MoneyGram International Inc., a company that provides money transfer services, has reached a deal with the U.S. Department of Justice and will pay $100 million for aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program.
According to court documents, MoneyGram was involved in mass marketing and consumer fraud phishing schemes, perpetrated by corrupt MoneyGram agents and others. Starting in 2004 and continuing until 2009, the scams – which generally targeted the elderly and other vulnerable groups – included posing as victims’ relatives in urgent need of money and falsely promising victims large cash prizes, various high-ticket items for sale over the Internet at deeply discounted prices or employment opportunities as “secret shoppers.”
In each case, the perpetrators required the victims to send them funds through MoneyGram’s money transfer system. Despite thousands of complaints by customers who were victims of fraud, MoneyGram failed to terminate agents that it knew were involved in scams.
“MoneyGram’s broken corporate culture led the company to privilege profits over everything else,” said Assistant Attorney General Breuer.
“MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetrate fraudulent schemes targeting the elderly and other vulnerable victims," Breuer continued. "In addition to forfeiting $100 million, which will be used to compensate victims, MoneyGram must for the next five years retain a corporate monitor who will report regularly to the Justice Department.”
In addition to the fine, MoneyGram has agreed to enhanced compliance obligations and structural changes including: the creation of an independent compliance and ethics committee; adoption of a worldwide anti-fraud and anti-money laundering standard; adoption of a bonus system which rates all executives on success in meeting compliance obligations and adoption of enhanced due diligence for agents deemed to be high risk or operating in a high-risk area.