Visa 2008 Annual Report Download - page 29

Table of Contents
MasterCard-branded debit cards and has repaid to Visa U.S.A. any unearned benefits or financial incentives under its Visa U.S.A. agreement. The settlement
service fee bylaw was rescinded as of the effective date of the order. See Note 23—Legal Matters to our consolidated financial statements included in Item 8
in this report.
The developments discussed above and any future limitations on our business resulting from settlements of, or judgments in, pending or potential
litigation could limit the fees we charge and reduce our payments volume, which could materially and adversely affect our revenues, operating results,
prospects for future growth and overall business.
If we are partially or wholly unable to realize the benefit of our deferred tax assets related to our litigation expenses incurred in connection with the
covered litigation, our financial results and cash flows may be materially and adversely affected.
Our fiscal 2008 statement of operations reflects a litigation provision of $1.5 billion including an additional provision of $1.1 billion related to
settlement of the Discover litigation and management's liability estimate for other matters under the guidelines of SFAS No. 5. For tax purposes, the deduction
related to these matters is deferred until the payments are made and thus the Company established deferred tax assets of $857 million at September 30, 2008
related to these and other litigation payments, which is net of a reserve to reflect our best estimate of the amount of the benefit to be realized. Although we
believe that the estimates and judgments we made in establishing our deferred tax asset and related reserves are reasonable, some or all of these judgments are
subject to review by the taxing authorities. If one or more of the taxing authorities were to successfully challenge our right to realize some or all of the tax
benefit we have recorded and we were unable to realize this benefit, it could have a material and adverse effect on our financial results and cash flows.
The payments industry is the subject of increasing global regulatory focus, which may result in costly new compliance burdens being imposed on us
and our customers and lead to increased costs and decreased payments volume and revenues.
We and our customers are subject to regulations that affect the payments industry in many countries in which our cards are used. Regulation of the
payments industry has increased significantly in recent years. Examples of such regulation include:
• Anti-Money Laundering Regulation. Most jurisdictions in which we and our customers operate have implemented, amended or have pending anti-
money laundering regulations, such as the U.S.A. PATRIOT Act, which requires the creation and implementation of comprehensive anti-money
laundering programs.
• U.S. Treasury Office of Foreign Assets Control Regulation. Visa U.S.A. and Visa International are subject to regulations imposed by the U.S.
Treasury Office of Foreign Assets Control, or OFAC. OFAC restricts financial dealings with Cuba, Iran, Myanmar and Sudan, as well as
financial dealings with certain restricted parties, such as identified money laundering fronts for terrorists or narcotics traffickers. While we
prohibit financial institutions that are domiciled in those countries or are restricted parties from being Visa members, many Visa International
members are non-U.S. financial institutions, and thus are not subject to OFAC restrictions. Accordingly, our payments system may be used for
transactions in or involving countries or parties subject to OFAC-administered sanctions.
• Regulation of the Price of Credit. In recent years, legislation, regulations or other legal requirements affecting credit cards have been adopted in a
number of the jurisdictions in which our cards are used. For example, in the United States, Congress and the federal
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