electronic
      or other means a copy of this Order to: (1) all principals, officers,
      directors, and LLC managers and members; (2) all employees, agents, and
      representatives who participate in conduct related to the subject matter
      of this Order, including, but not limited to, Western Union agents and
      employees who are involved in any way with consumer fraud complaints or
      who are involved in the hiring, training or monitoring of Western Union
      agents; and (3) any business entity resulting from any change in structure
      as set forth in the Section titled Compliance Reporting. Defendant must
      send a copy of this Order to current personnel within seven (7) days of
      entry of this Order. For all others, delivery must occur before they
      assume their responsibilities; and

	C.	From each
      individual or entity to which a Defendant delivered a copy of this Order,
      that Defendant must obtain, within thirty (30) days, a signed and dated
      acknowledgment of receipt of this Order. Provided that, in the event that Defendant is unable to
      secure such acknowledgements from all current Western Union agents,
      despite notice of this requirement, Defendant shall retain proof of
      distribution of this Order to all current Western Union agents, such as an
      electronic mail receipt, a certified mail receipt, or an affidavit of
      service.
	        	
	30

IX.

COMPLIANCE
REPORTING

IT IS FURTHER ORDERED that
Defendant make timely submissions to the Commission:

	A.	One (1) year after entry of this Order, Defendant must submit a
      compliance report, sworn under the penalty of perjury, that:
	        	        	 
		1.	Identifies
      the primary physical, postal, and email address and telephone number, as
      designated points of contact, which representatives of the Commission may
      use to communicate with Defendant;

	2.	Identifies any business entity that Defendant has any ownership
      interest in or controls directly or indirectly that may affect compliance
      obligations arising under this Order;
	 
	3.	Describes in detail whether and how Defendant is in compliance with
      each Section of this Order, including, but not limited to, describing the
      following:
	 
	        	a.	The number
      of Western Union agents, by country, identified by the procedures in
      Section III.B.3 of this Order;
		        	
		b.	The names,
      addresses, and telephone numbers of all Western Union agent locations that
      have been suspended, restricted, or terminated by Defendant for reasons
      related to fraud-induced money transfers, the dates of and the specific
      reasons for the suspensions, restrictions, or terminations, and, for
      Western Union agents that have been reactivated after suspension, the
      dates of the reactivations; and
	 
		c.	Evidence
      showing that Defendant has and is complying with the requirements of
      Sections I through V of this Order; and
	 
	4.	A copy of each Order Acknowledgment obtained pursuant to this
      Order, unless previously submitted to the
Commission.

31

	B.	Annually, unless otherwise stated in this Subsection, for a period
      of ten (10) years after Defendant’s submission of the compliance report
      required by Subsection A of this section, Defendant shall submit a
      compliance report, sworn under penalty of perjury, that:
	 
		1.	Notifies the Commission of any change in any designated point of
      contact within fourteen (14) days of the change;
	 
		2.	Notifies the Commission of any change in the structure of any
      entity that Defendant has any ownership interest in or controls directly
      or indirectly that may affect compliance obligations arising under this
      Order, including: creation, merger, sale, or dissolution of the entity or
      any subsidiary, parent, or affiliate that engages in any acts or practices
      subject to this Order, within fourteen (14) days of the
  change;
	 
		3.	Describes in detail whether and how Defendant is in compliance with
      each Section of this Order, including, but not limited to, describing the
      following:
	 
	        	        	a.	The number
      of Western Union agents, by country, identified by the procedures in
      Section III.B.3 of this Order;
			        	
			b.	The names,
      addresses, and telephone numbers of all Western Union agents that have
      been suspended, restricted, or terminated by Defendant for reasons related
      to fraud-induced money transfers, the dates of and the specific reasons
      for the suspensions, restrictions, or terminations, and, for Western Union
      agents that have been reactivated after suspension, the dates of the
      reactivations; and
			        	
			c.	Evidence showing that Defendant has and is complying
      with the requirements of Sections I through V of this
  Order;

32

	C.	Defendant must submit to the Commission notice of the filing of any
      bankruptcy petition, insolvency proceeding, or similar proceeding by or
      against Defendant within fourteen (14) days of its filing;
	        	 
	D.	Any submission to the Commission required by this Order to be sworn
      under penalty of perjury must be true and accurate and comply with 28
      U.S.C. § 1746, such as by concluding: “I declare under penalty of perjury
      under the laws of the United States of America that the foregoing is true
      and correct. Executed on: _____” and supplying the date, signatory’s full
      name, title (if applicable), and signature; and
		   
	E.	Unless otherwise directed by a Commission representative in
      writing, all submissions to the Commission pursuant to this Order must be
      emailed to DEbrief@ftc.gov or sent by overnight courier (not the U.S.
      Postal Service) to: Associate Director for Enforcement, Bureau of Consumer
      Protection, Federal Trade
      Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin: FTC
      v. Western Union. 

33

	
      X.
    

		 
	
      RECORDKEEPING

		 
	
      IT IS FURTHER ORDERED
      that Defendant must create certain records for ten (10) years after entry
      of this Order, and retain each such record for five (5) years.
      Specifically, Defendant must create and retain the following records:
      

		 
	A.	Defendant’s current written programs and
      policies governing the detection and prevention of consumer fraud and the
      installation and oversight of its agents, including, but not limited to,
      its Anti-Fraud Program;
	        	
	B.	Defendant’s current policies and procedures
      governing consumer fraud education or training provided to Western Union
      agents or other appropriate personnel;
	 
	C.	All Western Union agent applications,
      records reflecting due diligence conducted by Defendant with respect to
      such applications, and with respect to agents whose contracts come up for
      renewal, and written agreements entered into with Western Union
      agents;
	 
	D.	Records of all complaints and refund
      requests, whether received directly or indirectly, such as through a third
      party, from any source, anywhere in the world, about potentially
      fraud-induced money transfers, and any response, including, but not limited to, the
      information listed in Section III.B.1 of this Order; 

34

	E.	Records reflecting all steps Defendant has
      taken to monitor the activity of its agents to detect, reduce and prevent
      consumer fraud, including, but not limited to, records of Defendant’s
      reviews, audits, or investigations of Western Union agents associated with
      consumer fraud, communications with such agents regarding consumer fraud
      matters, and any remedial action taken against agents due to
    fraud;
	        	
	F.	Copies of documents relating to compliance
      reviews or mystery shops conducted by Defendant of elevated fraud risk
      agent locations pursuant to Section IV of this Order; and
	 
	G.	All records necessary to demonstrate full
      compliance with each provision of this Order, including submissions to the
      Commission.

XI. 

COMPLIANCE
MONITORING

IT IS FURTHER ORDERED that,
for the purpose of monitoring Defendant’s compliance with this Order and any failure to transfer any
assets as required by this Order:

	A.	Within fourteen (14) days of receipt of a
      written request from a representative of the Commission, Defendant must:
      submit additional compliance reports
      or other requested information, which must be sworn under penalty of
      perjury; appear for depositions; and produce documents for inspection and
      copying. The Commission is also authorized to obtain discovery, without
      further leave of court, using any of the procedures prescribed by Federal
      Rules of Civil Procedure 29, 30 (including telephonic depositions), 31,
      33, 34, 36, 45, and 69; 
	        	 

	B.	For matters concerning this Order, the
      Commission is authorized to communicate directly with Defendant. Defendant
      must permit representatives of the Commission to interview any employee or
      other person affiliated with Defendant who has agreed to such an
      interview. The person interviewed may have counsel present;
  and
	        	
	C.	The Commission may use all other lawful
      means, including posing, through its representatives as consumers,
      suppliers, or other individuals or entities, to Defendant or any
      individual or entity affiliated with Defendant, without the necessity of
      identification or prior notice. Nothing in this Order limits the
      Commission’s lawful use of compulsory process, pursuant to Sections 9 and
      20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1.

35

XII.

RETENTION OF
JURISDICTION

IT IS FURTHER ORDERED that this Court retains jurisdiction of
this matter for purposes of construction, modification, and enforcement of this
Order.

SO ORDERED this _____ day of __________ ,
2017.

	UNITED STATES DISTRICT
JUDGE

36

SO STIPULATED AND AGREED:

PLAINTIFF FEDERAL
TRADE COMMISSION 

	/s/ Karen D. Dodge	     	Dated:  	   January 19, 2017
	
      KAREN D. DODGE (IL
      6204125)
JOANNIE T. WEI (IL 6276144) 
ELIZABETH C. SCOTT (IL
      6278075) 
Attorneys for Plaintiff 
Federal Trade Commission 
55
      West Monroe Street, Suite 1825 
Chicago, Illinois 60603
      
kdodge@ftc.gov
      (Dodge) 
jwei@ftc.gov (Wei)
      
escott@ftc.gov
      (Scott) 
			

DEFENDANT THE WESTERN
UNION COMPANY 

	/s/ John R. Dye	     	Dated:  	  January 18, 2017
	JOHN R.
      DYE
Executive Vice President and General
Counsel

COUNSEL FOR DEFENDANT THE
WESTERN UNION COMPANY 

	/s/ Edward B. Schwartz	     	Dated:  	  January 18, 2017
	
      EDWARD B. SCHWARTZ (DC
      429690) 
Steptoe & Johnson LLP 
Attorneys for Defendant 
1330 Connecticut
      Avenue, NW 
Washington, DC 20036 
(202) 429-6220 (telephone)
      
(202) 429-3902 (facsimile) 
eschwartz@steptoe.com

37

	/s/ Sean M. Berkowitz	     	Dated:  	  January 18, 2017
	
      SEAN M. BERKOWITZ (IL 6209701) 
Latham & Watkins LLP 
Attorneys for Defendant 
330 North Wabash Avenue, Suite 2800
      
Chicago, Illinois 60611 
(312) 777-7016 (telephone) 
(312)
      993-9767 (facsimile) 
sean.berkowitz@lw.com
			

38

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

	 	)	
	FEDERAL
      TRADE COMMISSION,	)	
	 	)	
	Plaintiff,	)	
	 	)	Civil Action
      No.
	v.	)	
	 	)	
	THE WESTERN
      UNION COMPANY, 	)	
	a
      corporation, also doing business as	)	
	Western
      Union Financial Services, Inc.,	)	
	and
      through other subsidiaries and affiliates, 	)	
	 	)	 
	Defendant.	)	
		)	

COMPLAINT FOR
PERMANENT INJUNCTIVE
AND
OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade
Commission (“FTC”), for its complaint alleges: 

1. The FTC brings this action
under Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), and the Telemarketing and
Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§
6101-6108, to obtain permanent injunctive relief, rescission or reformation of
contracts, restitution, the refund of monies paid, disgorgement of ill-gotten
monies, and other equitable relief for Defendant’s acts or practices in
violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and in violation of
the FTC’s Trade Regulation Rule entitled “Telemarketing Sales Rule” (“TSR”), 16
C.F.R. Part 310, in connection with
Defendant’s failure to take timely, appropriate, and effective measures to
mitigate fraud in the processing of money transfers sent by consumers.

