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Comment by josu | Hacker News Reader

>guilty of not being zealous enough at being a quasi-law enforcement agency and investigating its customer transactions...

Did we read the same article?

>Western Union (...) admitted "to aiding and abetting wire fraud" by allowing scammers to process transactions, even when the company realized its agents were helping scammers avoid detection

Furthermore:

>Between 2004 and 2012, the Colorado-based company knew of fraudulent transactions but failed to take steps that would have resulted in disciplining of 2,000 agents, authorities said.

If the prosecutors were able to prove that WU was aware that the transactions were fraudulent your comment makes no sense. They didn't need to be "a quasi-law enforcement agency" because they already knew that the transactions were fraudulent.

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You realize you are taking the prosecutions press release at face value, don't you?

If a few WU employees helped a few customers navigate the compliance hurdles, and some of those customers happened to be scammers, the press release would say the same thing.

> were able to prove

It's not 100% clear they were able to prove anything versus being able to corner WU into a settlement.

if WU agreed to a settlement of this size, its pretty safe to say that there's at least a good chance it would have been proven.

Or the settlement is well under the profit made from the crime.

That is irrelevant. They wouldn't settle if they could get away with not paying anything.

Say you rob a bank for 1 million. The federal government offers you a deal that if you pay 100k you will be free and clear of all charges. You don't take that deal? You'd prefer to risk a decade in prison (at 10k a year)?

That decision should be independent on whether there was 1 million or 10k in the bank when you robbed it. The proceeds from the robbery is a sunk cost (well in this case a profit). Your decision should be purely based on forward cash flows and outcome, you pay 100k or you do not and you take the risk to do jail time.

I never considered it that way but that makes sense.

Whether you stole 1M or 10k makes a big difference to the expected utility of a 100k loss, which is obvious if you consider someone who doesn't actually have 100k left to spend on a fine.

What kind of "good chance"? 20%? 5%? The economics probably favour settling even if it's as low as that.

There is a significant problem in the US with essentially extortion of financial companies by various Federal and State agencies. The risk of a conviction for financial misconduct is not the financial penalty, it is the consequences which would essentially destroy the company as the regulators would lock them out of markets.

Companies may very well be in the wrong and deserve punishing - but all they get are massive fines. Agencies like it because it looks good and money is always handy. Companies don't mind it as it removes risk (share prices often go up in the aftermath) and individuals don't get punished. That last part is the important bit, the individuals at fault here are able to continue to operate in regulated financial services roles, they can continue to be directors of companies etc.

Did they know of specific instances of fraud or just more generally that it was going on?

even when the company realized its agents were helping scammers avoid detection

I'm inclined to say on the record here that actively assisting and rendering aid to someone seeking avoid fraud detection kind of answers that question right off the bat

Yea, this could mean that a WU employee explained to a customer why they were being refused service, and explained how they'd have to redo their request in order to send money.

The prosecution will spin it as in cahoots, when it could have just been good customer service explaining a bunch of stupid rules.

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