Apr 7, 2017
China's Ant seeks to allay MoneyGram security fears
Apr 7, 2017
China's Ant Financial tried to soothe security concerns about its proposed $880 million takeover MoneyGram International Inc on Thursday, saying it intends to store U.S. user data locally once the deal closes.
The finance affiliate of Alibaba Group Holding Ltd will meet MoneyGram's existing security infrastructure standards and invest in U.S. jobs, Ant's head of international strategy Douglas Feagin said.
"Any data collected on MoneyGram users in the U.S. will continue to reside on the same ironclad U.S.-based servers that meet the high security standards your customers trust today," Feagin said in an open letter.
Feagin added that Ant plans to invest in global compliance measures and anti-money laundering programs.
Ant agreed to buy MoneyGram in January, but last month Kansas-based Euronet Worldwide Inc made a rival offer and called on the U.S. government to scrutinise Ant's bid over "significant national security risks."
Euronet chief Michael Brown said Chinese ownership could compromise the relationship between law enforcement and MoneyGram when investigating money laundering and "terrorist financing".
Euronet said in a statement on Thursday that "the location of servers is completely irrelevant to the security of data," since the architecture of the servers will be controlled by the ultimate owner of MoneyGram.
MoneyGram could not immediately be reached for comment.
Ant's bid comes amid heightened tension between China and the United States over trade. It will be subject to a review by the Committee on Foreign Investment (CFIUS), a U.S. inter-agency panel that reviews foreign acquisitions for national security risks which has scuttled recent Chinese deals.
Dallas-based MoneyGram is one of the biggest firms in the global remittance market, offering services in around 350,000 stores across 200 countries. It would provide Ant with a coveted network of financial partnerships and form a lynchpin in their international strategy.
Over the past six months Ant has acquired strategic interests in payment firms in Thailand, South Korea and the Philippines, adding to existing investments in India. It plans to announce at least two further deals in Asia this year.
Euronet's initial proposal is valued at about $1 billion and MoneyGram has said it will carefully consider the offer.
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