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MoneyGram Reaches Agreement with U.S. Authorities

  MoneyGram Reaches Agreement with U.S. Authorities

Business Wire

DALLAS -- November 09, 2012

MoneyGram International, Inc. (NYSE:MGI), a leading global payment services
company, announced today that it has reached a settlement with the U.S.
Attorney’s Office for the Middle District of Pennsylvania (“MDPA”) and the
Asset Forfeiture and Money Laundering Section of the Criminal Division of the
Department of Justice (“US DOJ”) relating to the previously disclosed
investigation of transactions involving certain of the Company’s U.S. and
Canadian agents, as well as its fraud complaint data and consumer anti-fraud
program, during the period from 2003 to early 2009. In connection with this
settlement, the Company entered into a deferred prosecution agreement (“DPA”)
with the MDPA and US DOJ dated as of November 8, 2012.

Under the terms of the DPA, no further action will be taken against MoneyGram
by the MDPA and US DOJ if it meets the conditions set forth in the agreement.
As part of the agreement, the Company has agreed to the appointment of an
independent compliance monitor and a forfeiture of $100 million that will be
available to victims of the consumer fraud scams perpetrated through MoneyGram
agents. MoneyGram has previously disclosed in its annual reports and other
public filings that it was in discussions with authorities concerning this
investigation. As announced on July 26, 2012, MoneyGram made an accrual in the
second quarter of 2012 for $30 million and as announced on November 9, 2012,
the Company made an additional accrual in the third quarter of 2012 for $70
million related to this matter.

MoneyGram cooperated with the MDPA and US DOJ during this investigation. In
considering the settlement agreement, the MDPA and US DOJ acknowledged
MoneyGram’s cooperation, implementation and maintenance of remedial measures
and undertakings to continue to enhance compliance beyond the enhancements
already made.

“The conduct described in the DPA’s statement of facts is unacceptable to
MoneyGram and counter to everything we strive to stand for,” said Pamela H.
Patsley, chairman and chief executive officer at MoneyGram. “We take
compliance very seriously at MoneyGram, and nothing angers us more than when
our services are used to perpetrate illegal activity. Since 2009, we’ve
created a new culture at the company and have taken numerous steps to enhance
our global compliance and anti-fraud programs.”

She continued, “These actions include the addition of new management and
significant investments and enhancements to staffing, processes and
technology, all of which is geared toward preventing consumer fraud and
ensuring we meet the highest levels of regulatory compliance. During that
time, we have invested more than $84 million in our compliance programs. We
remain fully committed to conducting our business with the highest levels of
integrity and remain vigilant in our efforts to partner with law enforcement
and regulators to thwart illegal activity.”

MoneyGram has taken remedial actions and implemented new compliance standards
to strengthen its anti-fraud and anti-money laundering programs. A summary of
these actions includes:

  *Terminated relationships with agents suspected to be involved in consumer
    fraud related to the MDPA and US DOJ investigation and aided in the
    prosecution of agents involved in criminal activities.
  *Paid $18 million as part of an agreement with the Federal Trade Commission
    in October of 2009, pursuant to which the FTC distributed the funds to
    consumers who were victims of the consumer fraud perpetrated through
    MoneyGram agents.
  *Overhauled its global compliance, AML and anti-fraud organization with a
    focus on building a more comprehensive compliance-based culture. The Chief
    Compliance Officer has the authority to terminate MoneyGram agents for
    fraud or money-laundering concerns.
  *Created two new executive-level positions with responsibility for
    enhancing efforts to combat consumer fraud, fostering cooperation with law
    enforcement, enhancing interaction with U.S. and International regulators
    and enhancing MoneyGram’s compliance systems.
  *Bolstered global compliance and risk management procedures by implementing
    a risk-based agent audit program which includes the implementation of a
    new anti-fraud alert system and a financial intelligence unit both of
    which are responsible for monitoring transactions and agent behavior.
  *Implemented a new agent training program that provides information on the
    types of consumer fraud scams as well as how to detect, prevent, report
    and handle suspicious transactions.
  *Strengthened partnerships with law enforcement globally to assist in the
    investigation and prosecution of money laundering, fraud and other
    matters. In the U.S., those agencies include the Federal Bureau of
    Investigation, U.S. Immigration & Customs Enforcement, U.S. Marshals
    Service, Drug Enforcement Agency, U.S. Secret Service, and U.S. Postal
    Service.

