Western Union 2014 Annual Report Download - page 247

2014 FORM 10-K
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
109
The Amendment provides that if WUFSI is unable to implement an effective AML compliance program along the U.S. and
Mexico border, as determined by the Monitor and subject to limited judicial review, within the timeframes to implement the
Monitor’s primary recommendations, the State may, within 180 days after the Monitor delivers its final report on the primary
recommendations on December 31, 2016, and subsequent to any judicial review of the Monitor’s findings, elect one, and only
one, of the following remedies: (i) assert a willful and material breach of the Southwest Border Agreement and pursue remedies
under the Southwest Border Agreement, which could include initiating civil or criminal actions; or (ii) require WUFSI to pay (a)
$50 million plus (b) $1 million per primary recommendation or group of primary recommendations that WUFSI fails to implement
successfully. There are currently more than 70 primary recommendations and groups of primary recommendations.
If the Monitor concludes that WUFSI has implemented an effective AML compliance program along the U.S. and Mexico
border within the timeframes to implement the Monitor’s primary recommendations, the State cannot pursue either of the remedies
above, except that the State may require WUFSI to pay $1 million per primary recommendation or group of primary
recommendations that WUFSI fails to implement successfully.
If, at the conclusion of the timeframe to implement the secondary recommendations on December 31, 2017, the Monitor
concludes that WUFSI has not implemented an effective AML compliance program along the U.S. and Mexico border, the State
cannot assert a willful and material breach of the Southwest Border Agreement but may require WUFSI to pay an additional $25
million. Additionally, if the Monitor determines that WUFSI has implemented an effective AML compliance program along the
U.S. and Mexico border but has not implemented some of the Monitor’s secondary recommendations or groups of secondary
recommendations that were originally classified as primary recommendations or groups of primary recommendations on the date
of the Amendment, the State may require WUFSI to pay $500,000 per such secondary recommendation or group of
recommendations. There is no monetary penalty associated with secondary recommendations that are classified as such on the
date of the Amendment or any new secondary recommendations that the Monitor makes after the date of the Amendment.
The Amendment requires WUFSI to continue funding the Monitor’s reasonable expenses in $500,000 increments as requested
by the Monitor. The Amendment also requires WUFSI to make a one-time payment of $250,000, which was paid in March 2014,
and thereafter $150,000 per month for five years to fund the activities and expenses of a money transfer transaction data analysis
center formed by WUFSI and a Financial Crimes Task Force comprised of federal, state and local law enforcement representatives,
including those from the State. In addition, California, Texas, and New Mexico are also participating in the money transfer
transaction data analysis center.
The changes in WUFSI’s AML program required by the Southwest Border Agreement, including the Amendment, and the
Monitor’s recommendations have had, and will continue to have, adverse effects on the Company’s business, including additional
costs. Additionally, if WUFSI is not able to implement a successful AML compliance program along the U.S. and Mexico border
or timely implement the Monitor’s recommendations, each as determined by the Monitor, the State may pursue remedies under
the Southwest Border Agreement and Amendment, including assessment of fines and civil and criminal actions. Such fines and
actions could have a material adverse effect on the Company’s business, financial condition or results of operations.