MasterCard 2014 Annual Report Download - page 14

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individual markets and a heightened focus on working with governments has improved our ability to serve a broad array of
participants in global payments.
Government Regulation
General. Government regulation impacts key aspects of our business. We are subject to regulations that affect the payments
industry in the many countries in which our cards and payment devices are used. See “Risk Factors-Legal and Regulatory Risks”
in Part I, Item 1A of this Report.
Interchange Fees. Interchange fees associated with four-party payments systems like ours are being reviewed or challenged in
various jurisdictions around the world. Examples include:
• legislation to regulate interchange fees (such as the legislation expected to be adopted by the European Union in 2015);
• competition-related regulatory proceedings (such as the European Commission’s December 2007 decision restricting our
cross-border interchange fees, which was ultimately upheld in September 2014);
• central bank regulation (such as in Australia); and
• litigation (such as the merchant litigations in the United States, Canada and the United Kingdom).
For more detail, see our risk factors in “Risk Factors - Legal and Regulatory Risks” in Part I, Item 1A of this Report related to
regulation of payment systems, including interchange fees and related practices. Also see Note 18 (Legal and Regulatory
Proceedings) to the consolidated financial statements included in Part II, Item 8.
Payments System Regulation. Regulators in several countries around the world either have, or are seeking to establish, authority
to regulate certain aspects of the payments systems in their countries. Such authority could result in regulation of various aspects
of our business. Payment system oversight also could be used to provide resources or preferential treatment or other protection
to selected domestic payments and processing providers, such as in Russia and Ukraine. See our risk factors in “Risk Factors -
Legal and Regulatory Risks” in Part I, Item 1A related to payments system regulation and government actions that may prevent
us from competing effectively. Additionally, we are or may be subject to regulations related to our role in the financial industry
and our relationship with our financial institution customers. For example, certain of our operations are periodically reviewed by
the U.S. Federal Financial Institutions Examination Council under its authority to examine financial institutions’ technology service
providers.
No-Surcharge Rules. We have historically implemented policies in certain regions that prohibit merchants from charging higher
prices to consumers who pay using MasterCard products instead of other means. Authorities in several jurisdictions have acted
to end or limit the application of these no-surcharge rules (or indicated interest in doing so), including in Australia and Canada.
Additionally, pursuant to the terms of settlement of the U.S. merchant class litigation, we have modified our no-surcharge rules
to permit U.S. merchants to surcharge credit cards, subject to certain limitations.
Data Protection and Information Security. Aspects of our operations or business are subject to privacy and data protection laws
in the United States, the European Union and elsewhere. For example, in the United States, we and our customers are respectively
subject to Federal Trade Commission and federal banking agency information safeguarding requirements under the Gramm-Leach-
Bliley Act that require the maintenance of a written, comprehensive information security program. Due to constant changes to
the nature of data, regulatory authorities around the world are considering numerous legislative and regulatory proposals concerning
privacy and data protection. In addition, the interpretation and application of these privacy and data protection laws in the United
States, Europe and elsewhere are often uncertain and in a state of flux. See our risk factor in “Risk Factors - Legal and Regulatory
Risks” in Part I, Item 1A of this Report related to regulation in the areas of consumer privacy, data use and/or security.
Anti-Money Laundering. MasterCard is subject to anti-money laundering (“AML”) laws and regulations, including the USA
PATRIOT Act. We have implemented a comprehensive AML program designed to prevent our payment network from being used
to facilitate money laundering and other illicit activity. Our AML compliance program is comprised of policies, procedures and
internal controls, including the designation of a compliance officer, and is designed to address these legal and regulatory
requirements and assist in managing money laundering and terrorist financing risks.
Economic Sanctions. We are subject to regulations imposed by the U.S. Office of Foreign Assets Control (“OFAC”) restricting
financial transactions and other dealings with Crimea, Cuba, Iran, Syria and Sudan and with persons and entities included in
OFAC’s list of Specially Designated Nationals and Blocked Persons (the “SDN List”). Cuba, Iran, Syria and Sudan have been
identified by the U.S. State Department as terrorist-sponsoring states. We have no offices, subsidiaries or affiliated entities located
in these countries and do not license financial institutions domiciled in these countries. We have established a risk-based compliance