1 

JURISDICTION AND
VENUE 

2. This Court has subject
matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. §§ 45(a), 53(b), 6102(c), and
6105(b). 

3. Venue is proper in this
district under 28 U.S.C. § 1391(b)(2), and (c)(2), and 15 U.S.C. § 53(b). 

PLAINTIFF

4. The FTC is an independent
agency of the United States Government created by statute. 15 U.S.C. §§ 41-58.
The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits
unfair or deceptive acts or practices in or affecting commerce. The FTC also
enforces the Telemarketing Act, 15 U.S.C. §§ 6101-6108. Pursuant to the
Telemarketing Act, the FTC promulgated and enforces the TSR, 16 C.F.R. Part 310,
which prohibits deceptive and abusive telemarketing acts or practices.

5. The FTC is authorized to
initiate federal district court proceedings, by its own attorneys, to enjoin
violations of the FTC Act and the TSR, and to secure such equitable relief as
may be appropriate in each case, including rescission or reformation of
contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. §§
53(b), 56(a)(2)(A)-(B), 6102(c), and
6105(b). 

2 

DEFENDANT

6. Defendant The Western Union
Company (“Western Union”), also doing business as Western Union Financial
Services, Inc., and through other subsidiaries and affiliates, is a Delaware
corporation with its principal place of business at 12500 East Belford Avenue,
Englewood, Colorado 80112. Western Union transacts or has transacted business in
this district, as well as throughout the United States and the world.

7. Western Union operates, and
enters into contracts for the provision of, money transfer services worldwide,
through numerous subsidiaries and affiliates, including, but not limited to,
Western Union Financial Services, Inc., Western Union Payment Services Ireland
Limited (“WUPSIL”), Western Union Payment Services Network EU/EEA Limited,
Western Union Financial Services (Canada) Inc., Western Union Network Ireland
Ltd., Western Union Network Canada Company, Western Union Network France SAS,
Western Union Network Belgium Sprl., Western Union Payment Services UK Ltd.,
Western Union International Bank GmbH, American Rapid Corporation, Grupo
Dinamico Empresarial, S.A. de C.V., Servicio Integral de Envios, S.A. de C.V.,
and Operaciones Internacionales OV, S.A. DE C.V. 

3 

COMMERCE

8. At all times material to
this Complaint, Defendant has maintained a substantial course of trade in or
affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15
U.S.C. § 44. 

BACKGROUND

9. For many years, Western
Union’s money transfer system has been used by fraudsters around the world to
obtain money from their victims. Discrete subsets of Western Union agents in
various countries have largely been responsible for processing the payments, and
many Western Union agents have played active and important roles in facilitating
those frauds. As described more fully below, although Western Union has long
been aware and has received many warnings that its system is being used for
frauds, for many years it has failed to implement adequate and effective
policies and procedures to detect and prevent fraud and to take prompt action to
effectively address problematic agent locations. In some instances, Western
Union’s agent locations have been, or likely been, complicit in the frauds, and
have engaged in suspicious activities indicative of complicity in paying out
fraud-induced money transfers. In other cases, Western Union’s agent locations
have facilitated the scams by paying out fraud-induced money transfers in
violation of Western Union’s anti-fraud and/or Anti-Money Laundering (“AML”)
policies and procedures that impact consumer fraud. Western Union has known about the problem and
has identified many of the agents providing substantial assistance or support to
the frauds. Although as a result of the FTC’s investigation, Western Union has
improved aspects of its anti-fraud program since 2012, Western Union still has
failed in many cases to promptly suspend and terminate agent locations
facilitating fraud. Instead, Western Union has continued to profit from the
activities of these agents.

4 

Western Union’s Money
Transfer System 

10. Western Union offers money
transfer services to consumers worldwide through a network of approximately
515,000 agent locations in more than 200 countries and territories. Western
Union is the largest money transfer company in the United States and worldwide.
More than 50,000 of its 515,000 agent locations are in the United States. In
addition to offering money transfer services under the Western Union brand,
Western Union owns and operates Orlanda Valuta (“OV”), which provides money
transfer services primarily to Mexico, and Vigo, which provides money transfer
services primarily to Latin America and the Caribbean. Consumers in the United
States can send money transfers through OV and Vigo from thousands of Western
Union agent locations. According to Western Union, “[e]very day, millions of
consumers rely on Western Union Money Transfer® service to send money to loved
ones near and far.” 

11. Consumers wishing to send
funds using Western Union’s money transfer system may initiate a transaction in
person, online, or over the telephone. Western Union claims that its locations
are “around every corner” with “knowledgeable agents,” and that its money
transfer services are “fast, convenient, and safe.” Although the amount that may
be sent online or over the telephone is sometimes restricted, there typically
are no restrictions on the amount of money that a consumer can send in person
from agent locations. Certain countries, however, limit the amount of money that
can be picked up from agent locations. For in-person money transfers, consumers
must pay with cash or a bank-issued debit card. For online or telephone
transfers, consumers typically must pay with a credit or debit card. Over 90% of
money transfers sent through Western Union are initiated in person at Western
Union’s agent locations. 

12. When initiating a money
transfer at one of Western Union’s agent locations, the sender must complete a
“send form,” which typically requires the sender’s name, address and telephone
number, and the name of the recipient and the city, state/province, and country
to which the money transfer is being sent. Consumers initiating money transfers
at Western Union’s agent locations may select from Western Union’s “Money in
Minutes” or “Next Day” services, where available. For money transfers above a
certain amount, such as $1,000, the sender must present identification (“ID”)
and the agent locations must record in Western Union’s system the sender’s ID
information. Over time, in some countries, Western Union has lowered the amount
that triggers the ID requirement.

5

13. In order to send a money
transfer, consumers must pay a fee to Western Union. This fee varies depending upon the method of the money
transfer, the destination, the amount, the method of payment, and how quickly
the money transfer is to be completed. The money transfer fee for Western
Union’s “Money in Minutes” service is higher than its “Next Day” service.
According to Western Union’s website, to send a $1,000 “Money in Minutes” money
transfer from the United States to the United Kingdom (“UK”), consumers must pay
an $81 transfer fee if paying by credit or debit card, or $58 if paying in cash.
For international money transfers, in addition to charging consumers a money
transfer fee, Western Union also makes money from the foreign currency exchange.
Upon initiating a money transfer, consumers are provided with a unique tracking
number called a Money Transfer Control Number (“MTCN”). 

14. Prior to paying out funds
at its agent locations, Western Union’s practice is generally to require the
recipient to provide the MTCN, to complete a “receive form” with the recipient’s
name, address and telephone number, and to present ID. For many years, for money
transfers of less than $1,000, even though recipients may have been required to
present ID, Western Union agent locations worldwide have not been required to
record in Western Union’s system the recipient’s ID information. When the
recipient does not have an ID and the money transfer is less than $1,000, the
sender sometimes has the option of using a “Test Question and Answer.” According
to Western Union, this option “is designed for emergency situations where the
receiver doesn’t have proper identification” because his or her wallet was
stolen. 

15. Regardless of the method
used to initiate the money transfer, all Western Union money transfers flow
through the same global money transfer system controlled by Western Union. This
system coordinates and makes funds available to complete the transactions.
Agents must have active accounts with Western Union to send and receive money
transfers using Western Union’s money transfer system. 

16. Once Western Union’s agent
locations have paid out the funds, Western Union’s policy typically is that the
sender cannot obtain a refund from Western Union of either the amount
transferred or the money transfer fee, even if the sender was a victim of fraud
or the money transfer was paid out to someone other than the intended recipient.
The policy even applies if the Western Union agent location was complicit in the
fraud, engaged in suspicious activity, or failed to follow Western Union’s
policies and procedures when processing the money transfer (e.g., by failing to record the recipient’s ID or other required information).

6

Use of Western Union’s
Money Transfer 
System to Facilitate Fraud and Harm Consumers

17. Over the years, money
transfers have increasingly become the payment method of choice for scams that
prey on consumers around the world. Fraudulent telemarketers and con artists
prefer to use money transfers to facilitate their scams because, among other
reasons, they can pick up money transferred within minutes at multiple locations
and, oftentimes, the perpetrators are afforded anonymity because the payments
are untraceable. For example, money transfers can be picked up at any location
within a particular state or country; some money transfers can be picked up
without presenting or having to record an ID; fake names, addresses, and IDs
sometimes can be used; and Western Union’s own agent locations sometimes fail to
follow the company’s policies and procedures in paying out money transfers, and
in other instances, are complicit in the frauds. Therefore, it is often
difficult for consumers and law enforcement to identify and locate the
recipients of fraud-induced money transfers. 

18. Western Union maintains a
database of complaints it receives about fraud-induced money transfers. Based on
information in that database, between January 1, 2004 and August 29, 2015,
Western Union received at least 550,928 complaints about fraud-induced money
transfers, totaling at least $632,721,044. Over 80% of the complaints in the
database were from U.S. consumers. The average individual consumer fraud loss
reflected in that database was approximately $1,148. That is more than three
times the amount of Western Union’s average money transfer for the years 2010
through 2014—approximately $346—and more than seven times the amount of Western
Union’s median money transfer for the same period—approximately $162.

19. As explained more fully
below, the complaints in Western Union’s database represent only a small
percentage of the actual fraud perpetrated through Western Union’s money
transfer system because most victimized consumers do not complain directly to
Western Union. In addition, Western Union also does not include information in
its database about all of the complaints it receives. Therefore, since at least January 1, 2004, it is
likely that Western Union’s money transfer system has been used to send billions
of dollars in fraud-induced payments to telemarketers and con artists worldwide.

7

Western Union’s
Contractual Authority 
to Oversee and Take Action Against its
Agents

20. Western Union requires
that its agents, which are also referred to as authorized delegates or
representatives, sign written agreements in order to offer and provide payment
services through Western Union’s money transfer system. The initial terms of the
written agreements typically are five years, after which they are renewable for
additional periods of time. Western Union pays its agents in the United States
an agreed-upon commission, performance bonus, and volume bonus for offering and
processing money transfer services on Western Union’s behalf, while it pays its
international agents an agreed-upon base compensation for the consumer fee
received, and a percentage of the foreign exchange profits, on each transaction.

21. Western Union’s written
agreements with its agents typically require the agents to comply with all
applicable laws, including laws for detecting and preventing money laundering.
These agreements also provide that Western Union has the right to immediately
suspend or terminate its agents, including any agent location. Western Union’s
agents are required to keep records for all transactions, provide them to
Western Union upon request, and cooperate with any audit or review by Western
Union. The agreements also provide Western Union with the right to inspect and
audit its agents’ books and records to monitor the agents’ compliance with the
agreement, applicable law, and Western Union’s policies. 

