- The firm’s revenues fell by more than 49% on Friday
- MoneyGram executives say that the revenue decrease was due to higher compliance standards
- Kahn Swick & Foti and Schall Law Firm are now investigating MoneyGram separately
Multiple law firms are now investigating MoneyGram International after the money transfer brand agreed to forfeit $125 million for not complying with a previous agreement with the US Department of Justice. The news was followed by a decrease in the company’s revenues, according to Business Wire.
Although MoneyGram has relatively low overseas transfer rates, revenues fell by more than 49% on Friday but the company says, their decreased revenue is due to higher compliance standards, insinuating that it is not because of the investigations.
Kahn Swick & Foti, LLC (KSF) reportedly started its investigations on Friday. The law firm has former Louisiana Attorney General Charles C Foti, Jr as one of its partners giving said inquiry a heavier weight in the eyes of analysts. Los Angeles-based law firm Schall also announced that it is starting its own probe. In a press release, Schall Law Firm representatives encouraged those who believe that the company did not disclose pertinent information to its investors to contact the firm. Several other firms have stated they are investigating MoneyGram too.
Last week, the Department of Justice told the media that the $125 million forfeited by the company was due to a lack of resolution to allegations concerning aiding wire fraud and failing to maintain anti-money laundering controls. According to reports, several individuals and entities were able to transfer money internationally without going through the anti-money laundering protocols. Although this was not deliberate based on what analysts say, the DOJ said that MoneyGram “experienced significant weaknesses in its anti-money laundering (“AML”) and anti-fraud program during the term of the Agreement which caused a substantial rise in consumer fraud transaction. The company also failed to inform the DOJ about the weaknesses in the system. As a consequence, MoneyGram admitted to processing an estimated $125 million “in additional fraud transactions.”
KSF is reportedly focusing on finding out whether the company’s directors breached fiduciary duties to their shareholders. Find out more about the money transfer industry here.