UNITED STATES 
 SECURITIES AND EXCHANGE COMMISSION 
 Washington, D.C. 20549
_______________________________
FORM 8-K
_______________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the 
 Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 19, 2017 
 _______________________________
THE WESTERN UNION COMPANY
(Exact name of registrant as specified in charter) 
_______________________________

Delaware	001-32903	20-4531180	
(State or other jurisdiction	(Commission	(I.R.S. Employer	
of incorporation)	File Number)	Identification No.)	

12500 East Belford Avenue		
Englewood, Colorado	80112	
(Address of principal executive offices)	(Zip Code)	

(866) 405-5012 
 (Registrant’s telephone number, including area code)
N/A 
 (Former name or former address, if changed since last report.)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 	
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 	
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 	
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 
Item 1.01 Entry into a Material Definitive Agreement.
On January 19, 2017, The Western Union Company (the “Company”) announced that it, or its subsidiary Western Union Financial Services, Inc., as specified below, had entered into (1) a Deferred Prosecution Agreement (the “DPA”) with the United States Department of Justice (“DOJ”), and the United States Attorney’s Offices for the Eastern and Middle Districts of Pennsylvania, the Central District of California, and the Southern District of Florida (collectively, the “USAOs”), (2) a Stipulated Order for Permanent Injunction and Final Judgment (the “Consent Order”) with the United States Federal Trade Commission (“FTC”), and (3) a Consent to the Assessment of Civil Money Penalty with the Financial Crimes Enforcement Network (“FinCEN”) of the United States Department of Treasury (the “FinCEN Agreement”), to resolve the respective investigations of those agencies. As previously disclosed in the Company’s filings with the United States Securities and Exchange Commission, the investigations by the DOJ and FTC 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. FinCEN provided notice to the Company dated December 16, 2016 of its investigation regarding possible violations of the United States Bank Secrecy Act. The DPA, Consent Order, and FinCEN Agreement are collectively referred to herein as the “Agreements.”
Under the Agreements, the Company will, among other things, (1) pay an aggregate amount of $586 million to the DOJ to be used to reimburse consumers who were the victims of third-party fraud conducted through the Company’s money transfer services (the “Compensation Payment”), and (2) retain an independent compliance auditor for three years to review and assess actions taken by the Company under the Agreements to further enhance its oversight of agents and protection of consumers. The FinCEN Agreement also sets forth a civil penalty of $184 million, the full amount of which will be deemed satisfied by the Compensation Payment, without any additional payment or non-monetary obligations. No separate payment to the FTC is required under the Agreements. If the Company fails to comply with the Agreements, it could face criminal prosecution, civil litigation, significant fines, damage awards or regulatory consequences which could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.
The foregoing summary of the Agreements does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Agreements, which are filed as Exhibits 10.1, 10.2, and 10.3 to this current report on Form 8-K and incorporated by reference into this Item 1.01. The Company’s press release announcing its entry into the Agreements is attached as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d)  Exhibits.

Exhibit
Number	     	Description of Exhibit	
10.1		Deferred Prosecution Agreement dated January 19, 2017 by and between The Western Union Company, the United States Department of Justice, and the United States Attorney’s Offices for the Eastern and Middle Districts of Pennsylvania, the Central District of California, and the Southern District of Florida	
10.2		Stipulated Order for Permanent Injunction and Final Judgment dated January 19, 2017 by and between The Western Union Company and the United States Federal Trade Commission	
10.3	 	Consent to the Assessment of Civil Money Penalty dated January 19, 2017 by and between Western Union Financial Services, Inc. and the Financial Crimes Enforcement Network of the United States Department of Treasury	
99.1		Press release issued by The Western Union Company on January 19, 2017.	

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: January 20, 2017	THE WESTERN UNION COMPANY	
 	
	By:	       /s/ D ARREN A. D RAGOVICH	
 	Name:   	        Darren A. Dragovich	
	Title:	        Vice President and Assistant Secretary	

EXHIBIT INDEX

Exhibit
Number	     	Description of Exhibit	
10.1		Deferred Prosecution Agreement dated January 19, 2017 by and between The Western Union Company, the United States Department of Justice, and the United States Attorney’s Offices for the Eastern and Middle Districts of Pennsylvania, the Central District of California, and the Southern District of Florida	
10.2		Stipulated Order for Permanent Injunction and Final Judgment dated January 19, 2017 by and between The Western Union Company and the United States Federal Trade Commission	
10.3	 	Consent to the Assessment of Civil Money Penalty dated January 19, 2017 by and between Western Union Financial Services, Inc. and the Financial Crimes Enforcement Network of the United States Department of Treasury	
99.1		Press release issued by The Western Union Company on January 19, 2017.	

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA,		:            		
 		:		
 Plaintiff		:
:	
CRIMINAL No.	
 	 	:		
v.		:		
 		:	(Judge                     )	
 		:		
THE WESTERN UNION COMPANY,		:		
 		:		
Defendant		:		

DEFERRED PROSECUTION AGREEMENT
Defendant THE WESTERN UNION COMPANY (“Western Union” or the “Company”), by its undersigned representatives, pursuant to authority granted by the Company’s Board of Directors, and the United States Department of Justice, Criminal Division, Money Laundering and Asset Recovery Section, the United States Attorney’s Offices for the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania, and the Southern District of Florida (collectively, the “Offices”), enter into this Deferred Prosecution Agreement (the “Agreement”), the terms and conditions of which are as follows:
Criminal Information and Acceptance of Responsibility
1. The Company acknowledges and agrees that the Offices will file the attached two count criminal Information in the United States District Court for the Middle District of Pennsylvania charging the Company with (1) willfully failing to implement an effective anti-money laundering program, in violation of Title 31, United States Code, Sections 5318(h) and 5322 and regulations issued thereunder; and (2) aiding and abetting wire fraud, in violation of Title 18, United States Code, Sections 1343 and 2. In so doing, the Company: (a) knowingly waives its right to indictment on these charges, as well as all rights to a speedy trial pursuant to the Sixth Amendment to the United States Constitution, Title 18, United States Code, Section 3161, and Federal Rule of Criminal Procedure 48(b); and (b) knowingly waives for the purposes of this Agreement and for the purposes of any charges by the United States arising out of the conduct described in the attached Statement of Facts any objection with respect to venue and consents to the filing of the Information, as provided under the terms of this Agreement, in the United States District Court for the Middle District of Pennsylvania. The Offices agree to defer prosecution of the Company pursuant to the terms and conditions described below.
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2. “Western Union Agent” or “Agents” are generally individuals or entities that own and/or operate businesses that have a contractual relationship with Western Union and, by virtue of that contractual relationship are authorized to offer Western Union’s money transfers to consumers. Western Union Agents may have multiple locations where Western Union services are offered. In the U.S., Western Union directly contracts with both network agents and independent agents. Network agents are retail chains that have one contract with Western Union through which the retailer offers Western Union services at multiple locations. Independent agents are small independent businesses such as convenience stores that contract directly with Western Union to offer Western Union services at their locations. In some countries outside the U.S., Western Union may operate through master agents, which are generally independent businesses that in turn subcontract with generally small independent stores who offer Western Union services at their locations. All Western Union Agent locations have access to the Money Transfer System and must send all Western Union transfers by wire via the Money Transfer System. “Western Union Agent” or “Agents” include, but are not limited to, network, independent, master, or subagents. The Company admits, accepts, and acknowledges that it is responsible under United States law for the acts of its officers, directors, and employees, as well as for certain conduct of its Agents, such as use of Western Union’s money transfer system, as charged in the Information, and as set forth in the Statement of Facts attached hereto as Attachment A and incorporated by reference into this Agreement, and that the allegations described in the Information and the facts described in Attachment A are true and accurate. Should the Offices pursue the prosecution that is deferred by this Agreement, the Company stipulates to the admissibility of the Statement of Facts in any proceeding, including any trial, guilty plea, or sentencing proceeding, and will not contradict anything in the Statement of Facts at any such proceeding.
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Term of the Agreement
3. This Agreement is effective for a period beginning on the date on which the Information is filed and ending three (3) years from the later of the date on which the Information is filed or the date on which the Court enters the Agreement. However, the Company agrees that in the event that the Offices determine, in their sole discretion, subject to the notice and opportunity to respond provisions in Paragraph 16, that the Company has knowingly violated any provision of this Agreement, an extension or extensions of the Term of the Agreement may be imposed by the Offices, in their sole discretion, for up to a total additional time period of one year, without prejudice to the Offices’ right to proceed as provided in Paragraphs 15 through 18 below. Any extension of the Agreement extends all terms of this Agreement. Conversely, in the event the Offices find, in their sole discretion, that the provisions of this Agreement have been satisfied, the Term of the Agreement may be terminated early. If the Court rejects the Agreement, all the provisions of the Agreement, including all attachments to and representations in this Agreement, shall be deemed null and void, and the Term shall be deemed to have not begun.
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Relevant Considerations
4. The Offices enter into this Agreement based on the individual facts and circumstances presented by this case and the Company. Among the factors considered were the following:
a. the seriousness of the conduct described in the Statement of Facts including the high-dollar amount of fraud-related and structured funds that the Company transmitted, and misconduct that spanned multiple jurisdictions and was known throughout the Company;
b. the Company’s willingness to acknowledge and accept responsibility for its conduct;
c. the Company’s significant compliance enhancements since at least 2012 designed to improve its anti-money laundering and anti-fraud compliance programs, which demonstrate the Company’s commitment to maintaining and enhancing the effectiveness of its compliance program;
d. the Company’s commitment to continue to enhance its anti-money laundering and anti-fraud compliance programs, including implementing and complying with the Enhanced Compliance Undertaking in Attachment C;
e. the Company’s cooperation with law enforcement;
f. the Company’s agreement to provide the Offices with access to and reports by the independent auditor retained pursuant the Federal Trade Commission (“FTC”) stipulated Order;
g. the Company’s agreement to cooperate with the Offices as described in Paragraph 5 below; and
h. the Company’s willingness to settle any and all civil and criminal claims currently held by the Offices for any act within the scope of the Statement of Facts.
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Future Cooperation and Disclosure Requirements
5. The Company shall cooperate fully with the Offices in any and all matters relating to the conduct described in this Agreement and the Statement of Facts and other conduct under investigation by the Offices or any other component of the Department of Justice at any time during the Term of the Agreement, subject to applicable law and regulations, until the later of the date upon which all investigations and prosecutions arising out of such conduct are concluded, or the end of the Term of the Agreement. At the request of the Offices, the Company shall also cooperate fully with other federal law enforcement and regulatory authorities and agencies, in any investigation of the Company, its subsidiaries or affiliates, or any of its present or former officers, directors, employees, Agents, Agent employees, consultants, or any other party, in any and all matters relating to the conduct described in this Agreement and the Statement of Facts and other conduct under investigation by the Offices or any component of the Department of Justice at any time during the Term of the Agreement. The Company agrees that its cooperation shall include, but not be limited to, the following:
a. The Company shall truthfully disclose all factual information relating to the conduct described in this Agreement and the Statement of Facts and other conduct under investigation by the Offices or any other component of the Department of Justice at any time during the Term of the Agreement in the possession of the Company or its subsidiaries not protected by a valid claim of attorney-client privilege or work product doctrine, with respect to its activities, those of its subsidiaries and affiliates, and those of its present or former directors, officers, employees, Agents, Agent employees, and consultants, including any evidence or allegations and internal or external investigations, or information learned from the FTC Auditor, about which the Company has any knowledge or about which the Offices may inquire. This obligation of truthful disclosure includes, but is not limited to, the obligation of the Company to provide to the Offices, upon request, any document, record or other tangible evidence about which the Offices may inquire of the Company, subject to applicable law and regulations;
b. Upon request of the Offices, the Company shall designate knowledgeable employees, agents or attorneys to provide the Offices the information and materials described in Paragraph 5(a) above on behalf of the Company. It is further understood that the Company must at all times provide complete, truthful, and accurate information;
c. The Company shall use its best efforts to make available for interviews or testimony, as requested by the Offices, present or former officers, directors, employees, Agents, Agent employees, and consultants of the Company, concerning the matters set forth in Paragraph 5(a). This obligation includes, but is not limited to, sworn testimony before a federal grand jury or in federal trials, as well as interviews with federal law enforcement and regulatory authorities, concerning the matters set forth in Paragraph 5(a). Cooperation under this Paragraph shall include identification of witnesses who, to the knowledge of the Company, may have material information regarding the matters under investigation;   
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d. With respect to any information, testimony, documents, records or other tangible evidence provided to the Offices pursuant to this Agreement, the Company consents to any and all disclosures, subject to applicable law and regulations, to other governmental authorities, including United States authorities and those of a foreign government, of such materials as the Offices, in their sole discretion, shall deem appropriate; and
e. If the Company cannot cooperate with the obligations in Paragraph 5 due to applicable law, regulations, or a valid claim of privilege, the Company will provide a log listing a general description of the information withheld, the applicable law, regulation, or privilege that prevents disclosure of the information requested, and a detailed statement explaining why the applicable law, regulation, or privilege prevents disclosure.
6. In addition to the obligations in Paragraph 5 above, during the Term of the Agreement, should the Company learn of credible evidence or allegations of criminal violations of U.S. federal law by the Company or its subsidiaries or affiliates, or any of its present or former officers, directors, employees, Agents, Agent employees, or consultants, the Company shall promptly report such evidence or allegations to the Offices.
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Forfeiture Amount
7. As a result of Western Union’s conduct, including the conduct set forth in the Statement of Facts, the parties agree that each of the Offices could institute a civil and/or criminal forfeiture action against certain funds held by Western Union and that such funds would be forfeitable pursuant to Title 18, United States Code, Sections 981 and 982 and Title 28, United States Code, Section 2461(c). Western Union hereby acknowledges that at least $586 million in consumer fraud proceeds are traceable to transactions in violation of Title 18, United States Code, Sections 1343 and 2, as described in the Statement of Facts. Western Union hereby agrees to forfeit to the United States the sum of $586 million (the “Forfeiture Amount”). The Offices are collecting the Forfeiture Amount in this manner to make the funds available to compensate victims of the fraud scheme described in the Statement of Facts, pursuant to 18 U.S.C. § 981(e)(6), under the Petition for Remission and/or Mitigation procedures of the United States Department of Justice or any other manner within the United States Attorney General’s discretion. The Company hereby agrees that, in the event the funds used to pay the Forfeiture Amount are not directly traceable to the transactions, the monies used to pay the Forfeiture Amount shall be considered substitute res for the purpose of forfeiture to the United States pursuant to Title 18, United States Code, Sections 981, 982 or Title 28, United States Code, Section 2461(c), and the Company releases any and all claims it may have to such funds. The Company shall pay $146.5 million of the Forfeiture Amount plus any associated transfer fees within five (5) business days of the date on which this Agreement is signed, pursuant to payment instructions provided by the Offices in their sole discretion. The Company shall pay the remaining sum of $439.5 million plus any associated transfer fees within ninety (90) business days of the date this Agreement is signed, pursuant to payment instructions provided by the Offices in their sole discretion. The Company agrees to sign any additional documents necessary to complete forfeiture of the funds.
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8. The Forfeiture Amount paid is final and shall not be refunded should the Government later determine that the Company has breached this Agreement and commences a prosecution against the Company. In the event of a breach of this Agreement and subsequent prosecution, the Offices are not limited to the Forfeiture Amount. The Offices agree that in the event of a subsequent breach and prosecution, it will recommend to the Court that the amounts paid pursuant to this Agreement be offset against whatever forfeiture the Court shall impose as part of its judgment. The Company understands that such a recommendation will not be binding on the Court.
Conditional Release from Liability
9. Subject to Paragraphs 15 through 18 below, the Offices agree, except as provided herein, that they will not bring any criminal or civil case against the Company or any of its wholly owned or controlled subsidiaries relating to any of the conduct described in the Statement of Facts, attached hereto as Attachment A, the criminal Information filed pursuant to this Agreement, or information that the Company disclosed to the Offices prior to the date of the Agreement. The Offices, however, may use any information related to the conduct described in the attached Statement of Facts against the Company in a: (a) prosecution for perjury or obstruction of justice; (b) prosecution for making a false statement; or (c) prosecution or other proceeding relating to a violation of any provision of Title 26 of the United States Code.
a. This Agreement does not provide any protection against prosecution for any future conduct by the Company.
b. In addition, this Agreement does not provide any protection against prosecution of any present or former officer, director, employee, shareholder, Agent, Agent employee, consultant, contractor, or subcontractor of the Company for any violations committed by them.
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Corporate Compliance Program
10. The Company represents that it has implemented and will continue to implement a compliance program reasonably designed to prevent and detect violations of the Bank Secrecy Act (“BSA”), money laundering statutes, and other specified unlawful activity throughout its operations, including those of its affiliates, Agents, and joint ventures, and those of its contractors and subcontractors whose responsibilities include providing money transfer services as required by law or regulation, Attachment C, or the FTC order.
11. In order to address any deficiencies in its anti-money laundering and anti-fraud programs, the Company represents that it has undertaken, and will continue to undertake in the future, in a manner consistent with all of its obligations under this Agreement, review and enhancement of its anti-money laundering and anti-fraud program, policies, procedures, and controls. If necessary and appropriate, the Company will adopt new or modify existing programs, reasonably designed policies, procedures, and controls in order to ensure that the company maintains: (a) effective anti-money laundering and anti-fraud programs; and (b) Agent oversight policies, including reasonably designed procedures and controls designed to detect, deter, and discipline violations of the BSA, money laundering, fraud and gambling statutes by Agents and their owners, employees, officers, directors, consultants, contractors, or subcontractors. The reasonably designed anti-money laundering and anti-fraud programs, policies, procedures and controls will include, but not be limited to, the minimum elements set forth in Attachment C, which is incorporated by reference into this Agreement.
12. The Company shall comply with the FTC Auditor Agreement and provide the FTC auditor reports to the Offices at the same time as provided to the FTC.
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Deferred Prosecution
13. In consideration of: (a) the past and future cooperation of the Company described in Paragraph 5 above; (b) the Company’s agreement to forfeiture of $586 million; and (c) the Company’s implementation and maintenance of compliance enhancements as described in Paragraphs 10 through 12 above and Attachment C, the Offices agree that any prosecution of the Company for the conduct set forth in the Statement of Facts be and hereby is deferred for the Term of this Agreement.
14. The Offices further agree that if the Company fully complies with all of its obligations under this Agreement, the Offices will not continue the criminal prosecution against the Company described in Paragraph 1 and, at the conclusion of the Term, this Agreement shall expire. Within three (3) months of the Agreement’s expiration, the Offices shall seek dismissal with prejudice of the criminal Information filed against the Company described in Paragraph 1 above, and agrees not to file charges in the future against the Company based on the conduct described in this Agreement and Attachment A.
10

Breach of the Agreement
15. If, during the Term of the Agreement, the Company (a) commits any felony under U.S. federal law; (b) provides in connection with this Agreement deliberately false, incomplete, or misleading information; (c) fails to cooperate as set forth in Paragraphs 5 and 6 of this Agreement; (d) fails to put into effect or operation, implement, and maintain a compliance program as set forth in Paragraphs 10 through 12 of this Agreement and Attachment C; or (e) otherwise fails to specifically perform or to fulfill completely each of the Company’s obligations under the Agreement, regardless of whether the Offices become aware of such a breach after the Term of the Agreement is complete, the Company shall thereafter be subject to prosecution for any federal criminal violation of which the Offices have knowledge, including, but not limited to, the charges in the Information described in Paragraph 1 and charges that arise from the conduct set forth in the Statement of Facts, which may be pursued by the Offices in the U.S. District Courts for the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania, or the Southern District of Florida, or any other appropriate venue. Determination of whether the Company has breached the Agreement and whether to pursue prosecution of the Company shall be in the Offices’ sole discretion, subject to the notice and opportunity to respond provisions in Paragraph 16. Any such prosecution may be premised on information provided by the Company or its personnel, Agents, or Agent employees. Any such prosecution relating to the conduct described in the Statement of Facts or relating to conduct known to the Offices prior to the date on which this Agreement was signed that is not time-barred by the applicable statute of limitations on the date of the signing of this Agreement may be commenced against the Company notwithstanding the expiration of the statute of limitations between the signing of this Agreement and the expiration of the Term of the Agreement plus one year. Thus, by signing this Agreement, the Company agrees that the statute of limitations with respect to any such prosecution that is not time-barred on the date of the signing of this Agreement shall be tolled for the Term of the Agreement plus six months. In addition, the Company agrees that the statute of limitations as to any violation of federal law that occurs during the Term of the Agreement will be tolled from the date upon which the violation occurs for the duration of the Term of the Agreement plus six months, and that this period shall be excluded from any calculation of time for purposes of the application of the statute of limitations.
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16. In the event that the Offices determine that the Company has breached this Agreement, the Offices agree to provide the Company with written notice of such breach prior to instituting any prosecution resulting from such breach. Within thirty (30) days of receipt of such notice, the Company shall have the opportunity to respond to the Offices in writing to explain the nature and circumstances of such breach, as well as the actions the Company has taken to address and remediate the situation, which explanation the Offices shall consider in determining whether to institute a prosecution.
17. In the event that the Offices determine that the Company has breached this Agreement: (a) all statements made by or on behalf of the Company to the Offices or to the Court, including the attached Statement of Facts, and any testimony given by the Company before a grand jury, a court, or any tribunal, or at any legislative hearings, whether prior or subsequent to this Agreement, and any leads derived from such statements or testimony, shall be admissible in evidence in any and all criminal proceedings brought by the Offices against the Company; and (b) the Company shall not assert any claim under the United States Constitution, Rule 11(f) of the Federal Rules of Criminal Procedure, Rule 410 of the Federal Rules of Evidence, or any other federal rule that any such statements or testimony made by or on behalf of the Company prior or subsequent to this Agreement, or any leads derived therefrom, should be suppressed or are otherwise inadmissible. The decision whether conduct or statements of any current director, officer, or employee, or any person acting on behalf of, or at the direction of, the Company will be imputed to the Company for the purpose of determining whether the Company has violated any provision of this Agreement shall be in the sole discretion of the Offices.  
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18. The Company acknowledges that the Offices have made no representations, assurances, or promises concerning what sentence may be imposed by the Court if the Company breaches this Agreement and this matter proceeds to judgment. The Company further acknowledges that any such sentence is solely within the discretion of the Court and that nothing in this Agreement binds or restricts the Court in the exercise of such discretion.
19. Thirty (30) days after the expiration of the period of deferred prosecution specified in this Agreement, the Company, by the Chief Executive Officer and the Chief Compliance Officer of the Company, after conducting a reasonable inquiry within the Company, will certify to the Offices that, in good faith reliance on information provided to the Chief Executive Officer and Chief Compliance Officer by third parties within the Company, and based on their best information and belief, the Company has met its disclosure obligations pursuant to Paragraph 6 of this Agreement. Such certification will be deemed a material statement and representation by the Company to the executive branch of the United States for purposes of Title 18, United States Code Section 1001, and it will be deemed to have been made in the judicial district in which this Agreement is filed.
Sale, Merger, or Other Change in Corporate Form of Company
20. Except as may otherwise be agreed by the parties hereto in connection with a particular transaction, the Company agrees that in the event that, during the Term of the Agreement, it undertakes any change in corporate form, including if it sells, merges, or transfers a substantial portion of its business operations as they exist as of the date of this Agreement, whether such sale is structured as a sale, asset sale, merger, transfer, or other change in corporate form, it shall include in any contract for sale, merger, transfer, or other change in corporate form a provision binding the purchaser, or any successor in interest thereto, to the obligations described in this Agreement. The Company shall provide the Offices at least thirty (30) days’ notice prior to undertaking any such sale, merger, transfer, or other change in corporate form, including dissolution, in order to give the Offices an opportunity to determine if such change in corporate form would impact the terms or obligations of the Agreement.  
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Public Statements by Company
21. The Company expressly agrees that it shall not, through present or future attorneys, officers, directors, employees, agents or any other person authorized to speak for the Company make any public statement, in litigation or otherwise, contradicting the acceptance of responsibility by the Company set forth above or the facts described in the Statement of Facts. Any such contradictory statement shall, subject to cure rights of the Company described below, constitute a breach of this Agreement and the Company thereafter shall be subject to prosecution as set forth in Paragraphs 15 through 18 of this Agreement. The decision whether any public statement by any such person contradicting a fact contained in the Statement of Facts will be imputed to the Company for the purpose of determining whether it has breached this Agreement shall be at the sole discretion of the Offices, subject to the notice and opportunity to respond provisions in Paragraph 16. If the Offices determine that a public statement by any such person contradicts in whole or in part information contained in the Statement of Facts, the Offices shall so notify the Company, and the Company may avoid a breach of this Agreement by publicly repudiating such statement(s) within five (5) business days after notification. The Company shall be permitted to raise defenses and to assert affirmative claims in other proceedings relating to the matters set forth in the Statement of Facts provided that such defenses and claims do not contradict, in whole or in part, a statement contained in the Statement of Facts. This Paragraph does not apply to any statement made by any present or former officer, director, employee, or agent of the Company in the course of any criminal, regulatory, or civil case initiated against such individual, unless such individual is speaking on behalf of the Company.
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22. The Company agrees that if it or any of its direct or indirect subsidiaries or affiliates issues a press release or holds any press conference in connection with this Agreement, the Company shall first consult the Offices to determine (a) whether the text of the release or proposed statements at the press conference are true and accurate with respect to matters between the Offices and the Company; and (b) whether the Offices have any objection to the release.
23. The Offices agree, if requested to do so, to bring to the attention of law enforcement and regulatory authorities the facts and circumstances relating to the nature of the conduct underlying this Agreement, including the nature and quality of the Company’s cooperation and remediation. By agreeing to provide this information to other authorities, the Offices are not agreeing to advocate on behalf of the Company, but rather are agreeing to provide facts to be evaluated independently by such authorities.
Limitations on Binding Effect of Agreement
24. This Agreement is binding on the Company and the Offices but specifically does not bind any other component of the Department of Justice, other federal agencies, or any state, local or foreign law enforcement or regulatory agencies, or any other authorities, although the Offices will, as described in Paragraph 23, discuss the Company’s compliance and cooperation with such agencies and authorities if requested to do so by the Company.
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Notice
25. Any notice to the Offices under this Agreement shall be given by personal delivery, overnight delivery by a recognized delivery service, or registered or certified mail, addressed to Chief, Money Laundering and Asset Recovery Section, Criminal Division, United States Department of Justice, 1400 New York Avenue, Washington, D.C. 20005; the United States Attorney, United States Attorney’s Office, Middle District of Pennsylvania, Harrisburg Federal Building and Courthouse, 228 Walnut Street, Suite 220, P.O. Box 11754, Harrisburg, PA 17108-1754; the United States Attorney, United States Attorney’s Office, Central District of California, 411 West Fourth Street, Santa Ana, CA 92701; the United States Attorney, United States Attorney’s Office, Eastern District of Pennsylvania, 615 Chestnut Street, Suite 1250, Philadelphia, PA 19106; the United States Attorney, United States Attorney’s Office, Southern District of Florida, 500 E. Broward Blvd., Ft. Lauderdale, FL, 33394. Any notice to the Company under this Agreement shall be given by personal delivery, overnight delivery by a recognized delivery service, or registered or certified mail, addressed to Western Union, Office of the General Counsel, 12500 East Belford Avenue, Englewood, CO 80112. Notice shall be effective upon actual receipt by the Offices or the Company.
Complete Agreement
26. This Agreement, including its attachments, sets forth all the terms of the agreement between the Company and the Offices. No amendments, modifications, or additions to this Agreement shall be valid unless they are in writing and signed by the Offices, the attorneys for the Company, and a duly authorized representative of the Company.
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AGREED:
FOR THE WESTERN UNION COMPANY:

/s/ John R. Dye	     	/s/ Alice S. Fisher	
John R. Dye	     	Alice S. Fisher	
Executive Vice President and	     	Latham & Watkins LLP	
General Counsel	     	Counsel to the Company	
The Western Union Company	     		
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FOR THE U.S. DEPARTMENT OF JUSTICE:

BRUCE D. BRANDLER	     	M. KENDALL DAY	
United States Attorney		Chief, Money Laundering and	
Middle District of Pennsylvania	 	          Asset Recovery Section	
 		Criminal Division, U.S. Department of Justice	

/s/ Kim Douglas Daniel		/s/ Margaret A. Moeser	
Kim Douglas Daniel		Margaret A. Moeser	
Assistant United States Attorney		Trial Attorney	

EILEEN M. DECKER			
United States Attorney			
Central District of California			

/s/ Gregory W. Staples			
Gregory W. Staples			
Assistant United States Attorney			

WIFREDO A. FERRER			
United States Attorney			
Southern District of Florida			
 	
/s/ Randall D. Katz			
Randall D. Katz			
Assistant United States Attorney			
 	
LOUIS D. LAPPEN			
United States Attorney			
Eastern District of Pennsylvania			

/s/ Judy Smith			
Judy Smith			
Assistant United States Attorney			
 	
Date: 	January 19, 2017 			

COMPANY OFFICER’S CERTIFICATE
I have read this Agreement and carefully reviewed every part of it with outside counsel for the Western Union Company (the “Company”). I understand the terms of this Agreement and voluntarily agree, on behalf of the Company, to each of its terms. Before signing this Agreement, I consulted outside counsel for the Company. Counsel fully advised me of the rights of the Company, of possible defenses, and of the consequences of entering into this Agreement.
I have carefully reviewed the terms of this Agreement with the Board of Directors of the Company. I have advised and caused outside counsel for the Company to advise the Board of Directors fully of the rights of the Company, of possible defenses, the Sentencing Guidelines’ provisions, and of the consequences of entering into the Agreement.
No promises or inducements have been made other than those contained in this Agreement. Furthermore, no one has threatened or forced me, or to my knowledge any person authorizing this Agreement on behalf of the Company, in any way to enter into this Agreement. I am also satisfied with outside counsel’s representation in this matter. I certify that I am the Executive Vice President and General Counsel for the Company and that I have been duly authorized by the Company to execute this Agreement on behalf of the Company.
Date: January 18, 2017

	THE WESTERN UNION COMPANY	

By:    	/s/ John R. Dye	
	John R. Dye	
	Executive Vice President and General Counsel	

CERTIFICATE OF COUNSEL
I am counsel for the Western Union Company (the “Company”) in the matter covered by this Agreement. In connection with such representation, I have examined relevant Company documents and have discussed the terms of this Agreement with the Company Board of Directors. Based on our review of the foregoing materials and discussions, I am of the opinion that the representative of the Company has been duly authorized to enter into this Agreement on behalf of the Company and that this Agreement has been duly and validly authorized, executed, and delivered on behalf of the Company and is a valid and binding obligation of the Company. Further, I have carefully reviewed the terms of this Agreement with the Board of Directors and the Chief Executive Officer of the Company. I have fully advised them of the rights of the Company, of possible defenses, and of the consequences of entering into this Agreement. To my knowledge, the decision of the Company to enter into this Agreement, based on the authorization of the Board of Directors, is an informed and voluntary one.
Date: 01/18/17                     

By: 	/s/ Alice S. Fisher	
 	Alice S. Fisher	
	Counsel for the Western Union Company	

ATTACHMENT A
STATEMENT OF FACTS
The following Statement of Facts is incorporated by reference as part of the Deferred Prosecution Agreement (the “Agreement”) between the United States Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section, the United States Attorney’s Offices for the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania, and the Southern District of Florida (collectively, the “Department” or the “United States”) and The Western Union Company, (“Western Union” or the “Company”). Certain of the facts herein are based on information obtained from third parties by the United States through their investigation and described to Western Union. The parties stipulate that the allegations in Count One and Two of the Information and the following facts are true and correct, and that were the matter to proceed to trial, the United States would prove them beyond a reasonable doubt, by admissible evidence:

1.	Starting in 2004 and ending in December 2012, Western Union violated U.S. laws by (1) willfully failing to implement and maintain an effective anti-money laundering (“AML”) program that was designed to detect, report, and prevent criminals from using Western Union to facilitate their fraud, money laundering, and structuring schemes, and (2) aiding and abetting fraudsters in their unlawful schemes by remaining in business with Agent locations that facilitated the unlawful fraud scheme.	
       		
2.	Western Union’s conduct included employees (1) repeatedly identifying Western Union Agent locations involved in or facilitating fraud-related transactions but knowingly failing to take effective corrective action; (2) repeatedly identifying Western Union Agents involved in or facilitating unlawful structuring but knowingly failing to take effective corrective action; (3) failing to adequately implement and maintain effective policies and procedures to discipline, suspend, terminate or take effective corrective action against Western Union Agent locations that repeatedly violated the Bank Secrecy Act and other statutes or Western Union anti-money laundering or anti-fraud policies; (4) modifying compliance reviews or results so that Agents with severe compliance failures would not face disciplinary action such as suspension or termination as required by Western Union policies or practices; (5) failing to take effective action to control transactions with characteristics indicative of illegal gaming; or (6) failing to file Suspicious Activity Reports (“SARs”) identifying Western Union Agents as suspicious actors.	
 	
3.	Fraudsters relied on Western Union’s money transfer system to receive fraud and other criminal proceeds worldwide from victims in the United States. Western Union’s conduct, including its failure to take effective corrective actions in a timely fashion, contributed to the success of the fraudsters’ schemes.	
 	
4.	This conduct occurred in various Western Union offices and Western Union Agent locations located in the United States and around the world, including, in particular, through wires sent from the Middle District of Pennsylvania in furtherance of the fraud scheme that Western Union aided and abetted.	
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Legal Background

5.	Congress enacted the Bank Secrecy Act, Title 31, United States Code Section 5311 et seq., and its implementing regulations (collectively the “BSA”) to address an increase in criminal money laundering activity utilizing financial institutions.	
       			
6.	Western Union is a “financial institution” as defined in the BSA. 31 U.S.C. § 5312(a)(2); 31 C.F.R. § 1010.100. As a financial institution and money services business (“MSB”) Western Union must establish, implement, and maintain an effective AML compliance program that, at a minimum, provides for: (a) internal policies, procedures, and controls to guard against money laundering; (b) an individual or individuals to coordinate and monitor day-to-day compliance with the BSA and AML requirements; (c) an ongoing employee training program; and (d) independent testing of programs. 31 U.S.C. § 5318(h); 31 C.F.R. § 1022.210. Pursuant to 31 U.S.C. § 5322, it is a crime to willfully violate the BSA.	
 	
