MoneyGram! Who can buy it?

In recent weeks, all eyes in the payments world, especially in the money transfer world, have been watching Ant Financial’s acquisition of MoneyGram. The news was announced in January 2017.

To say everyone is surprised is an understatement. MoneyGram is doing badly with the stock price, but overall it is doing well with the company. Although Goliath was challenged in several areas, he was successful.

Then a Chinese payment company made an offer out of the blue.

The day after the initial announcement, those who opposed this agreement were determined to post something negative about this possible merger.

Spin Doctor is installed.

Since then, the merger has had a major negative impact on the press. Senators, congressmen, and forward-thinking payment companies sign the National Security Agreement: that the Chinese government, through a Chinese company to buy MoneyGram, will have access to US citizens (especially military personnel using MoneyGram) on a scale like never before.

The proposed use and inferred patterns of this data could devastate and benefit the Chinese government. We will talk about this later.

Euronet

As expected, someone in the money transfer industry had to take the opportunity to contact one of the biggest and most respected names in the money transfer industry. Face the facts: Few people know Ria Financial. Despite her number 3 (after Western Union and MoneyGram), Ria is tall, but she has a branding issue (sorry about Ria’s size, that’s right!). Ria is owned by Euronet and the third largest bid for players has been a welcome respite for many who feared MG was going to China.

Just a week ago, Ant Financial increased the MG acquisition by $ 1.3 billion.

MoneyGram + Ant-Financial merger scenario

Here are some ideas, in no particular order:

• The CFIUS (the United States Foreign Investment Committee) has received many personal letters, emails, and various meetings (pictured) for those who believe business is a serious and damaging issue to the national security of the United States.

As ridiculous as the above statement is, let’s take a look at some of the points that are considered toxic under the current agreement. The threat to the security of the merger has some merit.

• In a company like MoneyGram, there is no secret technology that CFIUS thoroughly investigates, rather than buying a semiconductor company or an Internet infrastructure manufacturing company.

• The technology is not explored here. In fact, the technology is outdated (even by today’s standards), as is the money transfer industry. Very nascent, if we can say it.

• Access to historical data and the possible export of such confidential data (transactions) to the United States is a major concern.

• Access to the KYC information file on MoneyGram, which can be used by the Chinese government for correlation and/or profiling.

MoneyGram was investigated by the Department of Justice (DoJ) in 2012, where the anti-money laundering program was investigated.

To avoid convictions, MG has agreed to a $ 100 million (DPA) deferred promotion agreement to support and encourage telecommunications activities and to comply with the legal obligation imposed by the Bank Secrecy Act and several national regulators.

You can read the DoJ DPA here:

It is wrong to assume that MG is getting a relaxed hand from the regulator (state or federal). However, MG will oversee the regulator in the DPA, and in the event of a merger with Ant Financial, control may increase.

As a licensed money transmitter/company, MG must locate consumer and transaction data. This is required by law.

• FinCEN will also play a central role in this merger event. FinCEN is expected to participate in the approval process and may develop conditions to control access to data within federal and state guidelines. It also reduces the risk of loss or unauthorized use.

• CFIUS is also authorized to request additional measures that require further investigation. This will directly increase the benchmark for an AML / Compliance program within the merged entity.

What people usually don’t realize is that Ali Financial, Ant Financial, is already authorized to transfer money to various states in the United States. See the NMLS record below:

Does this mean the Chinese government already has access to US financial / consumer data?

No. And to assume otherwise would be totally unwise speculation.

City detectives repeatedly check money transfer companies to ensure that access to the information is strictly limited, even if it is only the parties through which the transaction is being sent. External actors do not have access to the data.

Party actors also have limited access. For example, don’t assume that your Social Security number and date of birth will be shared free of charge with correspondents outside the United States. It is strictly necessary to know that it will likely be necessary to investigate when an FMU outside of the United States submits an AML or CTF-related flag transaction.

It is true that Ant Financial has Chinese shareholders (National Social Security Fund – NSSF and China Investment Corporation). It’s not clear how much the Chinese government has, but the last time I read it I think it’s closer to something like a 15% stake in Ant Financial.

CFIUS will consider this very carefully and explore possible scenarios in which and how Ant Financial may influence this information to the benefit of the Chinese government.

The intelligence community in the United States will certainly be consulted and give their formal opinion (of a technical and tactical nature on anything under the control of intelligence agencies). It’s not that the money here is big ($ 1 billion  another billion is a donation from the US). What is analyzed with in-depth research is how financial data can be misused. Could there be a scenario where the new government could legally (or illegally) use the data to develop enhanced profiles of US personnel (government or otherwise)?

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