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Assistant Attorney General Leslie R. Caldwell Speaks at Treasury Roundtable on Financial Access for Money Service Businesses


Washington, DC
United States

Thank you for the kind introduction.  It is a pleasure to be here and to join Under Secretary [David S.] Cohen in welcoming you today.  I want to thank the Department of the Treasury for hosting this roundtable event.  Events like this are incredibly important as they encourage constructive and open dialogue between industry, regulators and law enforcement.  That kind of dialogue truly benefits all of us. 

Because protecting our financial system from exploitation by criminals and threats to national and international security requires close collaboration between the public and private sectors, I am particularly pleased to see that so many representatives from the financial industry are in attendance. 

In many instances, banks and money services businesses have been invaluable sources of information that has enabled law enforcement to bring criminals to justice both in the United States and abroad. 

Financial institutions often are our first line of defense against fraud, money laundering, terrorism financing and violations of sanctions laws.  Financial institutions that have money services businesses as customers have a particular responsibility to be attuned to the risks involved and not turn a blind eye to suspicious conduct.

Today, I’d like to speak about some cases prosecuted by the Criminal Division involving money services businesses and our view of the responsibilities of the financial institutions that provide banking and other financial services to those businesses. 

For a criminal enterprise to succeed, the criminals must be able to hide, move and get access to funds.  While most financial institutions are fully committed to avoiding doing business with criminals, some unfortunately still choose to put short-term profits ahead of doing both what is right and what they legally are required to do.  That’s where we come in.     

Within the Criminal Division, violations of the Bank Secrecy Act (BSA) are investigated and prosecuted by the Asset Forfeiture and Money Laundering Section – known as AFMLS – particularly its Money Laundering and Bank Integrity Unit.  In recent years, this unit has brought criminal charges against an array of businesses – ranging from the world’s largest banks to a local perfume dealer – for willful violations of the BSA. 

I’d like to focus today on two cases involving money services businesses.  The first case involves MoneyGram, the second largest money services business in the world, with over 275,000 locations in 190 countries. 

From 2004 to 2009, MoneyGram knew that certain of its agents were involved in consumer fraud schemes that preyed on the elderly and other vulnerable groups.  The schemes ranged from “lottery scams” in which victims falsely were promised large cash prizes to scams in which criminals placed distressed phone calls to victims falsely posing as a family member in trouble and in urgent need of cash. 

In addition, MoneyGram knew that some of its agents were involved in a large-scale money laundering scheme using the company’s money transfer system to conceal the movement of fraud proceeds.  Not only did MoneyGram fail to file SARs – suspicious activities reports – or terminate these agents, but, in certain circumstances, MoneyGram also actively assisted these agents by granting them additional outlets in which to operate.

Ultimately, in November 2012, as part of a deferred prosecution agreement, MoneyGram admitted to aiding and abetting wire fraud and to failing to maintain an effective anti-money-laundering program in violation of the BSA. 

The agreement required MoneyGram to forfeit $100 million, and those funds were used to compensate victims.  In addition, the government prosecuted 37 MoneyGram agents for their roles in the schemes.  Finally, as part of the resolution the company agreed to make significant enhancements and structural changes to its anti-money laundering program. 

The implementation of these enhancements is being overseen by an independent compliance monitor who reports regularly to the Department of Justice.  This outcome – strengthening the company’s anti-money-laundering program to prevent the recurrence of problems like that uncovered in our prosecution – is one of the most important types of results that the department can achieve.

The other case I’d like to discuss today involves Belair Payroll Services Inc., a multi-branch check cashing company that operated out of Queens, New York.  Our investigation revealed that Belair cashed more than $19 million in checks from purported health care companies that in fact had no legitimate business. 

The company also failed to obtain identification from certain customers, complied with customer requests not to file CTRs – currency transaction reports – with the government as required by law, or filed false CTRs, and concealed information from compliance officers. 

Ultimately, in November 2013, Belair pleaded guilty to violating the reporting and anti-money-laundering requirements of the BSA, and its owner pleaded guilty to conspiring to defraud the United States by willfully failing to pay income and payroll taxes.  Belair was required to forfeit over $3.2 million, and the owner was ordered to pay nearly $1 million in restitution. 

The Criminal Division is committed to investigating and prosecuting cases involving entities and individuals who willfully violate the BSA – the integrity of our financial system depends on it.   The Criminal Division does not seek to discourage financial institutions from serving money services business, or other lawful industries or businesses. 

We recognize that most money services businesses, even those considered “high risk,” are engaged in lawful activity, often providing critical financial services to those who may otherwise be excluded from the formal financial system. 

We also recognize that most financial institutions are fulfilling their BSA-related obligations by continuing to invest in anti-money laundering programs, training their employees to effectively identify and report suspicious activity, and cultivating collaborative relationships with one another and with law enforcement. 

As a result of these efforts, egregious conduct such as that in the MoneyGram and Belair cases is the exception, not the rule. 

The keys for financial institutions banking money services businesses (and other potentially high-risk clients) are to:  (1) know your customer; (2) understand the risks that a particular customer presents; (3) have an anti-money laundering program that works to effectively mitigate those risks; and (4) communicate with your regulators to ensure that the work you’re doing to mitigate those risks is sufficient.

All of us here today share the goal of ensuring a financial system free from illicit proceeds and criminal abuse.  The Department of Justice recognizes that pursuit of that goal does not require perfection. 

As noted in the FinCEN Statement on providing banking services to money services businesses, as a practical matter, it is not possible for a bank to detect and report all potentially illicit transactions that flow through an institution. 

But financial institutions must develop systems to identify money laundering activity, pay attention to whether their money services business customers are engaged in suspicious activity, and report it if they are. 

The Criminal Division is determined to hold both institutions and individuals accountable for criminal BSA violations.  Enforcement of these laws is an important part of keeping America’s financial infrastructure free from criminal activity, while enabling access for legitimate and lawful businesses.

I am grateful for the opportunity to welcome you today, and am confident that this forum will prompt meaningful discussion regarding these important issues. 

Thank you.

Updated January 13, 2015