MoneyGram 2009 Annual Report Download - page 20

Table of Contents
industry. Competitors in the electronic payments area include financial institutions, third parties that host financial institution and bill
payment services, third parties that offer payment services directly to consumers and billers offering their own bill payment services.
Our official check business competes primarily with financial institutions that have developed internal processing capabilities or services
similar to ours and do not outsource official check services. Financial institutions could also offer competing official check outsourcing
services to our existing and prospective official check customers.
There can be no assurance that growth in consumer money transfer transactions, bill payment transactions and other payment products
will continue. In addition, consolidation among payment services companies has occurred and could continue. If we are unable to
continue to grow our existing products, while also growing newly developed and acquired products, we will be unable to compete
effectively in the changing marketplace, and our business, financial condition and results of operations would be adversely affected.
MoneyGram and our agents are subject to a number of risks relating to United States and international regulatory requirements
which could result in material settlements, fines or penalties or changes in our or their 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 United States federal
anti-money laundering laws, including the Bank Secrecy Act and the requirements of the OFAC, which prohibit us from transmitting
money to specified countries or on behalf of prohibited individuals. Additionally, we are subject to the anti-money laundering laws in
many countries where we operate, particularly in the European Union. We are also subject to financial services regulations, money
transfer and payment instrument licensing regulations, consumer protection laws, currency control regulations, escheat laws, as well as
privacy and data protection laws. Many of the laws to which we are subject are evolving, unclear and inconsistent across various
jurisdictions, making compliance challenging.
Changes in laws, regulations or other industry practices and standards may increase our costs of operations and may disrupt our business
as we develop new business and compliance models. For example, the European Union's Payment Services Directive ("PSD") has created
a new framework of licensing and other regulations for our business operations in the European Union and imposes a number of new
requirements on our business, including greater potential liability on us for the conduct of our agents and the commission of third party
fraud utilizing our services. We have modified our business operations in the European Union in light of PSD and will likely experience
increased costs of operating in the European Union. In the event we fail to comply with the PSD, our business, financial position and
results of operations may be adversely impacted. Additionally, the United States and other countries periodically consider initiatives
designed to lower costs of international remittances which, if implemented, may adversely impact our business, financial position and
results of operations.
Changes in laws, regulations or other industry practices and standards, or interpretations of legal or regulatory requirements may reduce
the market for or value of our products or services or render our products or services less profitable or obsolete and 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 effect our ability to distribute our services and the cost of
providing such services, both by us and our agents. Many of our high volume agents are in the check cashing industry. Any regulatory
action that adversely affects check cashers could also cause this portion of our agent base to decline. If onerous regulatory requirements
were imposed on our agents, the requirements could lead to a loss of agents, which, in turn, could lead to a loss of retail business.
Any intentional or negligent violation by us of the laws and regulations set forth above could lead to significant fines or penalties and
could limit our ability to conduct business in some jurisdictions. Regulators in the United States and other jurisdictions are showing a
greater inclination than they have in the past to hold money services businesses like ours to higher standards of agent training and
monitoring for possible violations of laws and regulations by agents. Our systems, employees and processes may not be sufficient to
detect and prevent an intentional or negligent violation of the laws and regulations set forth above by our agents, which could also lead to
us being subject to significant fines or penalties. In addition to those direct costs, a failure by us or our agents to comply with applicable
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