|[November 09, 2012]
MoneyGram Reaches Agreement with U.S. Authorities
DALLAS --(Business Wire)--
MoneyGram (News - Alert) International, Inc. (NYSE:MGI), a leading global payment
services company, announced today that it has reached a settlement with
the U.S. Attorney's Office for the Middle District of Pennsylvania
("MDPA") and the Asset Forfeiture and Money Laundering Section of the
Criminal Division of the Department of Justice ("US DOJ") relating to
the previously disclosed investigation of transactions involving certain
of the Company's U.S. and Canadian agents, as well as its fraud
complaint data and consumer anti-fraud program, during the period from
2003 to early 2009. In connection with this settlement, the Company
entered into a deferred prosecution agreement ("DPA") with the MDPA and
US DOJ dated as of November 8, 2012.
Under the terms of the DPA, no further action will be taken against
MoneyGram by the MDPA and US DOJ if it meets the conditions set forth in
the agreement. As part of the agreement, the Company has agreed to the
appointment of an independent compliance monitor and a forfeiture of
$100 million that will be available to victims of the consumer fraud
scams perpetrated through MoneyGram agents. MoneyGram has previously
disclosed in its annual reports and other public filings that it was in
discussions with authorities concerning this investigation. As announced
on July 26, 2012, MoneyGram made an accrual in the second quarter of
2012 for $30 million and as announced on November 9, 2012, the Company
made an additional accrual in the third quarter of 2012 for $70 million
related to this matter.
MoneyGram cooperated with the MDPA and US DOJ during this investigation.
In considering the settlement agreement, the MDPA and US DOJ
acknowledged MoneyGram's cooperation, implementation and maintenance of
remedial measures and undertakings to continue to enhance compliance
beyond the enhancements already made.
"The conduct described in the DPA's statement of facts is unacceptable
to MoneyGram and counter to everything we strive to stand for," said
Pamela H. Patsley, chairman and chief executive officer at MoneyGram.
"We take compliance very seriously at MoneyGram, and nothing angers us
more than when our services are used to perpetrate illegal activity.
Since 2009, we've created a new culture at the company and have taken
numerous steps to enhance our global compliance and anti-fraud programs."
She continued, "These actions include the addition of new management and
significant investments and enhancements to staffing, processes and
technology, all of which is geared toward preventing consumer fraud and
ensuring we meet the highest levels of regulatory compliance. During
that time, we have invested more than $84 million in our compliance
programs. We remain fully committed to conducting our business with the
highest levels of integrity and remain vigilant in our efforts to
partner with law enforcement and regulators to thwart illegal activity."
MoneyGram has taken remedial actions and implemented new compliance
standards to strengthen its anti-fraud and anti-money laundering
programs. A summary of these actions includes:
Terminated relationships with agents suspected to be involved in
consumer fraud related to the MDPA and US DOJ investigation and aided
in the prosecution of agents involved in criminal activities.
Paid $18 million as part of an agreement with the Federal Trade
Commission in October of 009, pursuant to which the FTC (News - Alert) distributed
the funds to consumers who were victims of the consumer fraud
perpetrated through MoneyGram agents.
Overhauled its global compliance, AML and anti-fraud organization with
a focus on building a more comprehensive compliance-based culture. The
Chief Compliance Officer has the authority to terminate MoneyGram
agents for fraud or money-laundering concerns.
Created two new executive-level positions with responsibility for
enhancing efforts to combat consumer fraud, fostering cooperation with
law enforcement, enhancing interaction with U.S. and International
regulators and enhancing MoneyGram's compliance systems.
Bolstered global compliance and risk management procedures by
implementing a risk-based agent audit program which includes the
implementation of a new anti-fraud alert system and a financial
intelligence unit both of which are responsible for monitoring
transactions and agent behavior.
Implemented a new agent training program that provides information on
the types of consumer fraud scams as well as how to detect, prevent,
report and handle suspicious transactions.
