1

Francis J. Burke, Jr. (010570) fburke@steptoe.com Stacey F. Gottlieb (015084) sgottlieb@steptoe.com

2 STEPTOE & JOHNSON LLP

201 East Washington Street, Suite 1600 3 Phoenix, Arizona 85004-2382

4

Telephone: (602) 257-5200 Facsimile: (602) 257-5299

5 Attorneys for Western Union Financial Services, Inc.

6

UNITED STATES DISTRICT COURT

7

DISTRICT OF ARIZONA

8 WESTERN UNION FINANCIAL

9

SERVICES, INC. dba WESTERN UNION,

10 11 v.

Plaintiff,

12

TERRY GODDARD, in his Official Capacity as Attorney General of the

13 State of Arizona, and his successors,

14

Defendants.

) NO. ) ) ) COMPLAINT ) ) ) ) ) ) ) ) )

15

Plaintiff Western Union Financial Services, Inc. dba Western Union (³Western

16 Union´) allege as follows:

17

INTRODUCTION

18

1. On September 18, 2006, Western Union was informed that Attorney General

19 of the State of Arizona Terry Goddard had presented a seizure warrant to the Arizona

20 Superior Court, and that, if issued, Attorney General Goddard intended to seize certain

21 Western Union money transfers from 28 states to Mexico, even if such transfers were not

22 sent from or received in Arizona. Such seizures would violate the Commerce Clause and

23 the Foreign Commerce Clause of the United States Constitution, the Due Process Clause

24 and the Equal Protection Clause of the Fourteenth Amendment, and the right to Freedom

25 of Speech guaranteed by the First Amendment to the United States Constitution, and 42

26 U.S.C. § 1983. Such seizures threaten to directly regulate, unduly burden and facially

27 discriminate against money transfers in interstate and foreign commerce.

28

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1

NATURE OF THE ACTION

2

2. Plaintiff Western Union files its Complaint against Defendant Terry Goddard,

3 the Attorney General of the State of Arizona, and his successors.

4

3. On July 31, 2006, Attorney General Goddard issued a final Geographical

5 Targeting Order (³GTO´) pursuant to the Arizona Transmitter of Money Act, A.R.S. § 6-

6 1241J, in which he ordered Western Union to provide information about all transfers greater

7 than $300 to or from Sonora, Mexico from or to any location in the world. A copy of the

8 GTO is attached as Exhibit A. The Attorney General¶s explanation for that order is that the

9 Attorney General alleges that money transmitters must file regulatory reports such as

10 suspicious activity reports with the Attorney General of Arizona regarding certain Sonora

11 transactions wherever they may have originated and must have data on all Sonora

12 transactions to determine compliance.

13

4. On September 18, 2006, Defendant, through his agent Arizona Department of

14 Public Safety financial crimes investigator Daniel Kelly (³Kelly´), informed Western Union

15 that Defendant has presented a seizure warrant to the Arizona Superior Court. Western

16 Union has been informed that if seizure is ordered, Defendant will seek for forfeiture all

17 person-to-person money transfers, except for ³Quick Collect wires,´ of $500 or more that (1) 18 are sent from 28 different states1 and attempted to be paid out at 26 specified Western Union

19 agent locations in Sonora, Mexico, and/or (2) that are sent from one of the 28 states to

20 Mexico on or after the day seizure is initiated and that while waiting to be picked up have

21 been subject to the sender¶s or receiver¶s request for a refund, cancellation, or alteration. All

22 such seizures will herein after collectively be referred to as the ³threatened seizures.´

23

24

25

1 Western Union is informed that those 28 states are California, New York, Florida,

Illinois, Georgia, New Jersey, North Carolina, Virginia, Tennessee, Maryland, Texas,

26 Nevada, South Carolina, Ohio, Pennsylvania, Washington, Alabama, Indiana, Oregon,

Colorado, Minnesota, Utah, Connecticut, Michigan, Massachusetts, Wisconsin, Kentucky

27 and Delaware. Western Union also is informed that Defendant will seek such funds sent

from Arizona; however, money transfers originating in Arizona are not being contested in

28 this action.

