On Thursday, January 4, New York State officials said that three of the state’s biggest money making Western Union locations, including two run by a married couple in the city, “willfully ignored” state banking rules over eight years, permitting close to $3 billion in payments to be laundered to human traffickers in China.
According to the state Department of Financial Services, which led a month-long investigation, the company has agreed to pay a $60 million fine and periodically report about their anti-money-laundering compliance to state regulators.
The third location, which is known within the company as Agent 3, was located in the heavily Asian populated Queens neighborhood of Flushing, and was said to be Western Union’s main link to China.
According to the settlement agreement, in 2011, an executive at Western Union wrote in an email, “[Agent 3] is our top location to China in the entire United States. Please note that we need to work together to keep this agent active while still satisfying our compliance requirements.”
The compliance requirements of the company were apparently not at the top of its list of priorities.
DFS boss Maria Vullo said, “Western Union executives put profits ahead of the company’s responsibilities to detect and prevent money laundering and fraud, by choosing to maintain relationships with and failing to discipline obviously suspect, but highly profitable, agents.”
Besides the Flushing location the other two Western Unions are also located in areas with large numbers of Chinese immigrants, lower Manhattan and Sunset Park in Brooklyn.
According to the settlement, all the stores were involved in “structuring” transactions, in which large sums of money were split into to smaller amounts under $2,000, which is low enough for the transaction to not require an ID to be shown by the sender.
According to a Justice Department settlement last year with Western Union, the Manhattan store owner “admitted to [investigators] that he knew that consumers paid their debt to human smugglers in China through Western Union.”
In order to settle allegations of fraud and money-laundering, Western Union paid a fine of $586 million in the settlement with US regulators.
According to The Post, “The three New York locations were all so important to Western Union’s business that the compliance officers went out of their way to give them a few days’ notice before showing up, according to the DFS settlement. But even that didn’t deter the agent in Flushing.”
In 2011, an investigator of Western Union saw, during five visits to the store, “employees permitting (and in some cases, encouraging) customers to structure large transactions by enlisting friends or relatives to assist, and then dividing the larger transactions into smaller ones,” according to the DFS settlement.
By Hannah Hayes