MoneyGram Penalized $8.25M for Lax Agent Supervision During Chinese Transfer Spike

MoneyGram has agreed to pay an $8.25 million fine related to its failure to properly monitor local storefronts’ transfer activity to China. The company confirmed today it agreed to the settlement with the New York Department of Financial Services through a consent order. The company will also have to complete additional reporting obligations.

MoneyGram failed to properly supervise six storefront agents in New York City during a significant increase in financial transfers to China during 2015. One of those locations was in Flushing, Queens.

In the year before the spike, there were 7,500 transactions worth roughly $30 million, according to the department. In 2016 through May 2017 those numbers tripled to more than 25,000 transactions which collectively exceeded $100 million.

“The dramatic change in the number and size of the transactions processed by New York agents — most of which were small, store-front independent agents — was a clear indicator of increased money laundering risk, particularly given that the destination was known to carry a high AML risk,” the department said. “Moreover, other aspects of the increased transactions, including a suspicious pattern that many different senders transmitted money to the same recipient, were problematic and should have put MoneyGram on clear notice to address these risks.”

“The consent order resolves the department’s investigation into MoneyGram’s failure to adequately supervise local agents in New York City, including the Flushing neighborhood of Queens, that processed a substantial volume of suspicious transactions to China, in violation of Bank Secrecy Act/Anti-Money Laundering requirements and New York law.”

“Many New Yorkers depend on money transmitters to send money to their families, pay bills, and conduct other financial transactions,” said Superintendent Adrienne Harris. “To maintain the integrity of that system for law-abiding New Yorkers, it is crucial money transmitters like MoneyGram diligently monitor all activity on its platform to prevent bad actors from abusing the system for illegal means.”

MoneyGram ended its relationship with those agents following the discovery of the activity and said it began instituting remedial measures designed to ensure better agent supervision. They must also report on the enhancements to the policies and procedures of its BSA/AML compliance program, its Suspicious Activity Monitoring and Reporting program, and customer due diligence requirements.

“We’re pleased that this legacy matter from many years ago is now behind us,” said Alex Holmes, MoneyGram’s chairman and chief executive officer. “MoneyGram continues to work diligently to prevent its systems from being used to perpetrate any unlawful activity. Building an industry-leading compliance program has for years been front and center of our commitment to protecting our customers and communities.”


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