Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5976
    -0.0030 (-0.50%)
     
  • NZD/EUR

    0.5534
    -0.0009 (-0.16%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • NZD/JPY

    90.4470
    -0.3330 (-0.37%)
     

Western Union (WU) Faces $60M Fine for Lapses in Compliance

Western Union Co. WU will be paying $60 million on account of lapses in compliance programs during 2004-2012 period. Earlier, the world’s leading money transfer company accrued $49 million toward resolution of this matter

This payment will be made by Western Union to New York Department of Financial Services (NYDFS) to resolve violations of the state’s law arising out of the facts set forth in the deferred prosecution agreement (DPA) with the U.S. Department of Justice (DoJ).

The DoJ stated that during 2004-2012, Western Union violated U.S. laws as it processed hundreds of thousands of transactions for agents and others engaged in an international consumer fraudulent scheme.

As part of this scheme, fraudsters made contact with victims in the U.S. posing as family members in need or promised prizes or job prospects. The fraudsters compelled the victims to send money through Western Union to help their relative or claim a prize.

ADVERTISEMENT

However, he NYDFS acknowledged that since 2012, the company made a concerted efforts toward enhancing compliance strategy. To this end, it has made significant investments in compliance spending. The company has also successfully navigated the Southwest Border Anti-Money Laundering Compliance Program, which indicates its inclination toward checking illegal money laundering.

The enhanced compliance program is being undertaken by the company to protect its well-established brand name.

Providing secure and legal transactions is one of the main purviews of a money transfer company and Western Union is trying its best to deliver on this.

This is also evident from a more than 200% increase in overall compliance funding by the company over the past six years. Western Union spends approximately $200 million per year on compliance and has more than one-fifth of its workforce dedicated to these functions.

Apart from investing in compliance, the company is also spending on technology to keep pace with the rapid shift in the space from physical to electronic money transfer. High compliance and investment costs are expected to pressurize the company's bottom line. The company has also seen a weak top line growth since past many quarters due to soft volumes from oil producing countries, forex volatility, stiff competition and weak economy in some parts of the world.

These factors have cumulatively weighed on the company’s share price which are down 8.7% against its industry’s rally of 37.7%.

Western Union carries a Zacks Rank #3 (Hold). Some better-ranked players in the same space are Alliance Data Systems Corp. ADS, FleetCor Technologies, Inc. FLT and Green Dot Corp. GDOT. Each of these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Alliance Data beat estimates in each of the four reported quarters with an average positive surprise of 2.7%.

FleetCor posted a positive earnings surprise in each of the four quarters with an average of 2.5%.

Green Dot beat estimates in each of the four reported quarters with an average positive surprise of 26.9%.

5 Medical Stocks to Buy Now

Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia and other conditions.

New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.

Click here to see the 5 stocks >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
FleetCor Technologies, Inc. (FLT) : Free Stock Analysis Report
 
Alliance Data Systems Corporation (ADS) : Free Stock Analysis Report
 
Green Dot Corporation (GDOT) : Free Stock Analysis Report
 
Western Union Company (The) (WU) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research