22. Western Union’s agents,
which are also sometimes referred to as “network agents,” “master agents,” or
“super-agents,” in many instances provide Western Union’s money transfer
services through their own networks or locations, or, in countries outside of
the United States and Canada, also through sub-representatives, which Western
Union commonly refers to as “subagents” (hereinafter collectively referred to as
“agents” or “subagents”). Western Union typically is not involved in enrolling
its agents’ subagents and does not have a direct contractual relationship with
them. Western Union’s agreements with its agents, however, provide it with the
authority to suspend and terminate its agents’ subagents, as well as any
location at which its money transfer services are offered. 

8

Western Union’s Programs,
Policies, and Procedures 

23. Western Union has two
primary programs relating to the detection and prevention of consumer fraud and
the installation and oversight of agents: its anti-fraud program, which
sometimes is referred to as its consumer protection program, and its AML
program. As implemented by Western Union, for many years these interrelated
programs failed to adequately and effectively detect and prevent consumer frauds
employing Western Union’s money transfer system. Western Union’s design and
implementation of these programs for addressing fraud, as well as its oversight
of its global money transfer system, occur primarily within the United States.

24. For many years, Western
Union has failed to implement a comprehensive and effective anti-fraud program.
In or around April 2003, after Western Union became aware that some of its
agents had been suspected of being involved in paying out fraud-induced money
transfers to telemarketers, Western Union’s Security Department developed a
Standard Operating Procedure (“SOP”) for reviewing and suspending agents for
consumer fraud. The SOP outlines a process and guidelines for identifying agents
for review and suspension based on consumer fraud complaints, as well as a
process for reinstating or terminating agents. The SOP was revised at various
times, most recently in or around September 2010. Beginning in or around January
2006, the SOP included procedures that applied to agents outside of the United
States and Canada. However, to the extent that Western Union suspended and/or
terminated agents pursuant to the SOP, for many years the suspensions and/or
terminations were typically limited to agents in the United States and Canada.

25. In a written report in
January 2011, Western Union represented it was making “enhancements” to its
consumer protection program that were to include improvements to the company’s
program for conducting due diligence and training of its agents, monitoring
agent activity, and taking disciplinary action, including suspension and
termination, against agents. Subsequently, in a written report about its
anti-fraud program dated September 14, 2012, Western Union claimed it had
implemented “a comprehensive anti-fraud program” that included agent training,
agent monitoring, and “[p]rompt action, including suspensions and terminations,
against Agents when the Company identifies fraudulent activity.” Western Union
recognized in this report that its “first line of defense against fraud is to
engage Agents who will fully comply with the Anti-Fraud program and policies and
procedures.” 

9

26. As a result of the FTC’s
investigation, Western Union has made progress since 2012 in identifying and
blocking potentially fraudulent transactions and in otherwise protecting
consumers from fraud. Despite that, Western Union continued to fail, in certain
cases, to promptly suspend and terminate certain high-fraud agent locations,
including locations that appeared to be complicit in paying out fraud-induced
money transfers or repeatedly failed to comply with Western Union’s anti-fraud
and AML programs, policies, and procedures. 

27. In addition to its
anti-fraud program, Western Union is required by the Bank Secrecy Act (“BSA”) to
have an effective AML program to guard against money laundering, including, but
not limited to, guarding against the flow of illicit funds, such as funds
derived from fraud. As part of its AML program, Western Union has developed Know
Your Agent guidelines and policies, and policies and procedures for monitoring
transaction, customer, and agent activity for risks, including suspicious
activity and agent complicity. Western Union’s AML program relies heavily upon
its agents to have their own AML programs. In many cases, Western Union or its
agents have failed to implement effective AML policies and procedures pertaining
to consumer fraud, thereby making Western Union’s money transfer system more
vulnerable to consumer fraud. 

28. As described below,
Western Union has failed to: promptly investigate, suspend, and terminate
potentially complicit agents and subagents, or agents and subagents that have
failed to comply with Western Union’s anti-fraud and/or AML policies and
procedures that impact consumer fraud; conduct
adequate due diligence on
prospective and existing agents and subagents; effectively train, monitor, and
review agents, subagents, and front line associates, who are responsible at the
point of sale for processing money transfers at Western Union’s agent locations
(“FLAs”), with respect to consumer fraud; adequately collect, record, and report
consumer fraud involving its money transfer system; and adopt other reasonable
measures to prevent fraud-induced money transfers. In some cases Western Union
has failed to adopt adequate and effective policies and procedures to detect and
prevent fraud-induced money transfers, while in other cases it has failed to
adhere to its own anti-fraud and AML programs, policies, and procedures. 

10

WESTERN UNION’S MONEY
TRANSFER
SYSTEM HAS
REGULARLY BEEN USED FOR FRAUD

29.
Perpetrators of many different types of mass marketing and imposter scams have
relied on money transfer systems, including Western Union’s system, as a means
of fraudulently obtaining money from consumers around the world. All of these
scams operate deceptively in violation of Section 5 of the FTC Act, and many of
the scams also involve fraudulent telemarketing in violation of the TSR.

30.
In these scams, consumers often are instructed over the telephone or by email to
send money transfers through Western Union’s money transfer system. The
telemarketers and con artists use false or misleading statements to induce
consumers either to pay for purported goods or services, or to make payments as
a 15 result of purported circumstances, such
as emergencies, that do not exist. Consumers’ fraud-induced payments through
Western Union’s system often exceed $1,000 per transaction. The types of scams
referenced in Western Union’s own complaint database include, but are not
limited to: 

a.
Online or Internet purchases
(see FTC Consumer Alert on Online purchases, available at http://www.ftc.gov/news-events/press-releases/2006/07/ftc-advises-consumers-not-use-wire-transfers-online-purchases): According to Western Union’s complaint
database, between January 1, 2004 and August 29, 2015, the company received at
least 146,909 complaints about this type of scam totaling at least $187,877,003
in losses;

b.
Lottery or prize scams
(see http://www.consumer.ftc.gov/articles/0086-international-lottery-scams): According to Western Union’s complaint
database, between January 1, 2004 and August 29, 2015, the company received at
least 75,543 complaints about this type of scam totaling at least $86,138,055 in
losses;

c.
Emergency scams, including
grandparent scams (see http://www.consumer.ftc.gov/articles/0204-family-emergency-scams): According to Western Union’s complaint
database, between January 1, 2004 and August
29, 2015, the company received at least 41,897 complaints about this type of
scam totaling at least $73,807,353 in losses;

11

d.
Advance-fee loan scams
(see http://www.consumer.ftc.gov/articles/0078-advance-fee-loans): According to Western Union’s complaint
database, between January 1, 2004 and August 29, 2015, the company received at
least 71,296 complaints about this type of scam totaling at least $43,617,107 in
losses; and

e.
Online dating or romance scams
(see http://www.ftc.gov/news-events/press-releases/2010/11/ftc-warns-consumers-about-online-dating-scams): According to Western Union’s complaint
database, between January 1, 2004 and August 29, 2015, the company received at
least 44,588 complaints about this type of scam totaling at least $40,980,482 in
losses. 

31.
When consumers send the money transfers from one of Western Union’s agent
locations, the perpetrators of the scams described above, or those acting on
their behalf, frequently collect the funds from one of Western Union’s corrupt
or complicit agent locations or from agent locations that violate Western
Union’s anti-fraud and/or AML policies and procedures, such as by failing to
properly collect and record all of
recipients’ IDs or biological information, or by recording obviously false information.

12

A DISCRETE SUBSET OF
WESTERN UNION
AGENTS
WORLDWIDE HAS PAID OUT THE

MAJORITY OF
FRAUD-INDUCED MONEY TRANSFERS 

32.
Western Union’s records show that the majority of fraud-induced money transfers
have been paid out by a discrete, and easily identifiable, subset of Western
Union’s agents and subagents in various countries around the world. The vast
majority of Western Union agent locations worldwide do not pay out transactions
associated with a single fraud complaint to Western Union. In fact, only a small
and discrete subset of agents and subagents worldwide pay out money transfers
relating to any fraud complaints. An even more easily identifiable and distinct
subset of agents and subagents have been the subject of five or more fraud
complaints in a given year, but this group of Western Union agents has been
responsible for paying out most of the reported fraud losses. For
example:

a.
In 2012, 137 agent locations in Mexico (out of an average of 17,710 locations operating in that country each
month of the year) had five or more fraud complaints, and these 137 agents were
responsible for paying out approximately $3.2 million, amounting to over 80% of
the total reported fraud for Mexico that year. Similarly, in 2013, 140 agent
locations in Mexico (out of an average of 9,002 locations) paid out
approximately $2.1 million, amounting to over 75% of the total reported fraud in
Mexico, and in 2014, 108 agent locations (out of an average of 8,345 locations)
paid out approximately $1.5 million, amounting to over 76% of the total reported
fraud.

13

b.
In 2012, 188 agent locations in Nigeria (out of an average of 5,036 locations in
that country) had five or more fraud complaints, and these 188 agents paid out
approximately $1.9 million, amounting to over 77% of the total reported fraud
for Nigeria that year. In 2013, 235 agent locations in Nigeria (out of an
average of 5,034 locations) paid out approximately $1.5 million, amounting to
over 71% of the total reported fraud in Nigeria, and in 2014, 269 agent
locations (out of an average of 5,208 locations) paid out approximately $2.6
million, amounting to over 84% of the total reported fraud. 

33.
Western Union’s internal reports and memoranda show that the company was aware
that discrete and easily identifiable subsets of agents and subagents in various
locations were responsible for paying out the majority of fraud-induced money
transfers. For example, a Financial Intelligence Report titled “G.A.P. – United
Kingdom” stated that a review of fraud complaints in late 2009 revealed that one
network of agents “accounted for more consumer Fraud Complaints than any other
Agent Network in the United Kingdom” and that an analysis of data in the first
quarter of 2010 for nineteen agents demonstrated “indicators of Agent
complicity.” A January 19, 2012 memorandum regarding “GMI Fraud Monitoring and
Intelligence” stated that in Spain “when looking at a list of 30 Agents that
were investigated in 2010 it was determined that the amount of potential fraud
identified by GMI surpassed the total number of formal fraud complaints and
amounts for the entire country in 2010, demonstrating the true levels of fraud
related risk present in Spain.” (Emphasis in original.) In March 2012, a senior
compliance analyst found that from December 1, 2011 to February 24, 2012,
“nearly 85% of all emergency fund fraud complaints filed with Western Union”
involved money transfers paid out by one master agent in Mexico, Elektra,
through 94 of its locations.

14

MANY WESTERN UNION
AGENTS HAVE BEEN
ACTIVE OR COMPLICIT IN THE UNDERLYING
SCAMS

34.
Many Western Union agent locations that have received fraud-induced money
transfers from consumers and paid out such transfers to the fraudulent
telemarketers and con artists have been complicit in the underlying scams. In
some cases, the sellers, telemarketers, or imposters who have operated the scams
have been Western Union’s own agents or subagents. 

