Settlements relate to conduct that mainly occurred 2004 to 2012;
Company
has increased compliance funding 200 percent in the last five years;
Business
performance for 2016 in line with previous outlook
ENGLEWOOD, Colo.--(BUSINESS WIRE)--
The Western Union Company (NYSE: WU) today announced agreements with the
U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) that
resolve previously disclosed investigations focused primarily on the
Company’s oversight of certain agents and whether its anti-fraud
program, as well as its anti-money laundering controls, adequately
prevented misconduct by those agents and third parties. The conduct at
issue mainly occurred from 2004 to 2012.
As part of this resolution, Western Union will enter into a deferred
prosecution agreement with the DOJ and a consent order with the FTC. The
Company will pay a total of $586 million to the federal government,
which is to be used to reimburse consumers who were victims of fraud
during the relevant period. Western Union also will take specific
actions to further enhance its oversight of agents and its protection of
customers. Those actions will be reviewed by an independent compliance
auditor for three years.
Western Union said: “We share the government’s goal of protecting
consumers and the integrity of our global money transfer network, and we
worked hard to resolve these matters with the government.” The Company
emphasized: “We are committed to enhancing our compliance programs
to prevent illicit activity on our network and protect customers who
transfer money to friends, family and businesses.”
Over the past five years, Western Union increased overall compliance
funding by more than 200 percent, and now spends approximately $200
million per year on compliance, with more than 20 percent of its
workforce currently dedicated to compliance functions. The comprehensive
improvements undertaken by the Company have added more employees with
law enforcement and regulatory expertise, strengthened its consumer
education and agent training, bolstered its technology-driven controls
and changed its governance structure so that its Chief Compliance
Officer is a direct report to the Compliance Committee of the Board of
Directors.
Many state, national and international regulators and law enforcement
agencies have commended Western Union in recent years for its compliance
innovations, such as developing algorithms to help combat terrorist
financing, and for assisting with numerous investigations.
Western Union noted that its compliance enhancements have produced
significant and measurable results. The incidence of consumer fraud
reports associated with Western Union money transfers has been extremely
low – less than one-tenth of 1 percent of all consumer-to-consumer money
transfer transactions during the past 10 years. And, over the last five
years, the dollar value of reported fraud in consumer-to-consumer
transactions, compared with the total value of all such transactions,
has dropped more than 60 percent.
In late November 2016, as had previously been requested by the Company,
the DOJ provided to the Company a proposal for a combined resolution of
investigations by the U.S. Attorney’s Offices for the Eastern and Middle
Districts of Pennsylvania, the Central District of California and the
Southern District of Florida, which the Company sought to coordinate
with the resolution of other potential government claims. The Company
and the government agencies then engaged in intensive negotiations,
which led to the agreements announced today.
In addition to the resolution of the previously disclosed DOJ and FTC
investigations, the Company will simultaneously resolve, without any
additional payment or non-monetary obligations, potential claims by the
U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN)
relating to conduct in the 2010 to 2012 period that FinCEN contended
violated the Bank Secrecy Act. The Company received a notice of
investigation from FinCEN in mid-December 2016. The separate agreement
with FinCEN sets forth a civil penalty of $184 million, the full amount
of which will be deemed satisfied by the $586 million compensation
payment under the DOJ and FTC agreements.
Western Union anticipates taking a charge of approximately $570 million
in its 2016 fourth quarter, to record the costs associated with the
settlements, fees for the required independent compliance auditor, and
related matters. This amount is in addition to amounts previously
accrued in 2016 in connection with the FTC matter. The Company intends
to claim a deduction for the settlement payment, but because the tax
effect is not certain the Company does not anticipate recording a
related tax benefit in the fourth quarter.
Excluding the fourth-quarter charge, the Company anticipates reporting
2016 financial results in line with its financial outlook provided on
November 1, 2016. Western Union will report its full fourth-quarter
results on February 9, 2017.
About Western Union
The Western Union Company (NYSE: WU) is a leader in global payment
services. Individuals and families around the world count on Western
Union to reliably and efficiently transfer billions of dollars each year
to pay for education, purchase necessities, run businesses and/or help
relatives. These services provide an economic lifeline to many people
who lack access to the traditional financial system, and play an
important role in supporting developing economies.
As of September 30, 2016, the Western Union, Vigo and Orlandi Valuta
branded services were offered through a combined network of over 550,000
agent locations in more than 200 countries and territories and over
100,000 ATMs and kiosks, and included the capability to send money to
billions of accounts. In 2015, The Western Union Company completed 262
million consumer-to-consumer transactions worldwide, moving $82 billion
of principal between consumers, and 508 million business payments.
For more information, visit www.westernunion.com.
