Western Union 2010 Annual Report Download - page 16

Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Financial Reform Act” or “Act”)
became United States federal law in 2010. The Financial Reform Act creates a new Bureau of Consumer Financial
Protection (the “Consumer Protection Bureau”) whose purpose will be to issue and enforce consumer protection
initiatives governing financial products and services, including money transfer services in the United States, which
will require us to provide enhanced disclosures to our money transfer customers. Depending upon the final rules to
be issued by the Consumer Protection Bureau, we may need to modify our systems to provide these additional
disclosures or we may be liable for the failure of our money transfer agents to comply with the Act, the extent of
which liability will be determined by rules not yet enacted. In addition, rules adopted under the Act by other
governmental agencies may subject our corporate interest rate and foreign exchange hedging transactions to
centralized clearing and collateral posting requirements. Also, our Business Solutions business in the United States
may be subjected to increased regulatory oversight and licensing requirements relating to the foreign exchange
derivative products offered to certain of its customers.
Money Transfer and Payment Instrument Licensing and Regulation
In the United States, most states license money transfer services providers. Many states exercise authority over
the operations of our money transfer services and, as part of this authority, regularly examine us. Many states require
us to invest the proceeds of money transfers in high-quality, investment grade securities, and our use of such
investments is restricted to satisfy outstanding settlement obligations. We regularly monitor credit risk and attempt
to mitigate our exposure by making high-quality investments in compliance with these regulations. The majority of
our investment securities, classified within “settlement assets” in the consolidated balance sheets, most of which
relate to state licensing requirements in the United States, had credit ratings of “AA-” or better from a major credit
rating agency as of December 31, 2010.
These licensing laws also cover matters such as government approval of controlling shareholders and senior
management of our licensed entities, regulatory approval of agent locations, consumer disclosures and the filing of
periodic reports by the licensee, and require the licensee to demonstrate and maintain certain net worth levels. Many
states also require money transmitters and their agents to comply with federal and/or state anti-money laundering
laws and regulations.
Our money transfer and money order services are subject to anti-money laundering laws and regulations,
including the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 (collectively, the “BSA”) and
similar state laws and regulations. The BSA, among other things, requires money transfer companies and the issuers
and sellers of money orders, to develop and implement risk-based anti-money laundering programs, report large
cash transactions and suspicious activity, and in some cases, to collect and maintain information about consumers
who use their services and maintain other transaction records. Many states impose similar and, in some cases, more
stringent requirements. These requirements also apply to our agents. In addition, the United States Department of
the Treasury has interpreted the BSA to require money transfer companies to conduct due diligence into and risk-
based monitoring of their agents inside and outside the United States.
Economic and trade sanctions programs administered by the United States Department of the Treasury Office of
Foreign Assets Control (“OFAC”) prohibit or restrict transactions to or from (or dealings with) certain countries,
their governments, and in certain circumstances, their nationals, as well as with specifically-designated individuals
and entities such as narcotics traffickers, terrorists and terrorist organizations. We provide very limited
consumer-to-consumer services to individuals in Cuba, Syria and Sudan pursuant to and as authorized by
advisory opinions of, or licenses granted by, OFAC.
Outside of the United States, our money transfer business is subject to some form of regulation in all of the
countries and territories in which we offer those services. These laws and regulations may include limitations on
what types of entities may offer money transfer services, limitations on the amount of principal that can be sent into
or out of a country, limitations on the number of money transfers that may be sent or received by a consumer and
controls on the rates of exchange between currencies. They may also include laws and regulations intended to help
detect and prevent money laundering or terrorist financing, including reporting requirements similar to those
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