CFPB and New York AG Sue MoneyGram 

MoneyGram

The federal Consumer Financial Protection Bureau (CFPB) and New York’s attorney general filed a federal lawsuit against MoneyGram International, Inc. and MoneyGram Payment Systems, Inc., alleging the companies failed to provide money to overseas recipients in a timely manner, according to a Thursday (April 21) news release.

The suit, filed in U.S. District Court for the Southern District of New York, states that MoneyGram is among the largest remittance providers in the United States and has been individuals in the United States to send billions of dollars abroad. The government agencies want to MoneyGram to compensate parties involved in botched transactions and to pay civil penalties.

The allegation comes amid MoneyGram’s planned acquisition by Madison Dearborn Partners, LLC, a Chicago-based private equity firm, for $1.8 billion.

Read more: MoneyGram Finds $1.8B Suitor in Madison Dearborn

The suit alleges MoneyGram frequently violated what often is called the Remittance Rule, a measure Congress passed in 2010 with the expressed intent to make money transfers more transparent and less risky than they had been.

“MoneyGram has repeatedly given senders inaccurate information about when their remittance transfers would be available to recipients abroad. When consumers have complained of remittance-transfer errors, MoneyGram has repeatedly failed to provide the investigations, responses, or remedies required by the Rule. MoneyGram has also failed to comply with policy-and-procedure and document-retention requirements,” the suit alleges.

“Our immigrant communities trusted MoneyGram to send their hard-earned money back home to loved ones but MoneyGram let them down,” New York Attorney General Letitia James said in a prepared statement. “Consumers deserve to know where their money went. Companies have an obligation to be transparent with consumers, treat them fairly, and follow the law, but MoneyGram repeatedly failed to do so.”

MoneyGram International Inc. is based in Dallas. Investors have included Thomas H. Lee Partners, L.P. and Goldman, Sachs & Co.

A news release from the CFPB states that the agency worked with MoneyGram shortly after the company came under the agency’s regulatory purview in 2014.

“When the CFPB began its MoneyGram examinations between 2014 and 2016, it found multiple problems,” the news release states. “Then in 2019, the CFPB did a subsequent exam to see if MoneyGram had followed through on promises to fix its problems. In short, for more than five years, the CFPB worked with MoneyGram to fully comply with the law, but MoneyGram continually failed to do so.”

The government’s announcement of the lawsuit adds: “MoneyGram is no stranger to financial crime and has violated law enforcement orders on multiple occasions with multiple government agencies. In 2009, the company agreed to pay $18 million to settle fraud charges brought by the Federal Trade Commission, and was required to implement a comprehensive anti-fraud and agent-monitoring program. But in 2018, after it was given ample time to implement that order, MoneyGram had to pay $125 million to settle allegations that it failed to do so. In 2012, MoneyGram agreed to forfeit $100 million and enter into a deferred prosecution agreement with the Department of Justice, admitting it criminally aided and abetted wire fraud and failed to maintain an effective anti-money laundering program. MoneyGram also violated that agreement. MoneyGram has also faced other law enforcement actions leading to significant redress and penalties.”

Bloomberg quoted a MoneyGram statement that reads: “The Bureau and NYAG know that MoneyGram has invested heavily in compliance to build a best-in-class compliance program with record-low anti-fraud numbers designed to protect consumers against harm. We have spent considerable time attempting to educate the CFPB about the Company’s robust and effective compliance efforts and the weakness of its case, including the complete absence of any consumer harm.”