Safe Harbor Compliance Statement for Forward-Looking Statements
This press release contains certain statements that are forward-looking
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are difficult
to predict. Actual outcomes and results may differ materially from those
expressed in, or implied by, our forward-looking statements. Words such
as "expects," "intends," "anticipates," "believes," "estimates,"
"guides," "provides guidance," "provides outlook" and other similar
expressions or future or conditional verbs such as "may," "will,"
"should," "would," "could," and "might" are intended to identify such
forward-looking statements. Readers of this press release of The Western
Union Company (the "Company," "Western Union," "we," "our" or "us")
should not rely solely on the forward-looking statements and should
consider all uncertainties and risks discussed in the "Risk Factors"
section and throughout the Annual Report on Form 10-K for the year ended
December 31, 2015. The statements are only as of the date they are made,
and the Company undertakes no obligation to update any forward-looking
statement.
Possible events or factors that could cause results or performance to
differ materially from those expressed in our forward-looking statements
include the following: (i) events related to our business and industry,
such as: changes in general economic conditions and economic conditions
in the regions and industries in which we operate, including global
economic and trade downturns, or significantly slower growth or declines
in the money transfer, payment service, and other markets in which we
operate, including downturns or declines related to interruptions in
migration patterns, or non-performance by our banks, lenders, insurers,
or other financial services providers; failure to compete effectively in
the money transfer and payment service industry, including among other
things, with respect to price, with global and niche or corridor money
transfer providers, banks and other money transfer and payment service
providers, including electronic, mobile and Internet-based services,
card associations, and card-based payment providers, and with digital
currencies and related protocols, and other innovations in technology
and business models; deterioration in customer confidence in our
business, or in money transfer and payment service providers generally;
our ability to adopt new technology and develop and gain market
acceptance of new and enhanced services in response to changing industry
and consumer needs or trends; changes in, and failure to manage
effectively, exposure to foreign exchange rates, including the impact of
the regulation of foreign exchange spreads on money transfers and
payment transactions; any material breach of security, including
cybersecurity, or safeguards of or interruptions in any of our systems
or those of our vendors or other third parties; cessation of or defects
in various services provided to us by third-party vendors; mergers,
acquisitions and integration of acquired businesses and technologies
into our Company, and the failure to realize anticipated financial
benefits from these acquisitions, and events requiring us to write down
our goodwill; political conditions and related actions in the United
States and abroad which may adversely affect our business and economic
conditions as a whole, including interruptions of United States or other
government relations with countries in which we have or are implementing
significant business relationships with agents or clients; failure to
manage credit and fraud risks presented by our agents, clients and
consumers; failure to maintain our agent network and business
relationships under terms consistent with or more advantageous to us
than those currently in place, including due to increased costs or loss
of business as a result of increased compliance requirements or
difficulty for us, our agents or their subagents in establishing or
maintaining relationships with banks needed to conduct our services;
decisions to change our business mix; changes in tax laws, or their
interpretation, and unfavorable resolution of tax contingencies; adverse
rating actions by credit rating agencies; our ability to realize the
anticipated benefits from productivity and cost-savings and other
related initiatives, which may include decisions to downsize or to
transition operating activities from one location to another, and to
minimize any disruptions in our workforce that may result from those
initiatives; our ability to protect our brands and our other
intellectual property rights and to defend ourselves against potential
intellectual property infringement claims; our ability to attract and
retain qualified key employees and to manage our workforce successfully;
material changes in the market value or liquidity of securities that we
hold; restrictions imposed by our debt obligations; (ii) events related
to our regulatory and litigation environment, such as: liabilities or
loss of business resulting from a failure by us, our agents or their
subagents to comply with laws and regulations and regulatory or judicial
interpretations thereof, including laws and regulations designed to
protect consumers, or detect and prevent money laundering, terrorist
financing, fraud and other illicit activity; increased costs or loss of
business due to regulatory initiatives and changes in laws, regulations
and industry practices and standards, including changes in
interpretations in the United States and globally, affecting us, our
agents or their subagents, or the banks with which we or our agents
maintain bank accounts needed to provide our services, including related
to anti-money laundering regulations, anti-fraud measures, customer due
diligence, agent and subagent due diligence, registration and monitoring
requirements, and consumer protection requirements; liabilities or loss
of business and unanticipated developments resulting from governmental
investigations and consent agreements with or enforcement actions by
regulators, including those associated with compliance with or failure
to comply with the settlement agreement with the State of Arizona, as
amended; the potential impact on our business from the Dodd-Frank Wall
Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as
well as regulations issued pursuant to it and the actions of the
Consumer Financial Protection Bureau and similar legislation and
regulations enacted by other governmental authorities related to
consumer protection; liabilities resulting from litigation, including
class-action lawsuits and similar matters, including costs, expenses,
settlements and judgments; failure to comply with regulations and
evolving industry standards regarding consumer privacy and data use and
security; effects of unclaimed property laws; failure to maintain
sufficient amounts or types of regulatory capital or other restrictions
on the use of our working capital to meet the changing requirements of
our regulators worldwide; changes in accounting standards, rules and
interpretations or industry standards affecting our business; and (iii)
other events, such as: adverse tax consequences from our spin-off from
First Data Corporation; catastrophic events; and management's ability to
identify and manage these and other risks.
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Source: The Western Union Company