MoneyGram plagued by tech, human error in OFAC sanctions settlement

The 359 transactions totaled $105,627 in value and were processed on behalf of approximately 40 individuals on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), as well as two individuals who initiated transactions linked to Syria.

OFAC determined the case to be “non-egregious.”

The details: Over a three-year period from March 2013 to April 2016, MoneyGram provided money transfer services to inmates as allowed by the Department of Justice’s Federal Bureau of Prisons (BOP). However, OFAC noted, the company did not screen inmates against the SDN List between March 2013 and January 2015, believing this was not expected under the BOP program.

“At the time of the transactions, MoneyGram had reason to know, based on payment details or attestations from customers, that these transactions may have a nexus to a blocked person or sanctioned jurisdiction, but nonetheless processed them based on an erroneous misunderstanding of its obligations or because of other screening failures,” OFAC stated.

Even when MoneyGram began screening the transactions, technology failures and human error allowed the lapses to continue, according to OFAC’s web notice. This included the processing of transactions for an additional blocked person. Human error was specifically cited regarding the Syria transactions, as MoneyGram analysts “improperly determined that the commercial transactions qualified as noncommercial, personal remittances.”

MoneyGram discovered the apparent violations as part of ongoing efforts to improve its compliance program and voluntarily self-disclosed the matter to OFAC.

Remedial measures: OFAC noted the majority of the problematic transactions MoneyGram processed would have been eligible for a license from the regulator.

MoneyGram has further improved its sanctions compliance procedures by:

• Retiring its legacy screening system and launching a new, enhanced system to monitor transactions;
• Implementing screening for all BOP-related transactions and denying services to commissary accounts that belong to known blocked persons based on daily screening; and
• Implementing additional training to its agent network to increase the quality of data collected.

Additionally, MoneyGram in 2016 increased its compliance department by 128 employees, appointed a new chief compliance officer, and significantly increased its investment in compliance-related functions.

“As part of its agreement with OFAC, MoneyGram said it will continue its implementation of these and other compliance commitments,” the regulator stated.

Compliance message: “This action highlights that money services businesses that are processing transactions for individuals worldwide … should understand the sanctions risks associated with those services and should take steps necessary to mitigate those risks,” OFAC stated. “In addition, this action highlights the importance of maintaining robust sanctions screening software and processes, especially for U.S. companies that operate globally.”