The Western Union Co. has agreed to forfeit $586 million and admitted to crimes in connection with money laundering and fraud schemes, in an agreement announced Thursday by the U.S. Justice Department and Federal Trade Commission.
In its agreement with the Justice Department, Western Union admits to criminal violations, including willfully failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud, officials said.
According to the written admissions, between 2004 and 2012, Western Union violated the Bank Secrecy Act and anti-fraud statutes by processing hundreds of thousands of transactions for Western Union agents and others involved in an international consumer fraud scheme.
As part of the scheme, offenders contacted victims in the United States and falsely posed as family members in need. Or, they promised prizes or job opportunities, according to a deferred prosecution agreement and an accompanying statement of facts,
Scheme participants directed the victims to wire money through Western Union to help their relative or claim their prize. Various Western Union agents were complicit, taking a cut of of the money transfer, prosecutors said.
Western Union, which is based in Englewood, Colorado, knew of, but failed to take corrective action against its agents involved in or facilitating ,fraud-related transactions, the Justice Department said in a statement.
Prosecutors said the company failed to fire or discipline agents who ,repeatedly violated federal law and Western Union policy through their illegal activity in the Central District of California, which includes Los Angeles, Orange, Ventura, Santa Barbara and San Luis Obispo counties, and elsewhere.
The FBI and other agencies found that Shen Zhou International in Monterey Park sent more than $310 million in Western Union transactions to China — about 50 percent of which were structured to avoid federal money reporting regulations, prosecutors said.
The owner of Shen Zhou — Zhihe “Frank” Wang, 60, of Monterey Park — pleaded guilty in 2013 to one count of structuring international transactions to evade reporting requirement in Santa Ana federal court.
Wang admitted making numerous transmission to China in $2,500 increments, which is just below the $3,000 amount that triggers various reporting and record-keeping requirements for money transmitters.
Western Union had policies against that, but took no disciplinary action against Shen Zhou beyond one 90-day probation in January 2006 during which Shen Zhou continued to process transactions, according to the Justice Department.
“This settlement should go a long way in thwarting the proceeds of illicit transactions being sent to China to fund human smuggling or drug trafficking, as well as to interrupt the ease with which scam artists flout U.S. banking regulations in schemes devised to defraud vulnerable Americans,” said Deirdre Fike, the assistant director in charge of the FBI’s Los Angeles field office.