2

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1

5. Such assertion of regulatory authority over all Sonora transactions and

2 threatened seizures violate the Commerce Clause and the Foreign Commerce Clause of the

3 United States Constitution, and the Due Process Clause and the Equal Protection Clause of

4 the Fourteenth Amendment, and the right to Freedom of Speech guaranteed by the First

5 Amendment to the United States Constitution, and 42 U.S.C. § 1983. Such assertion of

6 regulatory authority over all Sonora transactions and threatened seizures directly regulate,

7 and unduly burden interstate and foreign commerce, are an improper attempt by the Arizona

8 Attorney General to extend his jurisdiction beyond the borders of Arizona, and violate

9 Western Union¶s right to Freedom of Speech guaranteed by the First Amendment.

10

6. Defendant¶s assertion of regulatory authority over all Sonora transactions and

11 threatened seizures are improper attempts by the Arizona Attorney General to extend his

12 jurisdiction beyond the borders of Arizona to directly regulate and unduly burden interstate

13 and foreign commerce. The assertion of regulatory authority over all Sonora transactions

14 and the threatened seizures will effectively force Western Union and its agents throughout

15 the United States and Mexico to shut down lawful lines of business, prevent timely delivery

16 of money transmissions as required by the laws of other domestic and foreign states and

17 Western Union¶s contracts with its customers, and interfere with Western Union¶s lawful

18 business relationships and contracts with its agents, all causing irreparable harm.

19

7. Western Union seeks declaratory judgment pursuant to 28 U.S.C. §§ 2201-

20 2202 on the grounds that the assertion of regulatory authority and threatened seizures violate

21 the Constitution of the United States, and seeks further relief pursuant to 43 U.S.C. § 1983.

22 Western Union also seeks a permanent injunction barring Defendant from:

23

a. seizing or attempting to seize money transfer funds in Western

Union¶s possession, custody, or control, for any transaction that was not sent

24

from or received in Arizona or that is otherwise outside the scope of

Defendant¶s statutory jurisdiction; 25

a. prohibiting or interfering with Western Union¶s compliance with its

26

legal and contractual obligations to deliver transferred funds to the receiver

identified by the sender of money transfers that are not sent from or received

27

in Arizona; and

28

a. violating the Commerce Clause, Foreign Commerce, the Due Process

3

Doc. #507763 v.2 [86348.0029]

Clause and the Equal Protection Clause of the Fourteenth Amendment, and

1

the right to Freedom of Speech under the First Amendment by improper

regulation of money transfers and associated banking transactions taking

2

place in interstate and foreign commerce.

3

8. Western Union has no adequate remedy at law.

4

9. An actual controversy exists between the parties concerning their respective

5 rights and duties. Defendant¶s assertion of regulatory authority and request to the Arizona

6 Superior Court for issue of the seizure warrant makes this controversy definite and concrete,

7 touching on the parties¶ adverse legal interests, and amenable to specific relief through a

8 declaratory judgment.

9

10. The relief requested in this action is sought against Defendant, as well as

10 against each of Defendant¶s officers, employees, agents, and all persons acting in

11 cooperation with Defendant, under his supervision, at his direction, or under his control.

12

PARTIES

13

11. Plaintiff Western Union is a corporation organized under the laws of the State

14 of Colorado with its principal place of business in Englewood, Colorado. Western Union is

15 a financial services company whose primary business involves transmitting money sent by

16 one person to another person through interstate and/or foreign commerce via interstate or

17 international wire. Under various statutes and regulations, it is described as a financial

18 institution, money services business, and money transmitter. In Arizona, Western Union is

19 licensed to conduct business as a money transmitter under the State¶s Transmitters of Money

20 Act, A.R.S. §§ 6-1201 et seq.

21

12. Defendant Terry Goddard is the Attorney General of the State of Arizona and

22 is a defendant in his official capacity. Defendant Goddard and his successors are referred to

23 herein as the ³Attorney General.´

24

JURISDICTION AND VENUE

25

13. This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331, 2201, and 2202.

26

14. Venue is proper in the District of Arizona pursuant to 28 U.S.C. § 1391

27 because it is where Defendant resides.

28

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1

FACTUAL ALLEGATIONS

2

A. Western Union¶s Business

3

15. Western Union is a financial services company. Western Union¶s primary

4 business involves transmitting money sent by one person to another person through interstate

5 and/or foreign commerce by use of intrastate or international wire. While it began as a

6 telegraph company, today, Western Union is a global leader in money transfer services,

7 helping consumers and businesses send money and bill payments quickly, conveniently, and

8 reliably.

9

16. The typical Western Union customer uses its money transfer services for a

10 wide variety of legitimate purposes, including, among other things, living expenses,

11 automobile repairs, travel, medical treatment, educational expenses, and special occasion

12 gifts.

