MoneyGram disclosed it expects to pay a total of $15.8 million to settle two separate investigations by the New York State Department of Financial Services (NYDFS) and the Consumer Financial Protection Bureau (CFPB).
As part of an annual report filed with the Securities and Exchange Commission on Feb. 25, MoneyGram said it set aside $8.3 million to settle an inquiry by the NYDFS into the activities of “certain of our New York-based agents.” The New York investigation stems from a previous deferred prosecution agreement (DPA) entered into by MoneyGram with the Department of Justice (DOJ) in 2012 that was extended in 2018.
In November 2012, MoneyGram agreed to forfeit $100 million and enter a DPA with the DOJ for processing thousands of transactions for its own agents known to be engaging in a widespread money laundering scheme that defrauded tens of thousands of people out of at least $100 million.
In 2018, the DOJ extended the DPA for an additional 30 months, and MoneyGram agreed to pay an additional $125 million because of “significant weaknesses” the agency identified in the company’s anti-money laundering (AML) program. In May 2021, the company announced the DOJ concluded it had fulfilled its obligations under the DPA, including the approval of enhancements to its AML program by a compliance monitor.
In its annual report, MoneyGram disclosed it also set aside $7.5 million for a potential settlement with the CFPB regarding “four alleged violations under the Remittance Rule, the Electronic Fund Transfer Act, and the Consumer Financial Protection Act.” All these laws relate to federal money transfer regulations.
MoneyGram reported the CFPB sent it a civil investigative demand in March 2020 and followed that up with a notice and opportunity to respond and advise (NORA) letter in February 2021 “documenting the CFPB’s intent to take legal action against MoneyGram” for the four alleged violations. MoneyGram responded to the NORA letter in March 2021 and indicated negotiations with the CFPB may include a potential settlement.
MoneyGram announced Feb. 15 it agreed to be purchased by Madison Dearborn Partners for $11 per share in an all-cash transaction valued at approximately $1.8 billion, it said in a press release.
The transaction is expected to close in the fourth quarter of 2022, the company said.
Aaron Nicodemus covers regulatory policy and compliance trends for Compliance Week. He previously worked as a reporter for Bloomberg Law and as business editor at the Telegram & Gazette in Worcester, Mass.
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