Western Union 2012 Annual Report Download - page 20

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International Investment
No provision has been made for United States federal and state income taxes on certain of our outside tax basis differences,
which primarily relate to accumulated foreign earnings of approximately $4.4 billion as of December 31, 2012, as we expect to
reinvest these earnings outside the United States indefinitely. We intend to invest these earnings to expand and diversify our global
distribution and explore new service offerings and may also consider international acquisition opportunities. In 2011, our foreign
cash allowed us to acquire TGBP and the remaining interests in two of our largest European-based agents, Finint S.r.l. and Angelo
Costa, S.r.l. However, if we are unable to utilize accumulated earnings outside of the United States and we repatriate these earnings
to the United States in the form of actual or constructive dividends, we would be subject to United States federal income taxes
(subject to an adjustment for foreign tax credits), state income taxes and possible withholding taxes payable to various foreign
countries. Such taxes could be significant.
Regulation
Our business is subject to a wide range of laws and regulations enacted by the United States federal government, each of the
states, many localities and many other countries and jurisdictions, including the European Union. These include laws and regulations
regarding: financial services, consumer disclosure and consumer protection, currency controls, money transfer and payment
instrument licensing, payment services, credit and debit cards, electronic payments, foreign exchange hedging services and the
sale of spot, forward and option currency contracts, unclaimed property, the regulation of competition, consumer privacy, data
protection and information security. Our services also are subject to an increasingly strict set of legal and regulatory requirements
intended to help detect and prevent money laundering, terrorist financing, fraud, and other illicit activity. Failure, by Western
Union, our agents, or their subagents (agents and subagents are third parties, over whom Western Union has limited legal and
practical control), to comply with any of these requirements or their interpretation could result in the suspension or revocation of
a license or registration required to provide money transfer services and/or payment services or foreign exchange products, the
limitation, suspension or termination of services, the seizure of our assets, and/or the imposition of civil and criminal penalties,
including fines and restrictions on our ability to offer services.
We have developed and continue to enhance our global compliance programs, including our anti-money laundering program
comprised of policies, procedures, systems and internal controls to monitor and to address various legal and regulatory requirements.
In addition, we continue to adapt our business practices and strategies to help us comply with current and evolving legal standards
and industry practices, including heightened regulatory focus on compliance with anti-money laundering or fraud prevention
requirements. These programs include dedicated compliance personnel, training and monitoring programs, suspicious activity
reporting, regulatory outreach and education, and support and guidance to our agent network on regulatory compliance. Our money
transfer and payment service networks operate through third-party agents in most countries, and, therefore, there are limitations
on our legal and practical ability to completely control those agents' compliance activities. In 2012, the Company spent over $100
million on its compliance and regulatory programs.
Money Transfer and Payment Instrument Licensing and Regulation
Our money transfer and money order services are subject to anti-money laundering laws and regulations, including the Bank
Secrecy Act, as amended, including 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. Compliance with anti-money
laundering laws and regulations has become a top area of regulatory attention, with agreements being reached with Western Union
and several large financial institutions, including another money transfer provider.
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 money transfer and payments services to individuals in Cuba, Syria
and Sudan pursuant to and as authorized by advisory opinions of, or licenses granted by, OFAC.