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A money transfer company agreed to settle charges filed by the Federal Trade Commission ("FTC") for failing to implement previously prescribed FTC and DOJ anti-money laundering compliance programs. MoneyGram International, Inc. ("MoneyGram") agreed to extend its existing deferred prosecution agreement with the DOJ, forfeit $125 million in fees it received in connection with fraudulent transactions, and separately agreed to settle charges filed by the FTC for failing to implement FTC and DOJ fraud prevention compliance programs.
In 2009 and 2012, MoneyGram settled separate actions against it by the FTC and DOJ, respectively. However, according to both agencies, MoneyGram failed to implement the "comprehensive fraud prevention programs" and related compliance obligations that were required under the 2009 FTC Order and a 2012 DOJ Deferred Prosecution Agreement ("DPA"). The agencies claimed that MoneyGram's actions allowed fraudsters to continue executing fraud-induced money transfers. The agencies said that although MoneyGram created a fraud interdiction system in 2015, its system was not sufficient and failed to block a number of transactions with consumers who previously had received fraudulent transfers. In addition, the agencies claimed that MoneyGram failed to notify them of any failures in its controls or difficulties implementing the compliance programs. Despite what appears to be a significant failure to comply with the terms of the DOJ DPA and an FTC settlement order, both agencies appeared to give MoneyGram some credit for its efforts in complying with its obligations.
Commentary
Both government agencies were within their rights to void the DOJ DPA and the FTC settlement orders and file criminal charges for conduct MoneyGram had already conceded. If a party to a DPA violates it by continuing to commit misconduct, the government can rip up the agreement and simply file the criminal charges it could have at the time the DPA was entered. The company cannot defend against the misconduct alleged. However, likely due to MoneyGram's efforts to comply, and because it is one of the country's largest money remitters, the government was loathe to file what could have been a business-ending indictment. Rather, the government played it smart here. By extending the DPA and the FTC settlement agreement, the government can better police continued compliance and MoneyGram continues to have a significant incentive to make sure the government is satisfied. By imposing a significant monetary penalty greater than what the government could have collected at the time of the DPA, the government sufficiently messaged that violating a DPA has significant financial and monitoring consequences.
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