First Data 2013 Annual Report Download - page 14

payment instrument sales be invested in high-quality marketable securities prior to the settlement of the transactions. Such licensing laws also may cover
matters such as regulatory approval of consumer forms, consumer disclosures and the filing of periodic reports by the licensee, and require the licensee to
demonstrate and maintain levels of net worth. Many states also require money transmitters, issuers of payment instruments and their agents to comply with
federal and/or state anti-money laundering laws and regulations.
Government agencies may impose new or additional rules on money transmission and sales of payment instruments, including regulations which
(i) impose additional identification, reporting or recordkeeping requirements; (ii) limit the entities capable of providing the sale of payment instruments; and
(iii) require additional consumer disclosures.
The Company is subject to unclaimed or abandoned property (escheat) laws in the U.S. and abroad which require the Company
to turn over to certain government authorities the property of others held by the Company that has been unclaimed for a specified period of time such as, in the
Integrated Payment Systems business, payment instruments that have not been presented for payment or, in the Retail and Alliance Services segment, account
balances that cannot be returned to a merchant following discontinuation of its relationship with the Company. A number of the Company’s subsidiaries hold
property subject to escheat laws and the Company has an ongoing program to comply with those laws. The Company is subject to audit by individual U.S.
states with regard to the Company’s escheatment practices.
 A number of the Company’s clients are financial institutions that are directly subject to various regulations and
compliance obligations issued by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and other agencies responsible for
regulating financial institutions. While these regulatory requirements and compliance obligations do not apply directly to the Company, many of these
requirements materially affect the services the Company provides to its clients and the Company overall. To remain competitive, the Company expends
significant resources to assist its clients in meeting their various compliance obligations, including the cost of updating the Company’s systems and services
as necessary to allow the Company’s clients to comply with applicable laws and regulations, and the cost of dedicating sufficient resources to assist the
Company’s clients in meeting their new and enhanced oversight and audit requirements established by the Consumer Protection Financial Bureau, the Office
of the Comptroller of the Currency and others. The Company expects to expend significant resources on an ongoing basis in an effort to assist its clients in
meeting their legal requirements.
Stored-value services offered to issuers by First Data Prepaid Services (“FDPS”) in the U.S., and by First Data’s International businesses (“First
Data International”) outside the U.S. are subject to various federal, state and foreign laws and regulations, which may include laws and regulations related to
consumer and data protection, licensing, escheat, anti-money laundering, banking, trade practices and competition and wage and employment. These laws
and regulations are evolving, unclear and sometimes inconsistent and subject to judicial and regulatory challenge and interpretation, and therefore the extent to
which these laws and rules have application to, and their impact on, FDPS, First Data International, financial institutions, merchants or others is in flux. At
this time the Company is unable to determine the impact that the clarification of these laws and their future interpretations, as well as new laws, may have on
FDPS, First Data International, financial institutions, merchants or others in a number of jurisdictions. These services may also be subject to the rules and
regulations of the various international, domestic and regional schemes, Networks and Associations in which FDPS, First Data International and the card
issuers participate. These schemes, Networks or Associations may, generally in their discretion, modify these rules and regulations and such modifications
could also impact FDPS, First Data International, financial institutions, merchants and others.
In addition, the Housing Assistance Tax Act of 2008 included an amendment to the Internal Revenue Code that requires information returns to be made
for each calendar year by merchant acquiring entities and third-party settlement organizations with respect to payments made in settlement of payment card
transactions and third-party payment network transactions occurring in that calendar year. This requirement to make information returns applies to returns
for calendar years beginning after December 31, 2010. Reportable transactions are also subject to backup withholding requirements. The Company could be
liable for penalties if it is not in compliance with these regulations.
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