7.	In 2004, the U.S. Department of Treasury, Financial Crimes Enforcement Network (“FinCEN”), which is the administrator of the BSA, explained AML program requirements for MSBs with foreign agents like Western Union (the “2004 FinCEN Release”). FinCEN advised that MSBs that use foreign agents to move funds into or out of the United States “must take reasonable steps to guard against the flow of illicit funds, or the flow of funds from legitimate sources to persons seeking to use those funds for illicit purposes” through their foreign agents. Specifically, FinCEN stated that MSB anti-money laundering programs should include procedures for the following:	
	       		
	a.	conducting reasonable risk-based due diligence on potential and existing foreign agents and counterparties to help ensure that such foreign agents and counterparties are not themselves complicit in illegal activity involving the MSB’s products and services;	
 	
	b.	risk-based monitoring and review of transactions from, to, or through the United States that are conducted through foreign agents and counterparties; and	
 	
	c.	responding to foreign agents or counterparties that present unreasonable risks of money laundering or the financing of terrorism. Such procedures should provide for the implementation of corrective action on the part of the foreign agent or counterparty or for the termination of the relationship with any foreign agent or counterparty that the MSB determines poses an unacceptable risk of money laundering or terrorist financing, or that has demonstrated systemic, willful, or repeated lapses in compliance with the MSB’s own anti-money laundering procedures or requirements.	
 	
8.	Under the BSA, financial institutions, including MSBs such as Western Union, must also maintain certain records and file certain reports, including those listed below.	
	       		
	a.	MSBs must record consumer identification information for the transmittal of funds of more than $3,000, 12 U.S.C. § 1829b; 31 C.F.R. § 1010.410;	
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	b.	MSBs must file Currency Transaction Reports (“CTRs”), which identify transactions or series of transactions involving currency of more than $10,000 in one day, 31 U.S.C. § 5313; 31 C.F.R. §§ 1010.311, 1010.313; and	
        	        		
	c.	MSBs must file SARs, which identify transactions of $2,000 or more that involve or are intended to hide funds derived from illegal activity, are designed to evade BSA requirements, serve no business or lawful purpose, or use the MSB to facilitate criminal activity, 31 U.S.C. § 5318(g); 31 C.F.R. § 1022.320.	
	 	
9.	“Structuring” or breaking transactions into smaller amounts to avoid the BSA’s recordkeeping and reporting requirements is a crime in violation of 31 U.S.C. § 5324. Willfully failing to file SARs is a crime in violation of 31 U.S.C. § 5322.	
        		
10.	Title 18, United States Code Sections 1343 and 2 make it a crime to use, or aid and abet the use of, interstate wires to carry out a scheme to defraud individuals of money or property by false promises.	
Western Union Background

11.	Western Union, headquartered in Englewood, Colorado, is a publicly traded company, a financial institution, and one of the largest MSBs in the world. Western Union employs approximately 10,000 individuals worldwide. In 2014, Western Union reported total revenues of $5.6 billion including more than $1.56 billion from U.S. operations and more than $4 billion from international operations. As an MSB, Western Union is currently registered with FinCEN in order to conduct its money transfer business. See 31 U.S.C. § 5330;31 C.F.R. § 1022.380. Most states and many foreign jurisdictions also require financial institutions, such as Western Union, to register or receive a license before offering money transfer services to the public.	
        		
12.	Western Union’s “Money Transfer System” is an electronic network operated and controlled by Western Union using servers in the United States. Using Western Union’s Money Transfer System, consumers can send money to other individuals in the United States and around the world. Western Union offers its money transfer services to consumers via approximately 550,000 Western Union Agent locations in more than 200 countries and territories. Approximately 90 percent of Western Union Agent locations are located outside the United States. In 2014, more than 150 million individual consumers used Western Union’s Money Transfer System to send or receive more than $85 billion through Western Union’s Agent locations.	
 	
13.	Western Union earns revenue by charging consumers a fee based on the money transfer amount and the destination location. Western Union earns additional revenue on international transactions that are sent in one currency and received in a different currency.	
 	
14.	“Western Union Agents” or “Agents” are generally independent individuals or entities, including banks, post offices, and small independent shops, that own and/or operate businesses that have a contractual relationship with Western Union. By virtue of that contractual relationship, Western Union Agents are authorized to offer Western Union’s money transfers to consumers. In the U.S., Western Union directly contracts with network and independent Agents. Network Agents are retail chains that have one contract with Western Union through which the retailer offers Western Union services at multiple locations. Independent Agents are small independent businesses such as convenience stores that contract directly with Western Union to offer Western Union services at their locations. Many U.S. Western Union Agents are also MSBs that must comply with the BSA. In some countries outside the U.S., Western Union operates through Master Agents, which are generally independent businesses that in turn subcontract with small independent businesses who offer Western Union services at their locations.	
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15.	Western Union Agents may have multiple locations where Western Union services are offered. Each Western Union Agent location has access to the Money Transfer System and must send all Western Union transfers by wire via the Money Transfer System.	
        		
16.	Western Union pays Western Union Agents a commission for the money transfers the Agents process. Western Union may also pay the Agents bonuses and other compensation based on transaction volume. Western Union can unilaterally terminate or suspend any Agent or Agent location anywhere in the world for a variety of reasons, including compliance reasons.	
 	
17.	To send money through Western Union, consumers may go to a Western Union Agent location and give the Agent location information, generally including (1) the sender and payee names, (2) the transfer amount and (3) the state or province and country where the money is to be sent. Sometimes the sender’s identification document is required. Consumers give the Western Union Agent location funds to cover the transfer amount and the fee. The Agent enters the transaction into the Money Transfer System and gives the consumer the Money Transfer Control Number (“MTCN”), a ten-digit Western Union reference number for the transaction.	
 	
18.	To receive a money transfer, the payee typically must appear in person at a Western Union Agent location and provide the Agent location with personal information including the payee’s name, address, telephone number, and sometimes the payee’s identification document, and the sender’s name and location city, state or province, and country, and the expected transfer amount. Paying Western Union Agent locations typically require the payee to provide the MTCN. To complete the transfer to the payee, the paying Agent then transmits this information to the Western Union Money Transfer System via international or interstate wire.	
 	
19.	The payee can receive the money transfer within minutes after the sender sends the transaction. With certain limited exceptions, Western Union, at its discretion, has the ability to refuse the transaction, or cancel the transaction before the payee receives the transfer from the paying Western Union Agent.	
 	
20.	“Fraudsters” include, among other individuals involved in the fraud scheme, certain owners, operators and employees of Western Union Agents.	
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The Scheme to Defraud Consumers Using the Western Union Money Transfer System

21.	Between 2004 and 2012, Fraudsters engaged in a scheme to defraud consumers through the Western Union Money Transfer System. Certain owners, operators, or employees of Western Union Agent locations were complicit in the scheme (the “Complicit Western Union Agent Locations”). Western Union aided and abetted the Fraudsters’ scheme to defraud by failing to suspend and/or terminate complicit Agents and by allowing them to continue to process fraud induced monetary transactions. The scheme relied on a variety of false promises and other misrepresentations to defraud victims into sending money through Western Union. Fraudsters involved in the scheme contacted victims by phone, U.S. mail, interstate courier, or the Internet, and fraudulently induced them to send money by, among other things:	
        		
	a.	falsely promising victims large cash prizes, lottery winnings, fictitious loans, or other payments;	
        	        		
	b.	falsely offering various high-ticket items for sale over the Internet at deeply discounted prices;	
	 	
	c.	falsely promising employment opportunities as “secret shoppers” who would be paid to evaluate retail stores; or	
	 	
	d.	falsely posing as the victim’s relative and claiming to be in trouble and in urgent need of money.	

22.	The Fraudsters told victims that they must send the money in advance to receive the promised outcome. Fraudsters directed the victims to send advance payments to fictitious payees using Western Union’s Money Transfer System.	
        		
23.	After the victims sent the money through Western Union, the Fraudsters asked them for the Western Union MTCN for the transfer. The Fraudsters took the MTCN to Western Union Agent locations, including Complicit Western Union Agent Locations, who gave the Fraudsters the victims’ money transfers. At no time did the victims receive what the Fraudsters falsely promised them.	
 	
24.	Certain Complicit Western Union Agent Locations knowingly entered false addresses, telephone numbers, and personal identification document information into the Western Union Money Transfer System in order to pay the fraudulently induced transfers to the Fraudsters or retransfer the funds to other Complicit Western Union Agent Locations elsewhere. Through these actions, the Complicit Western Union Agent Locations concealed the true identities of the Fraudsters, as well as their involvement in the scheme. The Complicit Western Union Agent Locations received money, which was usually subtracted from the victims’ money transfers.	
 	
25.	Western Union maintained a 1-800 number through which some U.S. victims reported the fraud scheme. Western Union recorded these complaints and others it received in what are known as Consumer Fraud Reports (“CFRs”). The CFRs contain detailed information about the victims, the transactions, and the Western Union Agent locations that paid the transfers. Western Union maintained a database of all CFRs and used that information to track and investigate Agent locations that paid transfers reported as fraud-induced.	
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26.	Between 2004 and 2012, Western Union’s CFRs identified more than $ 500 million in reported consumer fraud transactions sent through Western Union Agent locations. Not every victim of the scheme reported the fraud to Western Union. Western Union employees knew that the total amount of fraud was higher than reported fraud as a result of their analyses and internal reports regarding particular Agent locations throughout Western Union’s operations.	
        		
Western Union Knew Certain of Its Agents Were Complicit in the Scheme to Defraud
Using Western Union’s Money Transfer System	
        		
27.	Western Union knew that certain of its Agent locations were complicit in the scheme to defraud using Western Union’s Money Transfer System because some of those locations were prosecuted for their criminal activity. For example, between 2001 and 2012, twenty-eight Western Union Agent owners, operators, or employees were charged in the Middle District of Pennsylvania for their participation in fraud or money laundering using Western Union’s Money Transfer System.	
 	
28.	Western Union repeatedly identified Agent locations—particularly overseas Agent locations—that processed high levels of fraud transfers from U.S. victims, including certain Agent locations Western Union suspected were complicit in the fraud scheme, but it took insufficient action to stop these Complicit Agent Locations from facilitating consumer fraud. LJ, a 74 year old resident of the Middle District of Pennsylvania reported that she was the victim of a fraud scheme in October 2012. She attempted to report the fraud to Western Union and a Western Union employee told her that she was “wasting [her] time” reporting the fraud because “there are thousands of these complaints laying on the desk and nothing gets done.” Western Union identified Complicit Western Union Agent Locations through various means, including CFRs, transaction monitoring, and regular reports generated by Western Union analysts reviewing transactions that highlighted Agent locations exhibiting transaction patterns or behavior that were indicative of fraud-complicity.	
 	
29.	Western Union knew that the BSA required Western Union to monitor international Agents and take corrective action against Agents violating law or regulation. As a result of Western Union’s willful failure to implement or execute effective global Agent disciplinary policies or to act on its employees’ recommendations to discipline, suspend, or terminate international Agent locations, Complicit Western Union Agent Locations remained open for years and processed additional fraud transactions.	
 	
30.	In November 2005, Western Union entered into an agreement with the Attorneys General of 47 states and the District of Columbia (the “NAAG Agreement”) to resolve the states’ investigations into fraud transactions at Western Union. As part of the NAAG Agreement, Western Union promised to terminate any Agent—domestic or international—that was “complicit in fraud-induced transfers or knowingly ignore[d] such fraud, or, if certain employees of the agent or subagent are the [ sic ] complicit or knowingly ignoring parties, insist upon termination of such employees as a condition to continued agent or subagent status.” Western Union also agreed to suspend or terminate Agents that failed to take reasonable steps to reduce fraud transactions. After entering into the NAAG Agreement, Western Union did not implement or maintain effective policies or procedures to suspend or terminate international Agents that processed fraud payments.	
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31.	Certain Western Union employees recommended specific actions or policies and procedures to take action against potentially complicit Western Union Agent locations, but Western Union failed to adopt those recommendations. For example:	
        		
	a.	Global Guidelines: As early as 2004, an employee in Western Union’s Corporate Security Department prepared a set of “draft” Global Guidelines for discipline and suspension of Western Union Agent locations worldwide that processed a materially elevated number of reported fraud transactions. In these guidelines, the Corporate Security employee proposed mandatory review of any Agent location that paid 10 CFRs within 60 days. The Corporate Security employee further proposed automatically suspending any Agent location that paid five or more transactions reported as fraud within 60 days of a review. In other words, the Corporate Security employee proposed automatically suspending any Agent location that paid 15 CFRs within 120 days. Western Union did not approve or implement the proposed Global Guidelines.	
        	        		
	b.	60-Day Fraud Report: As early as 2005, Western Union’s Corporate Security Department used CFRs to generate a regular 60-Day Fraud Report, which identified Agent locations that processed five or more CFRs within 60 days. Corporate Security distributed the report to a broad group of Western Union employees, including Western Union senior employees, and cautioned that Agent locations that did not “drastically reduce” payments of transactions identified in CFRs within 60 days would be suspended. Even though Corporate Security threatened to suspend Agent locations, thousands of Complicit Western Union Agent Locations—particularly overseas—appeared on the 60-Day Fraud Report multiple times with increasing CFR payments without Western Union taking disciplinary action against them.	
	 	
	c.	Agent Fraud Complicity Programs : In January 2008, two Western Union departments separately proposed methods to discipline potentially Complicit Western Union Agent Locations. One proposal specifically warned against the influence of sales employees on any Agent location disciplinary process because sales employees’ “compensation is often based on agent performance—so they … see no reason good enough to hold their agent responsible” for fraud transactions. A Western Union senior vice president said she was “coordinating the many functions in the company that look at … data which might indicate an agent, a location, or an agent employee is engaged in illegal activities.” She was “focused on … analysis of the consumer fraud complaints … from a risk-based approach, separating out agent locations … that are complicit and need to be suspended.... [And] the need to enhance processes” at Western Union. Western Union’s then-Chief Compliance Officer wrote, “I am in favor of this proposal with two caveats: The necessary resource commitment -the more we look [for Agent involvement in fraud schemes] the more we find… and I’d like this communicated in the appropriate way so that everyone understands their roles and responsibilities.” Western Union did not implement either of the proposed disciplinary programs.	
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32.	Had Western Union implemented the proposed Global Guidelines or the other proposed policies listed above, it could have prevented significant fraud losses to victims. Specifically, the proposed Global Guidelines would have resulted in potential suspensions and terminations against more than 2,000 Agents locations worldwide. Had Western Union implemented the proposed Global Guidelines it would have stopped these same Agent locations from processing more than $174 million in reported fraud losses. Because few victims reported fraud to Western Union, total fraud-related losses— including reported and unreported fraud—incurred through these Agent locations is likely higher. Examples of the fraud conduct in the United Kingdom, Spain, Mexico, and Peru are below.	
        		
The Scheme to Defraud in the United Kingdom	
        		
33.	Through its CFRs and internal reporting, Western Union was aware of dozens of Complicit Agent Locations in the United Kingdom that would have been suspended under the proposed Global Guidelines. Western Union continued to engage in business with these Agent locations and profit from their fraud transactions by, among other things, collecting fees and other revenues on each fraudulent transaction certain Complicit Western Union Agent Locations processed.	
 	
34.	In 2008, Western Union owned a portion of some of the Master Agents of some of the Complicit Agent Locations. Western Union operated through Master Agent FEXCO in the United Kingdom, Spain, and other countries. Western Union owned 25% of FEXCO. FEXCO contracted with smaller independent businesses that offered Western Union money transfer services as Agent locations. Though the Agent locations in these countries did not contract directly with Western Union, Western Union could “terminate or suspend Money Transfer Services at any [Subagent location] at any time upon notice [to the Master Agent] if Western Union determine[d] in its sole discretion that operation of the Money Transfer Services at such Location(s) creates legal, regulatory, reputational, or financial risk for Western Union.” In 2008, FEXCO was Western Union’s largest Master Agent. FEXCO oversaw 10,000 Western Union Agent locations worldwide, processed more than $4 billion in Western Union money transfer principal, and generated $353 million in gross revenue for Western Union. Western Union Agent locations operating through FEXCO processed 89% of all Western Union transactions in the United Kingdom in 2008. As a Master Agent, FEXCO commanded commissions approximately 10 to 25 percent higher than small independent businesses that contracted directly with Western Union.	
 	
35.	Western Union London Agents UK Western Union Agent 1 and UK Western Union Agent 2, which both offered Western Union money transfers in London as subagents under FEXCO’s Master Agent arrangement with Western Union, were two examples of Western Union’s fraud conduct.	
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36.	Between 2004 and 2012, UK Western Union Agent 2 appeared on more than 73 Western Union 60-Day Fraud Reports and numerous other transaction reports (e.g., the Fraud Risk Index Report). Similarly, UK Western Union Agent 1 appeared on 63 Western Union 60-Day Fraud Reports and numerous other transaction reports. Western Union received approximately 2,342 CFRs identifying more than $3.6 million in losses to victims through fraud transactions paid by UK Western Union Agent 2 and its three related Agent locations between 2004 and 2012. During this same time period, Western Union received approximately 2,856 CFRs identifying more than $3.6 million in losses to victims through fraud transactions paid by UK Western Union Agent 1 and its related Agent location. For years, Western Union failed to take sufficient corrective action against these high-fraud Agents.	
        		
	a.	In November 2005, Western Union’s Corporate Security Department first identified UK Western Union Agents 1 and 2 in 60-Day Fraud Reports as Agents that processed a materially excessive amount of transactions reported in CFRs. Both UK Western Union Agents 1 and 2 each processed well over 15 CFRs in 120 days in 2005. UK Western Union Agents 1 and 2 appeared on every 60-Day Fraud Report in 2006.	
        	        		
	b.	Between January 2006 and May 2008, UK Western Union Agents 1 and 2 each appeared on the 60-Day Fraud Report repeatedly. During that time period, a Western Union Compliance analyst conducted multiple reviews of UK Western Union Agents 1 and 2 and identified suspicious activity at both Agents, which were respectively the sixth and ninth highest fraud payout Agents in the entire Europe, Middle East, and Africa region in February 2007. The analyst’s findings were escalated within Western Union, but Western Union took no corrective action and instead continued business with UK Western Union Agents 1 and 2 while the Agent locations continued to process excessive amounts of reported fraud transactions.	
	 	
	c.	In May 2008, a Compliance employee conducted another analysis of certain FEXCO Agents, including UK Western Union Agent 2 because “[p]revious analysis on FEXCO agents has yielded numerous compliance and fraud issues. [And t]hese issues have not been properly addressed and there is increasing interest in remediating these issues.” Western Union continued to monitor these Agents, but did not terminate them as a result of the analysis.	
	 	
	d.	Western Union’s Board of Directors authorized Western Union to acquire the remainder of FEXCO’s money transfer business for up to $224 million in July 2008. Through the FEXCO acquisition, Western Union planned to cut commissions costs, grow its international Agent network, and increase business and revenue.	
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	e.	At the time of the FEXCO acquisition in July 2008, certain Western Union employees including senior employees, knew that FEXCO’s United Kingdom Agents had paid high levels of fraud transactions and engaged in suspicious activity since at least 2005. By July 2008, consumer fraud victims had filed 25,643 CFRs, totaling more than $40 million in losses to victims, involving fraud paid by FEXCO Agents in the United Kingdom and Spain. This is nearly 20 percent of all fraud losses reported to Western Union from 2004—when Western Union began collecting CFRs—through July 2008. Between the time when UK Agents 1 and 2 paid 15 CFRs within 120 days and July 2008, UK Agent 2 alone paid more than $1 million in reported fraud transactions, while UK Agent 1 paid more than $2 million in reported fraud transactions.	
        	        		
	f.	In advance of the FEXCO acquisition, high-level Western Union employees knew that FEXCO lowered its Agent due diligence in 2007 “because of competition they faced in the market” and that Western Union would acquire Agents “with some of the largest fraud payouts in our network” including UK Western Union Agents 1 and 2. Western Union’s then-Vice President for Compliance in Europe cautioned senior Compliance employees that after acquiring FEXCO, Western Union would need to “create, almost from scratch an Agent Oversight policy and culture” at FEXCO Agents.	
	 	
	g.	In February 2009, Western Union acquired the remainder of FEXCO’s money transfer business for a net cash purchase price of $157.1 million. Following the acquisition, FEXCO was renamed Western Union Retail Services (“WURS”). By acquiring FEXCO, Western Union “directly manage[d]” more than 10,000 FEXCO Agent locations, including UK Western Union Agents 1 and 2. Western Union contracted directly with the former FEXCO Agents, now WURS Agents. After the acquisition and knowing that FEXCO had an ineffective AML/anti-fraud compliance program, Western Union did not suspend or terminate UK Western Union Agents 1 or 2, or other Agents that processed excessive amounts of fraud-related transfers.	
	 	
	h.	In November 2009, a Corporate Security employee identified high levels of fraudulent transactions paid by UK Western Union Agents 1 and 2 and other former FEXCO Agents in the United Kingdom. A Western Union Corporate Security analyst recommended to Compliance and Corporate Security employees the immediate suspension of UK Western Union Agents 1 and 2 and further warned senior employees that Agents acquired from FEXCO accounted for almost half of the fraud reports and advised that these problems “become[] our problem since we own them now.” Western Union, however, did not suspend UK Western Union Agents 1 or 2 at that time nor did it attempt to remediate the Agents.	
	 	
	i.	On January 15, 2010, a Compliance Analyst reviewed activity at UK Western Union Agent 1 and found “potential agent complicity in relation to fraud” that posed “significant risk to Western Union.” Despite these warnings and evidence that UK Western Union Agent 1 was complicit in fraud, Western Union took no corrective action against UK Western Union Agent 1.	
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	j.	On January 18, 2010, in a review of United Kingdom Agent operations, Compliance employees stated that fraud activity in the United Kingdom was on the rise and a number of Agent locations were “directly facilitating or assisting in the facilitation of fraud-related activity.” Compliance employees recommended mitigating the risk from United Kingdom Agent locations engaged in fraud “by terminating problem agents displaying common fraud patterns.”	
        	        		
	k.	On April 29, 2010, Western Union Compliance personnel again identified activity at UK Western Union Agents 1 and 2 that “demonstrate[d] indicators of Agent complicity” in consumer fraud transactions and recommended “suspension/termination of the agent locations.” A United Kingdom employee noted that UK Western Union Agents 1 or 2 were “very high transacting locations and if they were to be deleted, there would be a huge financial loss” to Western Union. Despite U.S. Compliance’s recommendation, Western Union did not suspend or terminate UK Western Union Agents 1 or 2.	
        	        		
	l.	About a month later, Western Union’s then-Compliance director told the then-Chief Compliance Officer and then-Deputy Chief Compliance Officer that UK Western Union Agents 1 and 2 and two related WURS Agents were four of the “six …highest [Agents] on the fraud report for the UK.” Sales employees continued to resist full suspension or termination. In lieu of a full suspension or termination, the Compliance director reached “an agreement … with the Business” to temporarily suspend the ability of these six Agents to pay transactions from the U.S.—though the Agents continued to process transactions, including fraud transactions, sent from outside of the U.S.—while Western Union employees had a “discussion” with the Agent owners.	
	 	
	m.	After a follow-up review showed that UK Western Union Agent 2 “has seen a slight decrease” in fraud complaints since the network review, Western Union lifted the suspensions after roughly three weeks and continued to conduct business with UK Western Union Agents 1 and 2 and the other Agent locations under review.	
	 	
	n.	Consumer fraud at UK Western Union Agents 1 and 2 returned almost immediately. On June 16, 2010, a Compliance Analyst identified UK Western Union Agent 2 as the number one paying Agent location of reported fraud in the world; that is, UK Western Union Agent 2 paid more transactions reported in CFRs between January 1 and June 15, 2010 than any other Western Union Agent. UK Western Union Agent 1 was the fifth highest CFR paying Agent during that same time period. On June 24, 2010, the United Kingdom Compliance Officer recommended terminating UK Western Union Agent 1. A senior Sales executive responded “Let’s be careful here.” Western Union did not terminate UK Western Union Agents 1 or 2.	
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	o.	On August 13, 2010, Western Union’s then-Director of Global Consumer and Agent Protection Program reviewed UK Western Union Agents 1 and 2, and other Agent locations due to a “worrysome increase” in consumer fraud payouts reported throughout the relevant region. He identified UK Western Union Agents 1 and 2, and UK Western Union Agent 2’s related Agent location as “3 top bad guys” and noted that their fraud payouts were “significantly lower.” Regarding some of the Agent locations, he told the then-United Kingdom Fraud Director, “You knew they were bad but not how bad! You will be surprised at how large these [consumer fraud]percentages are!” Despite the findings, Western Union did not discipline or terminate any of the three WURS Agent locations.	
        	        		
	p.	On October 25, 2010, a Compliance manager sent the United Kingdom Compliance director and then-Regional Vice President for AML Compliance for Europe a report titled “United Kingdom Agent Complicity Review: Fraud.” In his cover email with a subject of “United Kingdom – Fraud,” the Compliance manager stated “things are trending up … [Compliance] has been experiencing an increase in referrals for UK and while we have been relatively successful in keeping up with these referrals, it appears that our impact while, can be viewed as a good from a risk mitigation perspective, can also be seen as having an adverse impact on the business goals in UK….we have outlined a shift in our investigative tactics … for UK Agents that have activity that represents likely complicity in fraud related activity. Since we have deployed these tactics, we are beginning to see that the Agents are having a hard time providing a reasonable explanation for their activity and therefore, we are seeing a number of these cases resulting in terminations.”	
	 	
	q.	The report noted that there was “an increasing number of Western Union Agent locations [in the United Kingdom] that are either directly facilitating or assisting in the facilitation of fraud-related activity.” The report stated that “a surge in UK Agent terminations due to fraud related activity in the early months of 2010” did not “permanently eliminate[]” fraud-related activity, “rather the activity had simply shifted to other locations in the same geographic areas.” The report found that “locations escalated to [Western Union United Kingdom Compliance employees]were no longer being suspended and/ or terminated.” The report noted that an “example of this shift is the [WURS] Network” that Western Union operated directly. “WURS has agreed to the termination of only one location based on [Compliance] analysis, even though some of the most egregious levels of fraud complaints and evidence of Agent complicity have been identified at [those Agents].”	
	 	
	r.	In November 2010, a Compliance analyst conducted another review of UK Western Union Agent 2, and three other high-fraud United Kingdom Agent locations. The analyst again found “significant levels of questionable activity indicating Agent [or Agent employee] complicity” in consumer fraud schemes. Compliance again recommended suspension or termination of UK Western Union Agent 2 and the other Agent locations. A United Kingdom Compliance director told United Kingdom senior sales executives that “evidence of criminal or suspicious activities from these agents seem to be rather vivid. I know some of them are the top performance [ sic ]. I will keep you posted before any action is taken.”	
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	s.	Western Union suspended but did not terminate UK Western Union Agent 2 in November 2010. Western Union’s then-Compliance Director warned the then- Deputy Chief Compliance Officer that UK Western Union Agent 2 had been reviewed at least ten times without major disciplinary action demonstrating that “somewhere along the line, someone is losing touch with risk and is willing to absorb it.” Though Western Union temporarily suspended UK Western Union Agent 2 in November 2010, Western Union later allowed it to continue to process transactions, but temporarily restricted its ability to pay transactions of more than £350 from the United States and to send any transactions to Romania and Nigeria. While these restrictions limited the number of fraud transactions UK Western Union Agent 2 could process from U.S. victims, they did not prevent UK Western Union Agent 2 from paying fraud transfers from victims in other countries.	
        	        		
	t.	On December 2, 2010, a Compliance employee in the United Kingdom recommended terminating two UK Western Union Agent 2 employees but allowed UK Western Union Agent 2 to remain in operation and continue to process Western Union transactions. The Compliance employee cautioned that UK Western Union Agent 2 would be terminated if it ever appeared on Western Union’s 60-Day Fraud Report again. A few months later, UK Western Union Agent 2 appeared on Western Union’s 60-Day Fraud Report again but Western Union did not terminate UK Western Union Agent 2.	
	 	
	u.	On February 2, 2011, the London Metropolitan Police contacted Western Union regarding various fraud transactions paid at UK Western Union Agent 1 and other Agents. The Compliance Director asked an employee “is [UK Western Union Agent 1] a liability?” The employee replied “it’s the same deal as [UK Western Union Agent 2] … very high volume [Western Union Agent] that [Sales] always fights for.… it was one of six locations suspended by [the then-Compliance Director] in May 2010 due to a high number of fraud complaints but reactivated based on negotiations with [Sales].”	
        		
37.	Western Union terminated UK Western Union Agent 1 in October 2012; UK Western Union Agent 2 still operates as a Western Union Agent.	
	 	
The FTC Discussions Regarding Consumer Fraud Complicit Agents	
        		
38.	In December 2009—as fraud payouts were rising at certain Western Union Agents in the United Kingdom—the Federal Trade Commission (“FTC”) met with Western Union regarding Western Union’s antifraud efforts and the antifraud standards imposed on MoneyGram as part of the FTC’s 2009 settlement with MoneyGram. The FTC raised concerns regarding U.S. and international Western Union Agents that paid reported fraud transactions. Western Union did not adopt the standards imposed on MoneyGram.	
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39.	After negotiating with the FTC through 2010, Western Union agreed to use an Enhanced Fraud Monitoring Process known as the “FTC Matrix” with Agents in the U.S., Canada, the United Kingdom, Jamaica, and Nigeria in April 2011. Under the FTC Matrix, Western Union told the FTC it would immediately suspend and investigate any Agent in the United Kingdom, Jamaica, or Nigeria that, within a 30-day period, processed CFR transactions comprising five percent or more of total transaction payouts.	
        		
40.	Western Union’s United Kingdom Country Director told senior Compliance and Sales employees that he was “strongly opposed to the direct suspension/termination of locations [pursuant to the FTC Matrix] without any communication to the appropriate Master Agent, or the opportunity for the Master Agent to attempt to remedy the situation with the location. This could prove to be seriously detrimental to our relationship with the Master Agents. The Country Director said that the FTC Matrix would “dramatically effect [ sic ] the UK network location plan.” On April 13, 2011, a Compliance employee reported that the FTC Matrix in the “UK [was put] on hold.”	
 	
41.	After discussions between Western Union Compliance Department and Sales, it was agreed that instead of suspending Agents per the FTC Matrix, Western Union would restrict certain Agents in the United Kingdom from paying transactions sent from the United States. Because most CFRs were made by U.S. consumers, transactions identified in CFRs almost always originated from the U.S. As a result, restricting certain United Kingdom Agents from paying transactions originating in the U.S. meant that those Agents could not process transactions identified in CFRs and therefore would not hit the FTC Matrix.	
 	
42.	The U.S. transaction restriction was not effective at combating fraud. As one Western Union employee explained to Western Union’s United Kingdom Compliance Officer on June 8, 2011, “Problem is, we agreed in writing with the FTC on how to handle this stuff … Suspend pending was in the agreement. Also what I don’t like about just blocking US to UK is that we aren’t addressing potential bad Agents that way. People around the world are being defrauded but we only have data on the sends from the US though.”	
 	
43.	Western Union told the FTC about its restriction of certain Agent locations in the United Kingdom in summer 2012.	
 	
The Scheme to Defraud in Spain	
        		
44.	As with the United Kingdom, Western Union operated in Spain through Master Agent FEXCO. FEXCO contracted with subagents in Spain to process transactions, with FEXCO subagents processing 40% of all Western Union transactions in Spain in 2008. When Western Union acquired FEXCO’s money transfer business in February 2009, it entered into direct relationships with all of FEXCO’s subagents in Spain.	
 	
45.	In 2010 and 2011, Compliance employees identified Agent locations in Spain processing increasing numbers of reported fraud transactions. Between 2008 and 2010, reported fraud activity in Spain increased by a factor of eight. In 2008, victims filed 252 CFRs with Western Union regarding fraud transactions paid by Western Union Agent locations in Spain totaling $379,986 in losses to victims. In 2010, victims filed 2,192 CFRs with Western Union regarding fraud transactions paid by Western Union Agent locations in Spain totaling $5,127,420 in losses to victims.	
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46.	On January 21, 2011, Western Union Compliance employees conducted a “Spain Fraud Review” for “Agent Complicity.” Compliance employees found that CFR transactions paid in Spain drastically increased throughout 2010 and the estimated levels of total fraud paid by Agent locations with questionable activity “were often more than five times that of [CFR] figures associated with each” Agent location. Agents Western Union directly managed after it bought FEXCO were the “majority” of the Agents that demonstrated “complicity related to fraudulent activity.” A then-Compliance manager recommended to Compliance and Fraud Department vice presidents that Western Union take action against certain Agents.	
        		
47.	The report continued “in addition to suspending or terminating several locations, [Western Union Regional Compliance has] also worked with Agent Networks to address issues identified by [Compliance]. Some of the actions taken include temporarily routing Pay transactions through Agent CSCs for screening prior to payout. Additionally, Agents have in some cases limited the amount of Pay transactions particular locations can process in a given time period.” The report stated that “these controls have in some instances helped to reduce the amount of fraudulent activity occurring at locations in Spain.” The report concluded that Compliance “investigations continue[d] to identify levels of potential fraud that far surpass figures demonstrated by formal fraud complaints suggest[ing] high levels of risk related to Agent Complicity and fraudulent activity in the country. Additionally, the increasing trend of fraud complaints throughout 2010 indicates that the number of Agents appearing on the FRI will continue to increase and the number of Agent locations identified that display indicators of Agent complicity will likely surpass the number discovered in 2010, thus further heightening the risk exposure to Western Union.”	
 	
48.	On August 18, 2011, the Compliance Director and Compliance Managers recommended to the Director of Global Consumer and Agent Protection Program that Western Union address rising fraud in Spain by adding Spain to the FTC Matrix. Western Union did not follow Compliance’s recommendation. Fraud transactions continued to increase in Spain throughout 2011. In 2011, victims filed 3,710 CFRs with Western Union regarding fraud transactions paid by Western Union Agents in Spain totaling $7,593,352 in losses to victims.	
 	