35.
At least 146 of Western Union’s agents and subagents around the world, as well
as at least two FLAs, have been charged with acting collusively in the frauds
employing Western Union’s money transfer system. Of the 146 agents, 39 agents in the United States and Canada have
been charged in the United States with defrauding consumers through various mass
marketing and/or telemarketing schemes including fraudulent sweepstakes, advance
fee loans, business opportunities (including secret shopper or work-at-home
scams), emergency or person-in-need schemes, and/or Internet purchase offers.
The charges against these 39 agents have included conspiracy to commit mail
fraud, wire fraud and/or money laundering, and most of the agents have already
pleaded guilty or been convicted of the charges. These 39 agents paid out over
$5.2 million in money transfers that were reported to Western Union as having
been induced by fraud. As explained below, however, actual consumer losses far
exceed the reported losses. These matters include: 

	Case	Western Union Agents
	United States v. Agbasi,
      et al., No. 07-CR-504 (M.D. Pa.)	Stanley
      Akubueze and Christopher Ozurus (d/b/a Afro Spot Restaurant) 

Philip Utomi
      (d/b/a Swift Cash Centre)
	United States v. Bellini,
      et al., No. 07-CR-1402 (C.D. Cal.)	Vijayakumar
      Ramakrishnan (d/b/a Cafe Chambly) 

John Felix Alexander (d/b/a Imudia
      Int)
	United States v. Ayodele,
      et al., No. 10-CR-058 (M.D.
Pa.)	Soji Ayodele
      (d/b/a Total Communications Centre) 

Mohsen Golab (d/b/a Golden Century) 

Christian Kevin (d/b/a C K Business Service)
	United States v. Akinola,
      et al., No. 10-CR-300 (S.D.
    Tex.)	Jonathan
      Akinola (d/b/a Postal & Wireless Outlet)
	United States v. Groysman, No.
      10-CR-326 (M.D. Pa.)	Bella
      Groysman (d/b/a Professional Medical Supplies)

15

	United States v. Dobrovinsky-Kaz, No.
      10-CR-327 (M.D. Pa.)	Tatyana
      Dobrovinsky-Kaz (d/b/a Professional Medical Supplies)
	United States v. Abbey, No.
      10-CR-344 (M.D. Pa.)	Festus G.
      Abbey (d/b/a Abbey’s One Stop and Abbey Multi Service)
	United States v. Nwuda, No.
      10-CR-508 (C.D. Cal.)	Nmandi Nick
      Nwuda (d/b/a CKane Check Cashing & Postal)
	United States v. Idemudia, No.
      11-CR-001 (M.D. Pa.)	Eugene
      Idemudia (d/b/a IV Beauty Supply and RM & E)
	United States v. Agho,
      et al., No. 11-CR-113 (M.D.
Pa.)	Betty Agho
      (d/b/a Star Multiservice) 

Itohan Agho-Allen (d/b/a Miracle Multi Link) 

Prince Edosa (d/b/a Gosa Multi Services and A & M Communications)

Kennedy Onaiwu (d/b/a Kenizo Enterprise)

Ikejiani Okoloubu (d/b/a First Cone and Depanneur Ice) 

Susan Osagiede (d/b/a A & M Communications) 

Elvis Uadiele (d/b/a Diale Investment)

Nekpen Omorodion (d/b/a Global
      Multiservices)
	United States v. Adigun,
      et al., No. 11-CR-151 (M.D.
      Pa.)	Olufemi
      Adigun (d/b/a FAB)
	United States v. Louissaint, No.
      11-CR-201 (M.D. Pa.)	Emmanuel
      Louissaint (d/b/a Hudson Food Market II)
	United States v. Brown, No.
      12-CR-001 (M.D. Pa.)	Blessing
      Brown (d/b/a O & B Enterprise Inc)
	United States v. Mayele, No.
      12-CR-210 (C.D. Cal.)	Prince
      Martin Mayele (d/b/a Du Monde Digital Trades)
	United States v. Mgbolu,
      et al., No. 12-CR-232 (M.D.
      Pa.)	Alex Mgbolu
      (d/b/a FA CAM Assoc. & Financial Corp)

Chima Nneji (d/b/a Advanced
      Computer Service and Hallmark Business Services)

William Nneji (d/b/a
      Hallmark Business Services)

      16

	United States v. Idisi-Arah,
      et al., No. 12-CR-311 (M.D.
      Pa.)	Lucas Obi
      (d/b/a Canada Cash Express)
	United States v. Anyika,
      et al., No. 14-CR-006 (M.D.
Pa.)	Ejike
      Egwuekwe (d/b/a Merrick Multiple Services and Lincoln One Stop Place) 

      Franklyn Idehen (d/b/a Treasure Links and Cherrish Communication Center) 

Nnamdi Ihezuo (d/b/a Net Global & Multi Services)

Cyprian Osita Ngbadi
      (d/b/a Rockaway Business Center)
	State of Texas v. Mbaka, No.
      09-DCR-52310A (Tex. Dist. Ct. Ft. Bend County)	Boniface
      Ifeanyi Mbaka (d/b/a BIM Services)

36.
Criminal law enforcers in other countries also have taken action against at
least an additional 107 Western Union agents and two FLAs, including in the
following instances:

a.
Sentencing in the UK (in or around November 2012) of an individual, Peter
Oyewor, who operated at least two Western Union agent locations (d/b/a Benson
Logistics and Abmec Logistic) and was found guilty of money laundering over
£1.34 million in proceeds from consumer frauds;

b. Arrests made by the Nigerian
Special Fraud Unit (in or around June
2013) of two FLAs at a Western Union location (Skye Bank PLC) for aiding
Internet fraudsters; and 

c.
Arrests made by the Spanish police (in or around July 2014) of 105 Western Union agents in Spain, who were
involved in a massive international scam
involving Nigerian frauds that primarily targeted U.S., Canadian, and German
consumers, and caused at least €11.5 million (approximately $15.5
million) in consumer injury. 

17

WESTERN UNION HAS BEEN
AWARE THAT ITS SYSTEM
HAS BEEN USED FOR FRAUD-INDUCED MONEY
TRANSFERS

37. Since at least January
2004, Western Union has been aware that its system has regularly been used for
fraud and that it has an identifiable subset of agents and subagents with high
levels of fraud complaints. It also has been aware that many of its agent
locations with high-fraud payouts have: (1) violated Western Union’s anti-fraud
and/or AML policies and procedures; (2) engaged in suspicious activities; and/or
(3) been complicit, or likely complicit, in the frauds. Western Union’s
awareness of the consumer fraud problem is demonstrated by, among other things,
the hundreds of thousands of complaints it has received from consumers, its own
internal records and reports, and years of warnings from government agencies
throughout the world. 

Defrauded Consumers Have
Regularly Complained to Western Union 

38. When consumers realize
that they have been defrauded, they sometimes contact Western Union to report
the fraud, often using a toll-free number made available by Western Union to
consumers in certain countries, including the United States. In some cases,
consumers also have filed lawsuits against Western Union due to the company’s
role in processing the fraud-induced money transfers. In addition,
as described above, between approximately January 1, 2004 and August 29, 2015,
Western Union’s database shows at least 550,928 complaints it received about at
least $632,721,044 in fraud-induced money transfers. Western Union also has
other records reflecting additional complaints it received, which were not
recorded in the database, including a spreadsheet of at least 8,497 complaints
Western Union received in 2005 regarding fraud-induced money transfers, which
totaled at least $14,478,365. 

18

39. The complaints reported to
Western Union, however, represent only a fraction of the consumer frauds
employing Western Union’s money transfer system for at least three
reasons:

a. For years, Western Union
has failed to provide victims in many countries worldwide with access to a fraud
hotline, or a toll-free telephone number for victims to call to report fraud,
which is the most convenient mechanism for many victims to promptly report
fraud;

b. The majority of consumer
victims do not complain directly to Western Union. Western Union’s own internal reports recognize that only a
small percentage of consumers complain about fraud and that the volume of
fraud-induced money transfers is much higher than that reported to the company.
For example, Western Union has recognized in several reports that the actual
amount of fraud-induced money transfers
associated with agent locations was in some cases over five times higher than
the reported complaint figures; and

c. As further explained below, Western Union’s database of fraud
complaints is incomplete because Western Union has failed to log in its database
all of the complaints and reports about fraud it has received, as well as all of
the fraud-induced money transfers related to the complaints. 

19

Western Union’s Internal
Reports and Records Demonstrate Awareness of Consumer Fraud by Agents in Various Countries
Worldwide

40. Since at least 2005,
Western Union has conducted reviews and investigations, and generated indices
and reports, related to consumer fraud involving its money transfer system.
Information contained in Western Union’s internal reports, communications, and
other records demonstrates that the company has been aware of high levels of
consumer fraud involving particular countries and agents, including network
agents Western Union itself owns. These records demonstrate serious problems and
suspicious activities by particular Western Union agents and subagents,
including, but not limited to: (a) high numbers and patterns of complaints; (b)
spikes in the number of money transfers received; (c) money transfer amounts
that far exceed the average transfer amount; (d) data integrity issues (issues
relating to the recording of ID numbers, dates of birth, or other information
about recipients); (e) payouts within minutes after the money transfers were sent; (f) flipping (shortly after
receiving funds, a large portion of the money is sent to another recipient); (g)
surfing (suspicious look-ups of money transfers in Western Union’s system by
FLAs); and (h) substantial sends to high-risk countries known for fraud.

41. According to information
contained in Western Union’s complaint database, the United States has been the
top country for fraud payouts since at least 2004 and has generated over three
times the number of complaints as the next highest country. In fact, over $128.2
million in reported fraud has been paid out in the United States since 2010, and
Western Union has received more than 34,000 fraud complaints about transactions
totaling over $21.2 million since 2014. Certain agent locations in the United
States have operated for years despite high levels of fraud. For example,
between July 2008 and March 2015, one agent location in Washington, D.C.
generated at least 116 fraud complaints totaling $187,356. Even though reviews
of the agent in June 2014 and February 2015 identified confirmed and potential
fraud amounting to 84% and 55% of the money transfers paid at that location, the
agent was not terminated until August 2015, after it failed an undercover test
visit by a compliance officer tasked with assessing the agent’s AML compliance.
Another agent location in Detroit, Michigan, paid out at least 194 money
transfers totaling $379,031 in reported fraud since 2004. Although this agent has received Western Union’s fraud prevention
training multiple times, it has continued to receive fraud complaints. 