13

17. Western Union¶s success is founded on and maintained by its ability to

14 quickly, conveniently, and reliably help its customers transfer money. Western Union¶s

15 brand has become synonymous with speed, reliability, convenience, and trust in sending

16 money. Western Union¶s brand value, reputation, and goodwill suffer significant damages if

17 Western Union does not deliver money transfers within the contracted time.

18

18. Western Union offers services through a global network of more than 270,000

19 agent locations in all 50 states and the District of Columbia, and in more than 195 foreign

20 countries. It does business through local authorized agents, most of which conduct other

21 retail business at the same location. Western Union agents include large, publicly-owned

22 networks²such as post offices in many countries including France, Germany, China, India

23 and New Zealand²as well as private chains such as DHL, large national retailers such as

24 Elektra in Mexico, and banks in such countries as Germany and Japan.

25

19. In addition to offering money orders, and payment services for things such as

26 home and car loans, utilities, insurance, and child support, Western Union¶s basic service is

27 providing consumer-to-consumer cash transfers, or ³will call´ money transfer service.

28 Essentially, the money transfer service involves the receipt of money from a Western Union

5

Doc. #507763 v.2 [86348.0029]

1 customer with directions to transmit that money electronically to a designated recipient in the

2 form of cash or check, or through a transaction at an ATM type machine in some locations.

3

20. Western Union¶s legal duties and obligations have several sources. First,

4 money transfer senders and receivers are entitled to certain rights, and certain obligations

5 under the law of the jurisdiction in which the customer sends or receives money. Western

6 Union must honor those rights and obligations. In addition to these background legal rules,

7 all money transfers are governed by contractual terms and conditions agreed to by Western

8 Union and its customers, see, e.g., Terms & Conditions for internet transactions attached

9 Exhibit B, and the settlement transactions are governed by independent contracts between

10 Western Union and its agents.

11

21. Western Union offers three different money transfer services to its customers:

12 Will Call (global, but known as ³Dinero in Minutos´ in Mexico); Next Day (in Mexico), and

13 Direct to Bank (global). These services allow Western Union¶s customers to send money by

14 phone or from an agent location. Western Union¶s customers who send money using its Will

15 Call service or its Direct to Bank services also have the option of sending money online.

16

B. Money Transfers Constitute Interstate and Foreign Commerce

17

22. Transactions may be initiated at a Western Union agent location, by

18 telephone, or over the internet and can be picked up at any Western Union location

19 throughout the world on a ³will call´ basis. Every domestic money transfer to a send and

20 receive location within the United States constitutes interstate commerce, carried through the

21 interstate wires. Every money transfer that is sent from or received in a foreign nation, such

22 as Mexico, constitutes both interstate and foreign commerce because each transfer uses the

23 interstate wires as well as the international wires. Each money transfer generates additional,

24 related interstate and foreign commerce transactions in connection with collection and

25 reimbursement of agent funds and payment of agent commissions.

26

a. Money Transfer ³Send´ Transaction

27

23. In a typical transaction conducted using Western Union¶s online service

28 option, a consumer who wishes to send money logs onto www.westernunion.com, which

6

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1 connects the customer to Western Union servers located in State A, State B, or, in the case of

2 an international customers, Ireland; inputs information into an online ³Send Money´ form;

3 and pays for the transaction, usually using a credit card, along with the service fee, to 4 Western Union.2 From the Western Union server, the information is sent to Western Union

5 data processing system and then to the mainframe computer located at Western Union¶s data

6 processing center, located in State C (the ³mainframe´), where it is processed further, and

7 stored.

8

24. In a typical transaction conducted using Western Union¶s transfer by phone

9 service option, a consumer who wishes to send money calls Western Union¶s 1-800-CALL-

10 CASH, provides a Western Union customer service representative (a ³CSR´) located in

11 Texas, Missouri, West Virginia, or beginning at the end of this month, in Mexico City, with

12 the information to complete an electronic ³Send Money´ form, and pays for the transaction,

13 using a credit card, along with the service fee, to Western Union.

14

25. If, however, the sender is calling from an agent location from a special direct-

15 connect telephone, the call is routed to a CSR at a call center in Costa Rica, Texas (usually

16 special language calls) or the Dominican Republic, and the sender pays the local agent in

17 cash for the transfer. Nevertheless, under either scenario, the CSR enters the details of the

18 transaction into a computer terminal linked to a Western Union data processing system

19 where it is sent to the mainframe located in State C, where it is processed further, and stored.

