Settlements relate to conduct that mainly
occurred 2004 to 2012;Company has increased compliance funding 200
percent in the last five years;Business performance for 2016 in
line with previous outlook
The Western Union Company (NYSE: WU) today announced agreements
with the U.S. Department of Justice (DOJ) and Federal Trade
Commission (FTC) that resolve previously disclosed investigations
focused primarily on the Company’s oversight of certain agents and
whether its anti-fraud program, as well as its anti-money
laundering controls, adequately prevented misconduct by those
agents and third parties. The conduct at issue mainly occurred from
2004 to 2012.
As part of this resolution, Western Union will enter into a
deferred prosecution agreement with the DOJ and a consent order
with the FTC. The Company will pay a total of $586 million to the
federal government, which is to be used to reimburse consumers who
were victims of fraud during the relevant period. Western Union
also will take specific actions to further enhance its oversight of
agents and its protection of customers. Those actions will be
reviewed by an independent compliance auditor for three years.
Western Union said: “We share the government’s goal of
protecting consumers and the integrity of our global money transfer
network, and we worked hard to resolve these matters with the
government.” The Company emphasized: “We are committed to enhancing
our compliance programs to prevent illicit activity on
our network and protect customers who transfer money to
friends, family and businesses.”
Over the past five years, Western Union increased overall
compliance funding by more than 200 percent, and now spends
approximately $200 million per year on compliance, with more than
20 percent of its workforce currently dedicated to compliance
functions. The comprehensive improvements undertaken by the Company
have added more employees with law enforcement and regulatory
expertise, strengthened its consumer education and agent training,
bolstered its technology-driven controls and changed its governance
structure so that its Chief Compliance Officer is a direct report
to the Compliance Committee of the Board of Directors.
Many state, national and international regulators and law
enforcement agencies have commended Western Union in recent years
for its compliance innovations, such as developing algorithms to
help combat terrorist financing, and for assisting with numerous
investigations.
Western Union noted that its compliance enhancements have
produced significant and measurable results. The incidence of
consumer fraud reports associated with Western Union money
transfers has been extremely low – less than one-tenth of 1 percent
of all consumer-to-consumer money transfer transactions during the
past 10 years. And, over the last five years, the dollar value of
reported fraud in consumer-to-consumer transactions, compared with
the total value of all such transactions, has dropped more than 60
percent.
In late November 2016, as had previously been requested by the
Company, the DOJ provided to the Company a proposal for a combined
resolution of investigations by the U.S. Attorney’s Offices for the
Eastern and Middle Districts of Pennsylvania, the Central District
of California and the Southern District of Florida, which the
Company sought to coordinate with the resolution of other potential
government claims. The Company and the government agencies then
engaged in intensive negotiations, which led to the agreements
announced today.
In addition to the resolution of the previously disclosed DOJ
and FTC investigations, the Company will simultaneously resolve,
without any additional payment or non-monetary obligations,
potential claims by the U.S. Treasury Department’s Financial Crimes
Enforcement Network (FinCEN) relating to conduct in the 2010 to
2012 period that FinCEN contended violated the Bank Secrecy Act.
The Company received a notice of investigation from FinCEN in
mid-December 2016. The separate agreement with FinCEN sets forth a
civil penalty of $184 million, the full amount of which will be
deemed satisfied by the $586 million compensation payment under the
DOJ and FTC agreements.
Western Union anticipates taking a charge of approximately $570
million in its 2016 fourth quarter, to record the costs associated
with the settlements, fees for the required independent compliance
auditor, and related matters. This amount is in addition to
amounts previously accrued in 2016 in connection with the FTC
matter. The Company intends to claim a deduction for the settlement
payment, but because the tax effect is not certain the Company does
not anticipate recording a related tax benefit in the fourth
quarter.
Excluding the fourth-quarter charge, the Company anticipates
reporting 2016 financial results in line with its financial outlook
provided on November 1, 2016. Western Union will report its full
fourth-quarter results on February 9, 2017.
About Western Union
The Western Union Company (NYSE: WU) is a leader in global
payment services. Individuals and families around the world count
on Western Union to reliably and efficiently transfer billions of
dollars each year to pay for education, purchase necessities, run
businesses and/or help relatives. These services provide an
economic lifeline to many people who lack access to the traditional
financial system, and play an important role in supporting
developing economies.
As of September 30, 2016, the Western Union, Vigo and Orlandi
Valuta branded services were offered through a combined network of
over 550,000 agent locations in more than 200 countries and
territories and over 100,000 ATMs and kiosks, and included the
capability to send money to billions of accounts. In 2015, The
Western Union Company completed 262 million consumer-to-consumer
transactions worldwide, moving $82 billion of principal between
consumers, and 508 million business payments.
For more information, visit www.westernunion.com.
Safe Harbor Compliance Statement for Forward-Looking
Statements
This press release contains certain statements that are
forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are not guarantees
of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Actual outcomes and
results may differ materially from those expressed in, or implied
by, our forward-looking statements. Words such as "expects,"
"intends," "anticipates," "believes," "estimates," "guides,"
"provides guidance," "provides outlook" and other similar
expressions or future or conditional verbs such as "may," "will,"
"should," "would," "could," and "might" are intended to identify
such forward-looking statements. Readers of this press release of
The Western Union Company (the "Company," "Western Union," "we,"
"our" or "us") should not rely solely on the forward-looking
statements and should consider all uncertainties and risks
discussed in the "Risk Factors" section and throughout the Annual
Report on Form 10-K for the year ended December 31, 2015.
