Western Union 2015 Annual Report Download - page 210

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 $85 million in outstanding letters of credit and bank guarantees as of December 31, 2015.
The letters of credit and bank guarantees are primarily held in connection with lease arrangements and certain agent agreements.
The letters of credit and bank guarantees have expiration dates through 2020, with many having a one-year renewal option. The
Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances.
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, and in some cases, criminal charges. The Company regularly evaluates the status of legal
matters to assess whether a loss is probable and reasonably estimable in determining whether an accrual is appropriate. Furthermore,
in determining whether disclosure is appropriate, the Company evaluates each legal matter to assess if there is at least a reasonable
possibility that a loss or additional loss may have been incurred and whether an estimate of possible loss or range of loss can be
made. Unless otherwise specified below, the Company believes that there is at least a reasonable possibility that a loss or additional
loss may have been incurred for each of the matters described below. For certain of these matters, management is unable to provide
a meaningful estimate of the possible loss or range of loss because, among other reasons: (a) the proceedings are in preliminary
stages; (b) specific damages have not been sought; (c) damage claims are unsupported and/or unreasonable; (d) there is uncertainty
as to the outcome of pending appeals or motions; (e) there are significant factual issues to be resolved; or (f) novel legal issues or
unsettled legal theories are being asserted.
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 the Company's 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.
201 FORM 10-K
5