49.	In 2011 and 2012, SEPBLAC, Spain’s Anti-Money Laundering and Countering Financing of Terrorism Supervisory Authority, conducted an audit of Western Union’s Agents in Spain that revealed money laundering and fraud activity at certain Western Union Agent locations in Spain. In a report dated October 9, 2012, SEPBLAC informed Western Union that its work “reveals extremely serious facts.” SEPBLAC noted that, for a percentage of certain Western Union Agent locations, Western Union “itself has reported in suspicious transaction reports … [that] there were clear signs that [certain Agent locations] carried out money laundering activities.” SEPBLAC found that the money laundering activity was “particularly remarkable in overseas remittance transactions to Spain.” SEPBLAC determined that certain Agent locations “feign[ed] the involvement of beneficiaries who do not really exist, that is to say, the payments are not collected by clients, but by [A]gents who use an identity invented for that purpose.” SEPBLAC found that Western Union “reported to the Executive Service a significant numbers of [Agents] and cancelled the corresponding agency contracts.” Nevertheless, SEPBLAC concluded that Western Union’s “money laundering and terrorism financing prevention systems [were] ineffective” and due diligence was deficient.	
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50.	In a report dated December 20, 2012, SEPBLAC concluded that Western Union had not “fully accepted” the seriousness of the conduct SEPBLAC identified in its October 9, 2012 report, and that Western Union’s response to the October 9 findings, which stated that the report “indicated some needs for improvement in the agent oversight program” minimized what was an “absolute lack of control over the [A]gents’ activity which has made it possible for truly scandalous figures of fraud and money laundering related payments and remittances to be recorded.” On December 20, 2012, SEPBLAC found Western Union’s AML system in Spain “totally ineffective in preventing money laundering, related to fraud and other offenses, which has taken place on a large scale.”	
The Scheme to Defraud Elsewhere

51.	Western Union knew that Complicit Western Union Agent locations were not limited to the United Kingdom and Spain, but failed to implement or execute effective world-wide fraud policies until September 2012, eight years after employees first recommended adopting global policies.	
        		
52.	As early as March 2011 and continuing through 2012, certain Complicit Western Union Agent Locations in Mexico conspired to launder fraud proceeds using Western Union’s Money Transfer System. In these schemes, Complicit Agent locations in Mexico received the initial fraudulent transactions from victims in the United States via Western Union’s Money Transfer System. Minutes later, after taking a commission, the Complicit Agent Locations in Mexico would use the Western Union Money Transfer System to send the remaining money to Western Union Agent locations in Canada and other destinations. This two-step process was designed to conceal the ultimate destination of the fraud proceeds. Despite identifying certain Agent locations potentially involved in this activity as early as April 2011, Western Union allowed the Agent locations to remain open and the activity continued through 2012.	
 	
53.	In October 2011, Western Union learned from U.S. law enforcement and its own review of transaction data that certain Agent locations in Peru were participating in an emergency need fraud scam. Western Union reviewed four related Agent locations in Peru and found that those four Agent locations paid nearly half of all CFR transactions paid in Peru. Western Union did not terminate the Agent locations in October 2011, but instead allowed them to continue processing transactions. In the next six months, one of the four Agent locations paid 250 more CFR transactions totaling more than $600,000. Western Union suspended the four Agent locations in April 2012, but allowed the Agent locations’ owner to open another Western Union Agent location nine months later.	
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Victims of the Scheme to Defraud

54.	Below are examples of victims of the consumer fraud scheme perpetrated via Western Union’s Money Transfer System. Each of these victims was defrauded through Agents that had already paid 15 CFRs in 120 days.	
        		
        	a.	MV, a 60-year-old resident of the Middle District of Pennsylvania reported that in February 2006, a Fraudster contacted MV and falsely promised him that if he paid legal fees up front, he would receive a $1 million prize. On February 2, 2006, MV visited a Western Union Agent location in the Middle District of Pennsylvania and sent a $4,500 money transfer to claim his prize. UK Western Union Agent 2 in London, United Kingdom paid MV’s transfer on February 3, 2006. MV never received the prize he was promised.	
	        		
	b.	AI, a resident of the Middle District of Pennsylvania reported in July 2006, a Fraudster contacted AI and falsely promised her that if she paid money up front she would receive a sweepstakes prize. On July 8, 2006 and July 14, 2006, AI visited Western Union Agent locations in the Middle District of Pennsylvania and sent transactions of $1,500 and $1,750 to claim her prize. On July 10, 2006 and July 15, 2006, UK Western Union Agent 2 in London, United Kingdom, paid out AI’s transfers. AI never received the prize she was promised. AI reported the fraud to Western Union.	
 		
	c.	TD, a resident of the Middle District of Pennsylvania reported in May 2008, a Fraudster contacted TD and falsely promised him a motorcycle in exchange for an advance payment. On May 29, 2008, TD visited a Western Union Agent location in the Middle District of Pennsylvania and sent a $1,300 money transfer in exchange for the motorcycle. On May 31, 2008, UK Agent Western Union 2 in London, United Kingdom, paid out TD’s transfer. TD never received the motorcycle he was promised. TD reported the fraud to Western Union.	
 		
	d.	FS, a resident of the Middle District of Pennsylvania reported in May 2010, a Fraudster contacted FS and falsely promised to pay him for cashing checks provided FS paid the Fraudster the value of the checks in advance. On May 19, 2010, FS visited a Western Union Agent location in the Middle District of Pennsylvania and sent a $2,000 money transfer to receive the checks. UK Western Union Agent 1 in London, United Kingdom paid FS’s transfer on May 20, 2010. The checks FS received were counterfeit and FS never received the payment he was promised. FS reported the fraud to federal investigators.	
 		
	e.	PM, a 65-year-old resident of the Middle District of Pennsylvania reported that in May 2010, a Fraudster contacted PM and falsely promised her that if she paid fees up front she would receive prize money from a sweepstakes. Between May 1, 2010 and September 15, 2010, PM visited a Western Union Agent location in the Middle District of Pennsylvania and sent seven Western Union transactions totaling $9,550 to claim the prize. A Western Union Agent in London, United Kingdom, paid three of PM’s transfers totaling $3,450. PM never received the sweepstakes prize she was promised. PM reported the fraud to federal investigators.	
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	f.	MSC, a 90-year-old resident of the Middle District of Pennsylvania reported that in June 2011, a Fraudster contacted MSC and falsely told her that a family member was in trouble and needed monetary assistance. On June 24, 2011, MSC visited three different Western Union Agent locations in the Middle District of Pennsylvania and sent four money transfers totaling $9,600 to help her family member. On June 24, 2011, two Western Union Agent locations in Spain paid two of MSC’s transfers and a Western Union Agent location in Mexico paid two of MSC’s transfers. MSC’s family member was never in trouble and did not need monetary assistance. On July 29, 2011, MC reported to Western Union that she had been the victim of a fraud. Western Union recorded only one of MSC’s four transactions in its CFR database.	
        	        		
	g.	KL, an 85-year-old resident of the Middle District of Pennsylvania reported that in August 2011, a Fraudster contacted KL and falsely told him that a family member was in trouble and needed money. On August 11, 2011, KL visited a Western Union Agent location in the Middle District of Pennsylvania and sent two money transfers totaling $12,000 to help his family member. On August 11, 2011, two Western Union Agent locations in in Mexico paid KL’s transfers. KL’s family member was never in trouble. KL reported the fraud to Western Union.	

	h.	TSD, an 82-year-old resident of the Middle District of Pennsylvania reported that in August 2011, a Fraudster contacted TSD and falsely told him that a family member was in trouble and needed bail money. On August 18, 2011, TD visited a Western Union Agent location in the Middle District of Pennsylvania and sent a $2,300 money transfer to help his family member. On August 18, 2011, a Western Union Agent location in Spain paid TSD’s transfer. TSD’s relative was never in trouble. TSD reported the fraud to Western Union.	
	 	
	i.	RK, an 80-year-old resident of the Middle District of Pennsylvania reported that in August 2011, a Fraudster contacted RK and told her that her grandson was in an accident and needed money. On September 6, 2011, RK visited a Western Union Agent location in the Middle District of Pennsylvania and sent two transfers totaling $9,800 to help her grandson. On September 6, 2011, a Western Union Agent location in Mexico paid both of RK’s transfers. RK’s grandson had not been in an accident. RK reported the fraud to Western Union.	
	 	
	j.	JD, an 88-year-old resident of the Eastern District of Pennsylvania reported that in October 2011, a Fraudster contacted JD and falsely told him that his grandson was in the hospital and needed money. On October 4, 2011, JD visited a Western Union Agent location in the Eastern District of Pennsylvania and sent a $2,200 money transfer to help his grandson. On October 4, 2011, Western Union Agent location in Spain paid JD’s transfer. JD’s relative was never in the hospital.	
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        	k.	MC, a resident of the Southern District of Florida reported that on February 15, 2012, a Fraudster contacted MC and falsely told him a relative was in trouble and needed money. Between on or about February 15, 2012 and February 17, 2012, MC visited five Western Union Agent locations in the Southern District of Florida and sent five transfers totaling over $10,000. A Western Union Agent location in Peru paid three of MC’s transfers on or about February 16, 2012. MC’s relative had never been in trouble. MC reported the fraud to Western Union.	
	        		
	l.	HH, a 96-year-old resident of the Middle District of Pennsylvania reported that in February 2012, a Fraudster contacted HH and falsely told him that his grandson had been arrested abroad and needed bail money. On February 27, 2012, HH visited a Western Union Agent in the Middle District of Pennsylvania and sent two $2,400 money transfers to help his grandson. A Western Union Agent location in Peru, paid HH’s transfer on February 27, 2012. HH’s grandson had not been arrested and did not need bail money. HH reported the fraud to Western Union.	
Western Union’s Willful Failure to Prevent Structuring

55.	In March 2003, FinCEN fined Western Union $3 million, finding that the Company willfully failed to file SARs and “failed to establish SAR reporting procedures that would reasonably assure that it could identify and properly report structured transactions.” As part of the penalty, Western Union agreed to conduct further review to identify suspected structuring to avoid the CTR or $3,000 identification requirements and to “establish an enhanced nationwide due diligence policy to monitor its agents for BSA compliance [, which] shall include … terminating such agents that Western Union determines to be in chronic violation of Western Union policies and/or a substantial risk for money laundering.”	
        		
56.	Between 2004 and 2012, Western Union failed to terminate or discipline certain Agent locations who sent a high volume of transactions from the U.S. to China (“China Corridor Agents”) and repeatedly violated the BSA and Western Union policy through their structuring activity.	
 	
57.	As described in more detail below, Western Union, through various methods, recognized that four China Corridor Agents were engaged in violations of Western Union policies regarding structuring transactions. Western Union tracked how many SARs it filed on its Agent locations’ transactions and knew that a high number of SARs on transactions at a particular Agent location was an indicator that the Agent location might be involved in suspicious or illegal activity. Western Union filed thousands of SARs identifying individuals who sent potentially structured transactions through the China Corridor Agents. Between 2003 and 2012, Western Union filed more than 11,000 SARs on transactions conducted at one of the China Corridor Agents, U.S. Shen Zhou International Company, and more than 20,000 SARs on transactions conducted at three other China Corridor Agents, collectively.	
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58.	Some Western Union employees encouraged China Corridor Agents to grow their business by urging Agent owners to open additional Western Union locations and paying the owners bonuses. Some Western Union employees also pressed Compliance employees to ensure that certain China Corridor Agent locations were not suspended or terminated.	
        		
59.	Although Western Union filed thousands of SARs on customers of its Agent locations, Western Union rarely identified its Agent locations as suspicious actors or described the Agent locations’ role in the structuring conduct. Western Union’s practice was not to identify Agent locations as “subjects” of SARs unless Western Union found an Agent location “complicit” and terminated the Agent location as a result of the finding. Western Union typically only found Agent locations “complicit” if the owner or employee of an Agent location was arrested or identified in a public source such as “a news article that says the [Agent was] related to fraud, or [the Agent] was on … some sort of scam website” or if its own investigation determined that the Agent location was complicit.	
 	
60.	Between 2004 and 2012, customers at certain China Corridor Agents structured hundreds of millions of dollars in Western Union transactions to China. These China Corridor Agents were highly profitable and sent transactions from the U.S. to China between 2003 and 2012. Had Western Union’s AML program been effective, Western Union could have prevented these four Agent locations from allowing customers to structure at least $64 million of transactions beginning as early as April 2009.	
U.S. Shen Zhou International Company

61.	U.S. Shen Zhou International Company (“USZ”) was a vitamin and herbal supplements store owned by Frank Wang and located in Monterey Park, California in the Central District of California. On March 24, 2005, Wang became a Western Union Agent. USZ sent more than ninety percent of its transactions between 2005 and 2010 to China. USZ quickly became one of the largest Independent Western Union Agent locations in the United States, processing more than 100 Western Union transactions per day. By April 26, 2006, a Western Union sales employee described USZ as the “#1 China account.” Between 2005 and 2010, USZ sent more than $310 million in Western Union transactions to China, approximately 50 percent of which were structured.	
        		
62.	Wang pleaded guilty to illegal structuring in the U.S. District Court for the Central District of California on October 25, 2013. According to Wang, he and his employees at USZ structured and aided consumers in structuring a significant volume of Western Union transactions from the U.S. to China. Wang said that he and his employees allowed and assisted consumers in structuring transactions to avoid the BSA requirement that financial institutions review and record consumer identification on transactions of $3,000 or more. In aiding consumers in structuring these transactions, Wang said he supplied false identity information for his customers and entered that false information into Western Union’s Money Transfer System. Wang admitted to the Court that he acted in part to benefit Western Union by increasing revenue from fees to Western Union.	
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63.	Western Union employees knew that Wang and USZ employees were potentially structuring or aiding consumers in structuring transactions in violation of the BSA as early as December 2005, but allowed USZ to continue operating and sending structured transactions using Western Union’s Money Transfer System until Wang was arrested in October 2010.	
        		
64.	Between December 2005 and March 2010, Western Union conducted at least nine onsite compliance reviews at USZ and dozens of transaction reviews. In each onsite review, Western Union Compliance employees found that USZ employees were failing to comply with elements of the BSA or certain aspects of Western Union policy. Western Union repeatedly found that USZ was deficient in monitoring transactions, was not filing CTRs on all transactions that should have triggered the filing of a CTR, and was processing suspicious transactions without filing SARs on those transactions. The suspicious transactions were unusual and “repetitive,” characterized by multiple transactions of $2,500 each sent minutes apart, indicated that consumers were likely structuring transactions to avoid providing identification as required by the BSA.	
 	
65.	Between 2005 and March 2010, despite finding repeated violations of Western Union policies, Western Union took no disciplinary action against USZ beyond one 90-day probation in January 2006 during which USZ continued to process transactions.	
 	
66.	For example, in March 2010, Western Union conducted a compliance review of USZ that revealed failures to file SARs and verify customer identities. Under Western Union’s compliance policies, USZ’s failures should have resulted in Western Union placing the Agent on a 90-day Compliance Probation. Western Union did not place the Agent on probation, instead—contrary to its compliance policies—Western Union continued to monitor the Agent’s transactions.	
 	
67.	By 2010, Western Union had filed more than 11,000 SARs regarding transactions sent through USZ, without identifying USZ or Wang as individuals involved in suspicious conduct. The vast majority of the SARs Western Union filed identified the suspicious activity as structuring to avoid the BSA identification recordkeeping or CTR reporting requirements. Despite repeatedly finding that USZ was not complying with all elements of the BSA or all elements of Western Union’s AML requirements, Western Union did not identify the Agent’s suspicious conduct in the SARs it filed with law enforcement nor did it take any material action to stop USZ from assisting third parties in using Western Union systems to send structured transactions.	
 	
68.	On September 27, 2010, Wang was arrested for structuring through USZ. Western Union terminated USZ as an Agent after Wang’s arrest. After Wang’s arrest, he told law enforcement that a Western Union sales employee told Wang that Wang could open another Western Union Agent location in the Monterey Park, California area. The Western Union employee cautioned Wang not to use his own name to open the new Agent location, but to use a relative’s name instead. Wang did not open another Western Union Agent location.	
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Two China Corridor Agents in New York

69.	New York Agent 1 and New York Agent 2 were phone card and phone accessories stores owned and operated by Owner 1 in New York, New York. In 2003, Owner 1 began operating New York Agent 1 as a Western Union Agent location; Owner 1 began operating New York Agent 2 as a Western Union Agent location in 2005. Both Agents were “direct deposit” Agents, which means that they banked under Western Union’s name and were meant to receive additional review under Western Union’s policies. Between 2003 and 2011, New York Agents 1 and 2 sent more than $1.6 billion in Western Union transactions; almost all of those transactions were sent to China and approximately 25 to 30% of those transactions had characteristics indicative of structured transactions.	
        		
70.	New York Agents 1 and 2 were China Corridor Agents located in New York and both Agent locations became two of the largest Western Union Agent locations in the U.S., with New York Agent 1 processing approximately 3,000 transactions each month and New York Agent 2 processing approximately 5,000 transactions each month. One then-executive vice president noted that “any negative action against [New York Agent 1]will require prior notification” to Western Union’s then-President for the Americas and then-Executive Vice President for Asia Pacific “due to the heavy impact to our China business.”	
 	
71.	Owner 1 admitted to government law enforcement agents that he knew that consumers paid their debt to human smugglers in China through Western Union and that consumers would keep transactions under $2,000 in order to avoid providing identification.	
 	
72.	Western Union employees knew through compliance reviews, transactions reviews, and automatic reports designed to identify suspicious activity that New York Agent 1 and 2 employees were potentially structuring or aiding consumers in structuring transactions in violation of the BSA as early as 2006. For example, between 2004 and 2011, Western Union conducted at least a dozen onsite reviews of New York Agent 1 and eight onsite reviews of New York Agent 2. In each review Western Union found that the employees of New York Agents 1 and 2 were not complying with certain elements of the BSA or Western Union policy. Western Union repeatedly found that New York Agents 1 and 2 did not have sufficient compliance programs, were not filing SARs in every instance when a SAR was required, were allowing consumers to allegedly structure transactions, and were, in certain instances, entering false data in Western Union’s Money Transfer System.	
 	
73.	Despite these repeated violations, Western Union continued business with New York Agents 1 and 2 and allowed the Agent locations to continue operating and sending structured transactions using Western Union’s Money Transfer System until a bank asked Western Union for more information on the Agent locations’ AML programs in November 2011. Instead of suspending or terminating the Agent locations, Western Union permitted these Agent locations to continue operating. For example:	
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        	a.	Western Union had an unwritten policy to suspend an Agent location from conducting transactions if that Agent location was placed on probation three times. The term “probation” referred to Western Union’s policy of engaging in enhanced reviews of an Agent location. On July 18, 2008, a senior Compliance Officer noted that New York Agent 1 had been placed on probation by Western Union on three occasions but was not suspended per Western Union policy. Western Union approved New York Agent 1’s owner to open a third Agent location and paid the owner a $250,000 bonus to renew New York Agents 1 and 2’s contracts with Western Union.	
	        		
	b.	In November 2008, a Compliance employee recommended New York Agent 2’s third probation. Several months later a Western Union Sales employee stated that Sales was “encouraged to be proactive” with Agent locations with more than “2 ‘bad’ reviews. [Because i]f the agent has a third it is automatic suspension, no appeal and the recovery process takes about a week… Attitude seems to be a key portion of the process. If the agent is resistant rather than willing to adopt changes then they head very quickly to suspension.” A Western Union Sales director responded that Sales “help compliance group understand how important those Chinese agents are – not to shut them down automatically. [New York Agent 2] is #2 agent in the region and we can’t afford one week suspension.”	
	 	
	c.	On June 3, 2010, Western Union’s then-Compliance Director told the then-Chief Compliance Officer that Western Union reviewed New York Agent 1 on June 2, 2010. New York Agent 1 “had a bunch of transactions with false data[.] The [New York Agent 1 Compliance Officer, who was also the owner’s sister] admitted to accepting a bag of cash (80K) from a relative and making up transactions …So, the [Compliance Officer] of one of our biggest locations knew that she was breaking the law. This, plus other findings (forms did not match what was entered into the system) puts this as a suspension [of New York Agent 1]. This would be the [Agent’s] third compliance suspension. If I don’t suspend, then it is a probation. This would be [New York Agent 1’s] third probation, which is also a suspension. I’ll call the [Western Union] Business [employees].”	
	 	
	d.	Sales employees raised concerns with this suspension. Western Union’s then-President of the Americas told Western Union’s Chief Executive Officer “FYI. We are trying to save [New York Agent 1] (to [ sic ] agent NY to China).” Compliance suspended New York Agent 1 on June 3, 2010, but lifted the suspension 24 days later. New York Agent 1’s Compliance Officer continued to process transactions for another year despite admitting that the Compliance Officer conducted criminal transactions. Subsequent, Western Union compliance reviews continued to uncover additional BSA violations.	
	 	
	e.	A review of New York Agent 1 on November 12, 2010, revealed serious compliance failures, including violations of the BSA’s recordkeeping and reporting requirements that caused Compliance to recommend the Agent location’s third probation, which should have resulted in the Agent location’s immediate suspension. Avoiding probation and suspension for the Agent location “require[d] a policy exception” from a Compliance employee. Western Union employees did not suspend New York Agent 1 after this review.	
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        	f.	After a review of New York Agent 1 in January 2011, a Compliance employee again recommended suspension due to New York Agent 1’s continued compliance failures. Compliance suspended New York Agent 1 briefly but “after discussions with the business” placed New York Agent 1 on an Enhanced Probation Program ” that allegedly would have included “full training initially and then monthly, unannounced visits by [Western Union]”.	
	        		
74.	In 2011, the bank that held New York Agents 1 and 2’s direct deposit accounts asked Western Union to provide information about the compliance programs, risks, and reviews related to Western Union Agent locations who used the direct deposit accounts, including New York Agents 1 and 2. A Western Union Compliance employee said that if the bank found that “the risk is high, they may pull some of the bank accounts for these [Agents], which effectively will result in suspension of services. [The bank] can also file its own SARs and conduct law enforcement outreach which can elevate the risk that Western Union has with these locations.”	
        		
75.	The compliance employee also told other Compliance employees that he was communicating with the bank about the Agent locations, and that the other employees should “prepare [Sales] for this should it get to a point where [the bank] pulls a few bank accounts. I intend to communicate the significant amount of resources that Western Union puts towards maintaining these locations and will even demonstrate that we will terminate as we did with [another Agent location].” In November 2011, the bank asked for additional compliance information on New York Agents 1 and 2, and other Agent locations, including any material findings regarding the Agent locations. Western Union shared none of its findings regarding either New York Agents 1 or 2 with the bank. A senior Western Union sales executive told colleagues that closing “[New York Agents 1 and 2]at this time will impact the US-China corridor BADLY. Please see if there is anything we can do (like verify [New York Agent 1]has done something ‘not compliant’ and we re-educate [New York Agent 1]to be compliant) and to re-open them in a few weeks to catch the Chinese New Year rush.”	
 	
76.	Following the bank’s requests for information, Western Union closed New York Agents 1 and 2 in December 2011.	
 	
77.	By 2012, Western Union had filed nearly 20,000 SARs regarding transactions sent by New York Agents 1 and 2. Despite Western Union’s earlier findings, only two of these SARs identified the Agent’s involvement in suspicious activity. Between 2005 and 2012, the vast majority of these SARs identified the suspicious activity as structuring to avoid the BSA identification recordkeeping or CTR reporting requirements.	
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Hong Fai also known as Yong General

78.	Hong Fai General Contractors Corp., which later changed its name to Yong General Construction Co. Inc. (“Hong Fai”)was a construction company owned by Yong Quan Zheng 1 located in Philadelphia, Pennsylvania in the Eastern District of Pennsylvania. On September 13, 2006, Zheng signed an agreement to operate Hong Fai as a Western Union Agent from the small construction company office in the Chinatown area of Philadelphia. Zheng’s daughter Yan Hong Zhao a/k/a Yan Hong Zheng a/k/a Cindy (“Cindy”) and son-in-law Ming Zhao a/k/a Larry (“Larry”) operated the Western Union business at Hong Fai. Hong Fai quickly became a successful Western Union Agent location, processing more than $100,000 in money transfers per day, most of which were sent to China, by February 2007. From December 1, 2007 through March 6, 2012, Hong Fai sent over $126 million in Western Union transactions.	
        		
79.	On October 18, 2016, Cindy and Larry were charged in the U.S. District Court for the Eastern District of Pennsylvania with conspiracy to violate the BSA, including structuring of at least $21 million of transactions to China, and failure to file SARs. Sentencing for both defendants is scheduled for March 2017.	
 	
80.	Western Union employees knew that Hong Fai employees structured or aided or were potentially structuring or aiding consumers in structuring transactions in violation of the BSA and that Hong Fai was not filing SARs as required, but allowed Hong Fai to continue operating and sending structured transactions using Western Union’s Money Transfer System. As described below, through compliance reviews and other methods, certain Western Union employees identified suspicious and illegal conduct at Hong Fai for years but did not follow Western Union’s internal procedures to discipline or terminate Hong Fai.	
 	
81.	For example, between 2007 and 2012, Western Union conducted more than a dozen onsite or transaction reviews of Hong Fai. In these reviews, Western Union repeatedly found that Hong Fai violated certain elements of the BSA or certain aspects of Western Union policy. These reviews resulted in Western Union placing Hong Fai on probation three times, which should have resulted in suspension per Western Union practice. Despite these repeated violations, Western Union continued business with Hong Fai without effective discipline and allowed Hong Fai to change its name to Yong General and receive a new Agent identification number, which made it appear as though it was a new Agent location. Despite continued violations under its new name, Western Union terminated Hong Fai in 2012 only after law enforcement and Hong Fai’s bank continued to raise concerns about illegal transactions and Hong Fai’s failure to file SARs. Western Union filed no SARs identifying Hong Fai as a suspicious subject until after it terminated Hong Fai in 2012.	
 	
82.	As early as June 2007, Western Union was aware of “significant” compliance failures at Hong Fai involving structured transactions and failure to file SARs for suspicious transactions, but allowed Hong Fai to continue to operate. During a March 2008 review, a Compliance employee determined that the Agent location was structuring to avoid identification and CTR requirements, and also had failed to file SARs on suspicious transactions. As early as January 2009, Hong Fai’s bank notified Western Union that Hong Fai was engaged in suspicious transactions based on suspicious patterns of Hong Fai’s deposits and reports from third parties. Western Union allowed Hong Fai to remain in operation.	
____________________
1 Yong Quan Zhen pled guilty to unrelated charges on May 31, 2016.
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83.	On March 29, 2009, Western Union Compliance employees tried to suspend Hong Fai after Larry, who conducted the majority of transactions, told Western Union employees “he [was] not willing to comply with the AML Laws and Policies.” The compliance review also found that Hong Fai failed to file SARs on suspicious transactions, and Hong Fai employees were “helping customers structure transactions to avoid 3K [BSA] ID” requirement, a violation of the BSA.	
        		
84.	Western Union Compliance scheduled the start of Hong Fai’s suspension for April 9, 2009. Sales employees requested a delay in suspension because Hong Fai was a “very important Agent.” Despite the results of the compliance review showing that Hong Fai was violating the BSA, including structuring, after discussions with Sales, Compliance suspended Hong Fai, but within a few days lifted the suspension and rather placed it on probation and allowed the Agent location to continue processing transactions.	
 	
85.	Hong Fai’s compliance failures continued in 2010, when law enforcement contacted Western Union again about potential illegal payments sent through the Agent location. Compliance employees reviewed Hong Fai’s compliance history and found Hong Fai had multiple compliance failures dating back to 2007 that included structuring conduct and failure to file SARs, and that Hong Fai’s failures were continuing to take place. On June 10, 2010, Western Union’s Compliance Manager shared Hong Fai’s March 2009 compliance review with his team. A Compliance analyst responded that Hong Fai’s suspension had been changed to probation after Sales told Compliance that Hong Fai was the highest performing U.S.-to-China Agent in the Philadelphia region.	
 	
86.	In November 2010, a Compliance employee recommended discussing suspension of Hong Fai as “their compliance issues have not been resolved and the agent owner is sending transactions using different biographical data.” A compliance review on November 18, 2010, revealed that the owner was sending Western Union transactions for himself from the U.S. to China with false data. A Compliance employee warned “if this [A]gent is willing to enter different biographical information on transactions they are conducting for themselves, it is logical to conclude that they would be willing to enter fictitious biographical information for another consumer.” As part of this report, a Compliance employee noted that “Hong Fai … pose[d] significant consumer, legal/regulatory, financial and reputational risk to Western Union … evidenced by the questionable consumer traffic, questionable agent activity, and the Agent’s inability to adhere to compliance standards.” Nevertheless, Western Union did not suspend this Agent location.	
 	
87.	An onsite compliance review in July 2011 revealed continued violations of the BSA and Western Union policies. During the review, Cindy admitted to a Western Union Compliance employee that she would have structured a consumer’s $14,000 transaction into two transactions of less than $10,000 each if the Western Union employee had not been present because “good customer service was more important than compliance.” The Western Union Compliance employee also observed Hong Fai employees advising consumers on how to structure transactions, charge extra fees for transactions, and accept transactions over the phone. Hong Fai consumers told the Western Union Compliance employee that they had been able to use false identification documents at Hong Fai in the past.	
26

88.	Western Union did not suspend or terminate Hong Fai in 2011 though a then-Compliance director told a then-Compliance vice president that Western Union “[has] taken a huge chunk out of the US to China business this week by suspending 8 locations, 6 in the [Southwest Border] area and 2 in New York. We should have had another in Philly, but we’ve opted to let [Global Field Compliance] apply iCop.” The employee stated “as soon as its [ sic ] possible, we should apply RTRA controls on all US to China transactions.” The same then-Compliance director explained that though he was considering termination for Hong Fai in 2012, Sales had always “wanted this [Agent] saved and I don’t think anything has changed in their minds around the importance of the [A]gent.”	
        		
89.	On March 19, 2012, Western Union terminated Hong Fai as an Agent. Between 2007 and 2012, Western Union filed more than 1,000 SARs on transactions Hong Fai processed.	
AML Deficiencies Involving Gambling Transactions at Western Union

90.	In December 1997, Western Union signed an Agreement of Voluntary Cooperation with the Florida Attorney General regarding gambling transactions from Florida to offshore sportsbooks. As part of the agreement, Western Union agreed to advise certain Agents that interstate wagers violated Florida law and to implement procedures to limit certain gambling transactions.	
        		
91.	Through transaction data, Agent compliance reviews, additional law enforcement investigations, and other investigations, Western Union employees knew that individuals located in the Southern District of Florida and elsewhere continued to use its Money Transfer System through at least 2012 to send transactions that exhibited characteristics Western Union associated with illegal gambling-related transactions from the U.S. to other countries. Western Union detected these transactions in its Money Transfer System and knew that gambling-related transactions were “particularly well-suited for the layering and integration stages of money laundering. As a result, gambling websites generate substantial money laundering concerns due primarily to the volume and speed of transactions, as well as the anonymity offered. For these reasons, internet gambling operations are vulnerable to be used, not only for money laundering, but also for criminal activities ranging from terrorist financing to tax evasion.” Western Union employees identified legal and regulatory risks to Western Union if U.S. law enforcement found that the Company had “knowingly processed transactions for the purpose of illegal gambling.”	
 	
92.	Although Western Union had some systems and controls in place to combat the use of Western Union’s system to transmit illegal gambling-related transactions, Western Union did not enact effective controls to limit transactions that displayed characteristics associated with gambling through 2012. For example, in August 2009, Western Union Compliance employees proposed enhanced consumer monitoring on transactions from the U.S. to Costa Rica to reduce transactions that exhibited characteristics associated with gambling. Under the proposal, any consumer who sent a certain number of transactions exceeding a certain amount within a certain period would be subject to additional review and, if warranted, blocked from sending further Western Union transactions.	
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93.	Western Union implemented the enhanced consumer monitoring, but the monitoring did not reduce or eliminate gambling-related transactions sent by U.S. consumers to Costa Rica, which U.S. consumers sent “to take advantage of the many Costa Rican based gaming websites operating in the country.” For example, between January and February 2010, a Western Union analyst reviewed certain Agents in Costa Rica and found that “even with controls in place and additional requirements placed on our Agent Networks, the transaction patterns are indicative of Agent Complicity” in the gambling transactions. A Western Union analyst also found that the “enhanced consumer monitoring program [implemented in 2009] has not been effective in lessening the questionable activity (likely related to gaming) being sent from the U.S. to Costa Rica.” The analyst proposed additional controls on Agents in Costa Rica including limiting the Agents to specific but confidential payout thresholds.	
        		
94.	By at least July 2010, Western Union Compliance, Sales, and Technology employees began to discuss using Real Time Risk Assessment (“RTRA”) controls to limit transactions with characteristics associated with gambling from the U.S. to Costa Rica. In August 2010, Western Union concluded that the proposed RTRA rule would impact 18 Agents in Costa Rica and affect approximately $1 million worth of money transfers per month. Though Compliance employees pressed to get RTRA implemented due to ongoing identification of gambling-related transactions between the U.S. and Costa Rica, by October 2010, Western Union had not implemented this specific RTRA control targeting off-shore gaming.	
 	
95.	On October 14, 2010, Western Union Compliance analysts conducted another review of transactions paid by certain Agent locations in Costa Rica. The analysts interviewed some consumers who sent the transactions and admitted they were funding their online gambling accounts for the website www.pokerstars.com. The analysts found continued questionable Agent activity at certain Agent locations in Costa Rica which indicated that Agent location employees allowed some customers to provide incomplete or false information to receive suspicious transactions.	
 	
96.	On November 23, 2010, Compliance employees concluded that the enhanced consumer monitoring program was “not covering the appropriate risk and thus not as effective as it could be.” Compliance employees decided to suspend the program.	
 	
97.	On December 10, 2010, Compliance employees shared a plan with business employees for RTRA controls designed to reduce gambling-related transactions. Compliance employees noted that many consumers who confirmed that their transactions to Costa Rica were “for gambling purposes” sent multiple transactions within 30 days. According to Compliance employees, the enhanced consumer monitoring program did “not appear to be decreasing the amount of questionable transactions being paid out in Costa Rica.” Compliance proposed automatically limiting U.S. consumers to sending a specific number of transactions at specific thresholds to Costa Rica within a calendar month. Western Union implemented the RTRA program in March 2011.	
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98.	On April 15, 2011, a grand jury indicted the individuals behind www.pokerstars.com alleged bank fraud, money laundering, and illegal gambling offenses. Immediately after the indictment, Western Union transactions from the U.S. to Costa Rica dropped by 50 percent. Western Union employees noted the drop in transactions and associated it with the www.pokerstars.com indictment. As one Western Union employee noted, the pokerstars indictment was a “significant business risk” to Western Union because “[a]bout half of our transaction base appears to have left the system” after the indictment. Compliance employees found the drop in activity “not surprising given the patterns of activity associated with online gaming that we continue to see in Costa Rica.”	
        		
