MoneyGram 2009 Annual Report Download - page 10

Table of Contents
requirements. Many states and other regulators also subject us to periodic examinations and require us and our agents to comply with
anti-money laundering and other laws and regulations.
Escheatment Regulations. Unclaimed property laws of every state, the District of Columbia, Puerto Rico and the United States Virgin
Islands require that we track certain information on all of our payment instruments and money transfers and, if they are unclaimed at the
end of an applicable statutory abandonment period, that we remit the proceeds of the unclaimed property to the appropriate jurisdiction.
Statutory abandonment periods for payment instruments and money transfers range from three to seven years. Certain foreign
jurisdictions also may have unclaimed property laws, though we do not have material amounts subject to any such law.
Privacy Regulations. In the ordinary course of our business, we collect certain types of data which subjects us to certain privacy laws in
the United States and abroad. In the United States, we are subject to the Gramm-Leach-Bliley Act of 1999 (the "GLB Act"), which
requires that financial institutions have in place policies regarding the collection, processing, storage and disclosure of information
considered nonpublic personal information. We are also subject to privacy laws of various states. In addition, we are subject to the
European Union Privacy Directive (the "Privacy Directive"). We abide by the United States Department of Commerce's Safe Harbor
framework principles to assist in compliance with the Privacy Directive. In some cases, the privacy laws of a European Union member
state may be more restrictive than the Privacy Directive and may impose additional duties with which we must comply. We also have
confidentiality/information security standards and procedures in place for our business activities and with our third-party vendors and
service providers. Privacy and information security laws, both domestically and internationally, evolve regularly and conflicting laws in
the various jurisdictions where we do business pose challenges.
Banking Regulations. We were recently informed by Goldman Sachs that the Company may be deemed a controlled subsidiary of a bank
holding company under the Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act"), as a result of
Goldman Sachs' status as a bank holding company and its equity interest in the Company. Affiliates of Goldman Sachs beneficially own
all of the Company's Series B-1 Preferred Stock, and may convert the B-1 stock into non-voting Series D Preferred Stock (the "D Stock").
While not convertible into common stock of the Company while beneficially owned by Goldman Sachs, the D Stock may be sold or
transferred to a third party who may then convert the D Stock into common stock. As a result, Goldman Sachs has informed us that the
Company may be considered a controlled non-bank subsidiary of Goldman Sachs for U.S. bank regulatory purposes. Companies that are
deemed to be subsidiaries of a bank holding company are subject to the Bank Holding Company Act, and are thus subject to reporting to,
and examination and supervision by, the Federal Reserve Board.
Bank holding companies may engage in the business of banking, managing and controlling banks, as well as closely related activities.
Bank holding companies that are well-capitalized, well-managed and meet certain other conditions (referred to as "financial holding
companies") are allowed greater operational flexibility. The Federal Reserve Board has approved Goldman Sachs as a financial holding
company, and Goldman Sachs may engage in additional activities that are deemed financial in nature, such as securities and insurance
activities and certain merchant banking activities. The Federal Reserve Board, together with the U.S. Treasury Department, may
periodically announce additional permissible activities for financial holding companies.
The businesses that we conduct are permissible activities for subsidiaries of financial holding companies under U.S. law, and we do not
expect the limitations described above to adversely affect our current operations. It is possible, however, that these restrictions might limit
our ability to enter other businesses that we may wish to engage in at some time in the future. It is also possible that these laws may be
amended in the future, or new laws or regulations adopted, that adversely affect our ability to engage in our current or additional
businesses.
In addition, a financial holding company that falls out of compliance with the well-managed, well-capitalized and other requirements
applicable to financial holding companies must enter into an agreement with the Federal Reserve Board to rectify the situation. The
Federal Reserve Board may refuse to allow the financial holding company, including its subsidiaries, to engage in activities that are
permissible for financial holding companies but not permissible for bank holding companies. Consequently, Goldman Sachs' non-
compliance with the requirements applicable to financial holding companies could have an impact on the Company.
7