MoneyGram: Agents Kept Open After Internal Warnings

MoneyGram kept fraud agents open after its own fraud staff recommended closing them. Sales executives resisted, and complaints kept coming. Under its 2012 deferred prosecution agreement in the criminal case, MoneyGram admitted helping wire fraud and failing to maintain an effective anti-money laundering program. The government returned to court in 2018 over continuing failures.

MoneyGram International is a global money-services business headquartered in Dallas. A money-transfer network connects the agent accepting a customer’s funds, the transfer company, its banking arrangements, the payout agent and the recipient. In this case, corrupt agents helped turn it into a delivery system for scam proceeds, while MoneyGram collected fees and other revenue from the transactions.

MoneyGram Fraud Agents and Internal Termination Recommendations

MoneyGram fraud agents stayed open despite internal termination recommendations, a central failure described in the criminal case behind the DPA. The Justice Department’s account says fraud staff began recommending specific agents for termination as early as 2003. Senior sales executives rarely approved those recommendations.

The underlying scams gave customers reasons to send money urgently. Someone posed as a relative in trouble, promised a large cash prize, offered an expensive item at a deep discount online, or offered a secret-shopper job. The perpetrators required payment through MoneyGram. The criminal case described transactions processed from 2004 through 2009 for agents the company knew were involved in fraud.

The warnings reached senior management. At an April 2007 meeting, the fraud department recommended immediately closing 32 Canadian agents characterized as “the worst of the worst” for fraud. Sales disagreed. The outlets stayed open and continued processing transfers despite more complaints.

The complaint figures in the criminal case show what followed. Customers in the United States and Canada reported 1,575 instances of fraud in 2004 and 19,614 in 2008. MoneyGram had employees identifying the problem and recommending a response. The company repeatedly decided to keep the channel open.

What MoneyGram’s Anti-Money Laundering Program Failed to Do

MoneyGram’s anti-money laundering failures included missing suspicious activity reports, inadequate agent checks and a failure to share information between fraud and compliance teams. In the same criminal case, the government described failures at each stage of the relationship with an agent, from checking the business before accepting it to closing it after fraud emerged.

MoneyGram failed to establish procedures for terminating agents involved in fraud or money laundering. It also failed to file suspicious activity reports on agents it knew were involved.

Its agent audits were ineffective. Checks on prospective and existing agents did not adequately verify that a legitimate business existed, and its anti-money laundering program lacked sufficient staff and resources.

An agent review checks the business allowed onto the network; transaction monitoring follows the money moving through it. Customer complaints and suspicious activity reports connect those transactions to scams and investigators. When the fraud team knows which outlet keeps appearing in complaints but that information does not reach anti-money laundering staff, the company has lost the connection between the customer’s experience and its reporting decisions.

The incentives matter as much as the organization chart. The 2024 Wharton Initiative on Financial Policy and Regulation paper Anti-Money Laundering: Opportunities for Improvement describes research on a familiar divide inside financial institutions:

MoneyGram’s criminal case shows that conflict inside a sales operation. Its agreement called for executive bonuses to depend on meeting compliance obligations, alongside a worldwide anti-fraud and anti-money laundering standard and stronger checks on high-risk agents. That condition reached the executives deciding whether the warnings would cost an agent its business.

The Deferred Prosecution Agreement Breach and More Fraud Transactions

MoneyGram breached its deferred prosecution agreement through continuing anti-money laundering and anti-fraud weaknesses, incomplete improvements and inadequate disclosure to the government. According to the joint motion described in the Justice Department’s November 8, 2018 announcement, the company processed at least $125 million in additional consumer-fraud transactions between April 2015 and October 2016.

The amended agreement required MoneyGram to act on complaints. It agreed to block certain reported fraud senders and receivers within two days of receiving a complaint identifying them, and to terminate, discipline or restrict agents processing high volumes of transactions involving reported fraud senders and receivers.

The Federal Trade Commission separately alleged that MoneyGram violated its 2009 fraud-prevention order. It said the company knew for years about high fraud levels and suspicious activity involving certain agents, including large chains, but failed to promptly review, suspend or terminate them. The allegations concerned its failure to act on that knowledge.

The Compliance Officer’s Civil Case

The Financial Crimes Enforcement Network also pursued a civil case over a MoneyGram compliance executive’s alleged failures to maintain an effective anti-money laundering program and report suspicious activity.

The original assessment in 2014 was $1 million. The civil settlement announced in 2017 reduced the executive’s penalty to $250,000. The settlement included admissions and placed limits on the executive’s compliance work for three years.

What an Insider Can Show About Agent Controls

An insider can connect the warning to the decision and the transfers that followed. MoneyGram’s case makes that connection unusually concrete: fraud staff identified agents, recommended termination, met opposition from sales and continued receiving complaints about outlets left open.

Someone in fraud operations may know which complaints were grouped under the same agent and how the recommendation reached management. Someone in sales or agent management may know who rejected it and what explanation they gave. An anti-money laundering analyst or auditor may know whether that information reached the people responsible for reporting, whether the agent review addressed the complaints, or whether staffing left the work undone. Those are different views of the same decision.

The records become more useful when read together. A termination recommendation identifies the outlet and the concern. The management response explains why it stayed open. Later transaction records and complaints show what the company continued processing. We work with insiders to connect those parts of the business and identify where the authority to act actually sat.

The agent-assisted consumer-fraud pattern also appeared at Western Union. Under its deferred prosecution agreement in the criminal case, that company admitted helping wire fraud and willfully failing to maintain an effective anti-money laundering program. The parallel puts agent oversight at the center of the money-transfer business: the company’s controls determine who can keep using its network to collect from victims.

What Is the AML Whistleblower Law?

The AML whistleblower law provides awards for qualifying original information that leads to successful enforcement of covered financial-crime laws. The statutory award range is 10% to 30% of qualifying collected monetary sanctions in covered actions exceeding $1 million. FinCEN administers the program.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is a separate program from the AML whistleblower route. For a MoneyGram AML fraud whistleblower, identifying the program that fits the evidence is a judgment we make with you.

You Know Who Kept the Agent Open

If you saw fraud warnings overruled or complaint information kept from anti-money laundering staff, speak to one of our Whistleblower Experts about who kept the agents open. We build the case with you and bring in AML whistleblower lawyers who understand money-transfer networks and agent controls. From the first account of an ignored warning through the pursuit of a whistleblower reward, we stay on your side of the table.