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Wednesday, February 17, 2010

Western Union Settles Suits

Western Union settles Ariz. suits, will pay to fight money laundering by Mexican cartels.

Washington Post

Western Union Financial Services and the state of Arizona announced a settlement Thursday in which the company will pay $94 million to resolve a series of lawsuits over whether the money-transfer network was doing enough to combat money laundering by Mexican drug cartels and human smugglers.

Under court-approved terms, Western Union will pay $21 million to reimburse the state's legal and law enforcement costs between 2003 and 2007, contribute $50 million to a novel law enforcement grant program directed by the attorneys general of the four states on the U.S.-Mexico border and commit $23 million to strengthen its own anti-money-laundering efforts under an independent monitoring program.

Arizona Attorney General Terry Goddard (D) said the deal, under which Arizona, California, New Mexico and Texas would each distribute at least $7 million in border security grants for technology and personnel, would increase coordination for state anti-trafficking efforts across the 2,000-mile frontier. By comparison, he said his office's annual budget for anti-laundering operations is $2 million.

The settlement marks "a huge step forward in terms of cooperation and new resources for investigating and prosecuting border crime," Goddard said, where "we've gotten out-gunned and out-teched at almost every turn" by transnational narco-trafficking groups. "Attacking the flow of illicit funds from the United States to smuggling cartels in Mexico is fundamental to our goal of crushing the cartels."

David Schlapbach, executive vice president and general counsel of Western Union, said in a statement, "Assisting law enforcement in its efforts to combat illegal activity serves the public interest on both sides of the border and helps protect those who use our services."

The pact resolves claims that Western Union was not doing enough to prevent abuse of its services, which Arizona authorities said had become a favored payment system for human-smuggling networks. The company said that Goddard's requests and state warrants for large volumes of data on suspicious payments were unconstitutionally broad and violated the privacy of its customers.

Last June, the Arizona Supreme Court ruled that Goddard exceeded his authority in seeking records of transfers exceeding $500 from 29 other U.S. states to Sonora, the Mexican state directly south of Arizona. Western Union discussed the anticipated settlement during its October quarterly earnings announcement.

Terry Goddard Details Western Union Settlement

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