Can You Ever Be Completely Compliant?


Last week Western Union settled with regulators and agreed to pay $586 million to compensate fraud victims. Western Union admitted to willfully aiding and abetting wire fraud.

That is quite a statement.

Over the past 5 years , WU has dedicated over $200M enhancing its AML/BSA and overall compliance structure. It know as almost 20% of it's global organization focused on compliance. Can your company claim that level of investment to manage the complicated network of global regulations? And WU was still fined almost $600 million!

Here is a quote from one of the state regulators involve in the settlement.

“Western Union, the largest money service business in the world, has admitted to a flawed corporate culture that failed to provide a checks and balances approach to combat criminal practices,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “Western Union’s failure to implement proper controls and discipline agents that violated compliances policies enabled the proliferation of illegal gambling, money laundering and fraud-related schemes. Western Union’s conduct resulted in the processing of hundreds of millions of dollars in prohibited transactions.”

Now to be fair, the findings were related to transactions between 2004 and 2012, before the increased investment. However, Western Union has always been a leader in compliance and been well ahead the curve compared to it's competition. Their model of 500,000 agents that utilizes no WU employees to process billions in remittances is inherently more difficult to manage than a traditional FI. But they have utilized automation, technology and on-site visits to minimize the risk, and they still got fined.

Dig deep enough, stress any system and you are going to find weaknesses. And as the global money transfer leader, it is easy for regulator to focus on their deep pockets and brand awareness to make a statement. But regardless of the reason, WU touts compliance as a competitive advantage and they must pay almost 80% of their operating income in fines. How would your company fare?

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