MoneyGram 2011 Annual Report Download - page 17

Table of Contents
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 have a material adverse effect on our business, financial condition and results of operations.
Litigation or investigations involving us or our agents could result in material settlements, fines or penalties and may adversely affect our business,
financial condition and results of operations.
We have been, and in the future may be, subject to allegations and complaints that individuals or entities have used our money transfer services for
fraud−induced money transfers, as well as certain money laundering activities, which may result in fines, penalties, judgments, settlements and litigation
expenses. We also are the subject from time to time of litigation related to our business. The outcome of such allegations, complaints, claims and litigation
cannot be predicted.
Regulatory and judicial proceedings and potential adverse developments in connection with ongoing litigation may adversely affect our business, financial
condition and results of operations. There may also be adverse publicity associated with lawsuits and investigations that could decrease agent and customer
acceptance of our services. Additionally, our business has been in the past, and may be in the future, the subject of class action lawsuits, regulatory actions
and investigations and other general litigation. The outcome of class action lawsuits, regulatory actions and investigations is difficult to assess or quantify
but may include substantial fines and expenses, as well as the revocation of required licenses or registrations or the loss of approved status, which could
have a material adverse effect on our business, financial position and results of operations. Plaintiffs or regulatory agencies in these lawsuits, actions or
investigations may seek recovery of very large or indeterminate amounts, and the magnitude of these actions may remain unknown for substantial periods of
time. The cost to defend or settle future lawsuits or investigations may be significant.
We are subject to several investigations by the U.S. federal government and several U.S. state governments.
We have been served with subpoenas to produce documents and testify before a grand jury in the U.S. District Court for the Middle District of
Pennsylvania. The subpoenas sought information related to, inter alia, our U.S. and Canadian agents, as well as certain transactions involving such agents,
fraud complaint data, and our consumer anti−fraud program during the period from 2004 to 2009. We have provided information requested pursuant to the
subpoenas, and continue to provide additional information relating to the investigation. In addition, the Company has been provided with subpoenas for the
testimony of certain current and former employees in connection with the investigation. The Company has also been notified of a request for interviews of
one current executive officer and one former chief executive officer of the Company. The U.S. Department of the Treasury Financial Crimes Enforcement
Network, or FinCEN, also requested information, which we subsequently provided, concerning our reporting of fraudulent transactions during this period.
In November 2010, we met with representatives from the U.S. Attorney’s Office for the Middle District of Pennsylvania, or the MDPA USAO, and
representatives of FinCEN to discuss the investigation. In July 2011, we had further discussions with the MDPA USAO and representatives of the Asset
Forfeiture and Money Laundering Section of the U.S. Department of Justice, or the US DOJ. We have been informed that we are being investigated by the
federal grand jury in connection with these matters for the period 2004 to early 2009 as well as our anti−money laundering program during that period. In
January 2012, meetings were held between our representatives, the MDPA USAO and the Criminal Division of the US DOJ to discuss the investigation. We
continue to engage in discussions and cooperate with such government representatives regarding the ongoing investigation. During the course of these
discussions, we were advised that consideration is being given to a range of possible outcomes, including the seeking of criminal penalties against us.
However, no conclusions can be drawn at this time as to the outcome of the investigation and we are unable to predict the probable loss, or range of loss, if
any, associated with this matter.
We have also received Civil Investigative Demands from a working group of nine state attorneys general who have initiated an investigation into whether
we have taken adequate steps to prevent consumer fraud during the
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