MoneyGram is committed to ensuring that it remains in strict compliance with
all applicable laws, regulations and standards in each of the markets and
jurisdictions in which it operates.

About MoneyGram International, Inc.

MoneyGram International, Inc. is a leading global payment services company.
The Company's major products and services include global money transfers,
money orders and payment processing solutions for financial institutions and
retail customers. MoneyGram is a New York Stock Exchange listed company with
293,000 global money transfer agent locations in 197 countries and
territories. For more information, visit the Company's website at
moneygram.com.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including statements
with respect to, among other things, the financial condition, results of
operations, plans, objectives, future performance and business of MoneyGram
and its subsidiaries. Forward-looking statements can be identified by words
such as “believes,” “estimates,” “expects,” “projects,” “plans,” “will,”
“should,” “could,” “would” and other similar expressions. These
forward-looking statements speak only as of the date they are made, and
MoneyGram undertakes no obligation to publicly update or revise any
forward-looking statement, except as required by federal securities law. These
forward-looking statements are based on management’s current expectations and
are subject to certain risks, uncertainties and changes in circumstances due
to a number of factors. These factors include, but are not limited to: the
impact of the $100 million forfeiture on our financial condition and results
of operations, the Company’s compliance with the terms of the deferred
prosecution agreement, the effect of the settlement and compliance with the
deferred prosecution agreement on the Company’s reputation and business; the
outcome of ongoing investigations by several state governments; our ability to
maintain key agent or biller relationships, or a reduction in transaction
volume from these relationships; our substantial debt service obligations,
significant debt covenant requirements and credit rating; our capital
structure and the special voting rights provided to designees of Thomas H. Lee
Partners, L.P. on our Board of Directors; sustained financial market
illiquidity, or illiquidity at our clearing, cash management and custodial
financial institutions; continued weakness in economic conditions, in both the
United States and global markets; a material slow down or complete disruption
of international migration patterns; litigation involving MoneyGram or its
agents, which could result in material settlements, fines or penalties;
fluctuations in interest rates; our ability to manage credit risks from our
retail agents and official check financial institution customers; our ability
to manage fraud risks from consumers or agents; the ability of MoneyGram and
its agents to maintain adequate banking relationships; our ability to retain
partners to operate our official check and money order businesses; our ability
to maintain sufficient capital; our ability to attract and retain key
employees; our ability to successfully develop and timely introduce new and
enhanced products and services; investments in new products, services or
infrastructure changes; our ability to adequately protect our brand and
intellectual property rights and to avoid infringing on the rights of others;
our ability to compete effectively; the ability of us and our agents to comply
with U.S. and international laws and regulations, including the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010; changes in tax laws or
an unfavorable outcome with respect to the audit of our tax returns or tax
positions, or a failure by us to establish adequate reserves for tax events;
our offering of money transfer services through agents in regions that are
politically volatile or, in a limited number of cases, are subject to certain
restrictions by the Office of Foreign Assets Control; a security or privacy
breach in our facilities, networks or databases; disruptions to our computer
network systems and data centers; our ability to effectively operate and adapt
our technology to match our business growth; our ability to manage risks
related to the operation of retail locations and the acquisition or start-up
of businesses; our ability to manage risks associated with our international
sales and operations; our ability to maintain effective internal controls; and
the risks and uncertainties described in the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
sections of MoneyGram’s public reports filed with the SEC, including
MoneyGram’s Form 10-K for the year ended December 31, 2011 and its Form 10-Q
for the quarters ended September 30, 2012.

Contact:

MoneyGram International, Inc.
Media:
Patty Sullivan, 214-303-9923
media@moneygram.com
or
Investors:
Eric Dutcher, 214-999-7508
edutcher@moneygram.com
 
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