99.	Western Union employees ultimately found that despite the RTRA program, “Western Union services continue to be used for gaming purposes” between the U.S. and Costa Rica. Throughout 2011 and 2012, Western Union Compliance analysts continued to identify suspicious gambling transactions sent from the U.S. to Costa Rica. Western Union failed to implement a sufficiently effective control against gambling-related transactions.	
Western Union’s Remedial Actions and Compliance Enhancements

100.	Since at least September 2012, Western Union took remedial measures and implemented compliance enhancements to improve its anti-fraud and anti-money laundering programs. These remedial measures and compliance enhancements were taken at the direction of the Chief Executive Officer, the General Counsel, and the Chief Compliance Officer and reflect their ongoing commitment to enhancing compliance policies and procedures. These remedial and compliance measures included:	
        	        		
	a.	Western Union’s Fraud Risk Management Department—a new Department created in 2012—instituted global Agent oversight standards to identify and investigate any Agent worldwide that processed a certain number of reported fraud transactions.	
 	
	b.	Between 2013 and 2015, Western Union increased the number of employees in the Compliance Department by over 100% and increased the Compliance Department budget by over 60%.	
 	
	c.	In 2013, Western Union hired a new Chief Compliance Officer and other senior compliance staff. The Chief Compliance Officer has a direct reporting line to the Chairperson of the Compliance Committee of the Western Union Board of Directors.	
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	d.	Western Union created new compliance procedures to increase compliance authority and accountability, including with regard to Agent oversight. In particular, Western Union created a new AML Oversight Committee, which meets regularly and has authority to take corrective action against Agents and implement automatic transaction controls such as RTRA rules. Western Union also empowered employees in eight departments to suspend Agents based on analyses, on-site observations, and/or investigation results. Western Union further implemented explicit decision procedures and timelines for Agent oversight actions, including corrective action.	
        	        	        	 	
	e.	Western Union has continued to increase compliance technology related to Agent oversight. This includes but is not limited to enhancing RTRA rules related to gaming transactions; creating the Agent Complicity Index to identify Agents complicit in fraud; developing new compliance reporting systems to streamline, standardize, and automate certain compliance functions; and enhancing its consumer identification abilities.	
	 	
	f.	Western Union created new teams within its Financial Intelligence Unit to work with law enforcement and generate internal information for Agent and consumer analysis, including a Global Rapid Response Team to reach out to law enforcement proactively with investigative results related to crisis events and Strategic Intelligence Units to identify emerging criminal typologies.	
	 	
	g.	Western Union created and expanded its Courtesy Call Back program, under which certain potentially fraudulent transactions are held while Western Union contacts the sender to determine whether transaction is legitimate.	
	 	
	h.	Western Union expanded fraud reporting mechanisms, including international hotlines, which assist consumers outside the United States in reporting fraud scams to Western Union.	
	 	
	i.	Western Union instituted automatic interdiction of any individual identified in a fraud complaint as the recipient of a fraud-induced transfer and increased interdiction of individuals associated with transactions that exhibited characteristics associated with gambling.	
	 	
	j.	Western Union terminated its relationship with China Corridor Agents that engaged in structuring.	
	 	
	k.	Pursuant to the FTC order, Western Union has taken or will take a number of actions designed to enhance Agent oversight and reduce the risk of fraud.	
	 	
	l.	In addition, pursuant to the FTC Order, Western Union will “reimburse the principal amount of a consumer’s money transfer and any associated transfer fees whenever a consumer or his or her authorized representative reasonably claims that the transfer was fraudulently induced and:	
	 	
		i.	The consumer or his or her authorized representative asks Defendants, the sending agent, or front line associates to reverse the transfer before the transferred funds have been picked up; or	

                	ii.	Defendants, after reviewing information and data relating to the money transfer, determines that Defendants, their agents or the front line associated failed to comply with any of Defendants, policies and procedures relating to detecting and preventing fraud-induced money transfers when sending or paying out the money transfer by failing to: provide the required consumer fraud warnings; comply with Defendants’ interdiction or callback programs; verify the recipient’s identification; or accurately record the recipient’s identification(s) and other biographical data.”	
	        		
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ATTACHMENT B
CERTIFICATE OF CORPORATE RESOLUTIONS
WHEREAS, THE WESTERN UNION COMPANY (“Western Union” or the “Company”), a financial institution and money services business, has been engaged in discussions with the United States Department of Justice, Criminal Division, Money Laundering and Asset Recovery Section and the United States Attorney’s Offices for the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania, and the Southern District of Florida (collectively, the “Offices”) regarding fraud-induced money transfers, money laundering, structuring, gambling-related transfers, and the Company’s anti-money laundering program; and
WHEREAS, in order to resolve such discussions, it is proposed that the Company enter into a deferred prosecution agreement with the Offices (the “Deferred Prosecution Agreement”); and
WHEREAS, the Company’s Executive Vice President and General Counsel, John R. Dye, together with outside counsel for the Company, have advised the Board of Directors of the Company of the Company’s rights, possible defenses, the Sentencing Guidelines’ provisions, and the consequences of entering into such agreement with the Offices;
Therefore, the Board of Directors has RESOLVED that:
1. The Company (a) acknowledges the filing of the two-count Information charging the Company with willfully failing to implement an effective anti-money laundering program, in violation of Title 31, United States Code, Sections 5318(h) and 5322 and regulations issued thereunder, and aiding and abetting wire fraud, in violation of Title 18, United States Code, Sections 1343 and 2; (b) waives indictment on such charges and enters into the Deferred Prosecution Agreement with the Offices; and (c) agrees to forfeit $ 586 million to the United States;

2. The Company's Executive Vice President and General Counsel, John R. Dye, is hereby authorized, empowered and directed, on behalf of the Company, to execute the Deferred Prosecution Agreement substantially in such form as reviewed by this Board of Directors at this meeting with such changes as the Company's Executive Vice President and General Counsel, John R. Dye, may approve;
3. The Company's Executive Vice President and General Counsel, John R. Dye, is hereby authorized, empowered and directed to take any and all actions as may be necessary or appropriate and to approve the forms, terms or provisions of any agreement or other documents as may be necessary or appropriate, to carry out and effectuate the purpose and intent of the foregoing resolutions; and
4. All of the actions of the Company's Executive Vice President and General Counsel, John R. Dye, which actions would have been authorized by the foregoing resolutions except that such actions were taken prior to the adoption of such resolutions, are hereby severally ratified, confirmed, approved, and adopted as actions on behalf of the Company.

Date: 	January 18, 2017	 	By:       	/s/ John R. Dye	
			Corporate Secretary
The Western Union Company	

ATTACHMENT C
ENHANCED COMPLIANCE UNDERTAKING
In addition to the enhancements the Western Union Company (“Western Union” or the “Company”) has already made to the Company’s anti-fraud and anti-money laundering programs as described in the Statement of Facts, the Company agrees that it has or will undertake the following:
Board of Directors

1.	The Company has created an independent Compliance Committee of the Board of Directors with direct oversight of the Chief Compliance Officer and the Compliance Program, including anti-money laundering and anti-fraud programs. This Committee is responsible for overseeing the Company’s compliance with all aspects of this Agreement. All reports submitted as a part of this Agreement shall be sent under the cover of this Committee.	
        	 	
Adopt a Worldwide Compliance and Anti-Money Laundering Standard	
 	
2.	As described in Attachment A, the Statement of Facts, “Western Union Agents” or “Agents” are individuals or entities anywhere in the world that own and/or operate businesses that are contractually authorized to offer Western Union’s money transfers to consumers. Western Union Agents include, but are not limited to Independent Agents, Direct Agents, Master Agents, Network Agents or Subagents. The Company has required or will require all Western Union Agents around the world, regardless of their location, to adhere, at a minimum, to U.S. regulatory and anti-money laundering standards, unless in direct conflict with local law.	
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3.	The Company has or will design and implement a risk-based Know Your Agent program to ensure Western Union Agents throughout the world are complying with this policy.	
 	
4.	The Company has or will create procedures for corrective action, including termination, against Agents—including foreign Agent locations that process transactions to, from, or through the United States—that the Company has determined pose an unacceptable risk of money laundering or the financing of terrorism, or have demonstrated systemic, willful, or repeated lapses in compliance.	
 	
5.	When the Company identifies Agent locations in violation of law or Western Union policy and procedures, unless asked to do otherwise by law enforcement, or inconsistent with applicable law, the Company will provide notice to the Agent location in writing of the nature of the violation. The Company will require the Agent owner to acknowledge, in writing, that the Agent owner received notice of the violation. The Company will document any training or remedial measures taken by the Company or the Agent owner or location with regard to the violation.	
 	
Executive Review and Bonus Structure	
        		
6.	The Company has or will implement evaluation criteria related to compliance in its executive review and bonus system so that each Western Union executive is evaluated on what the executive has done to ensure that the executive’s business or department is in compliance with U.S. laws. A failing score in compliance, including anti-money laundering and anti-fraud programs, will make the executive ineligible for any bonus for that year.	
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7.	The Company will include in its new executive review and bonus system a provision that allows the Company to “claw back” bonuses for executives for conduct occurring after the filing of the Agreement that is later determined to have contributed to future compliance failures, subject to applicable law.	
 	
Anti-Fraud Alert System	
 	
8.	The Company has or will ensure that all transactions to, from, or through the United States, regardless of the origin or destination, are monitored to identify potentially fraudulent transactions.	
        		
Suspicious Activity Reports	
	        	 	
9.	The Company has or will create policies and procedures to ensure that the Company will follow all laws and regulations concerning the filing of Suspicious Activity Reports (“SARs”) in the United States for any suspicious activity, as defined by the Bank Secrecy Act and its implementing regulations. This includes, but is not limited to, filing SARs identifying:	
 	
	a.	suspicious activity identified by the Company related to transactions of $2,000 or more to, from, or through the United States, regardless of where in the world the suspicious transactions originate or are received;	
 	
	b.	transactions of $2,000 or more to, from, or through Agent locations in the United States that are reported by consumers to the Company as fraud-related, regardless of where in the world the suspicious transaction are received;	
C-3

	c.	Agent location owners, operators or employees anywhere in the world that the Company identifies as engaged in or allowing suspicious activity related to transactions of $2,000 or more to, from, or through the United States.	
        	        		
	High Risk Countries	
	 	
10.	The Company has or will assign anti-money laundering Compliance Officer(s) to oversee compliance for each country that the Company has designated as high risk for fraud or money laundering. By developing an expertise in their assigned high risk country, the Compliance Officer(s) will better enable the Company to detect and prevent fraud and money laundering activities in those countries.	
 		
	Requirements for Reporting	
	 	
11.	The Company will identify a point of contact within the Company to respond to the Offices’ requests.	
 	
12.	The Company will provide the Offices with reports every ninety (90) days regarding:	
 	
	a.	reported consumer fraud complaints, (1) listing all Western Union Agent locations worldwide with ten (10) or more complaints from consumers alleging transactions paid at the Agent location were the result of fraud; (2) for each Agent location on the list, the Company will identify the owner of the Agent location, total fraud complaints for the prior year, total number of receives for the prior year, total dollar value of the receives for the prior year, the average dollar value for receive transactions, total number of sends for the prior year, total dollar value of the sends for the prior year, the average dollar value for send transactions, total revenue earned by Western Union from the Agent location for the prior year (including, but not limited to transfer fees and currency exchange revenue), any additional Agent locations with the same owner, and the total consumer fraud complaints for each other Agent location with the same owner; (3) for each Agent location on the list, the Company will describe what actions, if any, have been taken against the Agent location and/or owner or employees of the Agent location and describe why such action (or lack of action) was deemed appropriate;	
C-4

        	b.	SAR reporting, (1) listing all Western Union Agent locations in the United States who are in the top 5% of Agents in terms of SARS filed by the Company; (2) for each Agent location on the list, the Company will identify the owner of the Agent location, total SARS filed by the Company within the reporting period, total SARS filed by the Company for the prior year; and, (3) for each Agent location on the list, the Company will describe what actions, if any, have been taken with regard to the Agent location and/or owner or employees of the Agent location and describe why such action (or lack of action) was deemed appropriate;	
 	        		
 	c.	corrective action, listing all Western Union Agent locations worldwide that were terminated, suspended or restricted in any way based on fraud, structuring, gambling, or money laundering concerns and whether or not a SAR was filed identifying the Agent location as the subject;	
 	 	
 	d.	corrective action, listing all Agent location termination, suspension or restriction recommendations by the Company’s Fraud Risk Management or Compliance Departments that were not accepted and an explanation of why. The Company will also indicate whether or not a SAR was filed identifying the Agent location as the subject.	
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13.	The Company will provide the Offices with reports quarterly (1) listing any programs, policies, or procedures designed to detect and prevent illegal gambling-related transactions and (2) summarizing the effectiveness of those programs, policies, or procedures.	
 	
Compliance with the Federal Trade Commission Order	
        		
14.	The Company will comply with the FTC Order, including but not limited to, provisions regarding Agent location due diligence; Agent location investigation, suspension, termination, or other disciplinary standards; the Independent Compliance Auditor; consumer fraud reimbursement; and submission of relevant information regarding consumer complaints about alleged fraud-induced money transfers the Company possesses in its fraud database for inclusion in the Consumer Sentinel Network, a secure online database operated by the FTC and available to law enforcement.	
 	
Access to Independent Parties	
 	
15.	The Company will provide the Offices with, or will not oppose access by the Offices to, copies of any report, not subject to a valid claim of attorney-client or other privilege, issued by any third party with independent oversight of the Company’s anti-money laundering, Bank Secrecy Act, or fraud compliance, appointed as a result of any agreement with U.S. federal or state law enforcement or regulatory agencies. This includes, but is not limited to, the monitor appointed as part of the Company’s Agreement with the State of Arizona and the Independent Compliance Auditor appointed as part of the Company’s Agreement with the FTC. The Offices will have direct access to any such third party and may communicate and meet with the third party without the presence of the Company.	
C-6

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

 	)		
FEDERAL TRADE COMMISSION,	)		
	)		
Plaintiff,	)		
	)	             Civil Action No.	
                 v.	)		
	)		
THE WESTERN UNION COMPANY,	)		
a corporation, also doing business as	)		
Western Union Financial Services, Inc.,	)		
and through other subsidiaries and affiliates,  	)		
	)		
Defendant.	)		
 	)		

STIPULATED ORDER FOR PERMANENT INJUNCTION
 AND FINAL JUDGMENT
Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), filed its Complaint for Permanent Injunctive and Other Equitable Relief (“Complaint”), pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108 . The Commission and Defendant The Western Union Company (“Western Union”) stipulate to the entry of this Stipulated Order for Permanent Injunction and Final Judgment (“Order”) to resolve all matters in dispute in this action between them.
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THEREFORE, IT IS ORDERED as follows:
FINDINGS
1. This Court has jurisdiction over this matter.
2. The Complaint charges Defendant with engaging in deceptive and unfair acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and the Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, in the course of providing money transfer services through its worldwide money transfer network.
3. Defendant neither admits nor denies any of the allegations in the Complaint, except as specifically stated in this Order. Only for purposes of this action, Defendant admits the facts necessary to establish jurisdiction.
4. Defendant waives any claim that it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agrees to bear its own costs and attorney fees.
5. Defendant and the Commission waive all rights to appeal or otherwise challenge or contest the validity of this Order.
DEFINITIONS
For purposes of this Order, the following definitions apply:
A. “Cash-to-cash money transfer” means the transfer of the value of cash from one person in one location to a recipient (payee) in another location that is received in the form of cash.
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B. “Cash reload money transfer” means the transfer of the value of cash from one person in one location to a recipient (payee) in another location that is received in a form that makes it possible for a person to convert the cash into an electronic form that can be used to add funds to a general-use prepaid card or an account with a payment intermediary.
C. “Consumer” means any person, worldwide, who initiates or sends a money transfer.
D. “Defendant” means The Western Union Company, also doing business as Western Union Financial Services, Inc., and through its other subsidiaries and affiliates, and its successors and assigns.
E. “Elevated fraud countries” means any country in which the principal amount of money transfers that are the subject of fraud complaints, received by Defendant from any source, represents one (1) percent or more of the principal amount of fraud complaints worldwide received by Defendant, for either money transfers sent or received in that country, determined on a quarterly basis, provided that once a country is determined to be one of the elevated fraud countries, it shall continue to be treated as such for purposes of this Order.
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F. “Elevated fraud risk agent location” means any Western Union agent location that has processed payouts of money transfers associated with:

	1.	Five (5) or more fraud complaints for such agent location, received by Defendant from any source, during the previous sixty (60) day period, based on a review of complaints on a monthly basis; and fraud complaints, received by Defendant from any source, totaling five (5) percent or more of the total payouts for such agent location in numbers or dollars in a sixty (60) day period, calculated on a monthly basis; or	
     	       		
	2.	Fifteen (15) or more fraud complaints for such agent location, received by Defendant from any source, during the previous sixty (60) day period, based on a review of complaints on a monthly basis.	
G. “Fraud-induced money transfer” includes any money transfer that was induced by, initiated, or sent as a result of, unfair or deceptive acts or practices and/or deceptive or abusive telemarketing acts or practices.
H. “Front line associate” means the employee of the Western Union agent responsible for handling a transaction at the point of sale for a consumer or a recipient (payee) of a money transfer, including by initiating, sending, or paying out the money transfer.
I. “Money transfer” means the sending of money (in cash or any other form, unless otherwise stated) between a consumer in one location to a recipient (payee) in another location using Defendant’s money transfer service, and shall include transfers initiated or sent in person, online, over the telephone, using a mobile app, or through whatever platform or means made available. The term “money transfer” does not include Defendant’s bill or loan payment services, or purchases of foreign currency conversions or options contracts from Defendant. 
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J. “Person” includes a natural person, an organization or other legal entity, including a corporation, partnership, sole proprietorship, limited liability company, association, cooperative, or any other group or combination acting as an entity.
K. “Seller” means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services in exchange for consideration.
L. “Telemarketer” means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer.
M. “Telemarketing” means any plan, program, or campaign which is conducted to induce the purchase of goods or services by use of one or more telephones, and which involves a telephone call, whether or not covered by the TSR.
N. “Western Union agent” means any network agent, master agent, representative, authorized delegate, independent agent, super-agent, national account agent, key account agent, strategic account agent, sub-representative, subagent, or any location, worldwide, authorized by Defendant to offer or provide any of its money transfer products or services. 
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I.
PROHIBITED BUSINESS ACTIVITIES
IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, and employees, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting, offering for sale, or providing money transfer services, are permanently restrained and enjoined from:

A.	Transmitting a money transfer that Defendant knows or reasonably should know is a fraud-induced money transfer, or paying out a money transfer to any person that Defendant knows or reasonably should know is using its system to obtain funds from a consumer, directly or indirectly, as a result of fraud;	
        		
B.	Providing substantial assistance or support to any seller or telemarketer that Defendant knows or reasonably should know is accepting from a U.S. consumer, directly or indirectly, a money transfer as payment for goods or services offered or sold through telemarketing;	
 	
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C.	Failing to do any of the following in connection with money transfers initiated by consumers:	
        	 	
	1.	Interdict recipients that have been the subject of any complaints about fraud-induced money transfers based on information provided to, or that becomes known by, Defendant;	
        	        		
	2.	Identify, prevent, and stop cash-to-cash money transfers and cash reload money transfers initiated or received in the U.S. from being used as a form of payment by sellers or telemarketers, including, but not limited to, by:	
	 	
		a.	Asking all U.S. consumers whether the money transfer is a payment for goods or services offered or sold through telemarketing;	
		        		
		b.	Declining to process money transfers from U.S. consumers where the money transfer is a payment for goods or services offered or sold through telemarketing; and	
	 	
		c.	Interdicting known sellers and telemarketers accepting money transfers as payments for goods or services offered through telemarketing;	
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	3.	Provide a clear, concise, conspicuous and uncontradicted consumer fraud warning on the front page of all money transfer forms, paper or electronic, utilized by consumers in elevated fraud countries (based on money transfers sent from those countries) to initiate money transfers using Defendant’s system that includes, but is not limited to:	
	 			
        		a.	A list of the most common types of scams that utilize Defendant’s money transfer system;	
	        	        		
		b.	A warning that it is illegal for any seller or telemarketer to accept payments from U.S. consumers through money transfers for goods or services offered or sold through telemarketing;	
	 	
		c.	A notice to consumers that the money transfer can be paid out to the recipient within a short time, and that after the money is paid out, consumers may not be able to obtain a refund from Defendant, even if the transfer was the result of fraud, except under limited circumstances; and	
	 	
		d.	A toll-free or local number and a website for Defendant, subject to the timing requirements set forth in Subsection C.4, that consumers may call or visit to obtain assistance and file a complaint if their money transfer was procured through fraud;	
	 	
	4.	Make available in all countries in which Defendant offers money transfer services a website that consumers may visit to obtain assistance and file a complaint if they claim their money transfer was procured through fraud, provided that websites that are not yet available shall be made available in accordance with the following schedule: (i) for countries determined to be elevated fraud countries, within six (6) months of entry of this Order; and (ii) for all other countries, within two (2) years of entry of this Order.	
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        	5.	Provide consumers who initiate or send money transfers via the Internet, telephone, mobile app, or any other platform that is not in- person, with substantially the same clear, concise, conspicuous and uncontradicted fraud warning required by Subsection C.3, provided that the warning may be abbreviated to accommodate the specific characteristics of the media or platform;	
	       		
	6.	Provide the required warning to consumers in the language used on the send form or other media type or platform used for the money transfer, in a form appropriate for the media or platform;	
	 	
	7.	Review and update the consumer warning as necessary to ensure its effectiveness in preventing fraud-induced money transfers; and	
	 	
	8.	Submit modifications to the warning, if any, to the Commission for review no less than ten (10) business days before any modified warning is disseminated to Western Union agents; p rovided that nothing herein shall prohibit Defendant from changing the nature or form of its service, send forms, or media or platform for offering money transfer services or from seeking to replace its send forms with an electronic form or entry system of some type in the future. In the event such changes are made, Defendant shall provide a consumer fraud warning substantially similar to that outlined in Subsection C.3 in a form appropriate to the media or platform;	
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D.	Failing to reimburse the principal amount of a consumer’s money transfer and any associated transfer fees whenever a consumer or his or her authorized representative reasonably claims that the transfer was fraudulently induced and:	
        		
	1.	The consumer or his or her authorized representative asks Defendant, the sending agent, or front line associates to reverse the transfer before the transferred funds have been picked up; or	
	        		
	2.	Defendant, after reviewing information and data relating to the money transfer, determines that Defendant, its agents, or the front line associates failed to comply with any of Defendant’s policies and procedures relating to detecting and preventing fraud-induced money transfers when sending or paying out the money transfer by failing to: provide the required consumer fraud warnings; comply with Defendant’s interdiction or callback programs; verify the recipient’s identification; or accurately record the recipient’s identification(s) and other required biographical data;	

E.	Failing to promptly provide information to a consumer, or his or her authorized representative, who reports being a victim of fraud to Defendant, about the name of the recipient of the consumer’s money transfer and the location where it was paid out, when such information is reasonably requested; and	
        		
F.	Failing to establish and implement, and thereafter maintain, a comprehensive anti-fraud program that is reasonably designed to protect consumers by detecting and preventing fraud-induced money transfers worldwide and to avoid installing and doing business with Western Union agents who appear to be involved or complicit in processing fraud-induced money transfers or fail to comply with Defendant’s policies and procedures to detect and prevent fraud (hereinafter referred to as “Defendant’s Anti-Fraud Program”). Such program, the content and implementation of which must be fully documented in writing, and provided to the FTC, shall contain administrative, technical, and physical safeguards appropriate to Defendant’s size and complexity and the nature and scope of Defendant’s activities, shall be consistent with this Order’s requirements, and shall include at least the following requirements:	
        	        		
	1.	Performance of due diligence on all prospective Western Union agents and existing Western Union agents whose contracts are up for renewal;	
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	2.	Designation of an employee or employees to coordinate and be accountable for Defendant’s Anti-Fraud Program;	
        	        		
	3.	Appropriate and adequate education and training on consumer fraud for Western Union agents and front line associates;	
	 	
	4.	Appropriate and adequate monitoring of Western Union agent and front line associate activity relevant to the prevention of fraud-induced money transfers;	
	 	
	5.	Prompt disciplinary action against Western Union agent locations where reasonably necessary to prevent fraud-induced money transfers;	
	 	
	6.	Adequate systematic controls to detect and prevent fraud-induced money transfers, including, but not limited to:	
		        		
		a.	Imposing more stringent identification requirements for money transfers sent to, or paid out in, elevated fraud countries;	
	 	
		b.	Holding suspicious money transfers at certain dollar thresholds to elevated fraud countries until Defendant has confirmed with the sender that they are not fraud-induced or has refunded the money to the sender; and	
	 	
		c.	Ensuring that Western Union agent locations are recording all required information about recipients required by Defendant’s policies or procedures or by law, including, but not limited to, their names, addresses, telephone numbers, and identifications, before paying out money transfers; and	
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        	7.	Periodic evaluation and adjustment of Defendant’s Anti-Fraud Program in light of:	
 	        	        		
 		a.	The results of the monitoring required by Subsection F.4 of this Section and Section III of this Order;	
 	 	
 		b.	Any material changes to Defendant’s operations or business arrangements; or	
 	 	
 		c.	Any other circumstances that Defendant knows or reasonably should know may have a material impact on the effectiveness of Defendant’s Anti-Fraud Program, provided that Defendant shall notify the FTC in writing of the adjustments to Defendant’s Anti-Fraud Program, and reasons for such adjustments, no more than thirty (30) days after any material modification to Defendant’s Anti-Fraud Program has been implemented.	
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II.
DUE DILIGENCE ON PROSPECTIVE AND EXISTING
WESTERN UNION AGENTS
IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, and employees, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting, offering for sale, or providing money transfer services, are hereby restrained and enjoined from:

A.	Failing to conduct thorough due diligence on all persons applying to become, or renewing their contracts as, Western Union agents, including any sub-representative or subagent, to avoid installing Western Union agents worldwide who may become elevated fraud risk agent locations, including, but not limited to, by:	
        	        		
	1.	Verifying government-issued identification;	
 	
	2.	Conducting all reasonably necessary background checks (criminal, employment, or otherwise) where permissible under local law;	
 	
	3.	Determining whether information or statements made during the agent application process are false or inconsistent with the results of Defendant’s background checks or other due diligence;	
 	
	4.	Taking reasonable steps to ascertain whether the prospective agent formerly owned, operated, had been a front line associate of, or had a familial, beneficial, or straw relationship with any location of any money services business that was suspended or terminated for fraud-related reasons, as permitted by applicable laws and regulations (including foreign laws and regulations) and with the required cooperation from other money transfer companies;	
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	5.	Ascertaining whether the prospective agent had previously been interdicted by Defendant for suspicious activities or had been reported to Defendant as a recipient of fraud-induced money transfers;	
	 	
	6.	Conducting an individualized assessment of the particular risk factors involved with each Western Union agent application and conducting all reasonably necessary investigative steps consistent with those risks; and	
	 	
	7.	Maintaining information about Defendant’s due diligence, including, but not limited to, information about the identities of the owners, their government-issued identifications, and the background check(s) conducted;	
        	        		
B.	Failing to reject applications where Defendant becomes aware or reasonably should have become aware based upon its due diligence that the applicant, or any of the applicant’s sub-representatives or subagents, presents a material risk of becoming an elevated fraud risk;	

C.	Failing to ensure that the written agreements entered into with all new Western Union agents require them to comply with Section I.C.2 of this Order;	
        		
D.	Failing to ensure that all new Western Union agents have effective policies and procedures in place at each of the agent’s locations to detect and prevent fraud-induced money transfers and other acts or practices that violate Section I of this Order;	
	 	
E.	Failing to take reasonable steps to confirm that Western Union agents whose contracts are up for renewal are complying with the terms of their agreements with Defendant, including, but not limited to, by having effective policies and procedures in place to detect and prevent fraud- induced money transfers; and	
 	
F.	Failing to require all new Western Union agents, and existing Western Union agents, to: (i) disclose and update the identities of any sub- representative or subagent; and (ii) maintain records on the identities of any front line associates at their sub-representatives’ or subagents’ locations.	
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III.
MONITORING COMPLIANCE OF WESTERN UNION AGENTS
IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, and employees, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting, offering for sale, or providing money transfer services, are hereby restrained and enjoined from:

A.	Failing to provide appropriate and adequate ongoing education and training on consumer fraud for all Western Union agents, and other appropriate Western Union personnel, including, but not limited to, education and training on detecting, investigating, preventing, reporting, and otherwise handling suspicious transactions and fraud-induced money transfers, and ensuring that all Western Union agents and front line associates are notified of their obligations to comply with Defendant’s policies and procedures and to implement and maintain policies and procedures to detect and prevent fraud-induced money transfers or other acts or practices that violate Section I of this Order;	
        		
B.	Failing to take all reasonable steps necessary to monitor and investigate Western Union agent location activity to detect and prevent fraud-induced money transfers, including, but not limited to:	
        	        	 	
	1.	Developing, implementing, adequately staffing, and continuously operating and maintaining a system to receive and retain all complaints and data received from any source, anywhere in the world, involving alleged fraud-induced money transfers, and taking all reasonable steps to obtain, record, retain, and make easily accessible to Defendant and, upon reasonable request, the FTC, all relevant information regarding all complaints related to alleged fraud-induced money transfers, including, but not limited to:	
		        	 	
		a.	The consumer’s name, address, and telephone number;	
		 	
		b.	The substance of the complaint, including the fraud type and fraud method, and the name of any person referenced;	
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		c.	The reference number, or Money Transfer Control Number, for each money transfer related to the complaint;	
        	        	        		
		d.	The name, agent identification number, telephone number, and address of the sending agent(s);	
		 	
		e.	The date of each money transfer;	
		 	
		f.	The amount of each money transfer;	
		 	
		g.	The money transfer fee for each money transfer;	
		 	
		h.	The date each money transfer is received;	
		 	
		i.	The name, agent identification number, telephone number, and address of the receiving agent(s);	
		 	
		j.	The name, address and telephone number of the recipient, as provided by the recipient, of each money transfer;	
16

		k.	The identification, if any, presented by the recipient, and recorded, for each money transfer;	
		 	
		l.	All transactions conducted by the consumer bearing any relationship to the complaint;	
		 	
		m.	To the extent there is any investigation concerning, and/or resolution of, the complaint:	
        	        	        	        		
			1.	The nature and result of any investigation conducted concerning the complaint;	
		 	
			2.	Any response to the complaint and the date of such response to the complaint;	
		 	
			3.	The final resolution of the complaint, the date of such resolution, and an explanation for the resolution; and	
		 	
			4.	If the resolution does not include the issuance of a refund, the reason for the denial of a refund;	
		 	
	2.	Taking all reasonable steps to identify Western Union agents or front line associates involved or complicit in fraud;	
	 	
	3.	Routinely reviewing and analyzing data regarding the activities of Western Union agent locations in order to identify the following:	
        	        	        		
		a.	Agent locations that have processed transactions associated with two (2) or more complaints about alleged fraud-induced money transfers, received by Defendant from any source, during a thirty (30) day period; and	
			 	
		b.	Elevated fraud risk agent locations, as defined above; and	
17

	4.	For agent locations identified pursuant to Subsection B.3 of this Section, fully investigate the agent location by reviewing transaction data and conducting analyses to determine if the agent location displayed any unusual or suspicious money transfer activity that cannot reasonably be explained or justified, including, but not limited to:	
        	        	        		
		a.	Data integrity issues, including, but not limited to, invalid, illegible, incomplete, missing, or conflicting biographical data for consumers or recipients of money transfers;	
	 	
		b.	Significant changes in the transaction patterns experienced at the agent location;	
	 	
		c.	Significant differences in the transaction patterns experienced at an agent location relative to the patterns experienced at other agent locations in the same country;	
	 	
		d.	Unusual demographic activity;	
	 	
		e.	Irregular concentrations of send and/or pay activity between the agent and one or more other Western Union agent locations;	
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	f.	Irregular concentrations of send and/or pay activity between the agent and one or more geographical areas that have been identified as high risk for fraud;	
                	        		
	g.	Unusual transaction patterns by senders or recipients;	
	 	
	h.	Flipping patterns;	
	 	
	i.	Suspicious structuring or splitting of money transfers; or	
	 	
	j.	Suspicious surfing patterns;	
        		
C.	Failing to take the following actions to prevent further fraud-induced money transfers, including, but not limited to, by:	
        	        		
	1.	Suspending Western Union agent locations, as follows, pending further investigation to determine whether the Western Union agent locations can continue operating consistent with this Order’s requirements:	
                	        		
	a.	For agent locations identified pursuant to Subsection B.3.a of this Section, if the investigation of the agent location required by Subsection B.4 of this Section is not completed within fourteen (14) days after the agent location is identified, suspending the Western Union agent location’s ability to conduct further money transfers until the investigation is completed; and	
19

	b.	For elevated fraud risk agent locations, immediately suspending the Western Union agent’s ability to conduct further money transfers until the review required by Subsection B.4 of this Section is completed, except that , for a Western Union agent that is a bank or bank branch and otherwise subject to this immediate suspension requirement by virtue of fraud complaints about money transfers that are transferred directly into its account holders’ bank accounts, Defendant shall comply with Subsection III.C.1.a. and also permanently block, or request that the Western Union agent block, all further money transfers to bank accounts for which Defendant has received any fraud complaint;	
                	        		
	2.	Upon completion of the investigation, terminating, suspending, or restricting Western Union agent locations as follows:	
        	        		
	a.	Terminating or suspending the Western Union agent location, or restricting the agent location’s ability to send and/or receive certain money transfers, if the findings indicate that the Western Union agent location is not, or has not been, complying with Defendant’s Anti-Fraud Program and other policies and procedures relating to detecting and preventing fraud-induced money transfers, including, but not limited to, by failing to collect and record required and accurate biographical information about, and government-issued identifications for, the recipients of money transfers; and	
                	        		
	b.	Terminating the Western Union agent location if the findings indicate that the Western Union agent location or any of its front line associates is, or may be, complicit in the fraud-induced money transfers, has failed to comply with Section IV of this Order, or has repeatedly failed to comply with Defendant’s Anti-Fraud and other policies and procedures relating to detecting and preventing fraud-induced money transfers;	
                	        		
	3.	On at least a monthly basis, providing notice to all Western Union agents in elevated fraud countries the substance of any complaints Defendant received involving transactions processed by the agents’ locations; and	
        	        		
	4.	Ensuring that all Western Union agents are enforcing effective policies and procedures to detect and prevent fraud-induced money transfers, or other acts or practices that violate Section I of this Order; and	
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D.	Failing to establish adequate controls to ensure that, prior to paying out money transfers, Western Union agent locations are recording all required information about the recipients of money transfers, including, but not limited to, the recipients’ names, addresses, telephone numbers, and identifications, and are taking reasonable steps to verify the identification presented by the recipients or, for money transfers that are directed to bank accounts, the identities of the account holders.	
        		
