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Money Transfer Firm Ping Express Executives Given Prison Sentences for AML Failings

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Texas-based money transfer company, Ping Express, has pleaded guilty to federal charges that it failed to adequately maintain an anti-money laundering (AML) program, allowing $167 million to move overseas without appropriate oversight or controls. Two of the FinTech’s executives and a manager have been sentenced to a combined eight years in US federal prison.

Ping Express was found guilty of: 

  • Conducting currency exchanges without a license
  • Falsely claiming to have suspicious transaction reporting measures in place
  • Allowing customers to violate its own first-time customer transaction caps
  • Conducting business in states where it was not licensed
  • Having an inoperative transaction monitoring program 

The company faces five years of probation and a fine of up to $500,000. Sentencing for the company has been set for December 19.

AML failings

The DoJ highlighted that the company charged US customers a fee to remit money to beneficiaries in Nigeria and other African nations despite not being licensed to offer currency exchange services. Of the $167 million Ping Express transmitted over a three-year period, $160 million went to Nigeria. 

Despite being required by law to submit suspicious activity reports to regulators, Ping Express did not submit a single report within three years. The company also admitted to not fulfilling its customer due diligence (CDD) obligations under the Bank Secrecy Act. It failed to gather sufficient information about its customers or the source and purposes of the funds being transmitted. 

In a memo to state regulators, Ping Express claimed it would limit the amount its customers could transact over various time frames. The thresholds in the memo were $3,000 for daily transactions, $4,500 for monthly transactions, and $499. For first-time customer transactions. However, the DoJ noted that the company allowed more than 1,500 customers to violate these rules, referencing one instance where a customer was permitted to remit more than $80,000 in one month. 

Money mule red flags

According to the DoJ, three individuals previously pleaded guilty to using Ping Express to transfer monies that were obtained unlawfully. One individual, Collins Orogun, as a money mule, received a fee for transferring money for “romance scam” fraudsters and other criminals. In two years, Mr. Orogun received more than $1.3 million, which he moved into several US bank accounts before moving more than $1 million of the funds to Africa through Ping Express. Orogunfaces up to 20 years in federal prison and is due to be sentenced on January 23, 2023.

This is not the first time the risk of fraud has been highlighted through so-called “romance scams.” In 2021 a Nigerian national living in Oklahoma was sentenced to four years in prison for operating a money laundering network that defrauded elderly Americans out of at least $2.5m. In response, the DoJ said: “This case is part of an ongoing national effort by the Department of Justice to address online fraud schemes, including those based out of Nigeria, that target US citizens and residents.”

As highlighted in our State of Financial Crime 2022 Report, the use of money mules and money mule networks to launder funds is a typology that firms should pay close attention to. Firms should consider certain “red flag” behaviors or characteristics of money muling as part of their AML response. These include:

  • Transaction patterns that do not fit the customer’s risk profile 
  • High-risk transfer origins and destinations
  • Shell companies created to obscure beneficial ownership

Key takeaways

The Ping Express case demonstrates the high penalties enforcement bodies are prepared to impose for clear neglect when it comes to building and maintaining an AML program. It’s also a reminder that, beyond policies on paper, regulators will assess the true effectiveness of a firm’s approach in practice.

 

A Guide to the US Anti-Money Laundering Act (AMLA)

A comprehensive guide to the US Anti-Money Laundering Act (AMLA), the most significant AML legislation passed by Congress in decades.

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Originally published July 22, 2022, updated July 22, 2022

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