MoneyGram 2015 Annual Report Download - page 15

Table of Contents
A substantial portion of our agent network locations, transaction volume and revenue is attributable to or generated by a limited number of key agents. During
2015 and 2014 , our ten largest agents accounted for 37 percent and 39 percent , respectively, of our total company fee and investment revenue. Our largest agent,
Walmart, accounted for 19 percent and 22 percent of our total company fee and investment revenue in 2015 and 2014 , respectively. The current term of our
contract with Walmart expires on February 1, 2019. If our contracts with our key agents, including Walmart, are not renewed or are terminated, or are renewed but
on less favorable terms, or if such agents generate fewer transactions or reduce their locations, our business, financial condition and results of operations could be
adversely affected. During 2015, our transaction volume at Walmart locations was adversely affected by the introduction in April 2014 of its competing white label
branded product for Walmart-to-Walmart money transfers in the U.S. The introduction of other competitive products by Walmart or our other key agents could
reduce our business with those key agents and intensify industry competition, which could adversely affect our business, financial condition and results of
operations.
Consumer fraud could adversely affect our business, financial condition and results of operations.
Criminals are using increasingly sophisticated methods to engage in illegal activities such as identity theft, fraud and paper instrument counterfeiting. As we make
more of our services available over the internet and other digital media, we subject ourselves to new types of consumer fraud risk because requirements relating to
consumer authentication are more complex with internet services. Certain former retail agents have also engaged in fraud against consumers, and existing agents
could engage in fraud against consumers. We use a variety of tools to protect against fraud; however, these tools may not always be successful. Allegations of
fraud may result in fines, settlements, litigation expenses and reputational damage.
The industry is under increasing scrutiny from federal, state and local regulators in connection with the potential for consumer fraud. If consumer fraud levels
involving our services were to rise, it could lead to regulatory intervention and reputational and financial damage. This, in turn, could lead to government
enforcement actions and investigations, reduce the use and acceptance of our services or increase our compliance costs and thereby have a material adverse impact
on our business, financial condition and results of operations.
MoneyGram and our agents are subject to numerous U.S. and international laws and regulations. Failure to comply with these laws and regulations could
result in material settlements, fines or penalties and changes in these laws or regulations could result in increased operating costs or reduced demand for our
products or services, all of which may adversely affect our business, financial condition and results of operations.
We operate in a highly regulated environment, and our business is subject to a wide range of laws and regulations that vary from jurisdiction to jurisdiction. We are
also subject to oversight by various governmental agencies, both in the U.S. and abroad. In light of the current conditions in the global financial markets and
economy, lawmakers and regulators in the U.S. in particular have increased their focus on the regulation of the financial services industry. New or modified
regulations and increased oversight may have unforeseen or unintended adverse effects on the financial services industry, which could affect our business and
operations.
The money transfer business is subject to a variety of regulations aimed at preventing money laundering and terrorism. We are subject to U.S. federal anti-money
laundering laws, including the Bank Secrecy Act and the requirements of OFAC, which prohibit us from transmitting money to specified countries or to or from
prohibited individuals. Additionally, we are subject to anti-money laundering laws in many other countries in which 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, privacy and data protection laws and anti-bribery laws. Many of these laws are constantly evolving, unclear and inconsistent
across various jurisdictions, making compliance challenging. Subsequent legislation, regulation, litigation, court rulings or other events could expose us to
increased program costs, liability and reputational damage.
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