MasterCard 2009 Annual Report Download - page 40

increased significantly in the last several years. See “Business—Government Regulation” in Part I, Item 1 for a
detailed description of such regulation and related legislation. Examples of such regulation and related legislation
include:
• Anti-money laundering regulation, such as Section 352(a) of the USA PATRIOT Act and an anti-money
laundering law enacted in India (which imposes requirements on payment systems, such as
MasterCard’s, and their customers).
• Payment systems regulation, such as the Indian Payments and Settlement Systems Act 2007, under
which payment system operators, such as MasterCard, operate under the authority and broad oversight
of the Reserve Bank of India. Increased regulatory focus in this area could result in additional
obligations or restrictions with respect to the types of products that we may offer to consumers, the
countries in which our cards may be used and the types of cardholders and merchants who can obtain or
accept our cards.
• Regulations imposed by OFAC, which impose restrictions on financial transactions with certain
countries and with persons and entities included on the SDN List. It is possible that transactions
involving persons or entities on the SDN List may be processed through our payment system, and that
our reputation may suffer due to some of our financial institutions’ association with these countries or
the existence of any such transactions, which in turn could have a material adverse effect on the value of
our stock.
• Legislation enacted by certain U.S. states (and pending in other states) regarding investments by pension
funds and other retirement systems in companies that have business activities or contacts with countries
that have been identified as terrorist-sponsoring states and similar legislation may be pending in other
states. As a result of such legislation, pension funds and other retirement systems may be subject to
reporting requirements with respect to investments in companies such as ours or may be subject to limits
or prohibitions with respect to those investments that may materially and adversely affect our stock
price.
• Issuer practices legislation and regulation, including the Credit CARD Act (which is being implemented
by the Board of Governors of the United States Federal Reserve System), which will have a significant
impact on the disclosures made by our customers and on our customers’ account terms and business
practices by, among other things, making it more difficult for credit card issuers to price credit cards for
future credit risk and significantly affecting the pricing, credit allocation, and business models of most
major credit card issuers. Additional regulations include recently adopted regulations by the Board of
Governors regulating overdraft fees imposed in connection with ATM and debit card transactions.
• Financial industry regulation, such as the proposed CFPA (passed by the U.S. House of
Representatives), which could have significant authority to regulate consumer financial products,
including consumer credit, deposit, payment, and similar products (although it is not clear whether the
CFPA would be authorized to regulate aspects of payment card network operations).
• Regulation of Internet transactions, including legislation enacted by the U.S. Congress (and applicable
to payment system participants, including MasterCard and our U.S. customers) requiring the coding and
blocking of payments for certain types of Internet gambling transactions, as well as various additional
legislative and regulatory activities with respect to Internet transactions which are being considered in
the United States.
Increased regulatory focus on us, such as in connection with the matters discussed above, may result in
costly compliance burdens and/or may otherwise increase our costs, which could materially and adversely impact
our financial performance. Similarly, increased regulatory focus on our customers may cause such customers to
reduce the volume of transactions processed through our systems, which would reduce our revenues materially
and adversely impact our financial performance. Finally, failure to comply with the laws and regulations
discussed above to which we are subject could result in fines, sanctions or other penalties, which could materially
and adversely affect our results of operations and overall business, as well as have an impact on our reputation.
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