Western Union 2015 Annual Report Download - page 139

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In addition, our United States business is subject to reporting, recordkeeping and anti-money laundering provisions of the
Bank Secrecy Act, as amended (collectively, the "BSA"), and to regulatory oversight and enforcement by the United States
Department of the Treasury Financial Crimes Enforcement Network ("FinCEN"). We have subsidiaries in Brazil and Austria
that are subject to banking regulations. These subsidiaries are also subject to regulation, examination and supervision by the
New York Department of Financial Services. Under the Payment Services Directive ("PSD") in the European Union ("EU"),
which became effective in late 2009, and similar legislation enacted or proposed in other jurisdictions, we have and will
increasingly become directly subject to reporting, recordkeeping, and anti-money laundering regulations, and agent oversight
and monitoring requirements, which have increased and will continue to increase our costs. These laws could also increase
competition in some or all of our areas of service.
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 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, results of operations, and cash flows.
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, results of operations, and cash flows.
The changes associated with the PSD, The Dodd-Frank Wall Street Reform and Consumer Protection Act (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, results of operations, and cash flows. Additional countries may adopt similar legislation.
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 activity is managed
through our Irish payment institution 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 regulations implementing the remittance provisions of the Dodd-Frank Act
impose responsibility on us for any related compliance failures of our agents and their subagents.
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