Western Union to pay $94 million to settle dispute over suspected smuggled money

Western Union to pay $94 million to settle dispute

PHOENIX — Western Union has agreed to a $94 million settlement Thursday in disputes with Arizona prosecutors that center on the state’s effort to reduce the flow of immigrant and drug smuggling money through wire transfers.

The deal includes $50 million for a nonprofit center that will offer grants to law enforcement agencies in California, Arizona, New Mexico and Texas to tackle money laundering and the smuggling of immigrants, drugs and guns along the 2,000-mile border.

“We have literally changed the game,” Arizona Attorney General Terry Goddard said of the settlement accepted by Maricopa County Superior Court.

The deal ends several years of disputes over whether Arizona prosecutors should have access to certain records of wire transfers, and whether they can seize suspected smuggling money headed to northern Mexico.

Authorities also have alleged in court that Western Union had some unscrupulous agents who knowingly helped smugglers send money to Mexico.

Western Union will pay $7 million to each of three Arizona law enforcement agencies to pay for costs of investigating the company and its agents.

The company will spend another $19 million to strengthen its own anti-money laundering efforts and pay an additional $4 million for independent monitoring of those efforts.

As part of the settlement, Western Union also will provide unprecedented access and analysis of records of wire transfers.

Joseph Cachey, Western Union’s chief compliance officer, said the company is doing more monitoring of transfers and research of its agents in the field.

“If you took a look at our business today, compared to maybe four years ago, you’d see that the transaction data would show that there is a completely different type of picture being painted,” Cachey said.

Authorities said the smuggling proceeds that flow through wire transfer services come mostly through immigrant smuggling, though some drug smugglers use wire services.

Many federal law enforcement agencies and analysts believe that $25 billion in drug proceeds are smuggled out of the U.S. each year. Most of the money is sneaked across the border in cars.

In Arizona alone, immigrant smuggling has been estimated to be a $1.7 billion a year business.

For more than four years, Goddard had used special court orders that allowed his prosecutors to seize $17 million in wire transfers flowing to Arizona that authorities said were payments to smugglers.

Prosecutors said their previous efforts were so successful that smugglers began to route their payments from other American states to northern Mexico.

Authorities responded by trying to seize money transfers going into the northern Mexican state of Sonora.

Western Union challenged such seizures, arguing Arizona prosecutors had no power to interfere with transfers into another country.

Last summer, the Arizona Supreme Court put the brakes on the effort by authorities.

On the Net:

Arizona Attorney General’s Office: www.azag.gov/

Western Union: www.westernunion.com/