MoneyGram 2011 Annual Report Download - page 11

Table of Contents
Banking Regulations — We completed an underwritten secondary offering of 10,237,524 shares of our common stock held by Goldman Sachs and others in
November and December 2011. Prior to that time, we were deemed a “controlled subsidiary” of Goldman Sachs & Co., a bank holding company under the
Bank Holding Company Act of 1956, as amended, or the BHC Act, as a result of Goldman Sachs’ ownership of shares of our non−voting D Stock.
Although the D Stock is 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 which may then convert the D Stock into common stock. In conjunction with the secondary offering of our common stock, we
also made a partial redemption of our Second Lien Notes held by Goldman Sachs in the aggregate principal amount of $175 million. As result of these
transactions and discussions with the Federal Reserve, Goldman Sachs has informed us that the Company is no longer deemed a controlled subsidiary of
Goldman Sachs. Therefore, we believe we are no longer subject to the regulations that apply to controlled subsidiaries of bank holding companies, or to
reporting requirements, examination or supervision by the Federal Reserve under the BHC Act.
Recent Federal Legislation in the United States — The Dodd−Frank Wall Street Reform and Consumer Protection Act, or the Dodd−Frank Act, was signed
into law on July 21, 2010. While the Dodd−Frank Act will likely impose additional regulatory requirements upon us, it is difficult to gauge the impact on
our business because many provisions of the Dodd−Frank Act require the adoption of rules and further studies. The Dodd−Frank Act creates a new Bureau
of Consumer Financial Protection, or the Bureau, which issues and enforces consumer protection initiatives governing financial products and services,
including money transfer services, in the United States. We will be required to provide enhanced disclosures to our money transfer customers, which will
require us to modify our systems and current consumer disclosures. Enhanced disclosure requirements, error resolution procedures, the extent of vicarious
liability for acts of our agents, refund requirements and other matter impacting how we offer international remittances in the United States were set forth in
the Final Remittance Rule that was issued by the Bureau on January 20, 2012 and published in the Federal Register on February 7, 2012. The effective date
of the Remittance Rule is February 7, 2013.
Regulation of Prepaid Cards — We sell our MoneyGram−branded prepaid card in the United States, in addition to loading prepaid cards of other card
issuers through our ExpressPayment system. Prepaid card services are generally subject to federal and state laws and regulations, including laws related to
consumer protection, licensing, escheat, anti−money laundering and the payment of wages. These laws are evolving, unclear and sometimes inconsistent.
The extent to which these laws are applicable to us is uncertain and we are currently unable to determine the impact that any future clarification, changes or
interpretation of these laws will have on our services.
Clearing and Cash Management Bank Relationships
Our business involves the movement of money. We move money through a network of clearing and cash management banks, and our relationships with
these clearing banks and cash management banks are a critical component of our ability to move funds on a global and timely basis.
We rely on two banks to clear our retail money orders and we currently have eight official check clearing banks. We believe these relationships provide
sufficient capacity for our money order and official check outsourcing services.
We maintain contractual relationships with a variety of domestic and international cash management banks for automated clearing house, or ACH, and wire
transfer services for the movement of consumer funds and agent settlements. There are a limited number of international cash management banks with a
network large enough to manage cash settlements for our entire agent base. In addition, some large international banks have opted not to bank money
service businesses. As a result, we also utilize regional or country−based banking partners in addition to large cash management banks.
Intellectual Property
The MoneyGram brand is important to our business. We have registered our MoneyGram trademark in the United States and a majority of the other
countries where we do business. We maintain a portfolio of other trademarks that are also important to our business, including our globe with arrows logo,
ExpressPayment, MoneyGram Rewards, FormFree, and PrimeLink marks. In addition, we maintain a portfolio of MoneyGram branded domain names.
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