Western Union Co. will pay a total of $586 million to settle two federal investigations related to whether its antifraud and anti-money-laundering operations adequately oversaw its agents and dealings with third parties.
Western Union expects to take a charge of about $570 million for the fourth quarter of 2016 to record the costs associated with the settlements, fees for the required independent compliance auditor and related matters. Aside from that charge, the company expects its fourth-quarter earnings to be in line with its outlook provided in November 2016.
The agreement covers investigations by the Department of Justice and Federal Trade Commission. The alleged misconduct occurred from 2004 to 2012.
According to a company release, Western Union will enter into a deferred prosecution agreement with the DOJ and a consent order with the FTC, pursuant to which the company will pay $586 million in total to the federal government. The money will be used to reimburse consumers who were victims of fraud during the relevant period.
Western Union will also take explicit actions to further improve its oversight of agents and its protection of customers, which will be reviewed by an independent compliance auditor for three years.
At the same time, Western Union will resolve potential claims by the Treasury Department's Financial Crimes Enforcement Network relating to conduct from 2010 to 2012 that FinCEN said violated the Bank Secrecy Act.
The separate agreement with FinCEN sets forth a civil penalty of $184 million, but that amount will be deemed satisfied by the $586 million payment under the DOJ and FTC agreements, the company said.