Capital One 2006 Annual Report Download - page 34

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require verification of customer identification; and require financial institutions to have in place an anti-money laundering
program.
Interstate Taxation
Several states have passed legislation which attempts to tax the income from interstate financial activities, including credit
cards, derived from accounts held by local state residents. Based on the volume of our business in these states and the nature
of the legislation passed to date, we currently believe that this development will not materially affect our financial condition.
Legislation
Legislation has been enacted requiring additional disclosures for credit cards and other types of consumer lending. Such
legislation places additional restrictions on the practices of credit card issuers and consumer lenders generally. In addition to
the FCRA and FACT Act provisions discussed above, Congress has enacted broad changes to the federal Bankruptcy code,
including a sweeping reform of the consumer bankruptcy provisions which, while instituting a means test for individuals
filing under Chapter 13 and enacting other reforms, also requires credit card issuers to provide regular disclosures to
customers of the financial effect of regularly making only the minimum required payment on their accounts. Also, proposals
have been made to restrict certain consumer lending practices and expand the privacy protections afforded to customers of
financial institutions. The current Congress is holding hearings on credit card practices of various kinds, including fees,
marketing practices, and changing customers interest rates, but most analysts believe the prospects for broad legislation
range from uncertain to unlikely. Consequently it remains unclear whether and in what form any legislation will be adopted
or, if adopted, what its impact on us would be. Congress or individual states may in the future consider other legislation that
would materially and/or adversely affect the banking or consumer lending industries.
Sarbanes-Oxley Act Compliance
On July 30, 2002, the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act) was passed into law. The Sarbanes-Oxley Act
applies to all companies that are required to file periodic reports with the Securities and Exchange Commission (SEC) and
contains a number of significant changes relating to the responsibilities of directors and officers and reporting and
governance obligations of SEC reporting companies. In addition, the Sarbanes-Oxley Act also created the Public Company
Accounting Oversight Board (the PCAOB), a private sector, non-profit corporation whose mission is to oversee the
auditors of public companies. The PCAOB recommends rulemaking to the SEC and sets certain standards for the auditors
which it oversees. Since the passage of the Sarbanes-Oxley Act, we have taken a variety of steps which we believe places us
in substantial compliance with the effective provisions of the Sarbanes-Oxley Act. We continue to monitor SEC rulemaking
and PCAOB activities to determine if additional changes are needed to comply with provisions that may become effective in
the future. Furthermore, our management has supervised the design of, or has designed, internal controls and procedures to
provide reasonable assurances regarding the reliability of its financial reporting and disclosure controls and procedures to
ensure that material information regarding the Company is made known to them, particularly during the period in which this
Annual Report on Form 10-K is being prepared and has evaluated the effectiveness of those controls as more fully set forth in
Controls and Procedures below. We have, in compliance with Section 404 of the Sarbanes-Oxley Act, certified, in
connection with this Annual Report on Form 10-K, that we did not discover, during the execution of its internal control
processes, any material weaknesses. Managements assessment of the effectiveness of internal control over financial
reporting excludes the evaluation of the internal controls over financial reporting of North Fork Bancorporation and its
subsidiaries, which were acquired on December 1, 2006. In addition, our management policy is to disclose to our auditors
and the Audit and Risk Committee of the Board of Directors significant deficiencies, if any, in the design or operation of our
internal control over financial reporting, which are reasonably likely to adversely affect our ability to record, process,
summarize and report financial information, as well as any fraud, whether or not material, by those that have a significant
role in these processes.
International Regulation
The Bank faces regulation in foreign jurisdictions where it currently operates, and may, in the future, operate. Those
regulations may be similar to or substantially different from the regulatory requirements the Bank faces in the United States.
In the United Kingdom, the Bank operates through the U.K. Bank, which was established in 2000. The U.K. Bank is
regulated by the Financial Services Authority (FSA) and licensed by the Office of Fair Trading (OFT). The U.K. Bank is
an authorized deposit taker and thus is able to take consumer deposits in the U.K. The U.K. Bank has also been granted a
full license by the OFT to issue consumer credit under the U.K.s Consumer Credit Act1974. The FSA requires the U.K.
Bank to maintain certain regulatory capital ratios at all times, and it may modify those requirements at any time. The U.K.
Bank obtains capital through earnings or through additional capital infusion from the Bank, subject to approval under
Regulation K of the rules administered by the Federal Reserve. If the U.K. Bank is unable to generate or maintain sufficient
capital in favorable terms, it may choose to restrict its growth to maintain its required capital levels. In addition, the