Western Union 2014 Annual Report Download - page 246

2014 FORM 10-K
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
108
5. Commitments and Contingencies
Letters of Credit and Bank Guarantees
The Company had approximately $210 million in outstanding letters of credit and bank guarantees as of December 31, 2014.
The letters of credit and bank guarantees are primarily held in connection with lease arrangements, certain agent agreements, and
in relation to an uncertain tax position. The letters of credit and bank guarantees have expiration dates through 2018, with the
majority having a one-year renewal option. The Company expects to renew the letters of credit and bank guarantees prior to
expiration in most circumstances. The bank guarantees related to the uncertain tax position were extinguished in January 2015
after resolution of the related matter.
Litigation and Related Contingencies
The Company is subject to certain claims and litigation that could result in losses, including damages, fines and/or civil
penalties, which could be significant, or criminal charges. Substantially all of the Company's contingencies are subject to significant
uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. The Company
does not currently believe that any of these matters, individually or in the aggregate, will have a material adverse effect on its
financial position. However, litigation is inherently unpredictable and the Company could incur judgments, enter into settlements
or revise its expectations regarding the outcome of certain matters, and such developments could have a material adverse effect
on its financial position, results of operations or cash flows in the periods in which amounts are accrued or paid. The principal
pending matters the Company is a party to are discussed below.
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 the Company is 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. Primary recommendations may also be re-classified as secondary recommendations.