IV.	
REQUIREMENTS FOR ELEVATED FRAUD RISK AGENT LOCATIONS
IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, and employees, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting, offering for sale, or providing money transfer services, shall require and ensure that all elevated fraud risk agent locations that are still operating do the following for one (1) year from the date that Defendant identifies the agent as an elevated fraud risk agent location under the terms of this Order:

A.	For money transfers that are not transferred directly into a recipient’s bank account, photocopy or scan the identification documents or biometric information presented by the recipient and retain the photocopies or images, along with the receive forms, for a period of five (5) years; and	

B.	Demonstrate during compliance reviews or mystery shops, which Defendant shall conduct on at least a quarterly basis, that the agent location is complying with the requirements in this Section;	
       		
       Provided, however , that if Defendant reasonably believes that complying with Subsection A of this Section for money transfers received by an elevated fraud agent location in a particular foreign jurisdiction would violate that jurisdiction’s laws, Defendant may instead, upon notice to Commission staff, block all money transfers from the United States to that elevated fraud risk agent location or, with the agreement of Commission staff, take other appropriate action at that location to protect consumers from fraud.	
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V.
SHARING COMPLAINT INFORMATION
IT IS FURTHER ORDERED that, Defendant, Defendant’s officers, agents, and employees, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, shall, in addition to, or as a modification of, any other policy or practice that the Defendant may have, including Defendant’s ongoing submission of information to the FTC for inclusion in the Consumer Sentinel Network (“Consumer Sentinel”):

A.	Provide notice to the consumer, or his or her authorized representative, at the time the Defendant is contacted with a complaint about alleged fraudulent activity associated with a money transfer, that (i) Defendant’s practice is to share information regarding the consumer’s money transfer and complaint with a database used by law enforcement authorities in the United States and other countries; and (ii) if the consumer does not want his or her name, address, and identification shared with law enforcement, Defendant will honor that request unless applicable law permits or requires Defendant to provide that information; and	
        		
B.	Regularly, but no more than every thirty (30) days, submit electronically to the FTC, or its designated agent, for inclusion in Consumer Sentinel, all relevant information Defendant possesses regarding complaints received from consumers, their authorized representatives, or any other source, anywhere worldwide, about alleged fraud-induced money transfers and regarding the underlying transfer itself, including, but not limited to, the information set forth in Section III.B.1.a through III.B.1.l. Provided , however , if Defendant receives a request from a consumer or the consumer’s authorized representative, which is documented by Defendant, stating that the consumer does not want the information shared with the database, or if Defendant received the complaint from a source other than the consumer or the consumer’s authorized representative, Defendant shall submit to the FTC an anonymized complaint with the consumer’s name, address, and telephone number redacted. Provided , further , that Defendant shall cooperate with the FTC in order to facilitate compliance with this Section.	
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VI.
INDEPENDENT COMPLIANCE AUDITOR
IT IS FURTHER ORDERED THAT an Independent Compliance Auditor (“ICA”) shall be appointed to further ensure compliance with Sections I-V of this Order, as set forth below:

A.	Commission staff and Defendant shall select the ICA. The ICA shall be an independent third party, not an employee of the Commission or of Defendant. No later than thirty (30) days after entry of this Order, Defendant shall propose to a representative of the Commission three qualified, third-party candidates to serve as the ICA for Defendant as set forth in this Section. In the event that Commission staff is unable to select at least one acceptable ICA from the three candidates proposed by Defendant, Defendant shall propose another candidate within fourteen (14) days after receiving notice of the rejection. This process shall continue until an ICA is chosen. If within ninety (90) days after entry of this Order, the parties are unable to agree on a candidate who is willing and able to perform the ICA’s duties under this Order, they shall submit the matter to the Court for determination.	
        	 	
B.	The ICA shall review, assess, and evaluate Defendant’s compliance with Sections I-V of this Order;	
        		
C.	The ICA is authorized to choose, engage, and employ attorneys, investigators, accountants, appraisers, and other independent contractors and technical specialists, as the ICA deems advisable or necessary in the performance of the ICA’s duties and responsibilities under the authority granted by this Order;	
	 	
D.	The ICA shall have immediate, unfettered access to all information, documents, personnel, and premises in the possession, custody, or control of Defendant or any Western Union agent that the ICA deems necessary to carry out the ICA’s duties pursuant to this Order; provided that , the ICA shall make reasonable efforts to avoid imposing upon Defendant undue costs and burdens; and provided that , if there is a dispute about the ICA’s access to Defendant’s or any Western Union agents’ information, documents, personnel, and premises, after attempting to resolve the dispute without court action and for good cause shown, Defendant or the ICA may file a motion with this Court seeking appropriate relief;	
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E.	Defendant shall fully cooperate with and assist the ICA. The cooperation and assistance shall include, but not be limited to, providing information to the ICA that the ICA deems necessary to be fully informed and discharge the responsibilities of the ICA under this Order, including proprietary information and trade secrets; providing any password required to access any computer, electronic file, or telephone data in any medium; and producing Defendant’s financial records. The parties agree that no attorney-client or other professional relationship shall be formed between the ICA and Defendant;	
        		
F.	The ICA shall prepare a budget and work plan as follows:	
        	        		
	1.	No later than sixty (60) days after the date on which the ICA is retained by Defendant, the ICA shall, in consultation with Commission staff and Defendant, prepare and present to Commission staff and Defendant an annual budget and work plan (the “ICA Budget”) describing the scope of work to be performed and the fees and expenses of the ICA and any professional staff to be incurred during the first year following the date on which the ICA is retained.	
	 	
	2.	The scope of work, fees, and expenses to be incurred by the ICA and any professional staff shall be reasonable and not excessive, in light of the ICA’s defined duties, responsibilities, and powers prescribed in this Order.	
24

	3.	The ICA shall prepare and submit to Defendant and to Commission staff an annual ICA Budget no later than ninety (90) days prior to the beginning of each subsequent year of the ICA’s term. If Defendant and Commission staff both approve the ICA Budget, the ICA shall adhere to and shall not exceed the approved ICA Budget, unless such deviations are authorized by agreement of the parties or order of the Court.	
        	        		
	4.	Within twenty-one (21) days of receipt of any ICA Budget, either Commission staff or Defendant may serve an objection to the ICA, who, within twenty-one (21) days of such objection, shall provide to Commission staff and Defendant a revised ICA Budget or a notice that no such revision will be made.	
	 	
	5.	Following the ICA’s response to an objection provided in accordance with Subsection VI.F.4 hereof, either Commission staff or Defendant may apply to the Court to modify the ICA Budget.	
	 	
	6.	Pending the Court’s decision concerning any application pursuant to Subsection VI.F.5, the ICA shall continue to perform its duties and implement the ICA Budget as prepared by the ICA.	
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G.	Within one hundred eighty (180) days from the date of the engagement of the ICA, and annually thereafter until the end of the ICA’s term, the ICA shall issue a report to Commission staff setting forth the ICA’s assessment of Defendant’s compliance with this Order (“Report”). If, at any time, the ICA determines that Defendant is not in substantial compliance with this Order, the ICA shall notify Commission staff and consult with Defendant. Defendant may submit to Commission staff and to the ICA a written response to the ICA’s notification;	
        		
H.	The Report and the contents thereof shall be treated as non-public material pursuant to the Commission’s Procedures and Rules of Practice. The FTC may share the Report and its contents with other law enforcement agencies, including, but not limited to, the United States Department of Justice (“DOJ”), as permitted by the Commission’s Procedures and Rules of Practice;	
 	
I.	The ICA’s term shall be three (3) years from the date on which the ICA is retained by Defendant. If the ICA resigns or is otherwise unable to fulfill his or her obligations as set out in this Section, the process set forth in Subsection N of this Section shall govern the selection of a new ICA;	
 	
J.	The ICA and all personnel hired by the ICA, including counsel to the ICA, are entitled to reasonable compensation for the performance of duties pursuant to this Order and for the cost of actual out-of-pocket expenses incurred by them, from Defendant’s assets. The ICA shall provide Defendant with an accounting and a request for payment of reasonable compensation every six (6) months after the ICA is appointed, or at intervals deemed appropriate by the ICA;	
26

K.	Defendant shall indemnify the ICA and hold the ICA harmless against all losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the ICA’s duties, including all reasonable fees of counsel and other reasonable expenses incurred in connection with the preparations for, or defense of, any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from gross negligence, willful or wanton acts, or bad faith by the ICA;	
        		
L.	In the event the ICA determines that the Defendant has failed to act consistently with the terms of this Section, the ICA shall notify the FTC and Defendant, and, for good cause shown, the ICA or the FTC may apply to the Court for appropriate relief, including for an extension of the ICA’s term set forth in Subsection I of this Section;	
 	
M.	The ICA may, from time to time as may be made necessary by circumstances outside the ICA’s control, such as by reason of the ICA’s temporary incapacity, family emergency, or natural disaster, appoint a temporary Acting ICA to act in the ICA’s stead. The rights, duties, and obligations of the ICA under this Section shall apply equally to any such duly appointed Acting ICA, provided, however, that the period during which the ICA’s role is filled by an Acting ICA shall not extend for longer than thirty (30) days;	

N.	If the ICA is no longer willing or able to continue to serve, or if the Court relieves the ICA of his duties at the request of the FTC or Defendant, Commission staff and Defendant shall mutually agree on a replacement ICA. If the parties are unable to agree on a replacement ICA within sixty (60) days, they shall submit the matter to the Court for determination within ten (10) days thereafter. The overall term of the ICA set forth in Subsection I of this Section shall be extended commensurate with the length of the absence of the ICA; and	
        		
O.	In the event of the appointment of a replacement ICA, the replacement ICA shall have all the rights, powers, duties, and obligations of the ICA under this Order.	
27

VII.
MONETARY JUDGMENT
IT IS FURTHER ORDERED THAT:

A.	Judgment in the amount of five hundred eighty-six million dollars ($586,000,000) is entered in favor of the Commission against Defendant as equitable monetary relief.	
        		
B.	Defendant shall satisfy the judgment in Subsection A of this Section by complying with the payment requirements set forth in Paragraph 7 of the Deferred Prosecution Agreement filed in United States v. The Western Union Company , 1:17-CR-00011-CCC (M.D. Pa. Jan. 19, 2017) (“DPA”).	
 	
C.	Defendant relinquishes dominion and all legal and equitable right, title, and interest in all assets transferred pursuant to this Order and Paragraphs 7 and 8 of the DPA and may not seek the return of any assets;	
 	
D.	The facts alleged in the Complaint will be taken as true, without further proof, in any subsequent civil litigation by or on behalf of the Commission, including in a proceeding to enforce its rights to any payment or monetary judgment pursuant to this Order, such as a nondischargeability complaint in any bankruptcy case;	
 	
E.	The facts alleged in the Complaint establish all elements necessary to sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral estoppel effect for such purposes;	
28

F.	Defendant acknowledges that its Employer Identification Number, which Defendant must submit to the Commission, may be used for collecting and reporting on any delinquent amount arising out of this Order, in accordance with 31 U.S.C. § 7701;	
        		
G.	All money paid pursuant to this Order and Paragraph 7 of the DPA shall be deposited into the DOJ or the Department of the Treasury Assets Forfeiture Funds. The FTC and DOJ intend to make the funds available to compensate the fraud victims described in the FTC Complaint and the DOJ Statement of Facts, as set forth in Paragraph 7 of the DPA. Defendant has no right to challenge any actions taken by DOJ, the FTC, or their representatives, pursuant to this Subsection; and	
 	
H.	No asset transfer required by this Order should be deemed, or deemed in lieu of, a fine, penalty, forfeiture, or punitive assessment. Defendant’s satisfaction of the judgment through a payment pursuant to the DPA is not intended to alter the remedial nature of the judgment.	
29

VIII.
ORDER ACKNOWLEDGMENT
IT IS FURTHER ORDERED that Defendant obtain acknowledgments of receipt of this Order:

A.	Defendant, within seven (7) days of entry of this Order, must submit to the Commission an acknowledgment of receipt of this Order sworn under penalty of perjury;	
        		
B.	For ten (10) years after entry of this Order, Defendant must deliver by electronic or other means a copy of this Order to: (1) all principals, officers, directors, and LLC managers and members; (2) all employees, agents, and representatives who participate in conduct related to the subject matter of this Order, including, but not limited to, Western Union agents and employees who are involved in any way with consumer fraud complaints or who are involved in the hiring, training or monitoring of Western Union agents; and (3) any business entity resulting from any change in structure as set forth in the Section titled Compliance Reporting. Defendant must send a copy of this Order to current personnel within seven (7) days of entry of this Order. For all others, delivery must occur before they assume their responsibilities; and	

C.	From each individual or entity to which a Defendant delivered a copy of this Order, that Defendant must obtain, within thirty (30) days, a signed and dated acknowledgment of receipt of this Order. Provided that , in the event that Defendant is unable to secure such acknowledgements from all current Western Union agents, despite notice of this requirement, Defendant shall retain proof of distribution of this Order to all current Western Union agents, such as an electronic mail receipt, a certified mail receipt, or an affidavit of service.	
        		
30	

IX.
COMPLIANCE REPORTING
IT IS FURTHER ORDERED that Defendant make timely submissions to the Commission:

A.	One (1) year after entry of this Order, Defendant must submit a compliance report, sworn under the penalty of perjury, that:	
        	        	 	
	1.	Identifies the primary physical, postal, and email address and telephone number, as designated points of contact, which representatives of the Commission may use to communicate with Defendant;	

2.	Identifies any business entity that Defendant has any ownership interest in or controls directly or indirectly that may affect compliance obligations arising under this Order;	
 	
3.	Describes in detail whether and how Defendant is in compliance with each Section of this Order, including, but not limited to, describing the following:	
 	
        	a.	The number of Western Union agents, by country, identified by the procedures in Section III.B.3 of this Order;	
	        		
	b.	The names, addresses, and telephone numbers of all Western Union agent locations that have been suspended, restricted, or terminated by Defendant for reasons related to fraud-induced money transfers, the dates of and the specific reasons for the suspensions, restrictions, or terminations, and, for Western Union agents that have been reactivated after suspension, the dates of the reactivations; and	
 	
	c.	Evidence showing that Defendant has and is complying with the requirements of Sections I through V of this Order; and	
 	
4.	A copy of each Order Acknowledgment obtained pursuant to this Order, unless previously submitted to the Commission.	
31

B.	Annually, unless otherwise stated in this Subsection, for a period of ten (10) years after Defendant’s submission of the compliance report required by Subsection A of this section, Defendant shall submit a compliance report, sworn under penalty of perjury, that:	
 	
	1.	Notifies the Commission of any change in any designated point of contact within fourteen (14) days of the change;	
 	
	2.	Notifies the Commission of any change in the structure of any entity that Defendant has any ownership interest in or controls directly or indirectly that may affect compliance obligations arising under this Order, including: creation, merger, sale, or dissolution of the entity or any subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order, within fourteen (14) days of the change;	
 	
	3.	Describes in detail whether and how Defendant is in compliance with each Section of this Order, including, but not limited to, describing the following:	
 	
        	        	a.	The number of Western Union agents, by country, identified by the procedures in Section III.B.3 of this Order;	
		        		
		b.	The names, addresses, and telephone numbers of all Western Union agents that have been suspended, restricted, or terminated by Defendant for reasons related to fraud-induced money transfers, the dates of and the specific reasons for the suspensions, restrictions, or terminations, and, for Western Union agents that have been reactivated after suspension, the dates of the reactivations; and	
		        		
		c.	Evidence showing that Defendant has and is complying with the requirements of Sections I through V of this Order;	
32

C.	Defendant must submit to the Commission notice of the filing of any bankruptcy petition, insolvency proceeding, or similar proceeding by or against Defendant within fourteen (14) days of its filing;	
        	 	
D.	Any submission to the Commission required by this Order to be sworn under penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: “I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on: _____” and supplying the date, signatory’s full name, title (if applicable), and signature; and	
	  	
E.	Unless otherwise directed by a Commission representative in writing, all submissions to the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin: FTC v. Western Union.	
33

X.	
	 	
RECORDKEEPING	
	 	
IT IS FURTHER ORDERED that Defendant must create certain records for ten (10) years after entry of this Order, and retain each such record for five (5) years. Specifically, Defendant must create and retain the following records:	
	 	
A.	Defendant’s current written programs and policies governing the detection and prevention of consumer fraud and the installation and oversight of its agents, including, but not limited to, its Anti-Fraud Program;	
        		
B.	Defendant’s current policies and procedures governing consumer fraud education or training provided to Western Union agents or other appropriate personnel;	
 	
C.	All Western Union agent applications, records reflecting due diligence conducted by Defendant with respect to such applications, and with respect to agents whose contracts come up for renewal, and written agreements entered into with Western Union agents;	
 	
D.	Records of all complaints and refund requests, whether received directly or indirectly, such as through a third party, from any source, anywhere in the world, about potentially fraud-induced money transfers, and any response, including, but not limited to, the information listed in Section III.B.1 of this Order;	
34

E.	Records reflecting all steps Defendant has taken to monitor the activity of its agents to detect, reduce and prevent consumer fraud, including, but not limited to, records of Defendant’s reviews, audits, or investigations of Western Union agents associated with consumer fraud, communications with such agents regarding consumer fraud matters, and any remedial action taken against agents due to fraud;	
        		
F.	Copies of documents relating to compliance reviews or mystery shops conducted by Defendant of elevated fraud risk agent locations pursuant to Section IV of this Order; and	
 	
G.	All records necessary to demonstrate full compliance with each provision of this Order, including submissions to the Commission.	
XI.
COMPLIANCE MONITORING
IT IS FURTHER ORDERED that, for the purpose of monitoring Defendant’s compliance with this Order and any failure to transfer any assets as required by this Order:

A.	Within fourteen (14) days of receipt of a written request from a representative of the Commission, Defendant must: submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; appear for depositions; and produce documents for inspection and copying. The Commission is also authorized to obtain discovery, without further leave of court, using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69;	
        	 	
B.	For matters concerning this Order, the Commission is authorized to communicate directly with Defendant. Defendant must permit representatives of the Commission to interview any employee or other person affiliated with Defendant who has agreed to such an interview. The person interviewed may have counsel present; and	
        		
C.	The Commission may use all other lawful means, including posing, through its representatives as consumers, suppliers, or other individuals or entities, to Defendant or any individual or entity affiliated with Defendant, without the necessity of identification or prior notice. Nothing in this Order limits the Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1.	
35

XII.
RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.
SO ORDERED this _____ day of __________ , 2017.

UNITED STATES DISTRICT JUDGE	

36

SO STIPULATED AND AGREED:
PLAINTIFF FEDERAL TRADE COMMISSION

/s/ Karen D. Dodge	     	Dated:  	    January 19, 2017	
KAREN D. DODGE (IL 6204125)
JOANNIE T. WEI (IL 6276144)
ELIZABETH C. SCOTT (IL 6278075)
Attorneys for Plaintiff
Federal Trade Commission
55 West Monroe Street, Suite 1825
Chicago, Illinois 60603
 kdodge@ftc.gov (Dodge)
 jwei@ftc.gov (Wei)
 escott@ftc.gov (Scott)				

DEFENDANT THE WESTERN UNION COMPANY

/s/ John R. Dye	     	Dated:  	  January 18, 2017	
JOHN R. DYE
Executive Vice President and General Counsel	

COUNSEL FOR DEFENDANT THE WESTERN UNION COMPANY

/s/ Edward B. Schwartz	     	Dated:  	  January 18, 2017	
EDWARD B. SCHWARTZ (DC 429690)
Steptoe & Johnson LLP
 Attorneys for Defendant
1330 Connecticut Avenue, NW
Washington, DC 20036
(202) 429-6220 (telephone)
(202) 429-3902 (facsimile)
 eschwartz@steptoe.com	

37

/s/ Sean M. Berkowitz	     	Dated:  	  January 18, 2017	
SEAN M. BERKOWITZ (IL 6209701)
Latham & Watkins LLP
Attorneys for Defendant
330 North Wabash Avenue, Suite 2800
Chicago, Illinois 60611
(312) 777-7016 (telephone)
(312) 993-9767 (facsimile)
sean.berkowitz@lw.com				

38

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

 	)		
FEDERAL TRADE COMMISSION,	)		
 	)		
Plaintiff,	)		
 	)	Civil Action No.	
v.	)		
 	)		
THE WESTERN UNION COMPANY,	)		
a corporation, also doing business as	)		
Western Union Financial Services, Inc.,	)		
and through other subsidiaries and affiliates,	)		
 	)	 	
Defendant.	)		
	)		

COMPLAINT FOR PERMANENT INJUNCTIVE
 AND OTHER EQUITABLE RELIEF
Plaintiff, the Federal Trade Commission (“FTC”), for its complaint alleges:
1. The FTC brings this action under Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, to obtain permanent injunctive relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief for Defendant’s acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and in violation of the FTC’s Trade Regulation Rule entitled “Telemarketing Sales Rule” (“TSR”), 16 C.F.R. Part 310, in connection with Defendant’s failure to take timely, appropriate, and effective measures to mitigate fraud in the processing of money transfers sent by consumers.
1

JURISDICTION AND VENUE
2. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. §§ 45(a), 53(b), 6102(c), and 6105(b).
3. Venue is proper in this district under 28 U.S.C. § 1391(b)(2), and (c)(2), and 15 U.S.C. § 53(b).
PLAINTIFF
4. The FTC is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also enforces the Telemarketing Act, 15 U.S.C. §§ 6101-6108. Pursuant to the Telemarketing Act, the FTC promulgated and enforces the TSR, 16 C.F.R. Part 310, which prohibits deceptive and abusive telemarketing acts or practices.
5. The FTC is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and the TSR, and to secure such equitable relief as may be appropriate in each case, including rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. §§ 53(b), 56(a)(2)(A)-(B), 6102(c), and 6105(b).
2

DEFENDANT
6. Defendant The Western Union Company (“Western Union”), also doing business as Western Union Financial Services, Inc., and through other subsidiaries and affiliates, is a Delaware corporation with its principal place of business at 12500 East Belford Avenue, Englewood, Colorado 80112. Western Union transacts or has transacted business in this district, as well as throughout the United States and the world.
7. Western Union operates, and enters into contracts for the provision of, money transfer services worldwide, through numerous subsidiaries and affiliates, including, but not limited to, Western Union Financial Services, Inc., Western Union Payment Services Ireland Limited (“WUPSIL”), Western Union Payment Services Network EU/EEA Limited, Western Union Financial Services (Canada) Inc., Western Union Network Ireland Ltd., Western Union Network Canada Company, Western Union Network France SAS, Western Union Network Belgium Sprl., Western Union Payment Services UK Ltd., Western Union International Bank GmbH, American Rapid Corporation, Grupo Dinamico Empresarial, S.A. de C.V., Servicio Integral de Envios, S.A. de C.V., and Operaciones Internacionales OV, S.A. DE C.V.
3

COMMERCE
8. At all times material to this Complaint, Defendant has maintained a substantial course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.
BACKGROUND
9. For many years, Western Union’s money transfer system has been used by fraudsters around the world to obtain money from their victims. Discrete subsets of Western Union agents in various countries have largely been responsible for processing the payments, and many Western Union agents have played active and important roles in facilitating those frauds. As described more fully below, although Western Union has long been aware and has received many warnings that its system is being used for frauds, for many years it has failed to implement adequate and effective policies and procedures to detect and prevent fraud and to take prompt action to effectively address problematic agent locations. In some instances, Western Union’s agent locations have been, or likely been, complicit in the frauds, and have engaged in suspicious activities indicative of complicity in paying out fraud-induced money transfers. In other cases, Western Union’s agent locations have facilitated the scams by paying out fraud-induced money transfers in violation of Western Union’s anti-fraud and/or Anti-Money Laundering (“AML”) policies and procedures that impact consumer fraud. Western Union has known about the problem and has identified many of the agents providing substantial assistance or support to the frauds. Although as a result of the FTC’s investigation, Western Union has improved aspects of its anti-fraud program since 2012, Western Union still has failed in many cases to promptly suspend and terminate agent locations facilitating fraud. Instead, Western Union has continued to profit from the activities of these agents.
4

Western Union’s Money Transfer System
10. Western Union offers money transfer services to consumers worldwide through a network of approximately 515,000 agent locations in more than 200 countries and territories. Western Union is the largest money transfer company in the United States and worldwide. More than 50,000 of its 515,000 agent locations are in the United States. In addition to offering money transfer services under the Western Union brand, Western Union owns and operates Orlanda Valuta (“OV”), which provides money transfer services primarily to Mexico, and Vigo, which provides money transfer services primarily to Latin America and the Caribbean. Consumers in the United States can send money transfers through OV and Vigo from thousands of Western Union agent locations. According to Western Union, “[e]very day, millions of consumers rely on Western Union Money Transfer® service to send money to loved ones near and far.”
11. Consumers wishing to send funds using Western Union’s money transfer system may initiate a transaction in person, online, or over the telephone. Western Union claims that its locations are “around every corner” with “knowledgeable agents,” and that its money transfer services are “fast, convenient, and safe.” Although the amount that may be sent online or over the telephone is sometimes restricted, there typically are no restrictions on the amount of money that a consumer can send in person from agent locations. Certain countries, however, limit the amount of money that can be picked up from agent locations. For in-person money transfers, consumers must pay with cash or a bank-issued debit card. For online or telephone transfers, consumers typically must pay with a credit or debit card. Over 90% of money transfers sent through Western Union are initiated in person at Western Union’s agent locations.
12. When initiating a money transfer at one of Western Union’s agent locations, the sender must complete a “send form,” which typically requires the sender’s name, address and telephone number, and the name of the recipient and the city, state/province, and country to which the money transfer is being sent. Consumers initiating money transfers at Western Union’s agent locations may select from Western Union’s “Money in Minutes” or “Next Day” services, where available. For money transfers above a certain amount, such as $1,000, the sender must present identification (“ID”) and the agent locations must record in Western Union’s system the sender’s ID information. Over time, in some countries, Western Union has lowered the amount that triggers the ID requirement.
5

13. In order to send a money transfer, consumers must pay a fee to Western Union. This fee varies depending upon the method of the money transfer, the destination, the amount, the method of payment, and how quickly the money transfer is to be completed. The money transfer fee for Western Union’s “Money in Minutes” service is higher than its “Next Day” service. According to Western Union’s website, to send a $1,000 “Money in Minutes” money transfer from the United States to the United Kingdom (“UK”), consumers must pay an $81 transfer fee if paying by credit or debit card, or $58 if paying in cash. For international money transfers, in addition to charging consumers a money transfer fee, Western Union also makes money from the foreign currency exchange. Upon initiating a money transfer, consumers are provided with a unique tracking number called a Money Transfer Control Number (“MTCN”).
14. Prior to paying out funds at its agent locations, Western Union’s practice is generally to require the recipient to provide the MTCN, to complete a “receive form” with the recipient’s name, address and telephone number, and to present ID. For many years, for money transfers of less than $1,000, even though recipients may have been required to present ID, Western Union agent locations worldwide have not been required to record in Western Union’s system the recipient’s ID information. When the recipient does not have an ID and the money transfer is less than $1,000, the sender sometimes has the option of using a “Test Question and Answer.” According to Western Union, this option “is designed for emergency situations where the receiver doesn’t have proper identification” because his or her wallet was stolen.
15. Regardless of the method used to initiate the money transfer, all Western Union money transfers flow through the same global money transfer system controlled by Western Union. This system coordinates and makes funds available to complete the transactions. Agents must have active accounts with Western Union to send and receive money transfers using Western Union’s money transfer system.
16. Once Western Union’s agent locations have paid out the funds, Western Union’s policy typically is that the sender cannot obtain a refund from Western Union of either the amount transferred or the money transfer fee, even if the sender was a victim of fraud or the money transfer was paid out to someone other than the intended recipient. The policy even applies if the Western Union agent location was complicit in the fraud, engaged in suspicious activity, or failed to follow Western Union’s policies and procedures when processing the money transfer ( e.g. , by failing to record the recipient’s ID or other required information).
6

Use of Western Union’s Money Transfer
System to Facilitate Fraud and Harm Consumers
17. Over the years, money transfers have increasingly become the payment method of choice for scams that prey on consumers around the world. Fraudulent telemarketers and con artists prefer to use money transfers to facilitate their scams because, among other reasons, they can pick up money transferred within minutes at multiple locations and, oftentimes, the perpetrators are afforded anonymity because the payments are untraceable. For example, money transfers can be picked up at any location within a particular state or country; some money transfers can be picked up without presenting or having to record an ID; fake names, addresses, and IDs sometimes can be used; and Western Union’s own agent locations sometimes fail to follow the company’s policies and procedures in paying out money transfers, and in other instances, are complicit in the frauds. Therefore, it is often difficult for consumers and law enforcement to identify and locate the recipients of fraud-induced money transfers.
18. Western Union maintains a database of complaints it receives about fraud-induced money transfers. Based on information in that database, between January 1, 2004 and August 29, 2015, Western Union received at least 550,928 complaints about fraud-induced money transfers, totaling at least $632,721,044. Over 80% of the complaints in the database were from U.S. consumers. The average individual consumer fraud loss reflected in that database was approximately $1,148. That is more than three times the amount of Western Union’s average money transfer for the years 2010 through 2014—approximately $346—and more than seven times the amount of Western Union’s median money transfer for the same period—approximately $162.
19. As explained more fully below, the complaints in Western Union’s database represent only a small percentage of the actual fraud perpetrated through Western Union’s money transfer system because most victimized consumers do not complain directly to Western Union. In addition, Western Union also does not include information in its database about all of the complaints it receives. Therefore, since at least January 1, 2004, it is likely that Western Union’s money transfer system has been used to send billions of dollars in fraud-induced payments to telemarketers and con artists worldwide.
7

Western Union’s Contractual Authority
to Oversee and Take Action Against its Agents
20. Western Union requires that its agents, which are also referred to as authorized delegates or representatives, sign written agreements in order to offer and provide payment services through Western Union’s money transfer system. The initial terms of the written agreements typically are five years, after which they are renewable for additional periods of time. Western Union pays its agents in the United States an agreed-upon commission, performance bonus, and volume bonus for offering and processing money transfer services on Western Union’s behalf, while it pays its international agents an agreed-upon base compensation for the consumer fee received, and a percentage of the foreign exchange profits, on each transaction.
21. Western Union’s written agreements with its agents typically require the agents to comply with all applicable laws, including laws for detecting and preventing money laundering. These agreements also provide that Western Union has the right to immediately suspend or terminate its agents, including any agent location. Western Union’s agents are required to keep records for all transactions, provide them to Western Union upon request, and cooperate with any audit or review by Western Union. The agreements also provide Western Union with the right to inspect and audit its agents’ books and records to monitor the agents’ compliance with the agreement, applicable law, and Western Union’s policies.
22. Western Union’s agents, which are also sometimes referred to as “network agents,” “master agents,” or “super-agents,” in many instances provide Western Union’s money transfer services through their own networks or locations, or, in countries outside of the United States and Canada, also through sub-representatives, which Western Union commonly refers to as “subagents” (hereinafter collectively referred to as “agents” or “subagents”). Western Union typically is not involved in enrolling its agents’ subagents and does not have a direct contractual relationship with them. Western Union’s agreements with its agents, however, provide it with the authority to suspend and terminate its agents’ subagents, as well as any location at which its money transfer services are offered.
8

Western Union’s Programs, Policies, and Procedures
23. Western Union has two primary programs relating to the detection and prevention of consumer fraud and the installation and oversight of agents: its anti-fraud program, which sometimes is referred to as its consumer protection program, and its AML program. As implemented by Western Union, for many years these interrelated programs failed to adequately and effectively detect and prevent consumer frauds employing Western Union’s money transfer system. Western Union’s design and implementation of these programs for addressing fraud, as well as its oversight of its global money transfer system, occur primarily within the United States.
24. For many years, Western Union has failed to implement a comprehensive and effective anti-fraud program. In or around April 2003, after Western Union became aware that some of its agents had been suspected of being involved in paying out fraud-induced money transfers to telemarketers, Western Union’s Security Department developed a Standard Operating Procedure (“SOP”) for reviewing and suspending agents for consumer fraud. The SOP outlines a process and guidelines for identifying agents for review and suspension based on consumer fraud complaints, as well as a process for reinstating or terminating agents. The SOP was revised at various times, most recently in or around September 2010. Beginning in or around January 2006, the SOP included procedures that applied to agents outside of the United States and Canada. However, to the extent that Western Union suspended and/or terminated agents pursuant to the SOP, for many years the suspensions and/or terminations were typically limited to agents in the United States and Canada.
25. In a written report in January 2011, Western Union represented it was making “enhancements” to its consumer protection program that were to include improvements to the company’s program for conducting due diligence and training of its agents, monitoring agent activity, and taking disciplinary action, including suspension and termination, against agents. Subsequently, in a written report about its anti-fraud program dated September 14, 2012, Western Union claimed it had implemented “a comprehensive anti-fraud program” that included agent training, agent monitoring, and “[p]rompt action, including suspensions and terminations, against Agents when the Company identifies fraudulent activity.” Western Union recognized in this report that its “first line of defense against fraud is to engage Agents who will fully comply with the Anti-Fraud program and policies and procedures.”
9

