Western Union 2014 Annual Report Download - page 153

2014 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 $5.6 billion as of December 31, 2014, as we have
reinvested and expect to continue to reinvest these earnings outside the United States indefinitely. Over the last several years, such
earnings have been used to pay for our international acquisitions and operations and provide initial Company funding of global
principal payouts for Consumer-to-Consumer and Business Solutions transactions. 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, private class action litigation, 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. As of December 31, 2014, these programs included approximately 1,900 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 2014, the Company spent over $180 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
Most of our 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 recent agreements being reached with Western Union, other money transfer
providers and several large financial institutions.