French Regulator Assesses Record Fine Against Western Union for AML Lapses

By Gabriel Vedrenne

France’s record €1 million penalty against Western Union for a litany of anti-money laundering violations signals an increasingly aggressive enforcement approach, sources told ACAMS

In a 14-page ruling published Jan. 15, France’s Prudential Supervision and Resolution Authority, or ACPR, cited the U.S.-headquartered money services business for 10 breaches of AML rules from January 2014 to June 2017, including failures to vet high-risk clients adequately and report suspicious activity to Tracfin, the country’s financial intelligence unit.

The penalty, while miniscule in comparison to the hundreds of millions of dollars Western Union has paid to U.S. authorities in recent years, is only the second levied by the ACPR against an MSB in nine years and shatters the €100,000 fine it assessed in July 2018 against another American MSB, Sigue Global Services, for similar violations.

“This sanction and the increasing activity [in this area] of the ACPR are meant to show that this authority is serious and that financial institutions should pay attention to it,” said Blandine Cordier Palasse, founder of BCP Executive Search, a recruitment firm for compliance professionals. “France is clearly doing everything possible to catch up.”

The regulator launched disciplinary proceedings against Western Union in February 2017, four months after an onsite inspection unearthed shortcomings with the MSB’s procedures for identifying politically exposed persons and vetting clients sending funds to Turkey, Syria and other high-risk jurisdictions.

Western Union’s €6,000 threshold for screening clients for political connections at the time was “not provided for by the regulatory provisions applicable to this category of customers,” the ACPR claimed in the ruling.

The ruling describes at least 14 instances in which Western Union stopped doing business with a client but failed to report them to Tracfin, and at least one instance in which the MSB added a customer to an internal blacklist without notifying the agency.

Western Union also did not report a customer who in 30 months made a total of 363 transfers to 23 persons in five countries, including high-risk jurisdictions, all while variably representing himself to staff as a job seeker or self-employed.

The unprecedented penalty against Western Union is motivated by regulatory efforts to address the vulnerability of MSBs to terrorist financiers and quash the perception that France is soft on corruption, Florence Schlegel, an attorney with Simon Associes in Paris, said.

Global advocacy group Transparency International currently ranks France’s efforts on corruption behind those of 22 other nations, including the United Arab Emirates and Estonia.

“That’s why the French authorities consider it high time to change and to be respected abroad,” Schlegel said.

Topics : Anti-money laundering , Counterterrorist Financing , Money Services Businesses
Source: France
Document Date: January 22, 2019