MoneyGram International has agreed to pay a fine of $125m to resolve charges by Federal Trade Commission (FTC) and the Department of Justice (DoJ) that it failed to control fraudulent remittances.
FTC said that MoneyGram breached a 2009 order that required the company to probe, suspend, and terminate high-fraud agents.
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The agency alleged that the company did not adequately address fraud originating from large agents and instead focussed on lower-volume, “mom and pop” agents.
The firm was also accused of failing to record complaints about fraud-induced money transfers and sharing it with FTC, as required under the 2009 order. Besides, it failed to offer adequate training on fraud management to agents, FTC said.
At the same time, MoneyGram was accused of breaching a 2012 deferred prosecution agreement (DPA) with the DoJ that required the company to put in place effective anti-money laundering measures.
However, the firm breached the settlement, DoJ said, resulting in the processing of another $125m of fraudulent transactions between April 2015 and October 2016. The settlement amount will be paid to consumers affected by the fraud.
In response, MoneyGram chairman and CEO Alex Holmes said: “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. Currently, our consumer fraud reports are at a 7-year low and less than 0.05 percent, or 5 basis points, of all transactions conducted through MoneyGram systems are reported as fraudulent.
“We will continue to bolster our compliance programme to ensure it meets the highest industry standards and advances our goal of providing increased protection for all consumers.”