Strengthened partnerships with law enforcement globally to assist in
the investigation and prosecution of money laundering, fraud and other
matters. In the U.S., those agencies include the Federal Bureau of
Investigation, U.S. Immigration & Customs Enforcement, U.S. Marshals
Service, Drug Enforcement Agency, U.S. Secret Service, and U.S. Postal
MoneyGram is committed to ensuring that it remains in strict compliance
with all applicable laws, regulations and standards in each of the
markets and jurisdictions in which it operates.
About MoneyGram International, Inc.
MoneyGram International, Inc. is a leading global payment services
company. The Company's major products and services include global money
transfers, money orders and payment processing solutions for financial
institutions and retail customers. MoneyGram is a New York Stock
Exchange listed company with 293,000 global money transfer agent
locations in 197 countries and territories. For more information, visit
the Company's website at moneygram.com.
Forward Looking Statements
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements with respect to, among other things, the financial
condition, results of operations, plans, objectives, future performance
and business of MoneyGram and its subsidiaries. Forward-looking
statements can be identified by words such as "believes," "estimates,"
"expects," "projects," "plans," "will," "should," "could," "would" and
other similar expressions. These forward-looking statements speak only
as of the date they are made, and MoneyGram undertakes no obligation to
publicly update or revise any forward-looking statement, except as
required by federal securities law. These forward-looking statements are
based on management's current expectations and are subject to certain
risks, uncertainties and changes in circumstances due to a number of
factors. These factors include, but are not limited to: the impact of
the $100 million forfeiture on our financial condition and results of
operations, the Company's compliance with the terms of the deferred
prosecution agreement, the effect of the settlement and compliance with
the deferred prosecution agreement on the Company's reputation and
business; the outcome of ongoing investigations by several state
governments; our ability to maintain key agent or biller relationships,
or a reduction in transaction volume from these relationships; our
substantial debt service obligations, significant debt covenant
requirements and credit rating; our capital structure and the special
voting rights provided to designees of Thomas H. Lee Partners, L.P. on
our Board of Directors; sustained financial market illiquidity, or
illiquidity at our clearing, cash management and custodial financial
institutions; continued weakness in economic conditions, in both the
United States and global markets; a material slow down or complete
disruption of international migration patterns; litigation involving
MoneyGram or its agents, which could result in material settlements,
fines or penalties; fluctuations in interest rates; our ability to
manage credit risks from our retail agents and official check financial
institution customers; our ability to manage fraud risks from consumers
or agents; the ability of MoneyGram and its agents to maintain adequate
banking relationships; our ability to retain partners to operate our
official check and money order businesses; our ability to maintain
sufficient capital; our ability to attract and retain key employees; our
ability to successfully develop and timely introduce new and enhanced
products and services; investments in new products, services or
infrastructure changes; our ability to adequately protect our brand and
intellectual property rights and to avoid infringing on the rights of
others; our ability to compete effectively; the ability of us and our
agents to comply with U.S. and international laws and regulations,
including the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010; changes in tax laws or an unfavorable outcome with respect to
the audit of our tax returns or tax positions, or a failure by us to
establish adequate reserves for tax events; our offering of money
transfer services through agents in regions that are politically
volatile or, in a limited number of cases, are subject to certain
restrictions by the Office of Foreign Assets Control; a security or
privacy breach in our facilities, networks or databases; disruptions to
our computer network systems and data centers; our ability to
effectively operate and adapt our technology to match our business
growth; our ability to manage risks related to the operation of retail
locations and the acquisition or start-up of businesses; our ability to
manage risks associated with our international sales and operations; our
ability to maintain effective internal controls; and the risks and
uncertainties described in the "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections of MoneyGram's public reports filed with the SEC (News - Alert),
including MoneyGram's Form 10-K for the year ended December 31, 2011 and
its Form 10-Q for the quarters ended September 30, 2012.
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