The statements are only as of the date they are made, and the
Company undertakes no obligation to update any forward-looking
statement.
Possible events or factors that could cause results or
performance to differ materially from those expressed in our
forward-looking statements include the following: (i) events
related to our business and industry, such as: changes in general
economic conditions and economic conditions in the regions and
industries in which we operate, including global economic and trade
downturns, or significantly slower growth or declines in the money
transfer, payment service, and other markets in which we operate,
including downturns or declines related to interruptions in
migration patterns, or non-performance by our banks, lenders,
insurers, or other financial services providers; failure to compete
effectively in the money transfer and payment service industry,
including among other things, with respect to price, with global
and niche or corridor money transfer providers, banks and other
money transfer and payment service providers, including electronic,
mobile and Internet-based services, card associations, and
card-based payment providers, and with digital currencies and
related protocols, and other innovations in technology and business
models; deterioration in customer confidence in our business, or in
money transfer and payment service providers generally; our ability
to adopt new technology and develop and gain market acceptance of
new and enhanced services in response to changing industry and
consumer needs or trends; changes in, and failure to manage
effectively, exposure to foreign exchange rates, including the
impact of the regulation of foreign exchange spreads on money
transfers and payment transactions; any material breach of
security, including cybersecurity, or safeguards of or
interruptions in any of our systems or those of our vendors or
other third parties; cessation of or defects in various services
provided to us by third-party vendors; mergers, acquisitions and
integration of acquired businesses and technologies into our
Company, and the failure to realize anticipated financial benefits
from these acquisitions, and events requiring us to write down our
goodwill; political conditions and related actions in the United
States and abroad which may adversely affect our business and
economic conditions as a whole, including interruptions of United
States or other government relations with countries in which we
have or are implementing significant business relationships with
agents or clients; failure to manage credit and fraud risks
presented by our agents, clients and consumers; failure to maintain
our agent network and business relationships under terms consistent
with or more advantageous to us than those currently in place,
including due to increased costs or loss of business as a result of
increased compliance requirements or difficulty for us, our agents
or their subagents in establishing or maintaining relationships
with banks needed to conduct our services; decisions to change our
business mix; changes in tax laws, or their interpretation, and
unfavorable resolution of tax contingencies; adverse rating actions
by credit rating agencies; our ability to realize the
anticipated benefits from productivity and cost-savings and other
related initiatives, which may include decisions to downsize or to
transition operating activities from one location to another, and
to minimize any disruptions in our workforce that may result from
those initiatives; our ability to protect our brands and our other
intellectual property rights and to defend ourselves against
potential intellectual property infringement claims; our ability to
attract and retain qualified key employees and to manage our
workforce successfully; material changes in the market value or
liquidity of securities that we hold; restrictions imposed by our
debt obligations; (ii) events related to our regulatory and
litigation environment, such as: liabilities or loss of business
resulting from a failure by us, our agents or their subagents to
comply with laws and regulations and regulatory or judicial
interpretations thereof, including laws and regulations designed to
protect consumers, or detect and prevent money laundering,
terrorist financing, fraud and other illicit activity; increased
costs or loss of business due to regulatory initiatives and changes
in laws, regulations and industry practices and standards,
including changes in interpretations in the United States and
globally, affecting us, our agents or their subagents, or the banks
with which we or our agents maintain bank accounts needed to
provide our services, including related to anti-money laundering
regulations, anti-fraud measures, customer due diligence, agent and
subagent due diligence, registration and monitoring requirements,
and consumer protection requirements; liabilities or loss of
business and unanticipated developments resulting from governmental
investigations and consent agreements with or enforcement actions
by regulators, including those associated with compliance with or
failure to comply with the settlement agreement with the State of
Arizona, as amended; the potential impact on our business from the
Dodd-Frank Wall Street Reform and Consumer Protection Act (the
“Dodd-Frank Act”), as well as regulations issued pursuant to it and
the actions of the Consumer Financial Protection Bureau and similar
legislation and regulations enacted by other governmental
authorities related to consumer protection; liabilities resulting
from litigation, including class-action lawsuits and similar
matters, including costs, expenses, settlements and judgments;
failure to comply with regulations and evolving industry standards
regarding consumer privacy and data use and security; effects of
unclaimed property laws; failure to maintain sufficient amounts or
types of regulatory capital or other restrictions on the use of our
working capital to meet the changing requirements of our regulators
worldwide; changes in accounting standards, rules and
interpretations or industry standards affecting our business; and
(iii) other events, such as: adverse tax consequences from our
spin-off from First Data Corporation; catastrophic events; and
management's ability to identify and manage these and other
risks.
WU-GWU-F
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version on businesswire.com: http://www.businesswire.com/news/home/20170119005920/en/
Western UnionBill Chandler, Corporate
Communications+1
720-332-2014bill.chandler@westernunion.comorMike Salop, Investor
Relations+1 720-332-8276mike.salop@westernunion.comorMedia
hotline:+1 720-332-1000 (select option 3, then
2)media@westernunion.com
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