Three of the largest revenue-producing Western Union locations in New York — including two Big Apple locations run by a married couple — “willfully ignored” state banking rules over an eight-year stretch and allowed criminals to launder payments of nearly $3 billion to human traffickers in China, state officials said Thursday.
The company, following a months-long probe, agreed to pay a $60 million fine and will report to state regulators periodically about their antimoney-laundering compliance, according to the state Department of Financial Services, which headed up the probe.
The third location, in Flushing, which was known to Western Union as Agent 3, was perhaps the company’s most important link to China.
“[Agent 3] is our top location to China in the entire United States,” a Western Union executive wrote in a 2011 email message, according to the settlement agreement. “Please note that we need to work together to keep this agent active while still satisfying our compliance requirements.”
Evidently, the company’s compliance requirements were not a top priority.
“Western Union executives put profits ahead of the company’s responsibilities to detect and prevent money laundering and fraud, by choosing to maintain relationships with and failing to discipline obviously suspect, but highly profitable, agents,” said Maria Vullo, the DFS boss.
All three Western Union locations — including one in lower Manhattan and one in Brooklyn’s Sunset Park — are in neighborhoods with large Chinese immigrant populations.
All locations were involved in “structuring” transactions, in which large amounts of money were broken up into amounts smaller than $2,000, according to the settlement. Transactions of less than that amount do not require the sender to show ID.
While the details of these transactions aren’t known, the owner of the Manhattan location “admitted to [investigators] that he knew that consumers paid their debt to human smugglers in China through Western Union,” according to a Justice Department settlement with the company last year.
In the settlement with US regulators, Western Union paid a $586 million fine to settle fraud and money-laundering allegations.
The three New York locations were all so important to Western Union’s business that the compliance officers went out of their way to give them a few days’ notice before showing up, according to the DFS settlement.
But even that didn’t deter the agent in Flushing.
During five visits to the business in 2011, a Western Union investigator saw “employees permitting (and in some cases, encouraging) customers to structure large transactions by enlisting friends or relatives to assist, and then dividing the larger transactions into smaller ones,” according to the DFS settlement.
Neither the names nor the addresses of the Western Union locations in New York were disclosed by the DFS.
The company, in a statement, said it is pleased the DFS’ inquiry has ended.