STATE OF CALIFORNIA

DEPARTMENT OF FINANCIAL INSTITUTIONS

 

 

In the Matter of )

)

WESTERN UNION FINANCIAL ) CONSENT AGREEMENT

SERVICES, INC. )

)

__________________________________________)

 

WHEREAS, Western Union Financial Services, Inc. ("Western Union") is licensed by the California Department of Financial Institutions (the "Department") as a money transmitter authorized to receive money for the purpose of transmitting it from agent locations in California to foreign countries;

WHEREAS, it is the common goal of Western Union and the Department to ensure compliance with applicable federal and California anti-money laundering laws and regulations, including the Bank Secrecy Act, 31 U.S.C. sections 5311 et seq., as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required To Intercept and Obstruct Terrorism Act of 2001 (the "USA Patriot Act"), and its implementing regulations, 31 C.F.R. Part 103 (collectively, "the BSA");

WHEREAS, it is the common goal of Western Union and the Department to ensure that Western Union adequately manages its operational, reputational, financial and compliance risks, and that Western Union conducts its business according to the requirements of Financial Code sections 1800 et seq. (the "Money Transmitters Law").

WHEREAS, the Department identified certain alleged shortcomings in the measures that Western Union employed to implement and comply with certain provisions of the BSA and the Money Transmitters Law during 2002, including alleged shortcomings in Western Union's oversight, training and supervision of its agents and its monitoring and compliance program to ensure that it and its agents complied with the BSA, and Western Union's alleged failure to timely file certain Currency Transaction Reports ("CTRs") and Suspicious Activity Reports ("SARs");

WHEREAS, Western Union has proactively taken corrective steps, and is implementing comprehensive enhancements to its compliance program, including its program of supervision of its agents, to address these alleged shortcomings;

NOW, THEREFORE, in the interest of resolving this matter and without any admission of wrongdoing by Western Union, the Department and Western Union hereby agree to the following:

ENHANCED COMPLIANCE PROGRAM

1. Within 30 days of the date of this Consent Agreement, Western Union will present an enhanced program satisfactory to the Commissioner for ensuring compliance with the BSA and the Money Transmitters Law ("the Program").

2. The Program will provide for enhanced policies, procedures, internal controls and monitoring systems for Western Union's money transfer products to ensure that:

      1. Required Currency Transaction Reports ("CTRs") are filed in accordance with BSA requirements for single and multiple transactions conducted by the same customer on the same business day at one or more agent locations; and
      2. Suspicious activity is identified and reported in accordance with the BSA requirements for filing Suspicious Activity Reports by Money Services Business ("SAR-MSBs").

3. Within 30 days from the date of this Consent Agreement, each of Western Union's money transfer products in the State of California will be monitored by the "Wire Watch" system or by another effective system for the purpose of reporting currency transactions and suspicious activity as described in the Program.

ENHANCED AGENT SUPERVISION, TRAINING AND MONITORING

4. The Program will provide for enhanced, risk-based agent management and oversight, by requiring Western Union to:

    1. Provide prompt training to new agents and complete initial training for all existing agents within one year of the date hereof on all aspects of compliance under the BSA, including the reporting of currency transactions and suspicious activity, and the implementation of anti-money laundering compliance programs. Such training shall be provided either in person or telephonically by trainers qualified on all aspects of compliance. Subsequently, Western Union shall provide updated training on at least an annual basis addressing appropriate topics, including changes in law or changes in Western Unionís policies and procedures. Such updated training may be provided in person or through other reasonable methods, including but not limited to: telephone, internet, inserts in Agent Information Packets, or other written materials.
    2. Implement risk-based periodic reviews of its agents' anti-money laundering compliance programs by Western Union compliance staff or other non-sales staff, including on-site audits of Tier I agent locations as defined in the Program; and
    3. Take disciplinary measures, as appropriate, with respect to agents that fail to adhere to the BSA or Western Union's internal BSA policies and procedures, or that fail to comply with the Money Transmitters Law, including probation, suspension or termination of agents, and promptly report any such disciplinary measures to the Department.

