Western Union settles for $3 million fine in Arizona

September 2, 2006

Western Union reached a $3 million settlement with regulators for the State of Arizona for its failure to comply with state reporting laws intended to help combat money laundering and illegal immigration.

Western Union Financial Services Inc. agreed with the Arizona Department of Financial Institutions to end or suspend its relationship with 14 outlets that failed to comply with state laws on reporting and documenting money transfers. The company agreed to pay a $1.6 million civil penalty, $1 million to a state task force on fraudulent identification and $400,000 to the state Department of Transportation.

Western Union also agreed to implement an enhanced compliance program and meet with department officials regularly to discuss compliance and supervision of its agent outlets. The agreement was signed in August.

Arizona officials, concerned about illegal immigration and smuggling activities, have stepped up their scrutiny of financial institutions in recent years. In 2004, a new state law made it easier for state prosecutors to seize money paid to migrant smugglers through money transfers.

The Department of Financial Institutions, working with attorney general's investigators, found that Western Union and its agents collected hard-to-read or otherwise unusable information on the identity of senders or receivers of money transfers at some locations. Also, Western Union's record- keeping was lax, and the company did not properly supervise its agents as required by the state.

'We will have a zero tolerance for those transmitters who are facilitating illegal immigration by failing to comply with the GTO and Arizona law,' the agency said in a statement.