Western Union 2014 Annual Report Download - page 177

2014 FORM 10-K
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Although most of our Orlandi Valuta and Vigo branded agents also offer money transfer services of our competitors, many
of our Western Union branded agents have agreed to offer only our money transfer services. While we expect to continue signing
certain agents under exclusive arrangements and believe that these agreements are valid and enforceable, changes in laws
regulating competition or in the interpretation of those laws could undermine our ability to enforce them in the future. Over the
past several years, several countries in Eastern Europe, the Commonwealth of Independent States, Africa and South Asia,
including India, have promulgated laws or regulations, or authorities in these countries have issued orders, which effectively
prohibit payment service providers, such as money transfer companies, from agreeing to exclusive arrangements with agents in
those countries. Certain institutions, non-governmental organizations and others are actively advocating against exclusive
arrangements in money transfer agent agreements. Advocates for laws prohibiting or limiting exclusive agreements continue to
push for enactment of similar laws in other jurisdictions. In addition to legal challenges, certain of our agents and their subagents
have refused to enter into exclusive arrangements. See risk factor "If we are unable to maintain our agent, subagent or global
business relationships under terms consistent with those currently in place, including due to increased costs or loss of business
as a result of increased compliance requirements or difficulty for us, our agents or their subagents in establishing or maintaining
relationships with banks needed to conduct our services, or if our agents or their subagents fail to comply with Western Union
business and technology standards and contract requirements, our business, financial condition and results of operations would
be adversely affected" above. The inability to enter into exclusive arrangements or to maintain our exclusive rights in agent
contracts in certain situations could adversely affect our business, financial condition or results of operations by, for example,
allowing competitors to benefit from the goodwill associated with the Western Union brand at our agent locations.
In addition to legal or regulatory restrictions discussed in the "Capital Resources and Liquidity" section in Part II, Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations, some jurisdictions use tangible net
worth and other financial strength guidelines to evaluate financial position. If our regulated subsidiaries do not abide by these
guidelines, they may be subject to heightened review by these jurisdictions, and the jurisdictions may be more likely to impose
new formal financial strength requirements. Additional financial strength requirements imposed on our regulated subsidiaries
or significant changes in the regulatory environment for money transfer providers could impact our primary source of liquidity.
Western Union is the subject of governmental investigations and consent agreements with or enforcement actions by
regulators.
State of Arizona Settlement Agreement
On February 11, 2010, Western Union Financial Services, Inc. ("WUFSI"), a subsidiary of the Company, signed a settlement
agreement ("Southwest Border Agreement"), which resolved all outstanding legal issues and claims with the State of Arizona
(the "State") and required the Company to fund a multi-state not-for-profit organization promoting safety and security along the
United States and Mexico border, in which California, Texas and New Mexico are participating with Arizona. As part of the
Southwest Border Agreement, the Company has made and expects to make certain investments in its compliance programs along
the United States and Mexico border and a monitor (the "Monitor") has been engaged for those programs. The Company has
incurred, and expects to continue to incur, significant costs in connection with the Southwest Border Agreement. The Monitor
has made a number of recommendations related to the Company's compliance programs, which we are implementing, including
programs related to our Business Solutions segment.
On January 31, 2014, the Southwest Border Agreement was amended to extend its term until December 31, 2017 (the
"Amendment"). The Amendment imposes additional obligations on the Company and WUFSI in connection with WUFSI’s anti-
money laundering ("AML") compliance programs and cooperation with law enforcement. In particular, the Amendment requires
WUFSI to continue implementing the primary and secondary recommendations made by the Monitor appointed pursuant to the
Southwest Border Agreement related to WUFSI’s AML compliance program, and includes, among other things, timeframes for
implementing such primary and secondary recommendations. Under the Amendment, the Monitor could make additional primary
recommendations until January 1, 2015 and may make additional secondary recommendations until January 31, 2017. After
these dates, the Monitor may only make additional primary or secondary recommendations, as applicable, that meet certain
requirements as set forth in the Amendment. The Monitor has made more than 70 primary recommendations and groups of
primary recommendations. Primary recommendations may also be re-classified as secondary recommendations.