First Data 2012 Annual Report Download - page 11

The Company’ s subsidiary in Germany, TeleCash GmbH & Co. KG (“TeleCash”), is certified and regulated as a processor for
domestic German debit card transactions by the Deutsche Kreditwirtschaft (“DK”), the German banking association. Failure to comply
with the technical requirements set forth by the DK may result in suspension or termination of services.
Banking regulation. Because a number of the Company’ s subsidiary businesses, including card issuer processing, merchant
processing and STAR Network businesses as well as those subsidiaries engaged in the business of ATM deployment, provide data
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rocessing services for financial institutions, they are subject to examination by the Federal Financial Institutions Examination Council,
an interagency body comprised of the federal bank and thrift regulators and the National Credit Union Association and national
regulatory bodies.
FDR Limited (“FDRL”) in the United Kingdom is authorized and regulated by the Financial Services Authority (“FSA”). The
FSA is the single regulatory authority for the full range of financial services in the United Kingdom, including banking, investment,
mortgage and insurance mediation services. FDRL is authorized by the FSA to carry on an insurance mediation business for the
purpose of arranging insurance to its issuer customers’ cardholders. As an FSA regulated firm, FDRL is required to meet certain
prudential and conduct of business requirements.
In the European Union, Directive 2007/60 EC, the “Payment Services Directive,” was released by the European Parliament and
by the Council on November 13, 2007, setting a framework for future regulation of bodies and corporations such as the national central
banks, financial institutions, e-money institutes and payment institutions. The Payment Services Directive was implemented in most EU
member states via national legislation effective November 1, 2009. As a result of the implementation of the Payment Services
Directive, a number of the Company’ s subsidiaries in the International segment have applied for and received a Payment Institution
License in the countries where such subsidiaries do business. As licensed payment institutions, the relevant entities are subject to
regulation and oversight in the applicable member state, which includes amongst other things, the requirement to maintain specified
regulatory capital.
First Data Loan Company Canada (“FDLCC”), through which the Company conducts some of its merchant acquiring activities in
Canada, is a Canadian loan company subject to regulation, examination and oversight by the Office of the Superintendent of Financial
Institutions and to various provincial registration and licensing requirements. First Data Trust Company, LLC (“FDTC”), engages in
trust activities previously conducted by the trust department of a former banking subsidiary of the Company. FDTC is subject to
regulation, examination and oversight by the Division of Banking of the Colorado Department of Regulatory Agencies. These financial
institution subsidiaries are also subject to various national and local banking and consumer protection laws and regulations that apply to
the activities they conduct. Since FDTC is not a “bank” under the Bank Holding Company Act of 1956, as amended (“BHCA”), and
FDLCC does not operate any banking offices in the U.S. or do business in the U.S., except such business as may be incidental to its
activities outside the U.S., the Company’ s affiliation with FDTC and FDLCC does not cause it to be regulated as a bank holding
company or financial holding company under the BHCA.
TeleCheck Payment Systems Limited in Australia holds an Australian Financial Services License under Chapter 7 of the
Corporations Act, which regulates the provision of a broad range of financial services in Australia. The license, issued by the Australian
Securities and Investments Commission, entitles the Australian operations of TeleCheck to deal in and provide general financial
product advice about its check guarantee and check verification product (which falls within the definition of a risk management product
under the legislation). The License and the Act requires that TeleCheck’ s Australian operations issue product documents that comply
with specific content requirements and follow prescribed procedures failing which penalties apply.
Further, in the Company’ s International segment, several subsidiaries provide services such as factoring or settlement that make
them subject to regulation by local banking agencies, including the National Bank of Slovakia, the National Bank of Poland and the
German Federal Financial Supervision Agency.
Privacy and information security regulations. Each of the Company’ s segments provides services that may be subject to
various state, federal and foreign privacy laws and regulations. Relevant federal privacy laws include the Gramm-Leach-Bliley Act,
which applies directly to a broad range of financial institutions and indirectly (or in some instances directly) to companies that provide
services to financial institutions. Relevant foreign privacy laws include Directive 95/46 EC of the European Parliament and of the
Council of 24 October 1995, as such directive is implemented in each member state of the European Union, however each member state
has its own data protection and privacy laws which in some cases may be more restrictive than the Directive and impose additional
duties on companies regarding registration/notification requirements and handling/transfer of personal data; the Australian Privacy Act
of 1988; and the Personal Information Protection and Electronic Documents Act in Canada. These laws and their implementing
regulations restrict the collection, processing, storage, use and disclosure of personal information, requires notice to individuals of
privacy practices and provides individuals with certain rights to prevent use and disclosure of protected information. These laws also
impose requirements for safeguarding and proper destruction of personal information through the issuance of data security standards or
guidelines. In addition, there are state laws restricting the ability to collect and utilize certain types of information
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