Western Union 2011 Annual Report Download - page 41

For example, under the PSD, Western Union is responsible for the compliance of its agents who are engaged
by one of our payments institution subsidiaries. The majority of our EU business is managed through our PSD
subsidiaries. Thus, the risk of adverse regulatory action against Western Union because of actions by its agents in
those areas has increased.
We may become 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 finalized. In addition, the Consumer Financial Protection Bureau (the
“CFPB”) created by the Act has recently issued regulations implementing remittance provisions of the Act,
which will impose responsibility on us for any related compliance failures of our agents.
The changes associated with the PSD, the Act and similar legislation enacted or proposed in other countries
could result in increased costs to comply with the new requirements, or in the event we or our agents are unable
to comply, could have an adverse impact on our business, financial condition and results of operations.
Additional countries may adopt similar legislation.
Regulatory initiatives and changes in laws, regulations and industry practices and standards affecting our
agents or subagents could require changes in our business model and increase our costs of operations, which
could adversely affect our operations, results of operations and financial condition.
Our agents are subject to a variety of regulatory requirements, which differ from jurisdiction to jurisdiction
and are subject to change. A material change in the regulatory requirements for offering money transfer services
in a jurisdiction important to our business could mean increased costs and/or operational demands on our agents
and subagents, which could result in their attrition, a decrease in the number of locations at which money transfer
services are offered and other negative consequences. The regulatory status of our agents could affect their
ability to offer our services. For example, our agents in the United States are considered Money Service
Businesses, or “MSBs,” under the BSA. An increasing number of banks view MSBs, as a class, as higher risk
customers for purposes of their anti-money laundering programs. Furthermore, some of our domestic and
international agents have had difficulty establishing or maintaining banking relationships due to the banks’
policies. If a significant number of agents are unable to maintain existing or establish new banking relationships,
they may not be able to continue to offer our services.
The types of enterprises that are legally authorized to act as our agents vary significantly from one country to
another. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents
(such as changes in requirements for capitalization or ownership) could adversely affect our ability to distribute
our services and the cost of providing such services, both by us and our agents. For example, a requirement that a
money transfer provider be a bank or other highly regulated financial entity could increase significantly the cost
of providing our services in many countries where that requirement does not exist today or could prevent us from
offering our services in an affected country. Further, any changes in law that would require us to provide directly
the money transfer services to consumers as opposed to through an agent network (which would effectively
change our business model) or that would prohibit or impede the use of subagents could significantly adversely
impact our ability to provide our services, and/or the cost of our services, in the relevant jurisdiction. Changes
mandated by laws which make Western Union responsible for any acts of its agents while they are providing the
Western Union money transfer service increase our risk of regulatory liability and our costs to monitor our
agents’ performance.
Although most of our Orlandi Valuta and Vigo branded agents are not exclusive, most of our Western Union
branded agents offer our services on an exclusive basis—that is, they have agreed by contract not to provide any
non-Western Union branded money transfer services. While we expect to continue signing agents under
exclusive arrangements and believe that these agreements are valid and enforceable, changes in laws regulating
competition or in the interpretation of those laws could undermine our ability to enforce them in the future.
Recently, several countries in Eastern Europe, the Commonwealth of Independent States, Africa and South Asia,
including India, have promulgated laws or regulations, or authorities in these countries have issued orders, which
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