Western Union 2013 Annual Report Download - page 145

2013 FORM 10-K
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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, 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.
Further, any determination that our agents or their subagents have violated laws and regulations could seriously damage our
reputation and brands, resulting in diminished revenue and profit and increased operating costs. In some cases, we could be liable
for the failure of our agents or their subagents to comply with laws which also could have an adverse effect on our business,
financial condition and results of operations.
For example, in the EU, Western Union is responsible for the compliance of our agents and their subagents with the PSD
when they are acting on behalf of one of our payments institution subsidiaries. The majority of our EU business is managed through
our Irish PSD subsidiary, which is regulated by the Central Bank of Ireland. Thus, the risk of adverse regulatory action against
Western Union because of actions by its agents or their subagents and the costs to monitor our agents or their subagents in those
areas has increased. The Consumer Financial Protection Bureau (the "CFPB") created by the Dodd-Frank Act has issued
amendments to the final regulations implementing the remittance provisions of the Dodd-Frank Act, which impose responsibility
on us for any related compliance failures of our agents and their subagents.
The changes associated with the PSD, the Dodd-Frank Act and similar legislation enacted or proposed in other countries have
resulted and will likely continue to result in increased costs to comply with the new requirements, and 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.
Our fees, profit margins and/or foreign exchange spreads may be reduced or limited because of regulatory initiatives and
changes in laws and regulations or their interpretation and industry practices and standards that are either industry wide or
specifically targeted at our Company.
The evolving regulatory environment, including increased fees or taxes, regulatory initiatives, and changes in laws and
regulations or their interpretation, industry practices and standards imposed by state, federal or foreign governments and
expectations regarding our compliance efforts, is impacting the manner in which we operate our business and may change the
competitive landscape and is expected to continue to adversely affect our financial results. New and proposed legislation relating
to financial services providers and consumer protection in various jurisdictions around the world has and may continue to affect
the manner in which we provide our services, see risk factor "The Dodd-Frank Act, as well as the regulations required by that Act
and the actions of the Consumer Financial Protection Bureau and similar legislation and regulations enacted by other government
authorities, could adversely affect us and the scope of our activities, and could adversely affect our operations, results of operations
and financial condition." Recently proposed and enacted legislation related to financial services providers and consumer protection
in various jurisdictions around the world and at the federal and state level in the United States has subjected and may continue to
subject us to additional regulatory oversight, mandate additional consumer disclosures and remedies, including refunds to
consumers, or otherwise impact the manner in which we provide our services. If governments implement new laws or regulations
that limit our right to set fees and/or foreign exchange spreads, then our business, financial condition and results of operations
could be adversely affected. In addition, changes in regulatory expectations, interpretations or practices could increase the risk of
regulatory enforcement actions, fines and penalties.
For example, our business has been affected and is currently being affected by on-going changes to our compliance procedures
related to our agreement and settlement with the State of Arizona. See risk factor "Western Union is the subject of governmental
investigations and consent agreements with or enforcement actions by regulators." Due to regulatory initiatives, we have changed
our compliance related practices and business model along the United States and Mexico border, including in the southwestern
region of the United States. Such changes have had, and will likely continue to have an adverse effect on our revenue, profit
margins, and business operations related to our United States to Mexico and United States to Latin America and the Caribbean
corridors.