MoneyGram 2006 Annual Report Download - page 15

Table of Contents
Our agents and MoneyGram are subject to a number of risks relating to U.S. and International regulatory requirements which could
result in material settlements, fines or penalties or changes in their or our business operations that may adversely affect our business,
financial condition and results of operations.
Our business is subject to a wide range of laws and regulations which vary from country to country. The money transfer business is
subject to a variety of regulations aimed at the prevention of money laundering and terrorism. We are subject to U.S. federal anti-money
laundering laws, including the Bank Secrecy Act, as amended by the USA Patriot Act, the requirements of the Office of Foreign Assets
Control ("OFAC"), which prohibit us from transmitting money to specified countries or on behalf of prohibited individuals and the anti-
money laundering laws in many countries where we operate, particularly in the EU. We are also subject to financial services regulations,
money transfer and payment instrument licensing regulations, currency control regulations, escheat laws, laws covering consumer
privacy, data protection and information security and consumer disclosure and consumer protection laws. Many of the laws to which we
are subject are evolving, unclear and inconsistent across various jurisdictions, making compliance challenging.
Any intentional or negligent violation of the laws and regulations set forth above by our employees or our agents could lead to significant
fines and/or penalties, and could limit our ability to conduct business in some jurisdictions. In addition to those direct costs, a failure by
us or our agents to comply with applicable laws and regulations also could seriously damage our reputation and brands, and result in
diminished revenue and profit and increased operating costs.
Changes in laws, regulations or other industry practices and standards, or interpretations of legal or regulatory requirements may occur
which could increase our compliance and other costs of doing business, could require significant systems redevelopment, reduce the
market for or value of our products or services or render our products or services less profitable or obsolete, and could have an adverse
effect on our results of operations. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents
(such as changes in requirements for capitalization or ownership) could adversely affect our ability to distribute our services and the cost
of providing such services, both by us and our agents. If onerous regulatory requirements were imposed on our agents, they could lead to
a loss of agents, which, in turn, could lead to a loss of retail business.
Failure by us or our agents to comply with the laws and regulatory requirements of applicable regulatory authorities could result in,
among other things, revocation of required licenses or registrations, loss of approved status, termination of contracts with banks or retail
representatives, administrative enforcement actions and fines, class action lawsuits, cease and desist orders and civil and criminal
liability. The occurrence of one or more of these events could materially adversely affect our business, financial condition and results of
operations.
The Company conducts money transfer transactions through agents in some regions that are politically volatile and/or, in a limited
number of cases, are subject to certain OFAC restrictions.
The Company conducts money transfer transactions through agents in some regions that are politically volatile and/or, in a limited
number of cases, are subject to certain OFAC restrictions. While the Company has instituted policies and procedures to protect against
violations of law, it is possible that the Company's money transfer service or other products could be used by wrong-doers in a
contravention of U.S. law or regulations. In addition to monetary fines or penalties that the Company could incur, the Company is also
subject to reputational harm that could adversely impact the value of the shareholder's investment.
We face security risks related to our electronic processing and transmission of confidential customer information. A material breach
of security of our systems could harm our business.
Any significant security or privacy breaches in our facilities, computer networks and databases could harm our business and reputation,
cause inquiries and fines or penalties from regulatory or governmental authorities, and cause a loss of customers. We rely on encryption
software and other technologies to provide security for processing and transmission of confidential customer information. Advances in
computer capabilities, new discoveries in the field of cryptography, or other events or developments, including improper acts by third
parties, may result in a compromise or breach of the security measures we use to protect customer transaction data. We may be required
to expend significant capital and other resources to protect against these security breaches or to alleviate problems caused by these
breaches. Third-party contractors also may experience security breaches involving the storage and transmission of our confidential
customer information. If users gain improper access to our or our contractor's
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