UPDATE 2-MoneyGram to forfeit $100 mln to settle U.S. fraud case

Fri Nov 9, 2012 1:30pm EST
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* Case involves violations of money laundering, fraud laws

* $100 mln to go to victims of fraud

* Case part of broader crackdown on money-laundering

Nov 9 (Reuters) - Payment transfer company MoneyGram International Inc agreed to forfeit $100 million and admitted it aided in wire fraud and failed to maintain an effective anti-money laundering program, according to court documents filed on Friday.

Between 2003 and 2009, the U.S. Justice Department said, the company processed thousands of transactions for its own agents who often tricked victims into wiring them money by posing as relatives or promising large cash prizes.

MoneyGram received thousands of complaints by customers who were victims of the fraud, but the company failed to terminate the agents that it knew were involved, the Justice Department said.

The company also admitted it failed to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act (BSA).

The case is one of the first big cases from a new crackdown against money laundering by banks and other financial institutions from the department's Money Laundering and Bank Integrity unit. While money-laundering charges have more often been brought as tag-along charges to other types of cases in the past, the new unit has been focused on the institutions that are required to take steps to catch and combat the potential laundering of funds.

Justice Department officials told Reuters in August they planned to bring more cases under the BSA against a broader spectrum of financial institutions than the department had in the past.   Continued...