Redbox 2010 Annual Report Download - page 24

interruptions and political and economic disruptions which could disrupt the supply and timely delivery of
products manufactured abroad. In addition, we could be affected by labor strikes in the sea shipping, trucking and
railroad industries. A reduction or interruption in supplies, or a significant increase in the price of one or more
supplies could have a material adverse effect on our business.
Our Money Transfer Business requires us to meet specific federal, state, local and foreign laws and
government regulations, subjecting us to additional risk.
In the second quarter of 2010, we moved our Money Transfer Business into discontinued operations as we
evaluated divestment opportunities. In the third quarter of 2010, we signed a stock purchase agreement with
Sigue Corporation to sell the companies which comprise our Money Transfer Business. In the interim, we
continue to run our Money Transfer Business in the ordinary course and continue to be subject to the risks related
to that business, as well as the risk that the sale will not be completed pursuant to the terms of the agreement, if at
all.
The money transfer industry is heavily regulated, both in the United States and internationally. We operate our
Money Transfer Business under the authority of the licenses and approvals that we have obtained where required
from the various jurisdictions in which we operate. There is no assurance that we will be able to maintain these
licenses and approvals in the future.
In operating the Money Transfer Business in the United States for example, we are responsible for compliance
with a variety of state laws and regulations, including licensing requirements, applicable to the business. In
addition, we are subject to United States federal anti-money laundering laws, including United States Department
of the Treasury registration requirements and reporting requirements for suspicious and certain other
transactions, and the requirements of the Office of Foreign Assets Control, which prohibit transmitting money to
specified countries or to, or on behalf of, prohibited individuals or entities. If we were to transmit money to, or on
behalf of, or otherwise conduct business with, a prohibited individual or entity, we could be required to pay
significant damages, including fines and penalties, and our ability to conduct business in the United States and
other jurisdictions could be limited. The USA PATRIOT Act and the U.S. Bank Secrecy Act mandate several
anti-money laundering requirements. Any violation of anti-money laundering laws could lead to significant
penalties, and could limit our ability to conduct business in the United States and other jurisdictions.
In addition, the money transfer industry is subject to international regulation, which varies from country to
country. In certain countries in which we operate, we are required to maintain licenses or other governmental
approvals in order to operate this business. As described above, we are responsible for compliance with these
laws and regulatory requirements in those countries in which we operate the Money Transfer Business. Although
most countries in which we operate this business do not regulate this business to the same degree as the United
States, this could change in the future.
Failure to comply, or, as discussed below the failure of a money services business that we have acquired to
comply before our acquisition, with the laws and government regulations in jurisdictions in which we operate, or
in which the acquired company operated the Money Transfer Business, 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, penalties or other damages, class action
lawsuits, cease and desist orders, and/or other civil and criminal liability. The occurrence of one or more of these
events could adversely affect our business, financial condition and results of operations. Furthermore, additions
to, or changes in, the laws, regulations or other industry practices and standards in the United States or any of the
foreign countries in which the Money Transfer Business operates, could also increase our compliance and other
costs of doing business, require significant systems redevelopment, reduce the market for, or value of, our
products or services or render our products or services less profitable or obsolete, lead to a loss of agents, and
have an adverse effect on our results of operations.
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