Western Union 2013 Annual Report Download - page 125

2013 FORM 10-K
15
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 $5.0 billion as of December 31, 2013, as we have
reinvested and expect to continue 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 we 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 significant 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.
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 an increasingly
strict set of legal and regulatory requirements intended to help detect and prevent money laundering, terrorist financing, fraud,
and other illicit activity. These also 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. 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, loss of consumer confidence, 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 2013, the Company spent over $150
million on its compliance and regulatory programs, including costs related to our amended settlement agreement with the State
of Arizona.
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, to 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 and
their subagents. 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, and certain
states also require money transfer companies to conduct due diligence reviews of their agents and subagents. Compliance with
anti-money laundering laws and regulations continues to be a focus of regulatory attention, with agreements being reached with
Western Union and several large financial institutions, including another money transfer provider.