On March 16, 2022, the New York State Department of Financial Services announced the entry of a consent order resolving the department’s investigation of anti-money laundering failures by MoneyGram International Inc., a global financial institution and money services business headquartered in Dallas, Texas, with operations in New York State and in 200 countries and territories around the world.
As described in the consent order, MoneyGram engages agents to process consumer-to-consumer money transfers, including over 1,000 agents in New York who process millions of transactions annually. The company pays commissions to the agents, as well as bonuses based on transaction volume. NYDFS initiated an investigation in March 2017, ultimately focusing on MoneyGram’s supervision of six New York City agents who conducted large volumes of transactions with MoneyGram locations in China – volumes that had more than tripled in number and value during the period investigated.
Multiple factors pointed to increased risk of money-laundering, such as the structure of the transactions, with different senders transmitting money to the same recipient, the spike in activity, and the known AML risk of doing business in China. And yet, according to the consent order, it took MoneyGram over a year to halt the suspicious activity, despite the company’s financial investigation unit having identified instances in which MoneyGram failed to detect, prevent, or take remedial measures to address the deficiencies or to cause the six MoneyGram agents to file suspicious activity reports.
NYDFS found that MoneyGram had failed to maintain an effective and compliant AML program during the relevant period, in violation of 3 NYCRR § 417.2, and that the company also failed to exercise reasonable supervision over its agents, in violation of 3 NYCRR § 406.3(g).
The consent order requires MoneyGram to pay a civil monetary penalty of $8.25 million. In assessing the penalty, NYDFS took into account MoneyGram’s cooperation with the investigation, and the company’s reporting on the results of its internal investigation of the matter, and compliance enhancement and remediation measures taken to prevent violations from occurring in the future. In addition to the monetary penalty, the consent order requires MoneyGram to submit a report on its current AML compliance program and annual follow-up reports updating NYDFS on the compliance program, including, among other items, details about the removal of agents from the MoneyGram system, due diligence efforts around the onboarding of new agents and the supervision of existing agents, transaction monitoring procedures, and suspicious activity reporting thresholds and processes.