20

42. Over the years, many other
countries in addition to the United States have emerged as high-risk countries
for fraud as international scams have become more pervasive. For example, from
2006 to 2012, the UK was the second highest-payout country for fraud-induced
money transfers behind the United States. During that time, Western Union’s UK
agents paid out over $82.4 million in reported fraud, and internal reports and
records demonstrate that Western Union was aware of problems with particular
agents in the UK. From January 1, 2004 to August 29, 2015, 172 UK agents paid
out over $44.3 million in reported fraud. A subset of only 34 of these agents
was responsible for paying out nearly half of the reported fraud (at least $21.2
million), most of which came from U.S. victims. The actual fraud paid out by
these agents was likely much higher. Total payouts by these agents during the
period they were receiving fraud complaints amounted to $389 million, with $154
million of that coming from U.S. senders. Notably, these agents also sent $104.6
million to Nigeria and $76.6 million to Romania, both of which are high-risk
countries for fraud, as acknowledged by Western Union itself. One agent alone,
News Mark, was the top fraud agent in the UK and worldwide. Between January 1,
2006 and January 14, 2013, Western Union received at least 1,421 fraud
complaints about News Mark totaling at least $2,150,892, of which over 84%, or $1,815,582, involved U.S. victims.
Although Western Union identified News Mark as a high-fraud agent in the
company’s 60-day reports at least 45 times between 2005 and 2010, and reviewed
it for fraud and other suspicious activities at least fifteen times between 2009
and 2012, Western Union suspended and reactivated News Mark at least three
different times before finally terminating it in 2014. 

43. By 2007, Western Union was
aware that Jamaica had become a hotbed for fraud. In that year alone, Western
Union received at least 3,065 complaints from U.S. consumers about money
transfers totaling $1,878,435 to Jamaica. Over the years, the top four fraud
payout agents in Jamaica have processed well over $1 million each in reported
fraud, for a combined total of at least $5,210,644. According to internal
Western Union reports, those agents also have engaged in other highly suspicious
activities, such as surfing. One of those agents, for example, surfed at least
985 transactions in a single month in 2010. Even though all four of these agents
have continued to receive many fraud complaints for years, including hundreds in
2015, they continue to operate. In fact, Western Union has only terminated one
agent in Jamaica for consumer fraud. That termination occurred on July 3, 2015,
and the terminated agent had a much smaller number of fraud complaints than
others that Western Union has not terminated. 

21

44. In 2008, according to
Western Union’s records, Mexico was one of the top five countries worldwide for
fraud payouts, with 1,393 complaints totaling over $1.8 million. In 2009, Mexico
was Western Union’s sixth highest payout destination, with 1,626 complaints
totaling over $2.1 million. Since 2011, it has consistently been in the top
three destination countries for reported fraud payouts from U.S. consumers, and
the top payout destination for fraud related to emergency scams. In 2011,
Western Union received at least 2,824 emergency scam complaints on transfers
paid out in Mexico. The total amount paid out on these transfers was $6,908,666,
and the average payout was $2,446. Of those victims who reported their date of
birth, nearly 70% were 65 years or older at the time they sent their money
transfers. Although Western Union has at least three master agents in Mexico,
internal reports and records show that one master agent, Elektra, has been
responsible for paying out most of the emergency scam complaints. Of the
reported emergency scam transfers paid out in Mexico between 2011 and 2014,
Elektra agents were responsible for payouts relating to at least 7,107
complaints totaling $12,494,602, or 88% of the total reported losses. During
that same period, nineteen Elektra agents paid out $6,425,782 in reported
emergency fraud, including one agent discussed further below that alone paid out
over $1.4 million in reported fraud. Nevertheless, and despite repeated reviews
and investigations of agent locations in Mexico, as of October 2015, Western
Union had rarely, if ever, terminated agent
locations in Mexico for consumer fraud, even in instances where particular agent
locations repeatedly appeared on fraud reports, or had confirmed and potential
fraud amounting to more than 25%, or even 50%, of their payouts.

45. By 2010, internal reports
and records show that Western Union was aware of a substantial increase in fraud
complaints involving money transfers sent to Spain, and that particular agents
there had very high levels of fraud and questionable activity. From 2009 to
2010, the number of complaints paid out in Spain increased from 583 to 2,195,
and the reported fraud amount rose from over $1.1 million to over $5.3 million.
Indeed, from 2010 to 2012, Spain was the third highest payout country by amount
for complained-of transfers, trailing only the United States and the UK. During
that time, Western Union received at least 8,086 complaints about transfers paid
out in Spain, totaling over $17 million. From 2007 to 2012, a subset of 61
agents in Spain paid out over $11.9 million in reported fraud. Western Union’s
internal reports and records document numerous instances of suspicious activity
by these agents, including flipping and sending money transfers to high-risk
countries. The reported fraud paid out by agents in Spain, moreover, likely
grossly understates the actual fraud. For example, 20 agents in Spain that were
responsible for over $5.7 million in reported fraud received more than $51.6
million during the period those agents were receiving fraud complaints, of which over $22.7 million came from U.S.
consumers. During that time, those 20 agents were responsible for sending over
$8.8 million to Nigeria, over $3.7 million to Canada, over $1.7 million to
Romania, and over $800,000 to Ghana, which are all high-risk fraud countries.
Although Western Union was aware of problematic agent locations in Spain, it
failed to promptly suspend and terminate those agent locations.

22

46. Prior to 2011, Western
Union received a small number of complaints each year involving its Peruvian
agents. For example, in 2010, Western Union recorded only 71 fraud reports
against agents in Peru totaling $38,492. In 2011, however, there was a dramatic
spike in complaints about money transfers paid out in Peru, especially about
emergency scams, with Western Union receiving at least 692 complaints totaling
$2,218,761. The average transfer amount in the complained-of transactions jumped
from $542 to $3,206. In 2012, the numbers increased to 1,003 fraud complaints
totaling $1,944,730. Over 96% of the complained-of transfers paid out in Peru in
2011 and 2012 originated from the United States. Between 2011 and 2012, thirteen
Peruvian agents paid out $3,603,539 in reported fraud, and together were
responsible for nearly 87% of the total reported fraud payouts in Peru for those
years. Internal reports and records show that Western Union was aware of the
dramatic increase in complaints, as well as particular Peruvian agent locations
that were responsible for paying out most of
the reported fraud. Despite its awareness, Western Union failed to terminate
problematic agent locations until after law enforcement began to inquire and
raise concerns about the fraud, and even then, one agent location terminated for
consumer fraud was reactivated under a different agent ID. In recent years,
Western Union has continued to receive complaints from U.S. consumers concerning
high-dollar emergency scam-related money transfers paid out at agent locations
in Peru. 

47. For many years, Nigerian
scammers have been at the center of many international frauds. Although Western
Union’s agent locations in Nigeria are in banks, those bank locations, too, have
paid out large numbers of fraud-induced money transfers and engaged in other
suspicious activities. According to Western Union’s records, Nigeria has been
the fourth highest payout destination for fraud complaints received by Western
Union since 2006. Since then, Western Union has received complaints about at
least 48,047 money transfers paid out in Nigeria, totaling over $38.2 million.
Approximately 86.7% of the complained-of transfers originated from the United
States. During this period, a subset of 68 Western Union agent locations in
Nigeria was responsible for at least 17,743 complaints totaling over $16.6
million in reported fraud. Based on the complaints, reported fraud is typically
paid out at various locations of two large banks in Nigeria. Overall, one of
those banks has at least 15,184 complaints totaling $11,292,195, while the other has at least 10,948 complaints
totaling $8,167,769. Individual locations of the two banks also have amassed
huge numbers of complaints. One location alone was responsible for at least 832
complaints totaling $1,407,252, while another was responsible for at least 1,741
complaints totaling $1,187,141. Despite repeated reviews and investigations of
agent locations in Nigeria, as of October 2015, Western Union had rarely, if
ever, terminated agent locations in Nigeria for consumer fraud.

23

48. Over the years, agent
locations in many other countries have appeared on Western Union’s fraud
reports, and have been reviewed by the company for fraud. Those countries
include, but are not limited to, Ghana, the Philippines, Bolivia, China,
Malaysia, the Dominican Republic, Greece, and Thailand. Some of those agent
locations continue to operate despite having high levels of fraud, while others
have been suspended or terminated, but only after having caused substantial
injury to consumers over many months or, in some cases, years. 

Government Agencies
Worldwide Warned Western Union
about Consumer Fraud Involving Its System

49. In addition to consumer
complaints and Western Union’s internal reports and records, Western Union’s
awareness of the consumer fraud problem with its money transfer system is
further demonstrated by the fact that law enforcement agencies in the United
States and throughout the world have warned the company for many years that its
money transfer system was being used to perpetrate consumer frauds,
and that Western Union was not adequately addressing  the problem. 

50. First, in or around 2002,
multiple state Attorneys General issued subpoenas to Western Union in
conjunction with their investigations of the use of Western Union’s money
transfer system by fraudulent telemarketers. In correspondence dated October 1,
2002, the Vermont Attorney General’s Office informed Western Union about
disturbing statistics regarding telemarketers in Quebec, Ontario, British
Columbia, and Israel misusing Western Union’s money transfer system for frauds.

24

51. In or around November
2005, Western Union entered into an agreement with forty-seven states and the
District of Columbia involving the use of Western Union’s money transfer system
by “fraudulent telemarketers in and outside the United States” (“2005
Agreement”). The 2005 Agreement imposed a number of requirements upon Western
Union, including warnings to consumers, agent training, closure of agents,
development of a computerized system to identify likely fraud, and increasing
anti-fraud staff. For example, the 2005 Agreement required that Western Union
“terminate those of its agents, subagents or locations, as the case may be, who
are complicit in fraud-induced transfers or who knowingly ignore such fraud, or,
if certain employees of the agent or subagent are the complicit or knowingly
ignoring parties, insist upon termination of such employees as a condition to
continued agent or subagent status.” The 2005 Agreement was in effect for five
years. Despite this agreement, as explained below, Western Union in many
instances failed to terminate many problematic agent locations, especially in
countries outside of the United States and Canada. 

52. In October 2009, the FTC
announced that it had reached a settlement with MoneyGram International, Inc.
(“MoneyGram”), Western Union’s main competitor, relating to charges that the
company had allowed its money transfer system to be used for fraud. The FTC
publicly released copies of the complaint and order against MoneyGram, which
required, among other things, the termination of any agent that “may be
complicit in” fraud. Following the FTC’s settlement with MoneyGram, FTC staff
sent a letter to Western Union in November 2009 expressing concern about the
“huge volume of fraud that employs money transfer services,” like that of
Western Union.

53. According to Western
Union’s records, in or around September 2010, the Japan Financial Services
Agency expressed concerns about Japanese consumers sending fraud-induced money
transfers to the UK, and “suspicious viewing/surfing of transactions in the
United Kingdom, resulting in either Paid in Error (PIE) or Non Payment Claims
[complaints about money transfers being paid to the wrong person or not being
paid].” 

25

54. Since at least June 2011,
the Minnesota Attorney General’s Office has been warning Western Union in
correspondence directed to the attention of the President and Chief Executive
Officer that “each year thousands of consumers are defrauded through use of your
company’s services,” and that “[g]iven your firm’s apparently continuing
inability or unwillingness to detect and prevent such wire transfer fraud, it
would seem appropriate to” issue refunds to consumers. This correspondence has
routinely described the consumer complaints the Minnesota Attorney General has
received from fraud victims. In response, Western Union typically has refused to
issue any refunds to the victims after the funds were paid out. 

