Fintech Western Union Hammered with $586M Fine

Note from the CEO:  So, everyone is worried that the new blockchain technology and Bitcoin can be used for………………………………….all the things good old Western Union has been doing. Whoa! This is really big and since WU is a part of the NASDAQ KFTX fintech index we cover daily, we thought we HAD to cover it. I guess crime does pay, until they catch you.

Western Union, a grand old name from long ago (telegraph lines, etc) has transformed itself into a fintech company over the years, has been busted for fraud, money laundering, illegal gambling and maybe more. Agreeing to pay a huge fine (like, $586M) to the Justice Department and the FTC will result in a big charge against fourth quarter earnings. Worse? A big black eye to a fine old line company.

“Western Union Co. agreed to pay $586 million and admitted it failed to stop money laundering and wire fraud as part of a deal with the U.S.

Lapses in the company’s anti-money laundering controls allowed hundreds of millions of dollars in prohibited transactions to be processed, enabling the proliferation of illegal gambling and scams that defrauded tens of thousands of victims, U.S. authorities said Thursday. Undocumented immigrants from China used Western Union to wire money from New York and California to their human smugglers, the Justice Department said.

The U.S. charged the firm with aiding and abetting wire fraud and failing to keep an effective anti-money laundering program. Prosecutors agreed to put the case on hold for three years and drop it if the company makes promised reforms. In the agreement, Western Union admitted that fraudsters around the world used its system to receive dirty money, and it failed to take action.

“Wiring money can be the fastest way to send it — directly into the pockets of criminals and scam artists,” Acting Assistant Attorney General David Bitkower said in a statement. “Western Union is now paying the price for placing profits ahead of its own customers.”

Read Full Article at Bloomberg