26. As a result of the FTC’s investigation, Western Union has made progress since 2012 in identifying and blocking potentially fraudulent transactions and in otherwise protecting consumers from fraud. Despite that, Western Union continued to fail, in certain cases, to promptly suspend and terminate certain high-fraud agent locations, including locations that appeared to be complicit in paying out fraud-induced money transfers or repeatedly failed to comply with Western Union’s anti-fraud and AML programs, policies, and procedures.
27. In addition to its anti-fraud program, Western Union is required by the Bank Secrecy Act (“BSA”) to have an effective AML program to guard against money laundering, including, but not limited to, guarding against the flow of illicit funds, such as funds derived from fraud. As part of its AML program, Western Union has developed Know Your Agent guidelines and policies, and policies and procedures for monitoring transaction, customer, and agent activity for risks, including suspicious activity and agent complicity. Western Union’s AML program relies heavily upon its agents to have their own AML programs. In many cases, Western Union or its agents have failed to implement effective AML policies and procedures pertaining to consumer fraud, thereby making Western Union’s money transfer system more vulnerable to consumer fraud.
28. As described below, Western Union has failed to: promptly investigate, suspend, and terminate potentially complicit agents and subagents, or agents and subagents that have failed to comply with Western Union’s anti-fraud and/or AML policies and procedures that impact consumer fraud; conduct adequate due diligence on prospective and existing agents and subagents; effectively train, monitor, and review agents, subagents, and front line associates, who are responsible at the point of sale for processing money transfers at Western Union’s agent locations (“FLAs”), with respect to consumer fraud; adequately collect, record, and report consumer fraud involving its money transfer system; and adopt other reasonable measures to prevent fraud-induced money transfers. In some cases Western Union has failed to adopt adequate and effective policies and procedures to detect and prevent fraud-induced money transfers, while in other cases it has failed to adhere to its own anti-fraud and AML programs, policies, and procedures.
10

WESTERN UNION’S MONEY TRANSFER
 SYSTEM HAS REGULARLY BEEN USED FOR FRAUD
29. Perpetrators of many different types of mass marketing and imposter scams have relied on money transfer systems, including Western Union’s system, as a means of fraudulently obtaining money from consumers around the world. All of these scams operate deceptively in violation of Section 5 of the FTC Act, and many of the scams also involve fraudulent telemarketing in violation of the TSR.
30. In these scams, consumers often are instructed over the telephone or by email to send money transfers through Western Union’s money transfer system. The telemarketers and con artists use false or misleading statements to induce consumers either to pay for purported goods or services, or to make payments as a 15 result of purported circumstances, such as emergencies, that do not exist. Consumers’ fraud-induced payments through Western Union’s system often exceed $1,000 per transaction. The types of scams referenced in Western Union’s own complaint database include, but are not limited to:
a. Online or Internet purchases ( see FTC Consumer Alert on Online purchases, available at http://www.ftc.gov/news-events/press-releases/2006/07/ftc-advises-consumers-not-use-wire-transfers-online-purchases ): According to Western Union’s complaint database, between January 1, 2004 and August 29, 2015, the company received at least 146,909 complaints about this type of scam totaling at least $187,877,003 in losses;
b. Lottery or prize scams ( see http://www.consumer.ftc.gov/articles/0086-international-lottery-scams ): According to Western Union’s complaint database, between January 1, 2004 and August 29, 2015, the company received at least 75,543 complaints about this type of scam totaling at least $86,138,055 in losses;
c. Emergency scams, including grandparent scams ( see http://www.consumer.ftc.gov/articles/0204-family-emergency-scams ): According to Western Union’s complaint database, between January 1, 2004 and August 29, 2015, the company received at least 41,897 complaints about this type of scam totaling at least $73,807,353 in losses;
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d. Advance-fee loan scams ( see http://www.consumer.ftc.gov/articles/0078-advance-fee-loans ): According to Western Union’s complaint database, between January 1, 2004 and August 29, 2015, the company received at least 71,296 complaints about this type of scam totaling at least $43,617,107 in losses; and
e. Online dating or romance scams ( see http://www.ftc.gov/news-events/press-releases/2010/11/ftc-warns-consumers-about-online-dating-scams ): According to Western Union’s complaint database, between January 1, 2004 and August 29, 2015, the company received at least 44,588 complaints about this type of scam totaling at least $40,980,482 in losses.
31. When consumers send the money transfers from one of Western Union’s agent locations, the perpetrators of the scams described above, or those acting on their behalf, frequently collect the funds from one of Western Union’s corrupt or complicit agent locations or from agent locations that violate Western Union’s anti-fraud and/or AML policies and procedures, such as by failing to properly collect and record all of recipients’ IDs or biological information, or by recording obviously false information.
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A DISCRETE SUBSET OF WESTERN UNION
 AGENTS WORLDWIDE HAS PAID OUT THE 
 MAJORITY OF FRAUD-INDUCED MONEY TRANSFERS
32. Western Union’s records show that the majority of fraud-induced money transfers have been paid out by a discrete, and easily identifiable, subset of Western Union’s agents and subagents in various countries around the world. The vast majority of Western Union agent locations worldwide do not pay out transactions associated with a single fraud complaint to Western Union. In fact, only a small and discrete subset of agents and subagents worldwide pay out money transfers relating to any fraud complaints. An even more easily identifiable and distinct subset of agents and subagents have been the subject of five or more fraud complaints in a given year, but this group of Western Union agents has been responsible for paying out most of the reported fraud losses. For example:
a. In 2012, 137 agent locations in Mexico (out of an average of 17,710 locations operating in that country each month of the year) had five or more fraud complaints, and these 137 agents were responsible for paying out approximately $3.2 million, amounting to over 80% of the total reported fraud for Mexico that year. Similarly, in 2013, 140 agent locations in Mexico (out of an average of 9,002 locations) paid out approximately $2.1 million, amounting to over 75% of the total reported fraud in Mexico, and in 2014, 108 agent locations (out of an average of 8,345 locations) paid out approximately $1.5 million, amounting to over 76% of the total reported fraud.
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b. In 2012, 188 agent locations in Nigeria (out of an average of 5,036 locations in that country) had five or more fraud complaints, and these 188 agents paid out approximately $1.9 million, amounting to over 77% of the total reported fraud for Nigeria that year. In 2013, 235 agent locations in Nigeria (out of an average of 5,034 locations) paid out approximately $1.5 million, amounting to over 71% of the total reported fraud in Nigeria, and in 2014, 269 agent locations (out of an average of 5,208 locations) paid out approximately $2.6 million, amounting to over 84% of the total reported fraud.
33. Western Union’s internal reports and memoranda show that the company was aware that discrete and easily identifiable subsets of agents and subagents in various locations were responsible for paying out the majority of fraud-induced money transfers. For example, a Financial Intelligence Report titled “G.A.P. – United Kingdom” stated that a review of fraud complaints in late 2009 revealed that one network of agents “accounted for more consumer Fraud Complaints than any other Agent Network in the United Kingdom” and that an analysis of data in the first quarter of 2010 for nineteen agents demonstrated “indicators of Agent complicity.” A January 19, 2012 memorandum regarding “GMI Fraud Monitoring and Intelligence” stated that in Spain “when looking at a list of 30 Agents that were investigated in 2010 it was determined that the amount of potential fraud identified by GMI surpassed the total number of formal fraud complaints and amounts for the entire country in 2010 , demonstrating the true levels of fraud related risk present in Spain.” (Emphasis in original.) In March 2012, a senior compliance analyst found that from December 1, 2011 to February 24, 2012, “nearly 85% of all emergency fund fraud complaints filed with Western Union” involved money transfers paid out by one master agent in Mexico, Elektra, through 94 of its locations.
14

MANY WESTERN UNION AGENTS HAVE BEEN
ACTIVE OR COMPLICIT IN THE UNDERLYING SCAMS
34. Many Western Union agent locations that have received fraud-induced money transfers from consumers and paid out such transfers to the fraudulent telemarketers and con artists have been complicit in the underlying scams. In some cases, the sellers, telemarketers, or imposters who have operated the scams have been Western Union’s own agents or subagents.
35. At least 146 of Western Union’s agents and subagents around the world, as well as at least two FLAs, have been charged with acting collusively in the frauds employing Western Union’s money transfer system. Of the 146 agents, 39 agents in the United States and Canada have been charged in the United States with defrauding consumers through various mass marketing and/or telemarketing schemes including fraudulent sweepstakes, advance fee loans, business opportunities (including secret shopper or work-at-home scams), emergency or person-in-need schemes, and/or Internet purchase offers. The charges against these 39 agents have included conspiracy to commit mail fraud, wire fraud and/or money laundering, and most of the agents have already pleaded guilty or been convicted of the charges. These 39 agents paid out over $5.2 million in money transfers that were reported to Western Union as having been induced by fraud. As explained below, however, actual consumer losses far exceed the reported losses. These matters include:

Case	Western Union Agents	
United States v. Agbasi , et al. , No. 07-CR-504 (M.D. Pa.)	Stanley Akubueze and Christopher Ozurus (d/b/a Afro Spot Restaurant)
Philip Utomi (d/b/a Swift Cash Centre)	
United States v. Bellini , et al. , No. 07-CR-1402 (C.D. Cal.)	Vijayakumar Ramakrishnan (d/b/a Cafe Chambly)
John Felix Alexander (d/b/a Imudia Int)	
United States v. Ayodele , et al. , No. 10-CR-058 (M.D. Pa.)	Soji Ayodele (d/b/a Total Communications Centre)
Mohsen Golab (d/b/a Golden Century)
Christian Kevin (d/b/a C K Business Service)	
United States v. Akinola , et al. , No. 10-CR-300 (S.D. Tex.)	Jonathan Akinola (d/b/a Postal & Wireless Outlet)	
United States v. Groysman , No. 10-CR-326 (M.D. Pa.)	Bella Groysman (d/b/a Professional Medical Supplies)	
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United States v. Dobrovinsky-Kaz , No. 10-CR-327 (M.D. Pa.)	Tatyana Dobrovinsky-Kaz (d/b/a Professional Medical Supplies)	
United States v. Abbey , No. 10-CR-344 (M.D. Pa.)	Festus G. Abbey (d/b/a Abbey’s One Stop and Abbey Multi Service)	
United States v. Nwuda , No. 10-CR-508 (C.D. Cal.)	Nmandi Nick Nwuda (d/b/a CKane Check Cashing & Postal)	
United States v. Idemudia , No. 11-CR-001 (M.D. Pa.)	Eugene Idemudia (d/b/a IV Beauty Supply and RM & E)	
United States v. Agho , et al. , No. 11-CR-113 (M.D. Pa.)	Betty Agho (d/b/a Star Multiservice)
Itohan Agho-Allen (d/b/a Miracle Multi Link)
Prince Edosa (d/b/a Gosa Multi Services and A & M Communications)
Kennedy Onaiwu (d/b/a Kenizo Enterprise)
Ikejiani Okoloubu (d/b/a First Cone and Depanneur Ice)
Susan Osagiede (d/b/a A & M Communications)
Elvis Uadiele (d/b/a Diale Investment)
Nekpen Omorodion (d/b/a Global Multiservices)	
United States v. Adigun , et al. , No. 11-CR-151 (M.D. Pa.)	Olufemi Adigun (d/b/a FAB)	
United States v. Louissaint , No. 11-CR-201 (M.D. Pa.)	Emmanuel Louissaint (d/b/a Hudson Food Market II)	
United States v. Brown , No. 12-CR-001 (M.D. Pa.)	Blessing Brown (d/b/a O & B Enterprise Inc)	
United States v. Mayele , No. 12-CR-210 (C.D. Cal.)	Prince Martin Mayele (d/b/a Du Monde Digital Trades)	
United States v. Mgbolu , et al. , No. 12-CR-232 (M.D. Pa.)	Alex Mgbolu (d/b/a FA CAM Assoc. & Financial Corp)
Chima Nneji (d/b/a Advanced Computer Service and Hallmark Business Services)
William Nneji (d/b/a Hallmark Business Services)	
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United States v. Idisi-Arah , et al. , No. 12-CR-311 (M.D. Pa.)	Lucas Obi (d/b/a Canada Cash Express)	
United States v. Anyika , et al. , No. 14-CR-006 (M.D. Pa.)	Ejike Egwuekwe (d/b/a Merrick Multiple Services and Lincoln One Stop Place)
Franklyn Idehen (d/b/a Treasure Links and Cherrish Communication Center)
Nnamdi Ihezuo (d/b/a Net Global & Multi Services)
Cyprian Osita Ngbadi (d/b/a Rockaway Business Center)	
State of Texas v. Mbaka , No. 09-DCR-52310A (Tex. Dist. Ct. Ft. Bend County)	Boniface Ifeanyi Mbaka (d/b/a BIM Services)	

36. Criminal law enforcers in other countries also have taken action against at least an additional 107 Western Union agents and two FLAs, including in the following instances:
a. Sentencing in the UK (in or around November 2012) of an individual, Peter Oyewor, who operated at least two Western Union agent locations (d/b/a Benson Logistics and Abmec Logistic) and was found guilty of money laundering over £1.34 million in proceeds from consumer frauds;
b. Arrests made by the Nigerian Special Fraud Unit (in or around June 2013) of two FLAs at a Western Union location (Skye Bank PLC) for aiding Internet fraudsters; and
c. Arrests made by the Spanish police (in or around July 2014) of 105 Western Union agents in Spain, who were involved in a massive international scam involving Nigerian frauds that primarily targeted U.S., Canadian, and German consumers, and caused at least €11.5 million (approximately $15.5 million) in consumer injury.
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WESTERN UNION HAS BEEN AWARE THAT ITS SYSTEM
HAS BEEN USED FOR FRAUD-INDUCED MONEY TRANSFERS
37. Since at least January 2004, Western Union has been aware that its system has regularly been used for fraud and that it has an identifiable subset of agents and subagents with high levels of fraud complaints. It also has been aware that many of its agent locations with high-fraud payouts have: (1) violated Western Union’s anti-fraud and/or AML policies and procedures; (2) engaged in suspicious activities; and/or (3) been complicit, or likely complicit, in the frauds. Western Union’s awareness of the consumer fraud problem is demonstrated by, among other things, the hundreds of thousands of complaints it has received from consumers, its own internal records and reports, and years of warnings from government agencies throughout the world.
Defrauded Consumers Have Regularly Complained to Western Union
38. When consumers realize that they have been defrauded, they sometimes contact Western Union to report the fraud, often using a toll-free number made available by Western Union to consumers in certain countries, including the United States. In some cases, consumers also have filed lawsuits against Western Union due to the company’s role in processing the fraud-induced money transfers. In addition, as described above, between approximately January 1, 2004 and August 29, 2015, Western Union’s database shows at least 550,928 complaints it received about at least $632,721,044 in fraud-induced money transfers. Western Union also has other records reflecting additional complaints it received, which were not recorded in the database, including a spreadsheet of at least 8,497 complaints Western Union received in 2005 regarding fraud-induced money transfers, which totaled at least $14,478,365.
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39. The complaints reported to Western Union, however, represent only a fraction of the consumer frauds employing Western Union’s money transfer system for at least three reasons:
a. For years, Western Union has failed to provide victims in many countries worldwide with access to a fraud hotline, or a toll-free telephone number for victims to call to report fraud, which is the most convenient mechanism for many victims to promptly report fraud;
b. The majority of consumer victims do not complain directly to Western Union. Western Union’s own internal reports recognize that only a small percentage of consumers complain about fraud and that the volume of fraud-induced money transfers is much higher than that reported to the company. For example, Western Union has recognized in several reports that the actual amount of fraud-induced money transfers associated with agent locations was in some cases over five times higher than the reported complaint figures; and
c. As further explained below, Western Union’s database of fraud complaints is incomplete because Western Union has failed to log in its database all of the complaints and reports about fraud it has received, as well as all of the fraud-induced money transfers related to the complaints.
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Western Union’s Internal Reports and Records Demonstrate Awareness of Consumer Fraud by Agents in Various Countries Worldwide
40. Since at least 2005, Western Union has conducted reviews and investigations, and generated indices and reports, related to consumer fraud involving its money transfer system. Information contained in Western Union’s internal reports, communications, and other records demonstrates that the company has been aware of high levels of consumer fraud involving particular countries and agents, including network agents Western Union itself owns. These records demonstrate serious problems and suspicious activities by particular Western Union agents and subagents, including, but not limited to: (a) high numbers and patterns of complaints; (b) spikes in the number of money transfers received; (c) money transfer amounts that far exceed the average transfer amount; (d) data integrity issues (issues relating to the recording of ID numbers, dates of birth, or other information about recipients); (e) payouts within minutes after the money transfers were sent; (f) flipping (shortly after receiving funds, a large portion of the money is sent to another recipient); (g) surfing (suspicious look-ups of money transfers in Western Union’s system by FLAs); and (h) substantial sends to high-risk countries known for fraud.
41. According to information contained in Western Union’s complaint database, the United States has been the top country for fraud payouts since at least 2004 and has generated over three times the number of complaints as the next highest country. In fact, over $128.2 million in reported fraud has been paid out in the United States since 2010, and Western Union has received more than 34,000 fraud complaints about transactions totaling over $21.2 million since 2014. Certain agent locations in the United States have operated for years despite high levels of fraud. For example, between July 2008 and March 2015, one agent location in Washington, D.C. generated at least 116 fraud complaints totaling $187,356. Even though reviews of the agent in June 2014 and February 2015 identified confirmed and potential fraud amounting to 84% and 55% of the money transfers paid at that location, the agent was not terminated until August 2015, after it failed an undercover test visit by a compliance officer tasked with assessing the agent’s AML compliance. Another agent location in Detroit, Michigan, paid out at least 194 money transfers totaling $379,031 in reported fraud since 2004. Although this agent has received Western Union’s fraud prevention training multiple times, it has continued to receive fraud complaints.
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42. Over the years, many other countries in addition to the United States have emerged as high-risk countries for fraud as international scams have become more pervasive. For example, from 2006 to 2012, the UK was the second highest-payout country for fraud-induced money transfers behind the United States. During that time, Western Union’s UK agents paid out over $82.4 million in reported fraud, and internal reports and records demonstrate that Western Union was aware of problems with particular agents in the UK. From January 1, 2004 to August 29, 2015, 172 UK agents paid out over $44.3 million in reported fraud. A subset of only 34 of these agents was responsible for paying out nearly half of the reported fraud (at least $21.2 million), most of which came from U.S. victims. The actual fraud paid out by these agents was likely much higher. Total payouts by these agents during the period they were receiving fraud complaints amounted to $389 million, with $154 million of that coming from U.S. senders. Notably, these agents also sent $104.6 million to Nigeria and $76.6 million to Romania, both of which are high-risk countries for fraud, as acknowledged by Western Union itself. One agent alone, News Mark, was the top fraud agent in the UK and worldwide. Between January 1, 2006 and January 14, 2013, Western Union received at least 1,421 fraud complaints about News Mark totaling at least $2,150,892, of which over 84%, or $1,815,582, involved U.S. victims. Although Western Union identified News Mark as a high-fraud agent in the company’s 60-day reports at least 45 times between 2005 and 2010, and reviewed it for fraud and other suspicious activities at least fifteen times between 2009 and 2012, Western Union suspended and reactivated News Mark at least three different times before finally terminating it in 2014.
43. By 2007, Western Union was aware that Jamaica had become a hotbed for fraud. In that year alone, Western Union received at least 3,065 complaints from U.S. consumers about money transfers totaling $1,878,435 to Jamaica. Over the years, the top four fraud payout agents in Jamaica have processed well over $1 million each in reported fraud, for a combined total of at least $5,210,644. According to internal Western Union reports, those agents also have engaged in other highly suspicious activities, such as surfing. One of those agents, for example, surfed at least 985 transactions in a single month in 2010. Even though all four of these agents have continued to receive many fraud complaints for years, including hundreds in 2015, they continue to operate. In fact, Western Union has only terminated one agent in Jamaica for consumer fraud. That termination occurred on July 3, 2015, and the terminated agent had a much smaller number of fraud complaints than others that Western Union has not terminated.
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44. In 2008, according to Western Union’s records, Mexico was one of the top five countries worldwide for fraud payouts, with 1,393 complaints totaling over $1.8 million. In 2009, Mexico was Western Union’s sixth highest payout destination, with 1,626 complaints totaling over $2.1 million. Since 2011, it has consistently been in the top three destination countries for reported fraud payouts from U.S. consumers, and the top payout destination for fraud related to emergency scams. In 2011, Western Union received at least 2,824 emergency scam complaints on transfers paid out in Mexico. The total amount paid out on these transfers was $6,908,666, and the average payout was $2,446. Of those victims who reported their date of birth, nearly 70% were 65 years or older at the time they sent their money transfers. Although Western Union has at least three master agents in Mexico, internal reports and records show that one master agent, Elektra, has been responsible for paying out most of the emergency scam complaints. Of the reported emergency scam transfers paid out in Mexico between 2011 and 2014, Elektra agents were responsible for payouts relating to at least 7,107 complaints totaling $12,494,602, or 88% of the total reported losses. During that same period, nineteen Elektra agents paid out $6,425,782 in reported emergency fraud, including one agent discussed further below that alone paid out over $1.4 million in reported fraud. Nevertheless, and despite repeated reviews and investigations of agent locations in Mexico, as of October 2015, Western Union had rarely, if ever, terminated agent locations in Mexico for consumer fraud, even in instances where particular agent locations repeatedly appeared on fraud reports, or had confirmed and potential fraud amounting to more than 25%, or even 50%, of their payouts.
45. By 2010, internal reports and records show that Western Union was aware of a substantial increase in fraud complaints involving money transfers sent to Spain, and that particular agents there had very high levels of fraud and questionable activity. From 2009 to 2010, the number of complaints paid out in Spain increased from 583 to 2,195, and the reported fraud amount rose from over $1.1 million to over $5.3 million. Indeed, from 2010 to 2012, Spain was the third highest payout country by amount for complained-of transfers, trailing only the United States and the UK. During that time, Western Union received at least 8,086 complaints about transfers paid out in Spain, totaling over $17 million. From 2007 to 2012, a subset of 61 agents in Spain paid out over $11.9 million in reported fraud. Western Union’s internal reports and records document numerous instances of suspicious activity by these agents, including flipping and sending money transfers to high-risk countries. The reported fraud paid out by agents in Spain, moreover, likely grossly understates the actual fraud. For example, 20 agents in Spain that were responsible for over $5.7 million in reported fraud received more than $51.6 million during the period those agents were receiving fraud complaints, of which over $22.7 million came from U.S. consumers. During that time, those 20 agents were responsible for sending over $8.8 million to Nigeria, over $3.7 million to Canada, over $1.7 million to Romania, and over $800,000 to Ghana, which are all high-risk fraud countries. Although Western Union was aware of problematic agent locations in Spain, it failed to promptly suspend and terminate those agent locations.
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46. Prior to 2011, Western Union received a small number of complaints each year involving its Peruvian agents. For example, in 2010, Western Union recorded only 71 fraud reports against agents in Peru totaling $38,492. In 2011, however, there was a dramatic spike in complaints about money transfers paid out in Peru, especially about emergency scams, with Western Union receiving at least 692 complaints totaling $2,218,761. The average transfer amount in the complained-of transactions jumped from $542 to $3,206. In 2012, the numbers increased to 1,003 fraud complaints totaling $1,944,730. Over 96% of the complained-of transfers paid out in Peru in 2011 and 2012 originated from the United States. Between 2011 and 2012, thirteen Peruvian agents paid out $3,603,539 in reported fraud, and together were responsible for nearly 87% of the total reported fraud payouts in Peru for those years. Internal reports and records show that Western Union was aware of the dramatic increase in complaints, as well as particular Peruvian agent locations that were responsible for paying out most of the reported fraud. Despite its awareness, Western Union failed to terminate problematic agent locations until after law enforcement began to inquire and raise concerns about the fraud, and even then, one agent location terminated for consumer fraud was reactivated under a different agent ID. In recent years, Western Union has continued to receive complaints from U.S. consumers concerning high-dollar emergency scam-related money transfers paid out at agent locations in Peru.
47. For many years, Nigerian scammers have been at the center of many international frauds. Although Western Union’s agent locations in Nigeria are in banks, those bank locations, too, have paid out large numbers of fraud-induced money transfers and engaged in other suspicious activities. According to Western Union’s records, Nigeria has been the fourth highest payout destination for fraud complaints received by Western Union since 2006. Since then, Western Union has received complaints about at least 48,047 money transfers paid out in Nigeria, totaling over $38.2 million. Approximately 86.7% of the complained-of transfers originated from the United States. During this period, a subset of 68 Western Union agent locations in Nigeria was responsible for at least 17,743 complaints totaling over $16.6 million in reported fraud. Based on the complaints, reported fraud is typically paid out at various locations of two large banks in Nigeria. Overall, one of those banks has at least 15,184 complaints totaling $11,292,195, while the other has at least 10,948 complaints totaling $8,167,769. Individual locations of the two banks also have amassed huge numbers of complaints. One location alone was responsible for at least 832 complaints totaling $1,407,252, while another was responsible for at least 1,741 complaints totaling $1,187,141. Despite repeated reviews and investigations of agent locations in Nigeria, as of October 2015, Western Union had rarely, if ever, terminated agent locations in Nigeria for consumer fraud.
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48. Over the years, agent locations in many other countries have appeared on Western Union’s fraud reports, and have been reviewed by the company for fraud. Those countries include, but are not limited to, Ghana, the Philippines, Bolivia, China, Malaysia, the Dominican Republic, Greece, and Thailand. Some of those agent locations continue to operate despite having high levels of fraud, while others have been suspended or terminated, but only after having caused substantial injury to consumers over many months or, in some cases, years.
Government Agencies Worldwide Warned Western Union about Consumer Fraud Involving Its System
49. In addition to consumer complaints and Western Union’s internal reports and records, Western Union’s awareness of the consumer fraud problem with its money transfer system is further demonstrated by the fact that law enforcement agencies in the United States and throughout the world have warned the company for many years that its money transfer system was being used to perpetrate consumer frauds, and that Western Union was not adequately addressing the problem.
50. First, in or around 2002, multiple state Attorneys General issued subpoenas to Western Union in conjunction with their investigations of the use of Western Union’s money transfer system by fraudulent telemarketers. In correspondence dated October 1, 2002, the Vermont Attorney General’s Office informed Western Union about disturbing statistics regarding telemarketers in Quebec, Ontario, British Columbia, and Israel misusing Western Union’s money transfer system for frauds.
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51. In or around November 2005, Western Union entered into an agreement with forty-seven states and the District of Columbia involving the use of Western Union’s money transfer system by “fraudulent telemarketers in and outside the United States” (“2005 Agreement”). The 2005 Agreement imposed a number of requirements upon Western Union, including warnings to consumers, agent training, closure of agents, development of a computerized system to identify likely fraud, and increasing anti-fraud staff. For example, the 2005 Agreement required that Western Union “terminate those of its agents, subagents or locations, as the case may be, who are complicit in fraud-induced transfers or who knowingly ignore such fraud, or, if certain employees of the agent or subagent are the complicit or knowingly ignoring parties, insist upon termination of such employees as a condition to continued agent or subagent status.” The 2005 Agreement was in effect for five years. Despite this agreement, as explained below, Western Union in many instances failed to terminate many problematic agent locations, especially in countries outside of the United States and Canada.
52. In October 2009, the FTC announced that it had reached a settlement with MoneyGram International, Inc. (“MoneyGram”), Western Union’s main competitor, relating to charges that the company had allowed its money transfer system to be used for fraud. The FTC publicly released copies of the complaint and order against MoneyGram, which required, among other things, the termination of any agent that “may be complicit in” fraud. Following the FTC’s settlement with MoneyGram, FTC staff sent a letter to Western Union in November 2009 expressing concern about the “huge volume of fraud that employs money transfer services,” like that of Western Union.
53. According to Western Union’s records, in or around September 2010, the Japan Financial Services Agency expressed concerns about Japanese consumers sending fraud-induced money transfers to the UK, and “suspicious viewing/surfing of transactions in the United Kingdom, resulting in either Paid in Error (PIE) or Non Payment Claims [complaints about money transfers being paid to the wrong person or not being paid].”
25

54. Since at least June 2011, the Minnesota Attorney General’s Office has been warning Western Union in correspondence directed to the attention of the President and Chief Executive Officer that “each year thousands of consumers are defrauded through use of your company’s services,” and that “[g]iven your firm’s apparently continuing inability or unwillingness to detect and prevent such wire transfer fraud, it would seem appropriate to” issue refunds to consumers. This correspondence has routinely described the consumer complaints the Minnesota Attorney General has received from fraud victims. In response, Western Union typically has refused to issue any refunds to the victims after the funds were paid out.
55. In or around October 2011, multiple state Attorneys General issued subpoenas to Western Union in connection with investigations of fraudulent telemarketers’ use of Western Union’s money transfer system. The subpoena issued by Vermont stated that it had “reason to believe that Western Union has provided substantial assistance to fraudulent telemarketers in the form of access to its money transfer system, despite knowing, or consciously avoiding knowing, of the fraud, in violation of the Vermont Consumer Fraud Act, 9 V.S.A. § 2453(a).”
56. On or about November 29, 2011, Western Union personnel met with the Korea Financial Supervisory Services to discuss the regulator’s concerns about consumer fraud involving Western Union’s money transfer system and its requirement that Western Union put together a plan to alleviate consumer fraud.
26

