Money services business agrees to extend DOJ deferred prosecution agreement; settles FTC order breach

Financial Crimes DOJ FTC Anti-Money Laundering Settlement

On November 8, the DOJ announced that a money services business has agreed to forfeit $125 million and extend its deferred prosecution agreement (DPA) due to deficiencies in its anti-fraud and anti-money laundering (AML) programs. The global settlement also resolves contempt allegations brought by the FTC related to the violation of a 2009 FTC order, which mandated that the company implement a comprehensive fraud prevention program.

The DOJ filed charges against the company in 2012 for allegedly “willfully failing to maintain an effective AML program and aiding and abetting wire fraud,” including scams targeting the elderly and other vulnerable groups that involved victims sending funds through the company’s money transfer system.  In connection with the DOJ’s and company’s joint motion to extend and amend the DPA, the DOJ announced that the company: (i) experienced significant weaknesses in its AML and anti-fraud program; (ii) inadequately disclosed these weaknesses to the government; and (iii) failed to complete all of the DPA’s required enhanced compliance undertakings, resulting in the processing of at least $125 million additional consumer fraud transactions between April 2015 and October 2016. Under the amendment to and extension of the DPA—in effect until May 2021—the company has agreed to, among other things, comply with additional enhanced anti-fraud and AML compliance obligations.

In a related matter, the FTC filed a motion for compensatory relief and modified order for permanent injunction, which alleges that the company failed to adopt and implement a comprehensive fraud prevention program mandated by the 2009 order.  The motion indicates that the company has agreed to the entry of an order modifying the 2009 Order to include a broader range of relief, including a requirement to interdict (or block) the transfers of known fraudsters and provide refunds for non-compliance with certain policies or procedures.