Western Union Reaches Agreements to Resolve U.S. Investigations
Settlements relate to conduct that mainly occurred 2004 to 2012;
Company has increased compliance funding 200 percent in the last five years;
Business performance for 2016 in line with previous outlook
The Western Union Company (NYSE: WU) today announced agreements with the U.S. Department of Justice (DOJ) and Federal Trade
Commission (FTC) that resolve previously disclosed investigations focused primarily on the Company’s oversight of certain agents
and whether its anti-fraud program, as well as its anti-money laundering controls, adequately prevented misconduct by those agents
and third parties. The conduct at issue mainly occurred from 2004 to 2012.
As part of this resolution, Western Union will enter into a deferred prosecution agreement with the DOJ and a consent order with
the FTC. The Company will pay a total of $586 million to the federal government, which is to be used to reimburse consumers who
were victims of fraud during the relevant period. Western Union also will take specific actions to further enhance its oversight of
agents and its protection of customers. Those actions will be reviewed by an independent compliance auditor for three years.
Western Union said: “We share the government’s goal of protecting consumers and the integrity of our global money transfer
network, and we worked hard to resolve these matters with the government.” The Company emphasized: “We are committed to enhancing
our compliance programs to prevent illicit activity on our network and protect customers who transfer money to
friends, family and businesses.”
Over the past five years, Western Union increased overall compliance funding by more than 200 percent, and now spends
approximately $200 million per year on compliance, with more than 20 percent of its workforce currently dedicated to compliance
functions. The comprehensive improvements undertaken by the Company have added more employees with law enforcement and regulatory
expertise, strengthened its consumer education and agent training, bolstered its technology-driven controls and changed its
governance structure so that its Chief Compliance Officer is a direct report to the Compliance Committee of the Board of
Directors.
Many state, national and international regulators and law enforcement agencies have commended Western Union in recent years for
its compliance innovations, such as developing algorithms to help combat terrorist financing, and for assisting with numerous
investigations.
Western Union noted that its compliance enhancements have produced significant and measurable results. The incidence of consumer
fraud reports associated with Western Union money transfers has been extremely low – less than one-tenth of 1 percent of all
consumer-to-consumer money transfer transactions during the past 10 years. And, over the last five years, the dollar value of
reported fraud in consumer-to-consumer transactions, compared with the total value of all such transactions, has dropped more than
60 percent.
In late November 2016, as had previously been requested by the Company, the DOJ provided to the Company a proposal for a
combined resolution of investigations by the U.S. Attorney’s Offices for the Eastern and Middle Districts of Pennsylvania, the
Central District of California and the Southern District of Florida, which the Company sought to coordinate with the resolution of
other potential government claims. The Company and the government agencies then engaged in intensive negotiations, which led to the
agreements announced today.
In addition to the resolution of the previously disclosed DOJ and FTC investigations, the Company will simultaneously resolve,
without any additional payment or non-monetary obligations, potential claims by the U.S. Treasury Department’s Financial Crimes
Enforcement Network (FinCEN) relating to conduct in the 2010 to 2012 period that FinCEN contended violated the Bank Secrecy Act.
The Company received a notice of investigation from FinCEN in mid-December 2016. The separate agreement with FinCEN sets forth a
civil penalty of $184 million, the full amount of which will be deemed satisfied by the $586 million compensation payment under the
DOJ and FTC agreements.
Western Union anticipates taking a charge of approximately $570 million in its 2016 fourth quarter, to record the costs
associated with the settlements, fees for the required independent compliance auditor, and related matters. This amount is in
addition to amounts previously accrued in 2016 in connection with the FTC matter. The Company intends to claim a deduction for the
settlement payment, but because the tax effect is not certain the Company does not anticipate recording a related tax benefit in
the fourth quarter.
Excluding the fourth-quarter charge, the Company anticipates reporting 2016 financial results in line with its financial outlook
provided on November 1, 2016. Western Union will report its full fourth-quarter results on February 9, 2017.
About Western Union
The Western Union Company (NYSE: WU) is a leader in global payment services. Individuals and families around the world count on
Western Union to reliably and efficiently transfer billions of dollars each year to pay for education, purchase necessities, run
businesses and/or help relatives. These services provide an economic lifeline to many people who lack access to the traditional
financial system, and play an important role in supporting developing economies.
As of September 30, 2016, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of
over 550,000 agent locations in more than 200 countries and territories and over 100,000 ATMs and kiosks, and included the
capability to send money to billions of accounts. In 2015, The Western Union Company completed 262 million consumer-to-consumer
transactions worldwide, moving $82 billion of principal between consumers, and 508 million business payments.
For more information, visit www.westernunion.com.