57. In February 2012, in response to a survey sent to law enforcement by Western Union, a Special Agent for the U.S. Secret Service warned Western Union of the following: that its services were “widely used by Nigerian scammers and other criminal elements overseas”; “a person in America can easily be robbed by someone in a foreign country and there is almost no possibility to recover that fraud loss”; its “services are widely used for online scams in the US”; and that Western Union “is a complete and almost total safe haven for the criminal element to freely launder illegal proceeds without detection.”
58. According to Western Union’s records, by the first quarter of 2012, the Serious Organised Crime Agency (“SOCA”) in the United Kingdom, presently known as the National Crime Agency, disclosed to Western Union that in relation to an “investigation conducted on money remitters in Western England,” SOCA had “surveyed Western Union customers and found that 81% of the transactions paid in Nigeria or Ghana were allegedly fraud related.”
59. In or around late May 2012, the Toronto Police Service sent Western Union a letter alerting the company that it “may have aided individuals with the criminal offense of laundering [the] proceeds of crime” from consumer frauds, and cautioning that it needed to take “the appropriate steps . . . to ensure that Western Union is not a party to this serious criminal offense, whether intentionally or willfully blind to its role.” In numerous additional instances, the Toronto Police Service emailed Western Union information about other fraud-induced money transfers and the names of individuals who had collected the transfers, telling the company to consider the emails a formal caution that allowing the individuals to collect future transfers could be considered “aiding the criminal offence of Laundering the Proceeds of Crime.”
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60. In or around October 2012, Western Union received a letter from SEPBLAC, Spain’s Financial Intelligence Unit and Anti-Money Laundering/Counter Financing of Terrorism Supervisory Authority, informing Western Union that an inspection had revealed “extremely serious facts,” which required WUPSIL to “adopt urgent measures in order to correct them immediately,” and that the operations of a “significant part of” Western Union’s agents in two networks owned by Western Union “are related to fraud and money laundering.”
DESPITE AWARENESS OF THE FRAUD,
WESTERN UNION HAS CONTINUED TO PROVIDE
 SUBSTANTIAL ASSISTANCE OR SUPPORT TO CONSUMER FRAUDS
61. Since at least January 2004, and continuing thereafter, Western Union has been aware that perpetrators of frauds have used its money transfer system to obtain funds from their victims, and for many years has knowingly, or with conscious avoidance of knowledge, provided substantial assistance or support to fraudulent telemarketers and con artists.
62. In some cases, Western Union’s agents, subagents, or FLAs have been complicit, or sometimes even participated, in the frauds. In other cases, Western Union’s agents, subagents, or FLAs have offered substantial assistance or support to the frauds by paying out funds in violation of Western Union’s own policies and procedures.
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63. Western Union has provided an essential service to these fraudulent telemarketers, sellers, and con artists by permitting them access to Western Union’s money transfer system. Exploiting this access to its full potential, telemarketing, mass marketing, and imposter scams have received, and continue to receive, millions of dollars from victimized consumers, while generating substantial revenue for Western Union from transaction fees and foreign currency exchange fees.
64. For many years, Western Union has failed to: (a) promptly investigate, suspend, and terminate potentially complicit agents and subagents, or agents and subagents that have failed to comply with Western Union’s anti-fraud and/or AML policies and procedures; (b) conduct adequate due diligence on prospective and existing agents and subagents; (c) effectively train, monitor, and review its agents, subagents, and FLAs; (d) adequately collect, record, and report consumer fraud involving its money transfer system; and (e) take other reasonable steps to prevent fraudulent telemarketers, sellers, and con artists from using Western Union’s money transfer system to perpetrate their frauds.
65. In numerous instances, Western Union has failed to take timely, appropriate, and effective measures to mitigate fraud in connection with its processing of money transfers sent by consumers despite knowledge, or conscious avoidance of knowledge, that: fraudulent telemarketers, sellers, and con artists have extensively accessed and exploited Western Union’s money transfer system; Western Union’s money transfer system has played an integral role in the scams; and a number of its agents have been complicit, or involved, in the frauds, or have failed to adhere to Western Union’s policies and procedures to detect and prevent fraud.
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Western Union Has Failed to Promptly Investigate, Suspend,
and Terminate Agents with High Levels of Consumer Fraud
66. Despite Western Union’s awareness of consumer fraud involving its system, Western Union has in many instances failed to promptly investigate, suspend, and terminate agents and subagents that have exhibited high levels of consumer fraud, some of which were likely complicit in frauds, or which have ignored such frauds by failing to comply with Western Union’s policies and procedures, thereby causing significant and ongoing harm to consumers.
67. Even though Western Union’s internal reports have identified agent locations where 5% to over 75% of the transactions (in volume or amount) constituted confirmed and potential fraud, and/or suspicious activities, such as surfing, flipping, and data integrity issues, Western Union has allowed many of these agents and subagents to continue operating, with only temporary suspensions, if any. In many cases, Western Union has simply “escalated,” or referred, such agents for further review or investigation, but the investigations often have been delayed for months, and in many instances, the escalations have failed to resolve the problems. Western Union frequently has relied on its master agents to conduct their own investigations of their subagents and locations, but has failed to ensure that the master agents’ investigations are adequate. Western Union also has sometimes repeatedly escalated the same agents for review or investigation without suspending or eventually terminating those agents even while the agent has continued to be the subject of fraud complaints. Western Union has sometimes even disregarded recommendations from its employees to suspend or terminate certain agents or subagents due to serious consumer fraud problems.
68. Western Union has permitted agents and subagents that have processed hundreds of thousands of dollars, or even millions of dollars, in confirmed and potential fraud to continue operating for months or even years despite highly suspicious activities and indications of complicity. For example, one agent location in Spain, Locutorio Okuns, operated from 2005 until at least 2012. During that time, the agent engaged in highly suspicious activity, including making payouts related to 126 complaints totaling at least $341,771 in reported fraud, and receiving over $1 million from the United States in money transfers that had characteristics indicative of fraud, such as unusually high-dollar amounts and serious data integrity issues. The agent also displayed highly suspicious spikes in volume that corresponded with spikes in fraud complaints. Although it was reviewed by Western Union at least five times, the agent was permitted to continue to operate for years, and its owner was ultimately one of the individuals arrested by the Spanish police in 2014, as described above. Another agent location in the UK, S S Newsagent, made payouts relating to at least 347 complaints totaling $924,695 in reported fraud between 2005 and 2012. That agent received over $2.7 million in money transfers from the United States, including over $1 million in 2007 alone, and the majority of those transactions had characteristics indicative of fraud, including unusually high-dollar amounts and data integrity issues. Even though the agent was reviewed multiple times, it was not terminated despite its history as a high-fraud agent.
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69. Even in instances where Western Union has suspended high-fraud agents after a few months rather than years, the agents often have generated significant consumer losses that Western Union could have prevented by acting more quickly. These agents frequently are immediately identifiable based on spikes in fraud complaints during the first problematic month. For example, during a 30-day period beginning in December 2011, Western Union received 54 complaints, totaling $246,746, concerning money transfers paid out at one agent location in Bolivia. This location had a Nigerian owner and had already been reviewed by Western Union in the past due to suspicious activity involving millions of dollars in payouts from China. Western Union failed to promptly suspend the agent and during a roughly four-month period from December 2011 to April 2012, it was responsible for paying out at least 191 transfers associated with fraud complaints totaling $825,319. The average reported fraud transfer was $4,321, and all of the complaints involved U.S. senders who were the victims of emergency scams. Although this agent was suspended in July 2012, it had paid out over $2.5 million in suspected fraud in just over four months before Western Union took action.
70. In instances where Western Union suspended agents or subagents due to consumer fraud, the suspensions often were only temporary, even in high-risk fraud countries, such as Nigeria, Ghana, and Jamaica. For example, in or around 2012, Western Union identified and suspended 13 agent locations in Montego Bay, Jamaica, that had been processing millions of dollars of fraudulent and potentially fraudulent money transfers related to lottery/sweepstakes fraud. The suspensions only lasted a short time, however, before the agents were reactivated. After being reactivated, ten of those agents have continued to pay out tens to hundreds of reported fraud complaints each year since 2013, and in that span have been the subject of 2,055 complaints totaling $737,319.
71. In some instances, reactivated agents or subagents were assigned new agent ID numbers or became subagents in different agent networks. For example, Western Union’s top fraud payout agent in Mexico made payouts relating to at least 410 complaints totaling over $1.4 million in reported fraud between March 2011 and July 2012. Western Union finally suspended the location in July 2012, but one month later, the same agent began to operate again under a new agent ID, and it continued generating fraud complaints. In addition, Western Union even reactivated some agents that had been terminated due to consumer fraud.
72. Western Union’s general practice has been to attempt to rehabilitate agents and subagents exhibiting high levels of consumer fraud by requiring its agents to implement “action plans” to address the problems, but this practice has been inadequate and ineffective. In many instances, Western Union or its agents have failed to create action plans that effectively address consumer fraud. The action plans also often do not adequately and effectively address problems with agents, subagents, and FLAs who are potentially complicit and/or have engaged in suspicious activities. For example, the action plans frequently call for the training of agent locations and FLAs even though Western Union has acknowledged that “identifying and eliminating complicit actors from the system is more effective at combating consumer fraud than training.” In other instances, Western Union or its agents have failed to create any action plan or for months have delayed creating action plans. Even after action plans have been created, in some cases, the agents and subagents have resisted implementing them, failed to do so satisfactorily, or even ignored them.
73. For many years, suspensions and/or terminations were typically limited to agents in the United States and Canada. For example, between January 1, 2006 and November 1, 2010, Western Union failed to terminate many problematic agent locations worldwide that had paid out $100,000 or more in reported fraud, including in the UK (124 agents), Nigeria (56 agents), Ghana (18 agents), Jamaica and Spain (16 agents each). In fact, two UK agents each were responsible for paying out over $2 million in reported fraud between January 1, 2006 and November 1, 2010. Moreover, as of October 2015, Western Union had rarely, if ever, terminated agent locations for fraud in certain high-risk countries, including, but not limited to, Mexico, Nigeria, Ghana, the Dominican Republic, China, and Haiti, despite high levels of fraud and indications of complicity at agent locations.
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Western Union Has Failed to Conduct Adequate Due Diligence on Agents
74. For many years, Western Union has failed to conduct adequate due diligence on its prospective agents and subagents, as well as those agents and subagents whose contracts come up for renewal. Western Union either has not conducted background checks on many of its agents and subagents, or to the extent background checks have been conducted, they often have been inadequate. It also has, in many instances, failed to maintain records demonstrating that it has conducted such background checks. In addition, despite awareness of problems with FLAs, Western Union does not conduct any due diligence on, and frequently knows little about, its agents’ and subagents’ FLAs.
75. For many years, Western Union has failed to conduct routine background checks of each of its prospective and existing agents and subagents located around the world. Even though Western Union’s agreements provide it with the authority to conduct background checks on its agents or subagents at any time, Western Union’s practice in many countries has been to rely on its agents to conduct due diligence on their own subagents and FLAs, rather than conduct its own background checks, including of subagents operating in high-risk fraud countries. In some instances, Western Union has approved agents or allowed existing agents to continue operating without even knowing the identities of all individuals with ownership, or beneficial ownership, interests in the agent. In other instances, Western Union has not known, and has not required its agents to disclose or update, the identities of all of its subagents or FLAs.
76. In numerous instances, background checks conducted by Western Union have not been thorough, consisting only of collecting limited information and conducting some type of credit or financial check, rather than criminal background checks of its agents and subagents. In many cases, Western Union has relied upon inaccurate, incomplete, or false information provided by agents and has failed to verify the accuracy of information provided by applicants. Western Union also has installed agents or subagents with criminal histories, including felonies and misdemeanors involving dishonesty, as well as histories of investigations and lawsuits involving allegations of fraud. For many years, the department at Western Union primarily responsible for conducting background checks has not been provided with sufficient information to conduct thorough background checks of every prospective and existing agent and subagent, such as information from law enforcement, information about investigations of agent locations, and access to consumer complaints.
77. In some cases, Western Union has installed agents or subagents that it had previously terminated, that were previously suspended or terminated by MoneyGram for fraud, or that were concurrently operating as MoneyGram agents (in violation of Western Union’s agent agreements). One Western Union agent in College Park, Georgia, for example, was suspended in 2006 due to consumer fraud, but began operating again in 2007 from the same address, but with a different business name and agent ID number, until it was suspended for fraud again. The agent then became a MoneyGram agent and continued to generate fraud-induced money transfers for approximately one year before being terminated by MoneyGram. After that, the agent returned to Western Union in 2009, and began operating for a third time with the same name and at the same location. A review in 2012 revealed that approximately 80% of its payouts were attributable to fraud, and it was later terminated. In 2015, the agent began operating again as a Western Union agent from the same address, using a similar name, but with a new agent ID number, and once again, it began generating fraud complaints.
78. Western Union’s background checks also have failed to prevent previously terminated agents or subagents from using straw men to become agents or owners again to gain access to Western Union’s money transfer system. In addition, Western Union has installed as agents or subagents individuals who had previously been interdicted ( i.e. , blocked from using Western Union’s money transfer system) due to suspicious activities, or were former FLAs at agent locations that were suspended or terminated for fraud. For example, after suspending an agent location in the Philippines due to high levels of fraud, Western Union discovered that the owner of the location had been a high-volume sender to Nigeria who Western Union had interdicted just two months before the location began operating. During the three-month period before the agent location was suspended, it generated at least 173 fraud complaints totaling $316,400, and paid out over $1.2 million in suspected fraud.
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Western Union Has Failed to Effectively Train, Monitor, and Review Agents
79. For many years, Western Union has failed to effectively train, monitor, and review its agents, subagents, and FLAs to detect and prevent consumer fraud and to prevent potential complicity at agent locations.
80. For many years, Western Union has provided only limited training to agents and subagents with respect to detecting and preventing consumer fraud, and its training overall has been inadequate and ineffective. In many instances, FLAs responsible for processing fraud-induced money transfers at Western Union’s agent locations have not been knowledgeable about Western Union’s anti-fraud and/or AML policies and procedures, including with respect to detecting and preventing fraud, properly recording customers’ biographical information and IDs, and addressing suspicious activities. Western Union also has not had an adequate and effective system in place to ensure that FLAs are knowledgeable in these areas. As a result, in many instances, Western Union’s high-fraud agent locations have violated the company’s policies and procedures by failing to collect proper IDs or biographical information from recipients of money transfers, accepting improper forms of IDs, or recording obviously incorrect or fictitious ID information into Western Union’s system.
81. Western Union’s complaint database shows that its agent locations that have paid out fraud-induced money transfers frequently have permitted fraudsters to pick up money transfers using fake IDs, or without recording IDs or other required information. For example, in many instances, these agent locations have recorded the same IDs for multiple recipients, or different IDs for the same recipients. In addition, for tens of thousands of fraud-induced money transfers, Western Union’s records frequently show no birthdates, or facially invalid birthdates, such as “1/1/1900,” for the recipients. Western Union’s records also show that its agent locations have paid out at least 32,764 money transfers of $1,000 or more that consumers reported as fraudulent from 2004 through August 2015 without recording any ID information for the recipients.
82. In addition, despite Western Union’s 2005 Agreement with the States, which required Western Union to “commence a program of person-to-person or telephone training at agent locations known to have a materially elevated level of outgoing or incoming fraud-induced transfers sent from the United States to anywhere except Mexico,” in many cases, and especially with respect to foreign agents and subagents, Western Union failed to comply with this requirement. For example, with respect to many of its foreign agent locations that have exhibited high fraud levels, Western Union’s practice was only to train the master agents and not to conduct person-to-person or telephone training at the agent locations that exhibited high levels of fraud.
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83. For many years, Western Union has failed to adequately monitor its agents’ activity for fraud. In many instances, Western Union employees responsible for monitoring the activities of agent locations have not been provided with sufficient information or resources to adequately monitor Western Union’s agents, subagents, and FLAs. For example, in some instances, Western Union has assigned more than one agent ID number to a single agent or subagent without providing Western Union employees with the means to easily locate all of the agent’s or subagent’s ID numbers in Western Union’s system. Western Union has similarly failed to provide its employees with the means to easily identify agents or subagents with common ownership. In addition, in some cases, Western Union’s employees have been unable to identify problematic FLAs because FLAs have not used unique IDs when processing money transfers. Western Union’s employees also sometimes have not had complete and historical information about particular agents and subagents, including information about all fraud complaints, prior reviews, investigations, and internal reports related to fraud, as well as transactional activity. Therefore, Western Union employees responsible for monitoring agent activity may not have been aware of all relevant information.
84. Western Union has failed to conduct adequate and routine onsite compliance reviews of its agent locations worldwide. Western Union often has relied on its master agents to conduct reviews, but has failed to ensure that those master agents are conducting adequate and effective oversight of their subagents and locations. In some cases, those agents have not even allowed Western Union employees to visit locations without them being present. In other cases, Western Union’s employees have not been able to conduct independent onsite reviews of certain locations because they were in areas considered too dangerous to visit. Western Union also has failed to conduct adequate and routine onsite reviews of many of its independent agents.
85. For many years, consumer fraud was not even routinely addressed in compliance reviews of agents. Even after it was added to the list of topics for these reviews, consumer fraud for many years was addressed only in a cursory manner. In addition, in many instances, Western Union employees who conduct compliance reviews have not been provided with information about fraud complaints received involving the agents being reviewed, so the employees could not adequately address issues related to the complaints in their reviews.
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Western Union Has Failed to Adequately Collect, Record,
and Report Consumer Fraud Involving Its Money Transfer System
86. Since at least January 2004, Western Union has maintained a complaint database, which contains information relating to complaints or reports the company receives about fraud-induced money transfers.
87. The information contained in Western Union’s complaint database significantly understates the number of actual fraud-induced money transfers and losses reported to the company. Despite receiving information from consumers, their family members, or law enforcement representatives about fraud-induced money transfers, Western Union often has failed to record information about all of those money transfers in its complaint database. In other instances, Western Union has failed to record in its database any of the victims’ fraud-induced money transfers.
88. Up until in or around December 2011, Western Union did not provide any toll-free number that consumers in countries other than the United States and Canada could use to report fraud and to try to stop the payout of a fraud-induced money transfer. For example, Western Union did not provide fraud hotlines for consumers in Germany, Mexico, Spain, and the UK until December 2011, for consumers in Australia, Japan, and Malaysia until February 2012, and for consumers in Austria, Belgium, Luxembourg, and Switzerland until August 2012.
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89. Western Union uses the information in its complaint database to administer its anti-fraud program, so it is important that the database be accurate and complete. For example, Western Union uses this information to: (a) monitor and identify agents, subagents, and FLAs that may be complicit in frauds; (b) create automated rules regarding particular corridors ( e.g. , limiting the number and amount of money transfers to receivers); and (c) interdict individuals who are the victims or the perpetrators of frauds. Therefore, Western Union’s failure to keep accurate and complete records of fraud-induced money transfers has impeded its efforts to detect and prevent consumer fraud.
90. Although Western Union employees have brought the underreporting of fraud-induced money transfers in the company’s complaint database to the attention of those responsible for maintaining the database, Western Union has failed to take adequate corrective action, if any, to address the problem.
91. Although the Financial Crime Enforcement Network (“FinCEN”), the primary administrator of the BSA, requires money services businesses like Western Union to file Suspicious Activity Reports (“SARs”) relating to fraud, Western Union has, in many cases, failed to file SARS on, and identify as the subject of SARS, particular agent locations in foreign countries that have processed high levels of fraud-induced money transfers sent by U.S. consumers and exhibited other suspicious activities.
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Western Union Has Failed to Take Other Reasonable Measures to
Mitigate Fraud in Connection With Its Processing of Money Transfers
92. For many years, Western Union has failed to take other reasonable measures to mitigate fraud in connection with its processing of money transfers, ignoring in some instances useful suggestions and recommendations from its employees and representatives of law enforcement agencies. These types of measures include, but are not limited to, the following: bolstering its ID requirements for sending or receiving money transfers, such as by imposing more robust ID requirements; requiring the collection of additional biographical information; implementing more controls for noncompliant transactions or potentially fraud-induced money transfers, including, but not limited to, transactions with data integrity issues and to high-risk countries; improving the company’s handling of, and ability to receive, complaints about fraud worldwide; and improving its interdiction system to be more effective in blocking money transfers associated with consumer fraud, including, but not limited to, by permanently blocking payouts to the recipients of fraud-induced money transfers.
93. Western Union has made it difficult for employees to take meaningful action to detect and prevent consumer fraud, including by failing to provide employees with sufficient information or resources, including complete records of consumer fraud complaints, as well as information about law enforcement contacts, investigations, and actions. For many years, departments within Western Union responsible for handling consumer fraud issues did not routinely share consumer fraud information with other groups or departments.
94. Although Western Union relies on its agents to comply with Western Union’s anti-fraud and AML programs, and to oversee the activity of their own subagents, locations, and FLAs, it often fails to provide its agents with the information necessary to conduct effective fraud reviews and to detect and prevent consumer fraud, including the potential complicity of particular agent locations and FLAs. For example, Western Union typically does not share with the agents themselves complaints it has received about fraud-induced money transfers processed by the agent locations or FLAs. Therefore, despite being tasked with overseeing the conduct of their own subagents, locations, and FLAs, Western Union’s agents in many cases are unaware of the nature, details, history, and volume of complaints involving the agent locations and FLAs.
95. Western Union and its agents also have failed to provide adequate and effective warnings to consumers about the fraud occurring through its money transfer system. Although Western Union provides some warnings on the first page of send forms located at some of its agent locations, in many cases, these warnings are not clear and conspicuous to many consumers. In addition, Western Union’s agent locations have failed to provide routine verbal warnings to consumers before they initiated money transfers, even in instances where consumers’ money transfers have displayed obvious signs of fraud, such as high-dollar money transfers by elderly consumers to countries known for fraud. Therefore, consumers often have been unaware of the risks associated with sending money through Western Union’s money transfer system.
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WESTERN UNION HAS FOR MANY YEARS FAILED 
 TO MAKE EFFECTIVE CHANGES TO PREVENT FRAUD
96. Even after January 2011, when Western Union claimed in a written report to have implemented “a comprehensive anti-fraud program” to protect consumers, Western Union still failed to adopt an adequate and effective anti-fraud program. Although as a result of the FTC’s investigation, Western Union has improved aspects of its anti-fraud program since 2012, the company still failed in certain cases to promptly terminate agents around the world that appeared to be complicit in paying out the fraud-induced money transfers, including numerous agents in Spain that operated between January 2011 and December 2012, and were arrested by the Spanish police in 2014 for their role in laundering large sums of money received from the fraud victims. As of October 2015, Western Union had rarely, if ever, terminated agent locations for fraud in certain high-risk countries, including, but not limited to, Mexico, Nigeria, Ghana, the Dominican Republic, China, and Haiti, despite high levels of fraud and indications of complicity at agent locations.
97. In numerous instances, Western Union has permitted agent locations to continue operating for months or years despite high levels of fraud and other suspicious activities. For example, from July 2009 to as recently as August 2015, an agent location in Malaysia made payouts relating to at least 252 fraud complaints totaling $389,061. Although the agent appeared on fraud reports and was reviewed for fraud many times between 2010 and 2014, the agent has not been terminated. In fact, in 2014, company executives approved the reactivation of that agent despite being informed that confirmed and potential fraud, as well as suspicious activity, amounted to approximately 54% of the agent’s pay volume. An agent location in Greece made payouts relating to at least 106 fraud complaints totaling $193,696 from July 2013 to October 2014. From 2012 to 2014, the agent paid out $5.4 million in money transfers, of which approximately $3.7 million were for $1,000 or more. That agent operated for over two years despite appearing on internal fraud or agent complicity index reports multiple times and being reviewed for fraud at least three times with findings of suspicious activities. From September 2013 to August 2015, an agent in Thailand paid out money transfers associated with at least 1,197 complaints totaling $425,409, of which 336 complaints totaling $117,290 were paid out in April 2015 alone. That agent was allowed to continue operating, despite a review in 2013 finding that 63% of the agent’s transactions in two months amounted to confirmed fraud and questionable activity, and a review in 2015 associated with three of its agent ID numbers finding that 25% of its activity in one month, amounting to over $1.2 million, was connected to fraud.
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VIOLATIONS OF THE FTC ACT
98. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair” or “deceptive” acts and practices in or affecting commerce, including acts or practices involving foreign commerce that “cause or are likely to cause reasonably foreseeable injury within the United States” or “involve material conduct occurring within the United States.”
99. Acts or practices are unfair under Section 5 of the FTC Act if they cause substantial injury to consumers that consumers cannot reasonably avoid themselves and that is not outweighed by countervailing benefits to consumers or competition. 15 U.S.C. § 45(n).
COUNT I
Unfair Acts or Practices
100. In numerous instances, in operating its worldwide money transfer system, Defendant has failed to take timely, appropriate, and effective action to detect and prevent fraud-induced money transfers through Defendant’s system, as described above.
101. Defendant’s actions cause or are likely to cause substantial injury to consumers that consumers cannot reasonably avoid themselves and that is not outweighed by countervailing benefits to consumers or competition.
102. Therefore, Defendant’s practices as described in Paragraph 100 above constitute unfair acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. §§ 45(a) and 45(n).
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THE TSR
103. Congress directed the FTC to prescribe rules prohibiting abusive and deceptive telemarketing acts or practices pursuant to the Telemarketing Act, 15 U.S.C. §§ 6101-6108. The FTC adopted the original TSR in 1995, extensively amended it in 2003, and amended certain provisions thereafter. 16 C.F.R. Part 310.
104. Defendant, its agents, or subagents have processed money transfers and provided related services on behalf of persons who are “sellers” or “telemarketers” engaged in “telemarketing,” as those terms are defined in Sections 310.2 (dd), (ff), and (gg) of the TSR.
105. The TSR prohibits telemarketers and sellers from making a false or misleading statement to induce any person to pay for goods or services. 16 C.F.R. § 310.3(a)(4).
106. The TSR also prohibits telemarketers and sellers from, among other things, requesting or receiving payment of any fee or consideration in advance of obtaining a loan or other extension of credit when the seller or telemarketer has guaranteed or represented a high likelihood of success in obtaining or arranging a loan or other extension of credit. 16 C.F.R. § 310.4(a)(4).
107. It is a violation of the TSR for any person to provide “substantial assistance or support” to any seller or telemarketer when that person “knows or consciously avoids knowing” that the seller or telemarketer is engaged in any act or practice that violates Sections 310.3(a), (c), or (d), or 310.4 of the TSR. 16 C.F.R. § 310.3(b).
108. On December 14, 2015, the FTC published a notice that it had adopted amendments to the TSR, including a prohibition against using “cash-to-cash” money transfers for outbound and inbound telemarketing transactions. 80 Fed. Reg. 77520 (Dec. 14, 2015). This prohibition became effective on June 13, 2016.
109. Pursuant to Section 3(c) of the Telemarketing Act, 15 U.S.C. § 6102(c), and Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of the TSR constitutes an unfair or deceptive act or practice in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
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VIOLATIONS OF THE TSR
COUNT II
Assisting and Facilitating TSR Violations
110. In numerous instances, in the course of processing money transfers, Defendant, its agents, or subagents have provided substantial assistance or support to sellers or telemarketers who Defendant or its agents or subagents knew or consciously avoided knowing:
a. Induced consumers to pay for goods and services through the use of false or misleading statements, including, without limitation, the statement that the consumer has won and will receive a large cash award if the consumer pays a requested fee or fees, in violation of Section 310.3(a)(4) of the TSR, 16 C.F.R. § 310.3(a)(4); and
b. Requested or received payment of a fee or consideration in advance of consumers obtaining a loan when the seller or telemarketer has guaranteed or represented a high likelihood of success in obtaining or arranging a loan for a person in violation of Section 310.4(a)(4) of the TSR.
111. Defendant’s acts or practices, as described in Paragraph 110 above, constitute deceptive telemarketing acts or practices that violate the TSR, 16 C.F.R. §310.3(b).
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CONSUMER INJURY
112. Consumers have suffered and will continue to suffer substantial injury as a result of Defendant’s violations of the FTC Act and the TSR. In addition, Defendant has been unjustly enriched as a result of its unlawful acts or practices. Absent injunctive relief by this Court, Defendant is likely to continue to injure consumers, reap unjust enrichment, and harm the public interest.
THIS COURT’S POWER TO GRANT RELIEF
113. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and such other relief as the Court may deem appropriate to halt and redress violations of any provision of law enforced by the FTC. The Court, in the exercise of its equitable jurisdiction, may award ancillary relief, including rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies, to prevent and remedy any violation of any provision of law enforced by the FTC.
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PRAYER FOR RELIEF
114. WHEREFORE, Plaintiff, the Federal Trade Commission, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), Section 6(b) of the Telemarketing Act, 15 U.S.C. § 6105(b), and the Court's own equitable powers, requests that the Court:
1. Enter a permanent injunction to prevent future violations of the FTC Act and the TSR by Defendant;
2. Award such relief as the Court finds necessary to redress injury to consumers resulting from Defendant's violations of the FTC Act and the TSR, including, but not limited to, rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies; and
3. Award Plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.

Dated: January 19, 2017	Respectfully Submitted,	
 	
	DAVID C. SHONKA	
	Acting General Counsel	
	 		
	/s/ Karen D. Dodge	 	
	KAREN D. DODGE (IL 6204125)	
	JOANNIE T. WEI (IL 6276144)	
	ELIZABETH C. SCOTT (IL 6278075)	
	Attorneys for Plaintiff	
	Federal Trade Commission	
	55 West Monroe Street, Suite 1825	
	Chicago, Illinois 60603	
	(312) 960-5634 (telephone)	
	(312) 960-5600 (facsimile)	
	kdodge@ftc.gov (Dodge)	
	jwei@ftc.gov (Wei)	
	escott@ftc.gov (Scott)	

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UNITED STATES OF AMERICA
DEPARTMENT OF THE TREASURY
 FINANCIAL CRIMES ENFORCEMENT NETWORK

IN THE MATTER OF:	)		
	)	 	
	)	Number 2017-01	
Western Union Financial Services, Inc.	)		
Englewood, Colorado	)		

CONSENT TO THE ASSESSMENT OF CIVIL MONEY PENALTY
I. INTRODUCTION
The Financial Crimes Enforcement Network (FinCEN) has determined that grounds exist to assess a civil money penalty against Western Union Financial Services, Inc. (WUFSI or the Company) pursuant to the Bank Secrecy Act (BSA) and regulations issued pursuant to that Act. 1
WUFSI admits to the facts set forth below and that its conduct violated the BSA. In order to resolve this matter, WUFSI consents to the assessment of a civil money penalty and enters this CONSENT TO THE ASSESSMENT OF CIVIL MONEY PENALTY (CONSENT) with FinCEN.
FinCEN has authority to investigate financial institutions, including money services businesses (MSBs), for compliance with and violation of the BSA pursuant to 31 C.F.R. § 1010.810, which grants FinCEN “[o]verall authority for enforcement and compliance, including coordination and direction of procedures and activities of all other agencies exercising delegated authority under this chapter. . . .”
____________________

1 The Bank Secrecy Act is codified at 12 U.S.C. §§ 1829b, 1951–1959 and 31 U.S.C. §§ 5311–5314, 5316–5332. Regulations implementing the Bank Secrecy Act appear at 31 C.F.R. Chapter X.

WUFSI is a wholly owned subsidiary of The Western Union Company (Western Union). WUFSI offers consumer to consumer remittance services through the branded payment services of Western Union, Vigo, and Orlandi Valuta, which comprise a network of approximately 500,000 agent locations in approximately 200 countries and territories worldwide. WUFSI operated as a “financial institution” and a “money services business” within the meaning of the BSA and its implementing regulations during the time relevant to this action. 2
Resolution with the United States Department of Justice
On the same date as this CONSENT, Western Union entered into a Deferred Prosecution Agreement (DPA) with the United States Department of Justice, Criminal Division, Money Laundering and Asset Recovery Section, and the U.S. Attorney’s Offices for the Middle District of Pennsylvania, Central District of California, Eastern District of Pennsylvania, and Southern District of Florida. 3 The DPA stems from allegations that during the period of 2004 through 2012, Western Union: failed to implement and maintain an effective anti-money laundering (AML) program in violation of the BSA and its regulations; and aided and abetted wire fraud. 4 As part of the DPA, the Department of Justice acknowledged that since at least September 2012, Western Union implemented compliance enhancements to continuously improve its anti-fraud and anti-money laundering programs. Further, Western Union agreed to continue to enhance its AML and anti-fraud programs, and to pay to the United States the sum of $586 million for restitution to the victims of the fraud.
____________________

2 31 U.S.C. § 5312(a)(2); 31 C.F.R. § 1010.100(t)(3).
3 United States v. The Western Union Company, et al. , CR-17-__ (M.D. Pa. 2017). This CONSENT is expressly conditioned on the U.S. District Court for the Middle District of Pennsylvania’s acceptance of the DPA. If the DPA does not become effective, this CONSENT shall be deemed null and void.
4 31 U.S.C. §§ 5318(h), 5322; 18 U.S.C. §§ 1342, 1343.
2

Resolution with the Federal Trade Commission
On the same date as this CONSENT, the Federal Trade Commission (FTC) entered into a Stipulated Order for Permanent Injunction and Final Judgement (Order) with Western Union. The Order is in resolution of the FTC’s allegations that Western Union failed to take timely, appropriate, and effective measures to mitigate fraud in the processing of money transfers sent by consumers. Western Union has neither admitted nor denied the FTC’s allegations. As part of the Order, Western Union has agreed to the appointment of an independent compliance auditor to ensure, among other things, that thorough due diligence is conducted on all prospective and existing Western Union agents, and that necessary steps are taken to monitor and investigate agent activity. Western Union has also agreed to a monetary judgment in the amount of $586 million which will be satisfied by complying with the payment requirements of its DPA with the United States Department of Justice, as referenced above in this CONSENT.
II. DETERMINATIONS
Prior to 2012, WUFSI willfully violated the BSA’s program, recordkeeping and reporting requirements. 5 As described below, WUFSI failed to adequately implement and maintain an effective, risk-based AML program by failing to implement or execute effective policies, procedures, and internal controls reasonably designed to assure ongoing compliance (in particular, failures to suspend or terminate certain agent locations in a timely manner); and failing to conduct adequate due diligence on certain foreign agents and subagents in Latin America. WUFSI also failed to file timely suspicious activity reports (SARs). 6
____________________

5 In civil enforcement of the BSA under 31 U.S.C. § 5321(a)(1), to establish that a financial institution or individual acted willfully, the government need only show that the financial institution or individual acted with either reckless disregard or willful blindness. The government need not show that the entity or individual had knowledge that the conduct violated the BSA, or that the entity or individual otherwise acted with an improper motive or bad purpose. WUFSI admits to “willfulness” here only as the term is used in civil enforcement of the BSA under 31 U.S.C. § 5321(a)(1).
6 Pursuant to WUFSI’s agreement with the states of Arizona, California, New Mexico and Texas, a court appointed monitor previously identified recommended program enhancements such as determinations made in this Section. At all times since the commencement of such agreement, WUFSI has been working to remediate the recommended program enhancements made pursuant to the agreement with the states of Arizona, California, New Mexico and Texas, many of which are reiterated in this CONSENT. WUFSI’s court appointed monitor has certified that such remediation has been successfully completed.
3

A. Violation of the Requirement to Implement an Effective Anti-Money Laundering Program
The BSA and its implementing regulations require MSBs to develop, implement, and maintain an effective written AML program that is reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of terrorist activities. 7 At a minimum, an MSB is required to implement a written AML program that: (a) provides for a system of internal controls reasonably designed to assure ongoing compliance; (b) designates an individual or individuals responsible for assuring day to day compliance with the program and BSA requirements; (c) provides training for appropriate personnel, including training in the detection of suspicious transactions; and (d) provides for independent review to monitor and maintain an adequate program. 8
Prior to 2012, in certain instances, WUFSI failed to implement or execute effective internal controls sufficient to reasonably assure that the institution did not facilitate money laundering transactions including illicit transactions related to fraud. Specifically, WUFSI failed to maintain adequate policies, procedures, and internal controls for conducting due diligence on its agents, to terminate or suspend agent locations involved in potential money laundering and fraud transactions, and to implement or execute internal controls reasonably designed to prevent fraud. As a result of WUFSI’s AML failures, certain agent locations and outlets that WUFSI suspected were involved in fraud and money laundering were able to continue to use WUFSI’s money transfer system to facilitate their activity.
MSBs that do business through agents or counterparties located outside of the United States must implement and maintain as part of their AML program risk-based policies, procedures, and controls reasonably designed to identify and minimize money laundering and other illicit financing risks associated with such business. FinCEN guidance has stated that “[t]o the extent [MSBs] utilize relationships with foreign agents or counterparties to facilitate the movement of funds into or out of the United States, they must take reasonable steps to guard against the flow of illicit funds, or the flow of funds from legitimate sources to persons seeking to use those funds for illicit purposes, through such relationships.” 9
____________________

7 31 U.S.C. § 5318(h); 31 C.F.R. § 1022.210(a).
8 31 C.F.R. §§ 1022.210(c), (d).
9 FinCEN Guidance (Interpretive Release No. 2004-1), Anti-Money Laundering Program Requirements for Money Services Businesses with Respect to Foreign Agents or Foreign Counterparties , 60 Fed. Reg. 74,439 (Dec. 14, 2004).
4

FinCEN has made clear that the AML programs for MSBs engaged in such transactions should, among other things, establish: (1) procedures for conducting reasonable, risk-based due diligence on potential and existing foreign agents and counterparties to help ensure that such foreign agents and counterparties are not themselves complicit in illegal activity involving the MSB’s products and services, including reasonable procedures to evaluate, on an ongoing basis, the operations of those foreign agents and counterparties; (2) procedures for risk-based monitoring and review of transactions from, to, or through the United States that are conducted through foreign agents and counterparties sufficient to enable the MSBs to identify and, where appropriate, report as suspicious such occurrences as instances of unusual wire activity; and (3) procedures for responding to foreign agents or counterparties that present unreasonable risks of money laundering or the financing of terrorism, including procedures that provide for the implementation of corrective action on the part of the foreign agent or counterparty or for the termination of the relationship with any foreign agent or counterparty that an MSB determines poses an unacceptable risk of money laundering. 10
1. Failure to Conduct Adequate Due Diligence on Foreign Agents/Outlets
For certain potential and existing agent locations within Latin America, WUFSI failed to establish adequate procedures for conducting reasonable, risk-based due diligence to help ensure that such foreign agent locations and counterparties are not themselves complicit in illegal activity involving WUFSI’s products and services, including reasonable procedures to evaluate, on an ongoing basis, the operations of those foreign agent locations and counterparties. WUFSI’s failure to conduct adequate due diligence on these domestic and foreign agent locations included not conducting adequate reviews (e.g., background checks and on-site reviews) of its higher-risk new agents, and not conducting enhanced due diligence on Latin American-based agent locations that were at higher risk for money laundering. Because of these failures, WUFSI did not have sufficient controls to effectively mitigate its money laundering risks along the southwest border between the United States and Mexico.
WUFSI’s failures to conduct sufficient initial due diligence into certain agent locations resulted in providing “new agent” agreements to agents owned by individuals who had previously been terminated by WUFSI for money laundering concerns. For example, in October 2011, with the assistance of law enforcement, WUFSI identified that four commonly owned agent locations in Peru accounted for nearly half of the transactions related to consumer fraud reports in Peru. After these agents processed transactions for another six months, WUFSI suspended these locations for this activity in April 2012. Despite these suspensions and WUFSI’s determination that the commonly-owned locations were high risk for fraud, WUFSI failed to identify these concerns when it allowed the common owner of these agents to open another location in December 2012.
WUFSI failed to implement or execute effective policies and procedures for conducting adequate due diligence to understand the money laundering risks associated with its subagent relationships within Mexico. WUFSI used a “master agent” or “master payee” payment model for remittances. The master agent would in turn contract with subagents to deliver funds to recipients. WUFSI did not have sufficient policies and procedures in place to understand the money laundering risks of its Mexican-based master agents and subagents and conduct ongoing due diligence of their activity.
For example, during the period covered by this CONSENT, WUFSI had a number of master agents and subagents in Mexico to provide its services along the southwest border of the United States with Mexico. Despite its knowledge of the money laundering risks associated with the southwest border and the use of money remittances to send narcotics proceeds to Mexico, WUFSI did not have sufficient knowledge of the activities of certain higher-risk subagents and did not itself conduct, or ensure that its master agents conducted, on-site reviews of certain subagents at higher-risk of money laundering. This failure prevented WUFSI from ensuring that its subagents were properly identifying the identification of the person obtaining money in Mexico. WUFSI’s ability to properly monitor these relationships was further affected by its use of three different processing systems for its Mexican-branded remittance services. WUFSI did not transfer the processing of these payments to one system until August 2012.
____________________