     

PROGRAM COMMITMENT, AUDITS AND INTERNAL REPORTING

5. To ensure effective implementation of the Program, Western Union further will:

    1. Assign adequate numbers of qualified staff to support a BSA compliance function that is separate from Western Union's business agent network management group, and otherwise ensure that the compliance function remains separate from the sales and agent recruitment function. Western Unionís compliance department, including auditors and training personnel, shall be adequately staffed within 30 days from the date of this Consent Agreement;
    2. Provide initial and annual training by qualified Western Union trainers to appropriate Western Union employees in all job relevant aspects of BSA compliance, including the reporting of currency transactions and suspicious activity.
    3. From October of 2002 through 2006, Western Union shall expend resources in the aggregate value of at least $5,000,000 to the development and implementation of the Program in the state of California, based upon an allocation of expense methodology acceptable to the DFI.
    4. Provide for regular periodic internal compliance reviews and testing of the Program on at least a semi-annual basis, and arrange for annual independent testing and auditing of the Program by qualified auditors in accordance with the requirements of the BSA; and
    5. Require Western Union's Chief Compliance Officer to report annually to Western Union's senior management and Board of Directors on the progress of implementation of the Program, including the results of independent testing and auditing of the Program and any disciplinary actions against agents, any state and federal regulatory examinations and enforcement actions, and a report on the resources spent and allocated to the Program. The Board of Directors shall approve the Program and any substantial amendments to the Program.

TRANSACTION SYSTEMS REVIEWS

6. Within 30 days from the date of this Consent Agreement, Western Union will report on additional testing of its systems that it has conducted to determine if any additional reports are required under the BSA, including testing to identify any additional suspicious activity over multiple days at one or more agent locations in California during 2002, and provide the Department with a summary of any additional reports that it has filed with the Department of the Treasury.

PROGRESS REPORTS

7. Through the year 2006, by the 15th day after the last day of each quarter, beginning with the third quarter of 2003, Western Union will report to the Department on its progress in implementing all aspects of the Program described in this Agreement.

 

NOTICES

8. All communications regarding this Agreement shall be sent to:

Julio Prada
Financial Institutions Manager
State of California

Dept. of Financial Institutions
111 Pine Street, Suite 1100
San Francisco, CA 94111-5013

Robert R. Venchiarutti
Acting Deputy Commissioner of Banks
State of California
Dept. of Financial Institutions
111 Pine Street, Suite 1100
San Francisco, CA 94111-5013

Christina Gold
President
Western Union Financial Services, Inc.
6200 South Quebec Street
Greenwood Village, CO 80111

Michael Jeronimus, Esq.
General Counsel
Western Union Financial Services, Inc.
6200 South Quebec Street
Greenwood Village, CO 80111

 

ENFORCEMENT

9. Western Union agrees that material failure to comply with terms of this Consent Agreement shall constitute a breach, and shall mean that Western Union is conducting its business in an unsafe manner within the meaning of Financial Code section 1819(c). In the event that the Department determines that Western Union has breached this Consent Agreement, the Department reserves the right to take any action it deems appropriate against Western Union (after providing Western Union with a reasonable opportunity to respond), including, but not limited to, pursuing monetary penalties, suspending or revoking Western Union's license to transmit money abroad, or ordering other remedial actions, all as authorized pursuant to the Financial Code.

MISCELLANEOUS

10. Compliance with the terms of this Consent Agreement constitutes a complete settlement by the Department of all civil and regulatory liability under the Money Transmitters Law of Western Union and its current and former directors, officers, employees or insiders or their successors and assigns based upon any violations of the BSA or of the Money Transmitters Law or the quality of its supervision, monitoring and training of its agents discussed above that occurred up to the date of this Consent Agreement.

11. This Consent Agreement shall not bar, estop or otherwise prevent any other agency or department of the State of California, or any other state or federal agency or department, from taking any other action affecting Western Union or its agents, or any of its current or former officers, directors, employees, or insiders, or their successors or assigns, with respect to the matters contained in or relating to this agreement.

12. Each provision of this Consent Agreement shall remain effective and enforceable unless stayed, modified, terminated or suspended in writing by the Commissioner.

13. Notwithstanding any provision of this Agreement, the Commissioner, in his sole discretion, may grant written extensions to Western Union to comply with the provisions of this Agreement.

14. The effective date of this Consent Agreement is the date on which it is signed by the Commissioner or the Chief State Examiner.

15. This is not a confidential document.

 

Dated: __8/14/2003______

 

 

DONALD R. MEYER
Commissioner of Financial Institutions

 

 

Dated: __8/14/2003______

By:_________________________________

Christina Gold
President
Western Union Financial Services, Inc.