By: James W. Kraus
MoneyGram International, Inc. has entered into a Deferred Prosecution Agreement (DPA) with DOJ in which it admits to criminally aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program. As part of the agreement, a criminal information was filed in the U.S. District Court for the Middle District of Pennsylvania. The DPA calls for MoneyGram to forfeit $100 million.
MoneyGram International, Inc., which is headquartered in Dallas, operates a global money business, providing electronic money transfers. According to the government, MoneyGram processed thousands of transactions from MoneyGram agents known to be involved in an international scheme to defraud members of the public. MoneyGram profited by collecting fees and other revenue from the fraudulent transactions. Apparently, the scams included posing as victims, relatives in urgent need of money and falsely promising victims large cash prizes. The government alleged that in each of the cases, the perpetrators required the victims to send them funds through MoneyGram’s money transfer system. MoneyGram acknowledged that, despite the complaints of thousands of victims, it failed to terminate the agents involved in the scams.
The government further alleged that MoneyGram’s involvement in the fraud scheme resulted from a failure to meet its Anti-Money Laundering (AML) obligations under the Bank Secrecy Act (BSA), 31 U.S.C. §§ 5311 et seq., including failure to implement policies governing the termination of agents involved in fraud; failure to implement policies or procedures to file the required Suspicious Activity Reports (SARs); failure to conduct effective AML audits of its agents and outlets; failure to conduct adequate due diligence on prospective and existing MoneyGram agents; and failure to sufficiently resource and staff its AML program. Most of the requirements noted above were either added to the BSA or strengthened as part of the USA Patriot Act of 2001.
As part of the DPA, MoneyGram is also required for the next five years to retain a corporate monitor who will report regularly to DOJ. The monitor will oversee MoneyGram’s implementation of procedures to accomplish its agreements to enhance compliance obligations and structural changes to prevent a repeat of the charged conduct.