Payment transfer company MoneyGram has agreed to pay $100 million and admitted it played a part in wire fraud, money laundering program, this according to court documents filed Friday.
It is said that between the years 2003 and 2009 the company processed thousands of transactions, by its very own agents, that willfully tricked victims into sending money posing as relatives or promising some types of cash prizes.
The company received thousands of complaints about the fraud, but never did anything to the agents involved. The company also admits it did not maintain an effective anti-fraud program.
This is one of the first big new cases from the government’s new Money Laundering and Bank Integrity unit. Swiss bank HSBC also said this week it is setting up to $1.5 billion aside for charges it violated money laundering laws.
MoneyGram has in turn agreed to a monitor and to create an independent ethics committee. The Justice Department says it will drop any criminal charges if it agrees to the terms.
The amount of the settlement equals the amount of the fraud and the Justice Department says that it will compensate the victims with this money. The settlement caused the company to sustain losses of $54.8 million now for the third quarter.
“Since 2009, we’ve created a new culture at the company and have taken numerous steps to enhance our global compliance and anti-fraud programs,” said Chief Executive Pamela Patsley.
MoneyGram has 284,000 money transfer agents worldwide in 196 countries and says it has created two new positions to combat against such fraud in the future.
MoneyGram customers use third-party agents to transfer money all over the world. Unlike newer online payment transfer services, where you need a credit card, MoneyGram is popular with those people who have no card and use cash. Because of the predominant usage of cash, when money was stolen it was impossible to retrieve.