55. In or around October 2011,
multiple state Attorneys General issued subpoenas to Western Union in connection
with investigations of fraudulent telemarketers’ use of Western Union’s money
transfer system. The subpoena issued by Vermont stated that it had “reason to
believe that Western Union has provided substantial assistance to fraudulent
telemarketers in the form of access to its money transfer system, despite
knowing, or consciously avoiding knowing, of the fraud, in violation of the
Vermont Consumer Fraud Act, 9 V.S.A. § 2453(a).”

56. On or about November 29,
2011, Western Union personnel met with the Korea Financial Supervisory Services
to discuss the regulator’s concerns about consumer fraud involving Western
Union’s money transfer system and its requirement that Western Union put
together a plan to alleviate consumer fraud. 

26

57. In February 2012, in
response to a survey sent to law enforcement by Western Union, a Special Agent
for the U.S. Secret Service warned Western Union of the following: that its
services were “widely used by Nigerian scammers and other criminal elements
overseas”; “a person in America can easily be robbed by someone in a foreign
country and there is almost no possibility to recover that fraud loss”; its
“services are widely used for online scams in the US”; and that Western Union
“is a complete and almost total safe haven for the criminal element to freely
launder illegal proceeds without detection.” 

58. According to Western
Union’s records, by the first quarter of 2012, the Serious Organised Crime
Agency (“SOCA”) in the United Kingdom, presently known as the National Crime
Agency, disclosed to Western Union that in relation to an “investigation
conducted on money remitters in Western England,” SOCA had “surveyed Western
Union customers and found that 81% of the transactions paid in Nigeria or Ghana
were allegedly fraud related.” 

59. In or around late May
2012, the Toronto Police Service sent Western Union a letter alerting the
company that it “may have aided individuals with the criminal offense of
laundering [the] proceeds of crime” from consumer frauds, and cautioning that it
needed to take “the appropriate steps . . . to ensure that Western Union is not
a party to this serious criminal offense, whether intentionally or willfully
blind to its role.” In numerous additional instances, the Toronto Police Service
emailed Western Union information about other fraud-induced money transfers and
the names of individuals who had collected the transfers, telling the company to
consider the emails a formal caution that allowing the individuals to collect
future transfers could be considered “aiding the criminal offence of Laundering
the Proceeds of Crime.” 

27

60. In or around October 2012,
Western Union received a letter from SEPBLAC, Spain’s Financial Intelligence
Unit and Anti-Money Laundering/Counter Financing of Terrorism Supervisory
Authority, informing Western Union that an inspection had revealed “extremely
serious facts,” which required WUPSIL to “adopt urgent measures in order to
correct them immediately,” and that the operations of a “significant part of”
Western Union’s agents in two networks owned by Western Union “are related to
fraud and money laundering.” 

DESPITE AWARENESS OF
THE FRAUD,
WESTERN UNION HAS CONTINUED TO
PROVIDE
SUBSTANTIAL
ASSISTANCE OR SUPPORT TO CONSUMER FRAUDS

61. Since at least January
2004, and continuing thereafter, Western Union has been aware that perpetrators
of frauds have used its money transfer system to obtain funds from their
victims, and for many years has knowingly, or with conscious avoidance of
knowledge, provided substantial assistance or support to fraudulent
telemarketers and con artists.

62. In some cases, Western
Union’s agents, subagents, or FLAs have been complicit, or sometimes even
participated, in the frauds. In other cases, Western Union’s agents, subagents,
or FLAs have offered substantial assistance or support to the frauds by paying
out funds in violation of Western Union’s own policies and procedures.

28

63. Western Union has provided
an essential service to these fraudulent telemarketers, sellers, and con artists
by permitting them access to Western Union’s money transfer system. Exploiting
this access to its full potential, telemarketing, mass marketing, and imposter
scams have received, and continue to receive, millions of dollars from
victimized consumers, while generating substantial revenue for Western Union
from transaction fees and foreign currency exchange fees.

64. For many years, Western
Union has failed to: (a) promptly investigate, suspend, and terminate
potentially complicit agents and subagents, or agents and subagents that have
failed to comply with Western Union’s anti-fraud and/or AML policies and
procedures; (b) conduct adequate due diligence on prospective and existing
agents and subagents; (c) effectively train, monitor, and review its agents,
subagents, and FLAs; (d) adequately collect, record, and report consumer fraud
involving its money transfer system; and (e) take other reasonable steps to
prevent fraudulent telemarketers, sellers, and con artists from using Western
Union’s money transfer system to perpetrate their frauds. 

65. In numerous instances,
Western Union has failed to take timely, appropriate, and effective measures to
mitigate fraud in connection with its processing of money transfers sent by
consumers despite knowledge, or conscious avoidance of knowledge, that:
fraudulent telemarketers, sellers, and con artists have extensively accessed and
exploited Western Union’s money transfer system; Western Union’s money transfer
system has played an integral role in the scams; and a number of its agents have
been complicit, or involved, in the frauds, or have failed to adhere to Western
Union’s policies and procedures to detect and prevent fraud. 

29

Western Union Has Failed to
Promptly Investigate, Suspend, 

and Terminate Agents with High Levels of Consumer
Fraud 

66. Despite Western Union’s
awareness of consumer fraud involving its system, Western Union has in many
instances failed to promptly investigate, suspend, and terminate agents and
subagents that have exhibited high levels of consumer fraud, some of which were
likely complicit in frauds, or which have ignored such frauds by failing to
comply with Western Union’s policies and procedures, thereby causing significant
and ongoing harm to consumers. 

67. Even though Western
Union’s internal reports have identified agent locations where 5% to over 75% of
the transactions (in volume or amount) constituted confirmed and potential
fraud, and/or suspicious activities, such as surfing, flipping, and data
integrity issues, Western Union has allowed many of these agents and subagents
to continue operating, with only temporary suspensions, if any. In many cases,
Western Union has simply “escalated,” or referred, such agents for further
review or investigation, but the investigations often have been delayed for
months, and in many instances, the escalations have failed to resolve the
problems. Western Union frequently has relied on its master agents to conduct
their own investigations of their subagents and locations, but has failed to
ensure that the master agents’ investigations are adequate. Western Union also
has sometimes repeatedly escalated the same agents for review or investigation
without suspending or eventually terminating those agents even while the agent
has continued to be the subject of fraud complaints. Western Union has sometimes
even disregarded recommendations from its employees to suspend or terminate
certain agents or subagents due to serious consumer fraud problems. 

68. Western Union has
permitted agents and subagents that have processed hundreds of thousands of
dollars, or even millions of dollars, in confirmed and potential fraud to
continue operating for months or even years despite highly suspicious activities
and indications of complicity. For example, one agent location in Spain, Locutorio Okuns, operated from 2005 until at
least 2012. During that time, the agent engaged in highly suspicious activity,
including making payouts related to 126 complaints totaling at least $341,771 in
reported fraud, and receiving over $1 million from the United States in money
transfers that had characteristics indicative of fraud, such as unusually
high-dollar amounts and serious data integrity issues. The agent also displayed
highly suspicious spikes in volume that corresponded with spikes in fraud
complaints. Although it was reviewed by Western Union at least five times, the
agent was permitted to continue to operate for years, and its owner was
ultimately one of the individuals arrested by the Spanish police in 2014, as
described above. Another agent location in the UK, S S Newsagent, made payouts
relating to at least 347 complaints totaling $924,695 in reported fraud between
2005 and 2012. That agent received over $2.7 million in money transfers from the
United States, including over $1 million in 2007 alone, and the majority of
those transactions had characteristics indicative of fraud, including unusually
high-dollar amounts and data integrity issues. Even though the agent was
reviewed multiple times, it was not terminated despite its history as a
high-fraud agent.

30

69. Even in instances where
Western Union has suspended high-fraud agents after a few months rather than
years, the agents often have generated significant consumer losses that Western
Union could have prevented by acting more quickly. These agents frequently are immediately identifiable based
on spikes in fraud complaints during the first problematic month. For example,
during a 30-day period beginning in December 2011, Western Union received 54
complaints, totaling $246,746, concerning money transfers paid out at one agent
location in Bolivia. This location had a Nigerian owner and had already been
reviewed by Western Union in the past due to suspicious activity involving
millions of dollars in payouts from China. Western Union failed to promptly
suspend the agent and during a roughly four-month period from December 2011 to
April 2012, it was responsible for paying out at least 191 transfers associated
with fraud complaints totaling $825,319. The average reported fraud transfer was
$4,321, and all of the complaints involved U.S. senders who were the victims of
emergency scams. Although this agent was suspended in July 2012, it had paid out
over $2.5 million in suspected fraud in just over four months before Western
Union took action. 

70. In instances where Western
Union suspended agents or subagents due to consumer fraud, the suspensions often
were only temporary, even in high-risk fraud countries, such as Nigeria, Ghana,
and Jamaica. For example, in or around 2012, Western Union identified and
suspended 13 agent locations in Montego Bay, Jamaica, that had been processing
millions of dollars of fraudulent and potentially fraudulent money transfers
related to lottery/sweepstakes fraud. The suspensions only lasted a short time,
however, before the agents were reactivated. After being reactivated, ten of
those agents have continued to pay out tens to hundreds of reported fraud
complaints each year since 2013, and in that span have been the subject of 2,055
complaints totaling $737,319. 

71. In some instances,
reactivated agents or subagents were assigned new agent ID numbers or became
subagents in different agent networks. For example, Western Union’s top fraud
payout agent in Mexico made payouts relating to at least 410 complaints totaling
over $1.4 million in reported fraud between March 2011 and July 2012. Western
Union finally suspended the location in July 2012, but one month later, the same
agent began to operate again under a new agent ID, and it continued generating
fraud complaints. In addition, Western Union even reactivated some agents that
had been terminated due to consumer fraud.

72. Western Union’s general
practice has been to attempt to rehabilitate agents and subagents exhibiting
high levels of consumer fraud by requiring its agents to implement “action
plans” to address the problems, but this practice has been inadequate and
ineffective. In many instances, Western Union or its agents have failed to
create action plans that effectively address consumer fraud. The action plans
also often do not adequately and effectively address problems with agents,
subagents, and FLAs who are potentially complicit and/or have engaged in
suspicious activities. For example, the action plans frequently call for the
training of agent locations and FLAs even though Western Union has acknowledged
that “identifying and eliminating complicit actors from the system is more
effective at combating consumer fraud than training.” In other instances,
Western Union or its agents have failed to create any action plan or for months
have delayed creating action plans. Even after action plans have been created,
in some cases, the agents and subagents have resisted implementing them, failed
to do so satisfactorily, or even ignored them. 

73. For many years,
suspensions and/or terminations were typically limited to agents in the United
States and Canada. For example, between January 1, 2006 and November 1, 2010,
Western Union failed to terminate many problematic agent locations worldwide
that had paid out $100,000 or more in reported fraud, including in the UK (124
agents), Nigeria (56 agents), Ghana (18 agents), Jamaica and Spain (16 agents
each). In fact, two UK agents each were responsible for paying out over $2
million in reported fraud between January 1, 2006 and November 1, 2010.
Moreover, as of October 2015, Western Union had rarely, if ever, terminated
agent locations for fraud in certain high-risk countries, including, but not
limited to, Mexico, Nigeria, Ghana, the Dominican Republic, China, and Haiti,
despite high levels of fraud and indications of complicity at agent
locations.

