DALLAS, Texas  (AP) -- MoneyGram said Friday that it has agreed to set up a US$100 million compensation fund as part of a settlement of government allegations of fraud through money-transfer scams from 2003 to 2009.

Under the terms of the deal with the US Attorney's Office for the Middle District of Pennsylvania and the Department of Justice, MoneyGram International said it has also taken other steps to prevent more scams. These include adding more investigators and beefing up technology to detect fraud.

The payment services provider said it has terminated relationships with the agents suspected of masterminding the fraud. It said it has also overhauled its corporate compliance programme and began a new training programme for agents to better sniff out and report scams.

The company previously set aside the money to compensate victims.

"The conduct described in the (settlement agreement) is unacceptable to MoneyGram and counter to everything we strive to stand for," said Pamela H. Patsley, chairman and chief executive officer, in a statement. "We take compliance very seriously at MoneyGram, and nothing angers us more than when our services are used to perpetrate illegal activity."

The Dallas-based company also said Friday that it lost $54.1 million, or 77 cents per share, in its third quarter due to costs related to the fraud settlement and related legal expenses. It had net income of $15.8 million, or 22 cents per share, a year ago.

Its revenue rose five percent to $338.6 million from $322 million a year ago.

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