The year 2016 marked the end of an era for the Arizona Attorney General’s Office as the $94 million dollar Western Union settlement with Arizona, Texas, New Mexico and California had all but evaporated. That settlement was a result of a case, which was the brainchild of Special Agents and Prosecutors of the Arizona Attorney General’s Office a decade earlier.
In that case, the government alleged that Western Union and other money transmitters facilitated money laundering with their money transmitting practices. The funds from the settlement were in part used to investigate complex money laundering cases.
In a February 3, 2014 press release, the Arizona Attorney General’s Office announced its intentions: “For the first time in history and as the result of a recently amended settlement agreement, Western Union and Arizona will take unprecedented and cooperative steps to combat money laundering. This includes Western Union’s commitment to continue to implement a series of anti-money laundering recommendations. By forging this cooperative and major undertaking, Arizona will be far better positioned to protect its citizens from border violence, gun running, and human and narcotic smuggling along the southwest border.”
Sadly, today there are no funds remaining from this settlement for the Arizona Attorney General’s Office to investigate these types of crimes which are often associated with many forms of criminal organizations including drug trafficking, human smuggling and terrorist organizations. The Brnovich administration requested an additional $10 million dollars late last year for shortfalls in the criminal investigations and prosecutions budget.
In 2015, this vacuum of funds was predicted, and a search for funds to continue these critical and expensive investigations was started, particularly for sustainable sources of funding. Then Assistant Chief Agent, Dr. Charles Loftus, proposed a fee for money transmitters much like the state of Oklahoma used for one of its specialized investigative units. Dr. Loftus, who worked on the Western Union case, indicated that using 2015 data, the estimated revenue for Arizona would be $12 to $14 million dollars annually, using a one dollar or percent fee for person-to-person transmissions generated within Arizona. Dr. Loftus added, “Now Walmart and many grocery stores are now offering money transmission services and the numbers are probably much higher than the 2015 estimate, more than enough to fully fund a specialized unit with Agents, Prosecutors and support staff.”
When this proposal was submitted to the Attorney General’s Office administration, it was not well received because it would be considered a tax and the Attorney General’s Office under the Brnovich administration didn’t want to propose a new tax to the Governor, who has taken a position against any new taxes. An odd position given that there is the opportunity to assess a fee on a huge amount of wealth being sent abroad every day, sometimes from illegal sources. The idea was shelved by Dr. Loftus until February of 2017.
“Build the wall” and bolster security at the border was the message from the newly sworn President. But with what funding? Dr. Loftus had an answer that should be revisited according to experts. Loftus’ model should be expanded on a national level. The estimate should get the attention of the DC crowd, around $1 billion annually if the Arizona model is used and money being sent outside the United State has a slightly higher fee attached. The bonus for the pro-Trump wall supporters is that in a roundabout way Mexico will pay for the wall while enhancing security.
Dr. Loftus posted the proposal on a new website http://www.azaml.com/ to generate some support for the idea. As of today, Dr. Loftus has not received a call from President Trump.
Related:
$94 Million Settlement to Aid Law Enforcement in Fighting Border Crime
UPDATE: Western Union Anti-Money Laundering Settlement Agreement