10 Id.
5

2. Failure to Terminate High-Risk Agent Locations 11
WUFSI failed to establish or implement sufficient procedures for suspending or terminating foreign agent locations or counterparties that presented unreasonable risks of money laundering including procedures that provide for the implementation of corrective action on the part of the foreign agent or counterparty or for the termination of the relationship with any foreign agent or counterparty that it determined posed an unacceptable risk of money laundering. Specifically, WUFSI applied disciplinary and termination actions inconsistently across its foreign agent locations.
For certain WUFSI agent locations, WUFSI relied on various means to identify agent locations that were potentially complicit in money laundering and/or fraudulent activity. WUFSI reviewed consumer fraud reports, which were reports submitted by customers that were victims of fraud, as well as suspicious activity reporting. WUFSI analysts also generated “60-day fraud reports” for any agent location that had five or more consumer fraud reports over a 60-day period. For agent locations that WUFSI believed were potentially complicit in the activity, WUFSI could implement remedial and disciplinary actions including temporary suspension, training, compliance inspections, and termination. Although WUFSI did rely on these corrective actions, it did not do so on a consistent basis and, at times, allowed business interests to comment on appropriate corrective actions.
For example, prior to 2012, WUFSI failed to sufficiently take corrective action against an agent location in the United Kingdom that had over 73 60-day fraud reports and over 2,000 consumer fraud reports sent to WUFSI. From 2005 through 2010, WUFSI identified this agent location as a high fraud risk and potentially complicit in fraud over five times. In each instance, WUFSI failed to terminate the relationship and relied on corrective actions that proved insufficient — including compliance reviews, training, and partial suspension. In 2010, WUFSI compliance staff recommended termination or suspension of this agent location in five separate instances as WUFSI analysts continued to identify significant potential fraudulent activity through the agent location. These recommendations did not result in termination of the relationship. WUFSI only issued partial suspensions from engaging in U.S.-originated transfers and then full reinstatement despite the continued presence of potentially fraudulent activity. Despite over seven years of significant potential fraudulent activity, WUFSI did not terminate this relationship until February of 2012.
In another example, WUFSI failed to take sufficient corrective action with respect to four agent locations that allowed customers to send remittances to China that displayed characteristics of structuring. From 2003 to 2012, WUFSI filed over 31,000 suspicious activity reports (SARs) on remittances processed by four agent locations that sent funds to China. For one of these agent locations, WUFSI filed over 11,000 SARs. Between 2005 and 2010, WUFSI identified that this agent had multiple compliance deficiencies including failure to file all currency transaction reports (CTRs) and failure to monitor all transactions for suspicious activity. Specifically, WUFSI repeatedly identified that this agent location facilitated transactions of $2,500, just below the $3,000 recordkeeping threshold, but above Western Union’s identification threshold, only minutes apart. Despite continually identifying this activity, WUFSI implemented insufficient corrective action and never suspended this agent location’s relationship and this agent location continued to be one of WUFSI’s top accounts for sending money to China. Despite the repeated identification of compliance deficiencies, potential structuring activity, and the filing of over 11,000 SARs, WUFSI did not terminate this agent location until its owner was arrested in September of 2010.
____________________

11 The items set forth in this Section are contained in in the DPA with the U.S. Department of Justice.
6

3. Failure to Implement Sufficient Policies to Prevent Fraud
Prior to 2012, WUFSI failed to implement a sufficient and adequately adhered to policy for disciplining agent locations that WUFSI personnel should have known or suspected were involved in fraud and/or money laundering. As early as 2004, WUFSI security and compliance staff identified the need to implement additional discipline policies to take corrective remedial action for agent locations that facilitated a high volume of fraud and/or money laundering transactions.
In the years following FinCEN’s Interpretative Release, 12 various WUFSI compliance staff also drafted or recommended additional policies for the company to reduce the number of fraudulent transactions and discipline foreign agents engaged in fraud or money laundering activity. However, WUFSI had unreasonable delays in implementing some of the policies.
B. Violations of the Requirement to Report Suspicious Activity
The BSA and its implementing regulations require MSBs to report transactions that the MSB “knows, suspects, or has reason to suspect” are suspicious, if the transaction is conducted or attempted by, at, or through the MSB, and the transaction involves or aggregates to at least $2,000 in funds or other assets. 13 A transaction is “suspicious” if the transaction: (a) involves funds derived from illegal activity; (b) is intended or conducted in order to hide or disguise funds or assets derived from illegal activity, or to disguise the ownership, nature, source, location, or control of funds or assets derived from illegal activity; (c) is designed, whether through structuring or other means, to evade any requirement in the BSA or its implementing regulations; (d) serves no business or apparent lawful purpose, and the MSB knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction; or (e) involves use of the MSB to facilitate criminal activity. 14
Like other BSA filings, suspicious activity reports (SARs) play an important role in detecting possible criminal activity. FinCEN and law enforcement use SARs to, among other things, investigate money laundering, terrorist financing and other serious criminal activity.
WUFSI’s failure to develop and implement policies and procedures that could be reasonably expected to detect and cause the reporting of suspicious transactions led to unreasonable delay in filing thousands of SARs. Before 2012, in many cases, WUFSI took over 90 days to investigate activity for which it had facts to constitute the basis for filing a SAR. Additionally, although WUFSI filed thousands of SARs on customers of its agent locations, it rarely filed SARs on its agent locations. WUFSI’s practice was not to identify agent locations as “subjects” of SARs unless it found the agent location to be complicit. WUFSI typically only found an agent to be complicit if the agent was arrested, publicly identified to be implicated in illicit transactions, or if WUFSI’s own investigation determined that the agent location was complicit. By not filing these SARs in a timely manner, WUFSI unnecessarily delayed reporting.
____________________
12 See supra , n.9.
13 31 C.F.R. § 1010.320(a)(2).
14 Id.
7

III. CIVIL MONEY PENALTY
FinCEN has determined that WUFSI willfully violated the program and reporting requirements of the BSA and its implementing regulations. FinCEN has also determined that grounds exist to assess a civil money penalty for these violations. 15
FinCEN has determined that the penalty in this matter will be $184 million based on WUFSI’s AML program failures and violations of its SAR filing obligations during the period before 2012. The U.S. Department of Justice will collect $586 million from WUFSI. The U.S. Department of Justice has stated that the funds collected through civil asset forfeiture will be used for restitution of victims of fraud. In recognition of this arrangement, FinCEN will deem its penalty fully satisfied by WUFSI’s payment to the U.S. Department of Justice as required by the Deferred Prosecution Agreement.
IV. UNDERTAKINGS
By executing this CONSENT, WUFSI agrees to provide FinCEN with any reports required by the DPA.
V. CONSENT TO ASSESSMENT
To resolve this matter, and only for that purpose, WUFSI consents to the assessment of a civil money penalty in the sum of $184 million and admits that it willfully violated the BSA’s program, recordkeeping, and reporting requirements.
WUFSI recognizes and states that it enters into this CONSENT freely and voluntarily and that no offers, promises, or inducements of any nature whatsoever have been made by FinCEN or any employee, agent, or representative of FinCEN to induce WUFSI to enter into the CONSENT, except for those specified in the CONSENT.
WUFSI understands and agrees that the CONSENT embodies the entire agreement between WUFSI and FinCEN relating to this enforcement matter, as described in Section II above. WUFSI further understands and agrees that there are no express or implied promises, representations, or agreements between WUFSI and FinCEN other than those expressly set forth or referred to in this document and that nothing in this CONSENT or in the ASSESSMENT OF CIVIL MONEY PENALTY (ASSESSMENT) is binding on any other agency of government, whether Federal, State or local.
____________________
15 31 U.S.C. § 5321; 31 C.F.R. § 1010.820.
8

VI. PUBLIC STATEMENTS
WUFSI expressly agrees that it shall not, nor shall its attorneys, agents, partners, directors, officers, employees, affiliates, or any other person authorized to speak on its behalf, make any public statement contradicting either its acceptance of responsibility set forth in the CONSENT or any fact in the DETERMINATIONS section of the CONSENT. FinCEN has sole discretion to determine whether a statement is contradictory and violates the terms of the CONSENT. If WUFSI, or anyone claiming to speak on behalf of WUFSI, makes such a contradictory statement, WUFSI may avoid a breach of the agreement by repudiating such statement within 48 hours of notification by FinCEN. If FinCEN determines that WUFSI did not satisfactorily repudiate such statement(s) within 48 hours of notification, FinCEN may void, in its sole discretion, the releases contained in the CONSENT and reinstitute enforcement proceedings against WUFSI. WUFSI expressly agrees to waive any statute of limitations defense to the reinstituted enforcement proceedings and further agrees not to contest any admission or other findings made in the CONSENT. This paragraph does not apply to any statement made by any present or former officer, director, employee, or agent of WUFSI in the course of any criminal, regulatory, or civil case initiated against such individual, unless WUFSI later ratifies such claims, directly or indirectly. WUFSI further agrees that, upon notification by FinCEN, it will repudiate such statement to the extent it contradicts either its acceptance of responsibility or any fact in the CONSENT.
VII. RELEASE
Execution of this CONSENT, and compliance with the terms of the ASSESSMENT and this CONSENT, settles all claims that FinCEN may have against WUFSI for the conduct described in Section II of this CONSENT. Execution of this CONSENT, and compliance with the terms of the ASSESSMENT and this CONSENT, does not release any claim that FinCEN may have for conduct by WUFSI other than the conduct described in Section II of this CONSENT, or any claim that FinCEN may have against any party other than WUFSI. Upon request, WUFSI shall truthfully disclose to FinCEN all factual information not protected by a valid claim of attorney-client privilege or work product doctrine with respect to the participation of parties other than WUFSI, including employees or agents of WUFSI, or others, regarding the conduct described in Section II of this CONSENT.
If FinCEN determines, in its sole judgment, that WUFSI has breached any portion of this agreement, FinCEN may void, in its sole discretion, the releases contained in this CONSENT and reinstitute enforcement proceedings against WUFSI, subject to written notice to WUFSI and an opportunity to cure. WUFSI expressly agrees to waive any statute of limitations defense to the reinstituted enforcement proceedings regarding the conduct described in Section II of this CONSENT, and further agrees not to contest any admission or other findings made in this CONSENT.
9

VIII. WAIVERS
Nothing in this CONSENT or the ASSESSMENT shall preclude any proceedings brought by FinCEN to enforce the terms of this CONSENT or the ASSESSMENT, nor shall it constitute a waiver of any right, power, or authority of any other representatives of the United States or agencies thereof, including but not limited to the U.S. Department of Justice.
In executing this CONSENT, WUFSI stipulates to the terms of this CONSENT and waives:

       	a.	       	All defenses to this CONSENT and the ASSESSMENT which can be waived;	
	 	
	b.		Any claim of double jeopardy based upon the execution of this CONSENT or the ASSESSMENT, or the payment of any civil money penalty herein or therein;	
	 	
       	c.	       	Any claim that this CONSENT, the ASSESSMENT or the civil money penalty is unlawful or invalid, or violates the Constitution of the United States of America; and,	
	 	
	d.		All rights to seek in any way to contest the validity of this CONSENT, the ASSESSMENT, or payment of the civil money penalty, on any grounds.	

/s/ John R. Dye	January 19, 2017	
John R. Dye	Date	
General Counsel and Assistant Secretary	

Western Union Financial Services, Inc.	

 	
 	
Accepted by:		
 	
/s/ Jamal El-Hindi	1/19/17	
Jamal El-Hindi	Date	
Acting Director		
 	
FINANCIAL CRIMES ENFORCEMENT NETWORK	
U.S. Department of the Treasury		

10

UNITED STATES OF AMERICA
DEPARTMENT OF THE TREASURY
 FINANCIAL CRIMES ENFORCEMENT NETWORK

IN THE MATTER OF:	)		
 	)		
 	)       	Number 2017-01	
Western Union Financial Services, Inc.	)		
Englewood, Colorado	)		

ASSESSMENT OF CIVIL MONEY PENALTY
I. INTRODUCTION
The Financial Crimes Enforcement Network (FinCEN) has determined that grounds exist to assess a civil money penalty against Western Union Financial Services, Inc. (WUFSI or the Company) pursuant to the Bank Secrecy Act (BSA) and regulations issued pursuant to that Act. 1
WUFSI admits to the facts set forth below and that its conduct violated the BSA. In order to resolve this matter, WUFSI consents to this assessment of a civil money penalty and entered the CONSENT TO THE ASSESSMENT OF CIVIL MONEY PENALTY (CONSENT) with FinCEN.
The CONSENT is incorporated into this ASSESSMENT OF CIVIL MONEY PEANLTY (ASSESSMENT) by reference.
FinCEN has authority to investigate financial institutions, including money services businesses (MSBs), for compliance with and violation of the BSA pursuant to 31 C.F.R. § 1010.810, which grants FinCEN “[o]verall authority for enforcement and compliance, including coordination and direction of procedures and activities of all other agencies exercising delegated authority under this chapter. . . .”
WUFSI is a wholly owned subsidiary of The Western Union Company (Western Union). WUFSI offers consumer to consumer remittance services through the branded payment services of Western Union, Vigo, and Orlandi Valuta, which comprise a network of approximately 500,000 agent locations in approximately 200 countries and territories worldwide. WUFSI operated as a “financial institution” and a “money services business” within the meaning of the BSA and its implementing regulations during the time relevant to this action. 2
____________________
1 The Bank Secrecy Act is codified at 12 U.S.C. §§ 1829b, 1951–1959 and 31 U.S.C. §§ 5311–5314, 5316–5332. Regulations implementing the Bank Secrecy Act appear at 31 C.F.R. Chapter X.
2 31 U.S.C. § 5312(a)(2); 31 C.F.R. § 1010.100(t)(3).

Resolution with the United States Department of Justice
On the same date as the CONSENT, Western Union entered into a Deferred Prosecution Agreement (DPA) with the United States Department of Justice, Criminal Division, Money Laundering and Asset Recovery Section, and the U.S. Attorney’s Offices for the Middle District of Pennsylvania, Central District of California, Eastern District of Pennsylvania, and Southern District of Florida. 3 The DPA stems from allegations that during the period of 2004 through 2012, Western Union: failed to implement and maintain an effective anti-money laundering (AML) program in violation of the BSA and its regulations; and aided and abetted wire fraud. 4 As part of the DPA, the Department of Justice acknowledged that since at least September 2012, Western Union implemented compliance enhancements to continuously improve its anti-fraud and anti-money laundering programs. Further, Western Union agreed to continue to enhance its AML and anti-fraud programs, and to pay to the United States the sum of $586 million for restitution to the victims of the fraud.
Resolution with the Federal Trade Commission
On the same date as the CONSENT, the Federal Trade Commission (FTC) entered into a Stipulated Order for Permanent Injunction and Final Judgement (Order) with Western Union. The Order is in resolution of the FTC’s allegations that Western Union failed to take timely, appropriate, and effective measures to mitigate fraud in the processing of money transfers sent by consumers. Western Union has neither admitted nor denied the FTC’s allegations. As part of the Order, Western Union has agreed to the appointment of an independent compliance auditor to ensure, among other things, that thorough due diligence is conducted on all prospective and existing Western Union agents, and that necessary steps are taken to monitor and investigate agent activity. Western Union has also agreed to a monetary judgment in the amount of $586 million which will be satisfied by complying with the payment requirements of its DPA with the United States Department of Justice, as referenced above in this CONSENT.
II. DETERMINATIONS
Prior to 2012, WUFSI willfully violated the BSA’s program, recordkeeping and reporting requirements. 5 As described below, WUFSI failed to adequately implement and maintain an effective, risk-based AML program by failing to implement or execute effective policies, procedures, and internal controls reasonably designed to assure ongoing compliance (in particular, failures to suspend or terminate certain agent locations in a timely manner); and failing to conduct adequate due diligence on certain foreign agents and subagents in Latin America. WUFSI also failed to file timely suspicious activity reports (SARs). 6
____________________
3 United States v. The Western Union Company, et al. , CR-17-__ (M.D. Pa. 2017). The CONSENT is expressly conditioned on the U.S. District Court for the Middle District of Pennsylvania’s acceptance of the DPA. If the DPA does not become effective, the CONSENT shall be deemed null and void.
 4 31 U.S.C. §§ 5318(h), 5322; 18 U.S.C. §§ 1342, 1343.
 5 In civil enforcement of the BSA under 31 U.S.C. § 5321(a)(1), to establish that a financial institution or individual acted willfully, the government need only show that the financial institution or individual acted with either reckless disregard or willful blindness. The government need not show that the entity or individual had knowledge that the conduct violated the BSA, or that the entity or individual otherwise acted with an improper motive or bad purpose. WUFSI admits to “willfulness” here only as the term is used in civil enforcement of the BSA under 31 U.S.C. § 5321(a)(1).
 6 Pursuant to WUFSI’s agreement with the states of Arizona, California, New Mexico and Texas, a court appointed monitor previously identified recommended program enhancements such as determinations made in this Section. At all times since the commencement of such agreement, WUFSI has been working to remediate the recommended program enhancements made pursuant to the agreement with the states of Arizona, California, New Mexico and Texas, many of which are reiterated in the CONSENT. WUFSI’s court appointed monitor has certified that such remediation has been successfully completed.
2

       A.	 	Violation of the Requirement to Implement an Effective Anti-Money Laundering Program	

The BSA and its implementing regulations require MSBs to develop, implement, and maintain an effective written AML program that is reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of terrorist activities. 7 At a minimum, an MSB is required to implement a written AML program that: (a) provides for a system of internal controls reasonably designed to assure ongoing compliance; (b) designates an individual or individuals responsible for assuring day to day compliance with the program and BSA requirements; (c) provides training for appropriate personnel, including training in the detection of suspicious transactions; and (d) provides for independent review to monitor and maintain an adequate program. 8
Prior to 2012, in certain instances, WUFSI failed to implement or execute effective internal controls sufficient to reasonably assure that the institution did not facilitate money laundering transactions including illicit transactions related to fraud. Specifically, WUFSI failed to maintain adequate policies, procedures, and internal controls for conducting due diligence on its agents, to terminate or suspend agent locations involved in potential money laundering and fraud transactions, and to implement or execute internal controls reasonably designed to prevent fraud. As a result of WUFSI’s AML failures, certain agent locations and outlets that WUFSI suspected were involved in fraud and money laundering were able to continue to use WUFSI’s money transfer system to facilitate their activity.
____________________
7 31 U.S.C. § 5318(h); 31 C.F.R. § 1022.210(a).
 8 31 C.F.R. §§ 1022.210(c), (d).
3

MSBs that do business through agents or counterparties located outside of the United States must implement and maintain as part of their AML program risk-based policies, procedures, and controls reasonably designed to identify and minimize money laundering and other illicit financing risks associated with such business. FinCEN guidance has stated that “[t]o the extent [MSBs] utilize relationships with foreign agents or counterparties to facilitate the movement of funds into or out of the United States, they must take reasonable steps to guard against the flow of illicit funds, or the flow of funds from legitimate sources to persons seeking to use those funds for illicit purposes, through such relationships.” 9
FinCEN has made clear that the AML programs for MSBs engaged in such transactions should, among other things, establish: (1) procedures for conducting reasonable, risk-based due diligence on potential and existing foreign agents and counterparties to help ensure that such foreign agents and counterparties are not themselves complicit in illegal activity involving the MSB’s products and services, including reasonable procedures to evaluate, on an ongoing basis, the operations of those foreign agents and counterparties; (2) procedures for risk-based monitoring and review of transactions from, to, or through the United States that are conducted through foreign agents and counterparties sufficient to enable the MSBs to identify and, where appropriate, report as suspicious such occurrences as instances of unusual wire activity; and (3) procedures for responding to foreign agents or counterparties that present unreasonable risks of money laundering or the financing of terrorism, including procedures that provide for the implementation of corrective action on the part of the foreign agent or counterparty or for the termination of the relationship with any foreign agent or counterparty that an MSB determines poses an unacceptable risk of money laundering. 10
____________________
9 FinCEN Guidance (Interpretive Release No. 2004-1), Anti-Money Laundering Program Requirements for Money Services Businesses with Respect to Foreign Agents or Foreign Counterparties , 60 Fed. Reg. 74,439 (Dec. 14, 2004).
10 Id.
4

1. Failure to Conduct Adequate Due Diligence on Foreign Agents/Outlets
For certain potential and existing agent locations within Latin America, WUFSI failed to establish adequate procedures for conducting reasonable, risk-based due diligence to help ensure that such foreign agent locations and counterparties are not themselves complicit in illegal activity involving WUFSI’s products and services, including reasonable procedures to evaluate, on an ongoing basis, the operations of those foreign agent locations and counterparties. WUFSI’s failure to conduct adequate due diligence on these domestic and foreign agent locations included not conducting adequate reviews (e.g., background checks and on-site reviews) of its higher-risk new agents, and not conducting enhanced due diligence on Latin American-based agent locations that were at higher risk for money laundering. Because of these failures, WUFSI did not have sufficient controls to effectively mitigate its money laundering risks along the southwest border between the United States and Mexico.
WUFSI’s failures to conduct sufficient initial due diligence into certain agent locations resulted in providing “new agent” agreements to agents owned by individuals who had previously been terminated by WUFSI for money laundering concerns. For example, in October 2011, with the assistance of law enforcement, WUFSI identified that four commonly owned agent locations in Peru accounted for nearly half of the transactions related to consumer fraud reports in Peru. After these agents processed transactions for another six months, WUFSI suspended these locations for this activity in April 2012. Despite these suspensions and WUFSI’s determination that the commonly-owned locations were high risk for fraud, WUFSI failed to identify these concerns when it allowed the common owner of these agents to open another location in December 2012.
5

WUFSI failed to implement or execute effective policies and procedures for conducting adequate due diligence to understand the money laundering risks associated with its subagent relationships within Mexico. WUFSI used a “master agent” or “master payee” payment model for remittances. The master agent would in turn contract with subagents to deliver funds to recipients. WUFSI did not have sufficient policies and procedures in place to understand the money laundering risks of its Mexican-based master agents and subagents and conduct ongoing due diligence of their activity.
For example, during the period covered by the CONSENT, WUFSI had a number of master agents and subagents in Mexico to provide its services along the southwest border of the United States with Mexico. Despite its knowledge of the money laundering risks associated with the southwest border and the use of money remittances to send narcotics proceeds to Mexico, WUFSI did not have sufficient knowledge of the activities of certain higher-risk subagents and did not itself conduct, or ensure that its master agents conducted, on-site reviews of certain subagents at higher-risk of money laundering. This failure prevented WUFSI from ensuring that its subagents were properly identifying the identification of the person obtaining money in Mexico. WUFSI’s ability to properly monitor these relationships was further affected by its use of three different processing systems for its Mexican-branded remittance services. WUFSI did not transfer the processing of these payments to one system until August 2012.
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2. Failure to Terminate High-Risk Agent Locations 11
WUFSI failed to establish or implement sufficient procedures for suspending or terminating foreign agent locations or counterparties that presented unreasonable risks of money laundering including procedures that provide for the implementation of corrective action on the part of the foreign agent or counterparty or for the termination of the relationship with any foreign agent or counterparty that it determined posed an unacceptable risk of money laundering. Specifically, WUFSI applied disciplinary and termination actions inconsistently across its foreign agent locations.
For certain WUFSI agent locations, WUFSI relied on various means to identify agent locations that were potentially complicit in money laundering and/or fraudulent activity. WUFSI reviewed consumer fraud reports, which were reports submitted by customers that were victims of fraud, as well as suspicious activity reporting. WUFSI analysts also generated “60-day fraud reports” for any agent location that had five or more consumer fraud reports over a 60-day period. For agent locations that WUFSI believed were potentially complicit in the activity, WUFSI could implement remedial and disciplinary actions including temporary suspension, training, compliance inspections, and termination. Although WUFSI did rely on these corrective actions, it did not do so on a consistent basis and, at times, allowed business interests to comment on appropriate corrective actions.
____________________
11 The items set forth in this Section are contained in in the DPA with the U.S. Department of Justice.
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For example, prior to 2012, WUFSI failed to sufficiently take corrective action against an agent location in the United Kingdom that had over 73 60-day fraud reports and over 2,000 consumer fraud reports sent to WUFSI. From 2005 through 2010, WUFSI identified this agent location as a high fraud risk and potentially complicit in fraud over five times. In each instance, WUFSI failed to terminate the relationship and relied on corrective actions that proved insufficient — including compliance reviews, training, and partial suspension. In 2010, WUFSI compliance staff recommended termination or suspension of this agent location in five separate instances as WUFSI analysts continued to identify significant potential fraudulent activity through the agent location. These recommendations did not result in termination of the relationship. WUFSI only issued partial suspensions from engaging in U.S.-originated transfers and then full reinstatement despite the continued presence of potentially fraudulent activity. Despite over seven years of significant potential fraudulent activity, WUFSI did not terminate this relationship until February of 2012.
In another example, WUFSI failed to take sufficient corrective action with respect to four agent locations that allowed customers to send remittances to China that displayed characteristics of structuring. From 2003 to 2012, WUFSI filed over 31,000 suspicious activity reports (SARs) on remittances processed by four agent locations that sent funds to China. For one of these agent locations, WUFSI filed over 11,000 SARs. Between 2005 and 2010, WUFSI identified that this agent had multiple compliance deficiencies including failure to file all currency transaction reports (CTRs) and failure to monitor all transactions for suspicious activity. Specifically, WUFSI repeatedly identified that this agent location facilitated transactions of $2,500, just below the $3,000 recordkeeping threshold, but above Western Union’s identification threshold, only minutes apart. Despite continually identifying this activity, WUFSI implemented insufficient corrective action and never suspended this agent location’s relationship and this agent location continued to be one of WUFSI’s top accounts for sending money to China. Despite the repeated identification of compliance deficiencies, potential structuring activity, and the filing of over 11,000 SARs, WUFSI did not terminate this agent location until its owner was arrested in September of 2010.
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3. Failure to Implement Sufficient Policies to Prevent Fraud
Prior to 2012, WUFSI failed to implement a sufficient and adequately adhered to policy for disciplining agent locations that WUFSI personnel should have known or suspected were involved in fraud and/or money laundering. As early as 2004, WUFSI security and compliance staff identified the need to implement additional discipline policies to take corrective remedial action for agent locations that facilitated a high volume of fraud and/or money laundering transactions.
In the years following FinCEN’s Interpretative Release, 12 various WUFSI compliance staff also drafted or recommended additional policies for the company to reduce the number of fraudulent transactions and discipline foreign agents engaged in fraud or money laundering activity. However, WUFSI had unreasonable delays in implementing some of the policies.
B. Violations of the Requirement to Report Suspicious Activity
The BSA and its implementing regulations require MSBs to report transactions that the MSB “knows, suspects, or has reason to suspect” are suspicious, if the transaction is conducted or attempted by, at, or through the MSB, and the transaction involves or aggregates to at least $2,000 in funds or other assets. 13 A transaction is “suspicious” if the transaction: (a) involves funds derived from illegal activity; (b) is intended or conducted in order to hide or disguise funds or assets derived from illegal activity, or to disguise the ownership, nature, source, location, or control of funds or assets derived from illegal activity; (c) is designed, whether through structuring or other means, to evade any requirement in the BSA or its implementing regulations; (d) serves no business or apparent lawful purpose, and the MSB knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction; or (e) involves use of the MSB to facilitate criminal activity. 14
____________________
12 See supra , n.9.
13 31 C.F.R. § 1010.320(a)(2).
14 Id.
9

Like other BSA filings, suspicious activity reports (SARs) play an important role in detecting possible criminal activity. FinCEN and law enforcement use SARs to, among other things, investigate money laundering, terrorist financing and other serious criminal activity.
WUFSI’s failure to develop and implement policies and procedures that could be reasonably expected to detect and cause the reporting of suspicious transactions led to unreasonable delay in filing thousands of SARs. Before 2012, in many cases, WUFSI took over 90 days to investigate activity for which it had facts to constitute the basis for filing a SAR. Additionally, although WUFSI filed thousands of SARs on customers of its agent locations, it rarely filed SARs on its agent locations. WUFSI’s practice was not to identify agent locations as “subjects” of SARs unless it found the agent location to be complicit. WUFSI typically only found an agent to be complicit if the agent was arrested, publicly identified to be implicated in illicit transactions, or if WUFSI’s own investigation determined that the agent location was complicit. By not filing these SARs in a timely manner, WUFSI unnecessarily delayed reporting.
III. CIVIL MONEY PENALTY
FinCEN has determined that WUFSI willfully violated the program and reporting requirements of the BSA and its implementing regulations. FinCEN has also determined that grounds exist to assess a civil money penalty for these violations. 15
____________________
15 31 U.S.C. § 5321; 31 C.F.R. § 1010.820.
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FinCEN has determined that the penalty in this matter will be $184 million based on WUFSI’s AML program failures and violations of its SAR filing obligations during the period before 2012. The U.S. Department of Justice will collect $586 million from WUFSI. The U.S. Department of Justice has stated that the funds collected through civil asset forfeiture will be used for restitution of victims of fraud. In recognition of this arrangement, FinCEN will deem its penalty fully satisfied by WUFSI’s payment to the U.S. Department of Justice as required by the DPA.
IV. UNDERTAKINGS
By executing the CONSENT, WUFSI agreed to provide FinCEN with any reports required by the DPA.
V. CONSENT TO ASSESSMENT
To resolve this matter, and only for that purpose, WUFSI consented to this ASSESSMENT of a civil money penalty in the sum of $184 million and admits that it willfully violated the BSA’s program, recordkeeping, and reporting requirements.
WUFSI recognizes and states that it entered into the CONSENT freely and voluntarily and that no offers, promises, or inducements of any nature whatsoever have been made by FinCEN or any employee, agent, or representative of FinCEN to induce WUFSI to enter into the CONSENT, except for those specified in the CONSENT.
WUFSI understands and agrees that the CONSENT embodies the entire agreement between WUFSI and FinCEN relating to this enforcement matter, as described in Section II above. WUFSI further understands and agrees that there are no express or implied promises, representations, or agreements between WUFSI and FinCEN other than those expressly set forth or referred to in this document and that nothing in the CONSENT or in this ASSESSMENT OF CIVIL MONEY PENALTY (ASSESSMENT) is binding on any other agency of government, whether Federal, State or local.
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VI. PUBLIC STATEMENTS
WUFSI expressly agrees that it shall not, nor shall its attorneys, agents, partners, directors, officers, employees, affiliates, or any other person authorized to speak on its behalf, make any public statement contradicting either its acceptance of responsibility set forth in the CONSENT or any fact in the DETERMINATIONS section of the CONSENT. FinCEN has sole discretion to determine whether a statement is contradictory and violates the terms of the CONSENT. If WUFSI, or anyone claiming to speak on behalf of WUFSI, makes such a contradictory statement, WUFSI may avoid a breach of the agreement by repudiating such statement within 48 hours of notification by FinCEN. If FinCEN determines that WUFSI did not satisfactorily repudiate such statement(s) within 48 hours of notification, FinCEN may void, in its sole discretion, the releases contained in the CONSENT and reinstitute enforcement proceedings against WUFSI. WUFSI expressly agrees to waive any statute of limitations defense to the reinstituted enforcement proceedings and further agrees not to contest any admission or other findings made in the CONSENT. This paragraph does not apply to any statement made by any present or former officer, director, employee, or agent of WUFSI in the course of any criminal, regulatory, or civil case initiated against such individual, unless WUFSI later ratifies such claims, directly or indirectly. WUFSI further agrees that, upon notification by FinCEN, it will repudiate such statement to the extent it contradicts either its acceptance of responsibility or any fact in the CONSENT.
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VII. RELEASE
Execution of the CONSENT, and compliance with the terms of this ASSESSMENT and the CONSENT, settles all claims that FinCEN may have against WUFSI for the conduct described in Section II of the CONSENT. Execution of the CONSENT, and compliance with the terms of this ASSESSMENT and the CONSENT, does not release any claim that FinCEN may have for conduct by WUFSI other than the conduct described in Section II of the CONSENT, or any claim that FinCEN may have against any party other than WUFSI. Upon request, WUFSI shall truthfully disclose to FinCEN all factual information not protected by a valid claim of attorney-client privilege or work product doctrine with respect to the participation of parties other than WUFSI, including employees or agents of WUFSI, or others, regarding the conduct described in Section II of the CONSENT.
If FinCEN determines, in its sole judgment, that WUFSI has breached any portion of this agreement, FinCEN may void, in its sole discretion, the releases contained in the CONSENT and reinstitute enforcement proceedings against WUFSI, subject to written notice to WUFSI and an opportunity to cure. WUFSI expressly agrees to waive any statute of limitations defense to the reinstituted enforcement proceedings regarding the conduct described in Section II of the CONSENT, and further agrees not to contest any admission or other findings made in the CONSENT.

Accepted by:			

 	
/s/ Jamal El-Hindi	 	January 19, 2017	 	
Jamal El-Hindi	 	Date	 	
Acting Director			
  	
FINANCIAL CRIMES ENFORCEMENT NETWORK	
U.S. Department of the Treasury			

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FOR IMMEDIATE RELEASE
Western Union Reaches Agreements to Resolve U.S. Investigations
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, CO – January 19, 2017 – 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 t he 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.
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Western Union Contacts:	     		
 	
Bill Chandler, Corporate Communications		Mike Salop, Investor Relations	
+1 (720) 332-2014	 	+1 (720) 332-8276	
bill.chandler@westernunion.com	 	mike.salop@westernunion.com	

Media hotline: +1 (720) 332-1000 (select option 3, then 2) 
 media@westernunion.com
# # #
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.