Deferred prosecution agreement MoneyGram: What it is and why it matters
MoneyGram International Inc. is a well-known American money transfer company that allows people to send and receive money worldwide. However, in 2012, the company found itself in hot water with the United States Department of Justice (DOJ) for failing to prevent or stop fraudulent money transactions that amounted to millions of dollars. As a result, MoneyGram entered into a deferred prosecution agreement (DPA) with the DOJ to avoid prosecution.
What is a deferred prosecution agreement (DPA)?
A deferred prosecution agreement is a legal arrangement between the Department of Justice and a company that has committed a crime. It is a form of alternative dispute resolution that allows the company to avoid prosecution by agreeing to take specific actions to remedy the situation. The DPA also imposes various conditions on the company, such as paying a fine and implementing new compliance measures to prevent future misconduct. The DOJ must approve the terms of the DPA, and if the company complies with all conditions, it will avoid criminal charges.
What happened with MoneyGram?
In 2012, MoneyGram entered into a deferred prosecution agreement with the DOJ to avoid prosecution for its role in facilitating fraudulent money transfers. MoneyGram had failed to identify and stop fraudulent transactions that amounted to over $100 million. The victims of the fraud were largely elderly people who were scammed by fraudulent telemarketers posing as family members in need of urgent financial assistance. MoneyGram had also failed to implement adequate compliance measures, despite knowing about the fraudulent activity.
As part of the DPA, MoneyGram agreed to pay a fine of $100 million and to implement new compliance measures to prevent future fraudulent activity. MoneyGram also agreed to retain an independent compliance monitor who would oversee its compliance efforts for five years.
Why does it matter?
The MoneyGram deferred prosecution agreement is significant because it highlights the importance of preventing and detecting fraudulent activity in the financial industry. It also shows that the DOJ is willing to use deferred prosecution agreements to hold companies accountable for their actions. The DPA allowed MoneyGram to avoid criminal prosecution by taking responsibility for its actions and agreeing to implement new measures to prevent similar misconduct in the future.
In conclusion, the MoneyGram deferred prosecution agreement is a reminder that companies must take their compliance responsibilities seriously. It also shows that the DOJ is committed to using all available tools to hold companies accountable for their actions. By entering into the DPA, MoneyGram avoided criminal charges and took steps to prevent future fraudulent activity. The agreement is a win-win situation for the company, its customers, and the financial industry as a whole.