31

Western Union Has Failed to
Conduct Adequate Due Diligence on Agents 

74. For many years, Western
Union has failed to conduct adequate due diligence on its prospective agents and
subagents, as well as those agents and subagents whose contracts come up for
renewal. Western Union either has not conducted background checks on many of its
agents and subagents, or to the extent background checks have been conducted,
they often have been inadequate. It also has, in many instances, failed to
maintain records demonstrating that it has conducted such background checks. In
addition, despite awareness of problems with FLAs, Western Union does not
conduct any due diligence on, and frequently knows little about, its agents’ and
subagents’ FLAs. 

75. For many years, Western
Union has failed to conduct routine background checks of each of its prospective
and existing agents and subagents located around the world. Even though Western
Union’s agreements provide it with the authority to conduct background checks on
its agents or subagents at any time, Western Union’s practice in many countries
has been to rely on its agents to conduct due diligence on their own subagents
and FLAs, rather than conduct its own background checks, including of subagents
operating in high-risk fraud countries. In some instances, Western Union has
approved agents or allowed existing agents to continue operating without even
knowing the identities of all individuals with ownership, or beneficial
ownership, interests in the agent. In other instances, Western Union has not
known, and has not required its agents to disclose or update, the identities of all of its subagents or
FLAs.

76. In numerous instances,
background checks conducted by Western Union have not been thorough, consisting
only of collecting limited information and conducting some type of credit or
financial check, rather than criminal background checks of its agents and
subagents. In many cases, Western Union has relied upon inaccurate, incomplete,
or false information provided by agents and has failed to verify the accuracy of
information provided by applicants. Western Union also has installed agents or
subagents with criminal histories, including felonies and misdemeanors involving
dishonesty, as well as histories of investigations and lawsuits involving
allegations of fraud. For many years, the department at Western Union primarily
responsible for conducting background checks has not been provided with
sufficient information to conduct thorough background checks of every
prospective and existing agent and subagent, such as information from law
enforcement, information about investigations of agent locations, and access to
consumer complaints. 

77. In some cases, Western
Union has installed agents or subagents that it had previously terminated, that
were previously suspended or terminated by MoneyGram for fraud, or that were
concurrently operating as MoneyGram agents (in violation of Western Union’s
agent agreements). One Western Union agent in College Park, Georgia, for example, was suspended
in 2006 due to consumer fraud, but began operating again in 2007 from the same
address, but with a different business name and agent ID number, until it was
suspended for fraud again. The agent then became a MoneyGram agent and continued
to generate fraud-induced money transfers for approximately one year before
being terminated by MoneyGram. After that, the agent returned to Western Union
in 2009, and began operating for a third time with the same name and at the same
location. A review in 2012 revealed that approximately 80% of its payouts were
attributable to fraud, and it was later terminated. In 2015, the agent began
operating again as a Western Union agent from the same address, using a similar
name, but with a new agent ID number, and once again, it began generating fraud
complaints. 

78. Western Union’s background
checks also have failed to prevent previously terminated agents or subagents
from using straw men to become agents or owners again to gain access to Western
Union’s money transfer system. In addition, Western Union has installed as
agents or subagents individuals who had previously been interdicted
(i.e., blocked from using Western Union’s money
transfer system) due to suspicious activities, or were former FLAs at agent
locations that were suspended or terminated for fraud. For example, after
suspending an agent location in the Philippines due to high levels of fraud,
Western Union discovered that the owner of the location had been a high-volume
sender to Nigeria who Western Union had interdicted just two months before the
location began operating. During the three-month period before the agent
location was suspended, it generated at least 173 fraud complaints totaling
$316,400, and paid out over $1.2 million in suspected fraud. 

32

Western Union Has Failed to
Effectively Train, Monitor, and Review Agents 

79. For many years, Western
Union has failed to effectively train, monitor, and review its agents,
subagents, and FLAs to detect and prevent consumer fraud and to prevent
potential complicity at agent locations. 

80. For many years, Western
Union has provided only limited training to agents and subagents with respect to
detecting and preventing consumer fraud, and its training overall has been
inadequate and ineffective. In many instances, FLAs responsible for processing
fraud-induced money transfers at Western Union’s agent locations have not been
knowledgeable about Western Union’s anti-fraud and/or AML policies and
procedures, including with respect to detecting and preventing fraud, properly
recording customers’ biographical information and IDs, and addressing suspicious
activities. Western Union also has not had an adequate and effective system in
place to ensure that FLAs are knowledgeable in these areas. As a result, in many
instances, Western Union’s high-fraud agent locations have violated the
company’s policies and procedures by failing to collect proper IDs or
biographical information from recipients of money transfers, accepting improper
forms of IDs, or recording obviously incorrect or fictitious ID information into Western Union’s system.

81. Western Union’s complaint
database shows that its agent locations that have paid out fraud-induced money
transfers frequently have permitted fraudsters to pick up money transfers using
fake IDs, or without recording IDs or other required information. For example,
in many instances, these agent locations have recorded the same IDs for multiple
recipients, or different IDs for the same recipients. In addition, for tens of
thousands of fraud-induced money transfers, Western Union’s records frequently
show no birthdates, or facially invalid birthdates, such as “1/1/1900,” for the
recipients. Western Union’s records also show that its agent locations have paid
out at least 32,764 money transfers of $1,000 or more that consumers reported as
fraudulent from 2004 through August 2015 without recording any ID information
for the recipients. 

82. In addition, despite
Western Union’s 2005 Agreement with the States, which required Western Union to
“commence a program of person-to-person or telephone training at agent locations
known to have a materially elevated level of outgoing or incoming fraud-induced
transfers sent from the United States to anywhere except Mexico,” in many cases,
and especially with respect to foreign agents and subagents, Western Union
failed to comply with this requirement. For example, with respect to many of its
foreign agent locations that have exhibited high fraud levels, Western Union’s
practice was only to train the master agents and not to conduct person-to-person
or telephone training at the agent locations that exhibited high levels of
fraud. 

33

83. For many years, Western
Union has failed to adequately monitor its agents’ activity for fraud. In many
instances, Western Union employees responsible for monitoring the activities of
agent locations have not been provided with sufficient information or resources
to adequately monitor Western Union’s agents, subagents, and FLAs. For example,
in some instances, Western Union has assigned more than one agent ID number to a
single agent or subagent without providing Western Union employees with the
means to easily locate all of the agent’s or subagent’s ID numbers in Western
Union’s system. Western Union has similarly failed to provide its employees with
the means to easily identify agents or subagents with common ownership. In
addition, in some cases, Western Union’s employees have been unable to identify
problematic FLAs because FLAs have not used unique IDs when processing money
transfers. Western Union’s employees also sometimes have not had complete and
historical information about particular agents and subagents, including
information about all fraud complaints, prior reviews, investigations, and
internal reports related to fraud, as well as transactional activity. Therefore,
Western Union employees responsible for monitoring agent activity may not have
been aware of all relevant information. 

84. Western Union has failed
to conduct adequate and routine onsite compliance reviews of its agent locations
worldwide. Western Union often has relied on its master agents to conduct
reviews, but has failed to ensure that those master agents are conducting
adequate and effective oversight of their subagents and locations. In some
cases, those agents have not even allowed Western Union employees to visit
locations without them being present. In other cases, Western Union’s employees
have not been able to conduct independent onsite reviews of certain locations
because they were in areas considered too dangerous to visit. Western Union also
has failed to conduct adequate and routine onsite reviews of many of its
independent agents. 

85. For many years, consumer
fraud was not even routinely addressed in compliance reviews of agents. Even
after it was added to the list of topics for these reviews, consumer fraud for
many years was addressed only in a cursory manner. In addition, in many
instances, Western Union employees who conduct compliance reviews have not been
provided with information about fraud complaints received involving the agents
being reviewed, so the employees could not adequately address issues related to
the complaints in their reviews. 

34

Western Union Has Failed to
Adequately Collect, Record, 

and Report Consumer Fraud Involving Its Money
Transfer System 

86. Since at least January
2004, Western Union has maintained a complaint database, which contains
information relating to complaints or reports the company receives about
fraud-induced money transfers. 

87. The information contained
in Western Union’s complaint database significantly understates the number of
actual fraud-induced money transfers and losses reported to the company. Despite
receiving information from consumers, their family members, or law enforcement
representatives about fraud-induced money transfers, Western Union often has
failed to record information about all of those money transfers in its complaint
database. In other instances, Western Union has failed to record in its database
any of the victims’ fraud-induced money transfers. 

88. Up until in or around
December 2011, Western Union did not provide any toll-free number that consumers
in countries other than the United States and Canada could use to report fraud
and to try to stop the payout of a fraud-induced money transfer. For example,
Western Union did not provide fraud hotlines for consumers in Germany, Mexico,
Spain, and the UK until December 2011, for consumers in Australia, Japan, and
Malaysia until February 2012, and for consumers in Austria, Belgium, Luxembourg,
and Switzerland until August 2012.

35

89. Western Union uses the
information in its complaint database to administer its anti-fraud program, so
it is important that the database be accurate and complete. For example, Western
Union uses this information to: (a) monitor and identify agents, subagents, and
FLAs that may be complicit in frauds; (b) create automated rules regarding
particular corridors (e.g., limiting the number
and amount of money transfers to receivers); and (c) interdict individuals who
are the victims or the perpetrators of frauds. Therefore, Western Union’s
failure to keep accurate and complete records of fraud-induced money transfers
has impeded its efforts to detect and prevent consumer fraud. 

90. Although Western Union
employees have brought the underreporting of fraud-induced money transfers in
the company’s complaint database to the attention of those responsible for
maintaining the database, Western Union has failed to take adequate corrective
action, if any, to address the problem. 

91. Although the Financial
Crime Enforcement Network (“FinCEN”), the primary administrator of the BSA,
requires money services businesses like Western Union to file Suspicious
Activity Reports (“SARs”) relating to fraud, Western Union has, in many cases,
failed to file SARS on, and identify as the subject of SARS, particular agent
locations in foreign countries that have processed high levels of fraud-induced
money transfers sent by U.S. consumers and exhibited other suspicious
activities. 

36

Western Union Has Failed
to Take Other Reasonable Measures to
Mitigate Fraud in Connection With Its
Processing of Money Transfers

92. For many years, Western
Union has failed to take other reasonable measures to mitigate fraud in
connection with its processing of money transfers, ignoring in some instances
useful suggestions and recommendations from its employees and representatives of
law enforcement agencies. These types of measures include, but are not limited
to, the following: bolstering its ID requirements for sending or receiving money
transfers, such as by imposing more robust ID requirements; requiring the
collection of additional biographical information; implementing more controls
for noncompliant transactions or potentially fraud-induced money transfers,
including, but not limited to, transactions with data integrity issues and to
high-risk countries; improving the company’s handling of, and ability to
receive, complaints about fraud worldwide; and improving its interdiction system
to be more effective in blocking money transfers associated with consumer fraud,
including, but not limited to, by permanently blocking payouts to the recipients
of fraud-induced money transfers. 

