Western Union 2012 Annual Report Download - page 22

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In connection with an agreement and settlement with the State of Arizona and other states entered into in February 2010, we
have funded $71 million, a portion of which was paid to a not-for-profit organization to promote safety and security along the
entire United States and Mexico border, with the rest paid to the State of Arizona for its costs associated with this matter. This
agreement and settlement also resolved all outstanding legal issues and claims with the State of Arizona. In addition, as part of
the agreement and settlement, we have made and expect to make certain investments in and enhancements to our compliance
programs along the United States and Mexico border and a monitor has been engaged for those programs. On January 23, 2013,
the monitor announced his intention to resign. A replacement monitor has been identified and is subject to court appointment. The
costs of the investments in our programs and for the monitor pursuant to the terms and conditions of the agreement and settlement
were expected to be $23 million over the period from signing through 2013; however, actual costs incurred have exceeded this
amount. In addition, in the fourth quarter of 2012, our Business Solutions business was included in the scope of the monitor's
review. Including the costs required pursuant to the agreement and settlement, the Company has spent over $40 million since 2010
on its compliance programs along the United States and Mexico border. We are considering entering into an extension of the term
of the agreement and settlement or another arrangement with the State of Arizona, either of which would require the approval of
the State of Arizona and could have further adverse effects on our business, including additional costs. The monitor has made a
number of recommendations regarding our compliance programs. While the Company has devoted significant time and resources
to these efforts, it is expected that not every recommendation of the monitor will be fully implemented within the required timeframe
ending on July 31, 2013. If the Company is not able to negotiate an extension of the agreement and settlement or other arrangement
and the State of Arizona determines that the Company has committed a willful and material breach, the State of Arizona has
indicated that it will pursue remedies under the agreement and settlement, which could include initiating civil or criminal actions.
The pursuit by the State of Arizona of remedies under the agreement and settlement could have a material adverse effect on our
business, financial condition or results of operations. See also Part I, Item 1A, Risk Factors - “Western Union is the subject of
governmental investigations and consent agreements with or enforcement actions by regulators” for more information on this
agreement and settlement, including the potential impact on our business.
Regulators worldwide are exercising increasingly closer supervision of money remitters and requiring increasingly greater
efforts to ensure compliance. As a result, we are experiencing increasing compliance costs related to verification, transaction
approval, disclosure, and reporting requirements, along with other requirements that have had and will continue to have a negative
impact on our business, financial condition, and results of operations.
Government agencies both inside and outside the United States may impose new or additional rules on money transfers
affecting us or our agents or their subagents, including regulations that:
• prohibit transactions in, to or from certain countries, governments and individuals and entities;
• impose additional identification, reporting or recordkeeping requirements;
• limit the types of entities capable of providing money transfer services, impose additional licensing or registration requirements
on us, our agents, or their subagents, or impose additional requirements on us with regard to monitoring or oversight of our
agents or their subagents;
• impose minimum capital or other financial requirements on us or our agents and their subagents;
• limit or restrict the revenue which may be generated from money transfers, including transaction fees and revenue derived
from foreign exchange;
• require enhanced disclosures to our money transfer customers;
• require the principal amount of money transfers originated in a country to be invested in that country or held in trust until
they are paid;
• limit the number or principal amount of money transfers which may be sent to or from the jurisdiction, whether by an individual,
through one agent or in aggregate; or
• impose taxes or fees on money transfer transactions.