MoneyGram International will pay a $125m fine after breaching a settlement that required it to improve its anti-money laundering controls, the US Department of Justice announced on Thursday.
The company had “significant weaknesses” in its anti-fraud and anti-money laundering programme, according to the justice department, even after settling charges in 2012 it had aided and abetted wire fraud by wilfully failing to maintain effective checks on money laundering.
MoneyGram failed to block at least $125m in fraudulent transactions between April 2015 and October 2016 as a result of a new, ineffective fraud prevention system it implemented, according to a court filing.
The filing said the company had told the justice department the increased amount of fraud going through its systems “was substantially related to external circumstances”.
The DoJ required the company to forfeit $125m and extended a 2012 deferred prosecution agreement, which had originally been due to end in November last year, until May 2021.
In a parallel announcement, the Federal Trade Commission said it had settled allegations that MoneyGram violated a 2009 order to crack down on fraudulent money transfers.
The FTC alleged the company failed to take steps to address fraud originating from large agents, instead targeting lower volume “mom and pop” agents “while treating large chain agents differently”.
“MoneyGram did not place any restrictions on one large chain agent until approximately mid-2013, even though the chain was the subject of more fraud complaints than any other MoneyGram agent worldwide,” the FTC alleged in its announcement.
Alex Holmes, MoneyGram’s chief executive, said its consumer fraud reports were at a seven-year low and less than 0.05 per cent of the company’s transactions were reported as fraudulent.
“Over the past several years, we have taken significant steps to improve our compliance programme and have remediated many of the issues noted in the agreements,” he said.
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