Western Union 2012 Annual Report Download - page 39

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Risks Related to Our Regulatory and Litigation Environment
As described under Part I, Item 1, Business, our business is subject to a wide range of laws and regulations enacted by the
United States federal government, each of the states (including licensing requirements), many localities and many other countries
and jurisdictions. Laws and regulations to which we are subject include those related to: 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. The failure by us, our agents
or their subagents to comply with any such laws or regulations could have an adverse effect on our business, financial condition
and results of operations and could seriously damage our reputation and brands, and result in diminished revenue and profit and
increased operating costs.
Our business is subject to a wide range of laws and regulations intended to help detect and prevent money laundering, terrorist
financing, fraud and other illicit activity. Failure by us, our agents or their subagents to comply with those laws and regulations
or their interpretation and increased costs or loss of business associated with compliance with those laws and regulations could
have an adverse effect on our business, financial condition and results of operations.
Our services 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. The interpretation of those requirements by judges, regulatory
bodies and enforcement agencies is changing, often quickly and with little notice. Economic and trade sanctions programs that
are administered by the United States Treasury Department's Office of Foreign Assets Control prohibit or restrict transactions to
or from or dealings with specified countries, their governments, and in certain circumstances, their nationals, and with individuals
and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations.
As United States federal and state as well as foreign legislative and regulatory scrutiny and enforcement action in these areas
increase, we expect that our costs of complying with these requirements will increase, perhaps substantially, or our compliance
will make it more difficult or less desirable for consumers to use our services, which would have an adverse effect on our revenue
and operating profit. 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, payment or foreign exchange services,
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 are subject to regulations imposed by the Foreign Corrupt Practices Act (the “FCPA”) in the United States and similar
laws in other countries, such as the Bribery Act in the United Kingdom, which generally prohibit companies and those acting on
their behalf from making improper payments to foreign government officials for the purpose of obtaining or retaining business.
Some of these laws, such as the Bribery Act, also prohibit improper payments between commercial enterprises. Because our
services are offered in virtually every country of the world, we face significant risks associated with FCPA and United Kingdom
Bribery Act compliance. Any determination that we have violated these laws could have an adverse effect on our business, financial
condition and results of operations.
In addition, our United States business is subject to reporting, recordkeeping and anti-money laundering provisions of the
Bank Secrecy Act, as amended, including by the USA PATRIOT Act of 2001 (collectively, the “BSA”), and to regulatory oversight
and enforcement by the United States Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”). We have
subsidiaries that are subject to banking regulations, primarily those in Brazil and Austria. These subsidiaries are also subject to
regulation, examination and supervision by the New York Department of Financial Services. Under the Payment Services Directive
(“PSD”) in the European Union (“EU”), which became effective in late 2009, and similar legislation enacted or proposed in other
jurisdictions, we have and will increasingly become directly subject to reporting, recordkeeping, and anti-money laundering
regulations, and agent oversight and monitoring requirements, which have increased and will continue to increase our costs. These
laws could also increase competition in some or all of our areas of service.
The remittance industry, including Western Union, has come under increasing scrutiny from government regulators and others
in connection with its ability to prevent its services from being abused by people seeking to defraud others. While we believe our
fraud prevention efforts are effective and comply with applicable law, the ingenuity of criminal fraudsters, combined with the
potential susceptibility to fraud by consumers during economically difficult times, make the prevention of consumer fraud a
significant and challenging problem. Our failure to continue to help prevent such frauds and increased costs related to the
implementation of enhanced anti-fraud measures, or a change in fraud prevention laws or their interpretation or the manner in
which they are enforced could have an adverse effect on our business, financial condition and results of operations.