In a recent announcement made by the U.S Justice Department, MoneyGram had agreed to pay a fine of $100 million. This fine is supposed to cater for the admitted offence of abetting and criminally aiding fraud wire transfers and failing to keep effective anti-fraud laundering programs. MoneyGram and many of its competitors play a key role in helping criminals steal and launder millions of dollars annually. Much of this cash is stolen from mid-size and small businesses. However, the U.S Justice Department statement seems to talk about issues be totally unrelated to these cybercrimes.
The scams which MoneyGram is accused of being part of by the department include one which targeted the elderly and other vulnerable groups. These scams include criminals posing as relatives of the victims who are in urgent need of cash. The criminals also falsely promised the victims large amounts in cash prize money or even being ‘secret shoppers’ for supposed rich person. The targeted victims were however required to send funds first through MoneyGram.
According to the government, the MoneyGram problems were deep rooted. There has been an old conflict between the security staff of the organization and its sales and marketing department. Also, among the firm’s problems is the neglect to deal with staff fraud wittingly by the employer.
Customers of MoneyGram have for a long time been launching complaints of fraud. However, the firm has never taken any initiative to deal with the crime yet it knew the agents who were perpetrating these crimes. Starting 2003, the firm’s fraud department pointed to the senior management the identity of fraud abetting agents and even recommended the termination of their relationship with the firm. None of these recommendations ever got approved because they weren’t signed or approved by senior staff in the sales and marketing department. Because of this, the fraud cases reported in the U.S and Canada grew from a small 1,575 in 2004 to 19,614 in 2008.
When the fraud figures are consolidated for years between 2004 and 2009, MoneyGram customers reported fraud cases of amounts totaling to around $100 million. The U.S AG’s office for the Middle District of Pennsylvania has drawn up charges of money laundering and fraud against 28 former agents of MoneyGram.
MoneyGram is fairly large. Even though the $100 million fine might seem colossal, you have to see in light of the fact that MoneyGram has 293,000 agent locations in almost every country you can think of. In other words, it is one of the largest organizations with a surefooted global presence.
Current figures are not available on how much MoneyGram has managed to transact in transfers this year. However, 2010 figures show that the organization transferred over $19 billion around the world. According to this source, MoneyGram is the second largest transfer company in the world. It is only second to the Western Union, which also happens to be struggling with similar anti-money laundering issues.
Even though criminals are becoming increasingly sophisticated, there is no denying that they are employing the same tactic in almost every cyberheist attack. In most of the reported cases, the controller of a firm is the one who opens an email which has been garnished with a malware attachment. Once the attachment is opened, the cybercriminals are able to access and remotely take control of the controller’s PC and hence the firm’s system.
With the stolen bank credentials of the firm, the criminals are able to access the bank accounts and see the available balances in readiness to plunder. The next thing the hackers do is add mules onto the payroll of the victim. For total success of this scam, the mules have to explicitly be advised by the hackers to go to their bank and wire the funds but in smaller amounts. The mules use close by MoneyGram and the Western Union agents to wire the money.
These crooks have made it their business to target small and medium-size businesses.