Safe Harbor Compliance Statement for Forward-Looking Statements
This press release contains certain statements that are forward-looking within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied
by, our forward-looking statements. Words such as "expects," "intends," "anticipates," "believes," "estimates," "guides," "provides
guidance," "provides outlook" and other similar expressions or future or conditional verbs such as "may," "will," "should,"
"would," "could," and "might" are intended to identify such forward-looking statements. Readers of this press release of The
Western Union Company (the "Company," "Western Union," "we," "our" or "us") should not rely solely on the forward-looking
statements and should consider all uncertainties and risks discussed in the "Risk Factors" section and throughout the Annual Report
on Form 10-K for the year ended December 31, 2015. The statements are only as of the date they are made, and the Company
undertakes no obligation to update any forward-looking statement.
Possible events or factors that could cause results or performance to differ materially from those expressed in our
forward-looking statements include the following: (i) events related to our business and industry, such as: changes in general
economic conditions and economic conditions in the regions and industries in which we operate, including global economic and trade
downturns, or significantly slower growth or declines in the money transfer, payment service, and other markets in which we
operate, including downturns or declines related to interruptions in migration patterns, or non-performance by our banks, lenders,
insurers, or other financial services providers; failure to compete effectively in the money transfer and payment service industry,
including among other things, with respect to price, with global and niche or corridor money transfer providers, banks and other
money transfer and payment service providers, including electronic, mobile and Internet-based services, card associations, and
card-based payment providers, and with digital currencies and related protocols, and other innovations in technology and business
models; deterioration in customer confidence in our business, or in money transfer and payment service providers generally; our
ability to adopt new technology and develop and gain market acceptance of new and enhanced services in response to changing
industry and consumer needs or trends; changes in, and failure to manage effectively, exposure to foreign exchange rates, including
the impact of the regulation of foreign exchange spreads on money transfers and payment transactions; any material breach of
security, including cybersecurity, or safeguards of or interruptions in any of our systems or those of our vendors or other third
parties; cessation of or defects in various services provided to us by third-party vendors; mergers, acquisitions and integration
of acquired businesses and technologies into our Company, and the failure to realize anticipated financial benefits from these
acquisitions, and events requiring us to write down our goodwill; political conditions and related actions in the United States and
abroad which may adversely affect our business and economic conditions as a whole, including interruptions of United States or
other government relations with countries in which we have or are implementing significant business relationships with agents or
clients; failure to manage credit and fraud risks presented by our agents, clients and consumers; failure to maintain our agent
network and business relationships under terms consistent with or more advantageous to us than those currently in place, including
due to increased costs or loss of business as a result of increased compliance requirements or difficulty for us, our agents or
their subagents in establishing or maintaining relationships with banks needed to conduct our services; decisions to change our
business mix; changes in tax laws, or their interpretation, and unfavorable resolution of tax contingencies; adverse rating actions
by credit rating agencies; our ability to realize the anticipated benefits from productivity and cost-savings and other
related initiatives, which may include decisions to downsize or to transition operating activities from one location to another,
and to minimize any disruptions in our workforce that may result from those initiatives; our ability to protect our brands and our
other intellectual property rights and to defend ourselves against potential intellectual property infringement claims; our ability
to attract and retain qualified key employees and to manage our workforce successfully; material changes in the market value or
liquidity of securities that we hold; restrictions imposed by our debt obligations; (ii) events related to our regulatory and
litigation environment, such as: liabilities or loss of business resulting from a failure by us, our agents or their subagents to
comply with laws and regulations and regulatory or judicial interpretations thereof, including laws and regulations designed to
protect consumers, or detect and prevent money laundering, terrorist financing, fraud and other illicit activity; increased costs
or loss of business due to regulatory initiatives and changes in laws, regulations and industry practices and standards, including
changes in interpretations in the United States and globally, affecting us, our agents or their subagents, or the banks with which
we or our agents maintain bank accounts needed to provide our services, including related to anti-money laundering regulations,
anti-fraud measures, customer due diligence, agent and subagent due diligence, registration and monitoring requirements, and
consumer protection requirements; liabilities or loss of business and unanticipated developments resulting from governmental
investigations and consent agreements with or enforcement actions by regulators, including those associated with compliance with or
failure to comply with the settlement agreement with the State of Arizona, as amended; the potential impact on our business from
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as well as regulations issued pursuant to it
and the actions of the Consumer Financial Protection Bureau and similar legislation and regulations enacted by other governmental
authorities related to consumer protection; liabilities resulting from litigation, including class-action lawsuits and similar
matters, including costs, expenses, settlements and judgments; failure to comply with regulations and evolving industry standards
regarding consumer privacy and data use and security; effects of unclaimed property laws; failure to maintain sufficient amounts or
types of regulatory capital or other restrictions on the use of our working capital to meet the changing requirements of our
regulators worldwide; changes in accounting standards, rules and interpretations or industry standards affecting our business; and
(iii) other events, such as: adverse tax consequences from our spin-off from First Data Corporation; catastrophic events; and
management's ability to identify and manage these and other risks.
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Western Union
Bill Chandler, Corporate Communications
+1 720-332-2014
bill.chandler@westernunion.com
or
Mike Salop, Investor Relations
+1 720-332-8276
mike.salop@westernunion.com
or
Media hotline:
+1 720-332-1000 (select option 3, then 2)
media@westernunion.com
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