93. Western Union has made it
difficult for employees to take meaningful action to detect and prevent consumer
fraud, including by failing to provide employees with sufficient information or
resources, including complete records of consumer fraud complaints, as well as
information about law enforcement contacts, investigations, and actions. For
many years, departments within Western Union
responsible for handling consumer fraud issues did not routinely share
consumer fraud information with other
groups or departments. 

94. Although Western Union
relies on its agents to comply with Western Union’s anti-fraud and AML programs,
and to oversee the activity of their own subagents, locations, and FLAs, it
often fails to provide its agents with the information necessary to conduct
effective fraud reviews and to detect and prevent consumer fraud, including the
potential complicity of particular agent locations and FLAs. For example,
Western Union typically does not share with the agents themselves complaints it
has received about fraud-induced money transfers processed by the agent
locations or FLAs. Therefore, despite being tasked with overseeing the conduct
of their own subagents, locations, and FLAs, Western Union’s agents in many
cases are unaware of the nature, details, history, and volume of complaints
involving the agent locations and FLAs. 

95. Western Union and its
agents also have failed to provide adequate and effective warnings to consumers
about the fraud occurring through its money transfer system. Although Western
Union provides some warnings on the first page of send forms located at some of
its agent locations, in many cases, these warnings are not clear and conspicuous
to many consumers. In addition, Western Union’s agent locations have failed to
provide routine verbal warnings to consumers before they initiated money
transfers, even in instances where consumers’ money transfers have displayed obvious signs of fraud, such as
high-dollar money transfers by elderly consumers to countries known for fraud.
Therefore, consumers often have been unaware of the risks associated with
sending money through Western Union’s money transfer system. 

37

WESTERN UNION HAS FOR
MANY YEARS FAILED
TO MAKE
EFFECTIVE CHANGES TO PREVENT FRAUD

96. Even after January 2011,
when Western Union claimed in a written report to have implemented “a
comprehensive anti-fraud program” to protect consumers, Western Union still
failed to adopt an adequate and effective anti-fraud program. Although as a
result of the FTC’s investigation, Western Union has improved aspects of its
anti-fraud program since 2012, the company still failed in certain cases to
promptly terminate agents around the world that appeared to be complicit in
paying out the fraud-induced money transfers, including numerous agents in Spain
that operated between January 2011 and December 2012, and were arrested by the
Spanish police in 2014 for their role in laundering large sums of money received
from the fraud victims. As of October 2015, Western Union had rarely, if ever,
terminated agent locations for fraud in certain high-risk countries, including,
but not limited to, Mexico, Nigeria, Ghana, the Dominican Republic, China, and
Haiti, despite high levels of fraud and indications of complicity at agent
locations. 

97. In numerous instances,
Western Union has permitted agent locations to continue operating for months or
years despite high levels of fraud and other suspicious activities. For example,
from July 2009 to as recently as August 2015, an agent location in Malaysia made
payouts relating to at least 252 fraud complaints totaling $389,061. Although
the agent appeared on fraud reports and was reviewed for fraud many times
between 2010 and 2014, the agent has not been terminated. In fact, in 2014,
company executives approved the reactivation of that agent despite being
informed that confirmed and potential fraud, as well as suspicious activity,
amounted to approximately 54% of the agent’s pay volume. An agent location in
Greece made payouts relating to at least 106 fraud complaints totaling $193,696
from July 2013 to October 2014. From 2012 to 2014, the agent paid out $5.4
million in money transfers, of which approximately $3.7 million were for $1,000
or more. That agent operated for over two years despite appearing on internal
fraud or agent complicity index reports multiple times and being reviewed for
fraud at least three times with findings of suspicious activities. From
September 2013 to August 2015, an agent in Thailand paid out money transfers
associated with at least 1,197 complaints totaling $425,409, of which 336
complaints totaling $117,290 were paid out in April 2015 alone. That agent was
allowed to continue operating, despite a review in 2013 finding that 63% of the
agent’s transactions in two months amounted to confirmed fraud and questionable
activity, and a review in 2015 associated
with three of its agent ID numbers finding that 25% of its activity in one
month, amounting to over $1.2 million, was connected to fraud.

38

VIOLATIONS OF THE FTC
ACT 

98. Section 5(a) of the FTC
Act, 15 U.S.C. § 45(a), prohibits “unfair” or “deceptive” acts and practices in
or affecting commerce, including acts or practices involving foreign commerce
that “cause or are likely to cause reasonably foreseeable injury within the
United States” or “involve material conduct occurring within the United
States.”

99. Acts or practices are
unfair under Section 5 of the FTC Act if they cause substantial injury to
consumers that consumers cannot reasonably avoid themselves and that is not
outweighed by countervailing benefits to consumers or competition. 15 U.S.C. §
45(n). 

COUNT I 

Unfair Acts or
Practices 

100. In numerous instances, in
operating its worldwide money transfer system, Defendant has failed to take
timely, appropriate, and effective action to detect and prevent fraud-induced
money transfers through Defendant’s system, as described above. 

101. Defendant’s actions cause
or are likely to cause substantial injury to consumers that consumers cannot
reasonably avoid themselves and that is not outweighed by countervailing
benefits to consumers or competition. 

102. Therefore, Defendant’s
practices as described in Paragraph 100 above constitute unfair acts or
practices in violation of Section 5 of the FTC Act, 15 U.S.C. §§ 45(a) and
45(n). 

39

THE
TSR 

103. Congress directed the FTC
to prescribe rules prohibiting abusive and deceptive telemarketing acts or
practices pursuant to the Telemarketing Act, 15 U.S.C. §§ 6101-6108. The FTC
adopted the original TSR in 1995, extensively amended it in 2003, and amended
certain provisions thereafter. 16 C.F.R. Part 310. 

104. Defendant, its agents, or
subagents have processed money transfers and provided related services on behalf
of persons who are “sellers” or “telemarketers” engaged in “telemarketing,” as
those terms are defined in Sections 310.2 (dd), (ff), and (gg) of the
TSR.

105. The TSR prohibits
telemarketers and sellers from making a false or misleading statement to induce
any person to pay for goods or services. 16 C.F.R. § 310.3(a)(4). 

106. The TSR also prohibits
telemarketers and sellers from, among other things, requesting or receiving
payment of any fee or consideration in advance of obtaining a loan or other
extension of credit when the seller or telemarketer has guaranteed or
represented a high likelihood of success in obtaining or arranging a loan or
other extension of credit. 16 C.F.R. § 310.4(a)(4).

107. It is a violation of the
TSR for any person to provide “substantial assistance or support” to any seller
or telemarketer when that person “knows or consciously avoids knowing” that the
seller or telemarketer is engaged in any act or practice that violates Sections
310.3(a), (c), or (d), or 310.4 of the TSR. 16 C.F.R. § 310.3(b).

108. On December 14, 2015, the
FTC published a notice that it had adopted amendments to the TSR, including a
prohibition against using “cash-to-cash” money transfers for outbound and
inbound telemarketing transactions. 80 Fed. Reg. 77520 (Dec. 14, 2015). This
prohibition became effective on June 13, 2016. 

109. Pursuant to Section 3(c)
of the Telemarketing Act, 15 U.S.C. §
6102(c), and Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation
of the TSR constitutes an unfair or deceptive act or practice in or affecting
commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

40

VIOLATIONS OF THE
TSR

COUNT
II

Assisting and
Facilitating TSR Violations 

110. In numerous instances, in
the course of processing money transfers, Defendant, its agents, or subagents
have provided substantial assistance or support to sellers or telemarketers who
Defendant or its agents or subagents knew or consciously avoided
knowing:

a. Induced consumers to pay
for goods and services through the use of false or misleading statements,
including, without limitation, the statement that the consumer has won and will
receive a large cash award if the consumer pays a requested fee or fees, in
violation of Section 310.3(a)(4) of the TSR, 16 C.F.R. § 310.3(a)(4);
and

b. Requested or received
payment of a fee or consideration in advance of consumers obtaining a loan when
the seller or telemarketer has guaranteed or represented a high likelihood of
success in obtaining or arranging a loan for a person in violation of Section
310.4(a)(4) of the TSR. 

111. Defendant’s acts or
practices, as described in Paragraph 110 above, constitute deceptive
telemarketing acts or practices that violate the TSR, 16 C.F.R. §310.3(b).

41

CONSUMER
INJURY 

112. Consumers have suffered
and will continue to suffer substantial injury as a result of Defendant’s
violations of the FTC Act and the TSR. In addition, Defendant has been unjustly
enriched as a result of its unlawful acts or practices. Absent injunctive relief
by this Court, Defendant is likely to continue to injure consumers, reap unjust
enrichment, and harm the public interest. 

THIS COURT’S POWER TO
GRANT RELIEF

113. Section 13(b) of the FTC
Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and such other
relief as the Court may deem appropriate to halt and redress violations of any
provision of law enforced by the FTC. The Court, in the exercise of its
equitable jurisdiction, may award ancillary relief, including rescission or
reformation of contracts, restitution, the refund of monies paid, and the
disgorgement of ill-gotten monies, to prevent and remedy any violation of any
provision of law enforced by the FTC. 

42

PRAYER FOR
RELIEF 

114. WHEREFORE, Plaintiff, the
Federal Trade Commission, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), Section 6(b) of the
Telemarketing Act, 15 U.S.C. § 6105(b), and
the Court's own equitable powers, requests that the Court: 

1. Enter a permanent injunction to prevent future
violations of the FTC Act and the TSR by Defendant; 

2. Award such relief as the Court finds necessary to
redress injury to consumers resulting from Defendant's violations of the FTC Act and the TSR, including, but not
limited to, rescission or reformation of contracts, restitution, the refund of
monies paid, and the disgorgement of ill-gotten monies; and 

3. Award Plaintiff the costs of bringing this action,
as well as such other and additional relief as the Court may determine to be just and proper.

	Dated: January 19, 2017	Respectfully Submitted,
	 
		DAVID C. SHONKA 
		Acting General Counsel
		 	
		/s/ Karen D.
      Dodge	 
		KAREN D. DODGE (IL 6204125)
		JOANNIE T. WEI (IL 6276144)
		ELIZABETH C. SCOTT (IL 6278075)
		Attorneys for Plaintiff
		Federal Trade Commission
		55
      West Monroe Street, Suite 1825
		Chicago, Illinois 60603
		(312) 960-5634 (telephone)
		(312) 960-5600 (facsimile)
		kdodge@ftc.gov (Dodge)
		jwei@ftc.gov (Wei)
		escott@ftc.gov (Scott)

43

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