20

26. When a Western Union customer uses a credit card to pay funds to Western

21 Union, a Western Union data processing system will communicate with non-Western Union

22

23

2 For security reasons, due to the nature of the information stored at its three data

processing centers, Western Union keeps the locations of such centers secret and

24 confidential. They are not, however, located in Arizona. Accordingly, Western Union will

refer to a particular state where such a center is located as, for example, ³State A.´ Thus, if a

25 data processing center is located in Hawaii and another is located in Wyoming, Hawaii may

throughout the Complaint be referred to as ³State A´ and Wyoming may throughout the

26 Complaint be referred to as ³State B.´ If the Court believes that it is necessary to know the

actual location of a Western Union data processing center, Western Union will provide the

27 Court with that information in camera to keep that information confidential. Unless

otherwise noted, individual Western Union data processing centers, whether it is located in

28 State A, B, or C, will be referred to as a ³Data Processing Center.´

7

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1 merchant service and non-Western Union risk scoring processing centers in Maryland,

2 Colorado, and Texas.

3

27. In a typical transaction conducted using a Western Union agent, a consumer

4 who wishes to send money enters a Western Union agent location, fills out a ³Send Money´

5 form [see, e.g., U.S. Send Money form attached as Exhibit C], provides any required

6 supporting documentation, and delivers the money, in cash along with the service fee, to the

7 agent. The Western Union agent enters the details of the transaction into a computer

8 terminal linked to a Western Union data processing system. The information flows from the

9 agent location to the mainframe at Western Union¶s data processing center located in State

10 C, where it is processed further, and stored.

11

28. Western Union assigns each money transfer a unique ³Money Transfer

12 Control Number,´ which is provided to the sender for him or her to communicate to the

13 recipient.

14

29. After a Western Union agent receives funds from the sender, the agent will

15 deposit the cash in trust for Western Union into its bank account. A Western Union

16 processing center in State C will then cause a separate back-office system located in State C

17 to create an Automated Clearing House (³ACH´) file to debit the agent bank account for the

18 funds collected from the sender. Western Union then sends the ACH debit file to its

19 Originating Depository Financial Institution (³ODFI´) for processing. The ODFI processes

20 the ACH debit file and, the next business day, Western Union account is credited.

21

30. A few large ³chain´ agents, such as a chain of supermarkets, send the funds

22 deposited into their accounts in trust for Western Union via Federal Reserve wire to Western

23 Union¶s operating account rather than have Western Union ACH their bank account.

24

b. The Money Transfer ³Payout´ Transaction

25

31. After the information from the ³Send Form´ is entered into a Western Union

26 data processing system and reaches Western Union¶s data processing center in State C, the

27 processing centers mainframe will reflect that the funds are available for payout.

28

8

Doc. #507763 v.2 [86348.0029]

1

32. Once the transaction has been successfully created by the system, Western

2 Union maintains money transfer funds, until such time as the transaction is paid, as required

3 by the laws applicable to the state in which the money transfer originated, that is, in accounts

4 backed by permissible investments stated by various U.S. governmental agencies such as the

5 Department of the Treasury.

6

33. Western Union money transfers usually can be retrieved within 10 to 15

7 minutes after the transaction is initiated. ³Dinero en Minutos´ money transfers to Mexico

8 are usually available for pick up by the receiver within minutes, on a ³will-call´ basis, at any

9 Western Union Dinero en Minutos agent location in Mexico.

10

34. However, until such time as the funds are paid out, Western Union¶s

11 customer, that is the sender of funds, may, upon written request, cancel the money transfer

12 and receive a refund of the principal amount. Some states, such as California, have laws that

13 govern Western Union¶s customer¶s right to refund.

14

35. To receive funds, a recipient enters a Western Union agent location,

15 completes the ³Receive Money´ form and presents it, along with identification and the

16 Money Transfer Control Number, to the agent. The agent confirms the documentation, and

17 takes whatever security actions are required (such as copying the recipient¶s identification).

18 Then, using a point of sale computer that links to Western Union¶s mainframe in State C, the

19 agent locates the money transfer on the mainframe, initiates the actual payment process by

20 selecting the transaction from the mainframe.

21

36. In the United States, most transfers are paid out in check, although some are

22 paid in cash. If the transfer is paid out in check, the agent issues a Western Union money

23 transfer check drawn on Western Union¶s bank account in Colorado payable to the recipient.

24 Typically, the recipient generally signs the check over to the agent, creating a third party

25 check, and the agent pays the recipient cash. The agent then deposits the third party check in

26 its bank account for reimbursement of the funds paid-out to the recipient. However, outside

27 of the United States, almost all money transfers are paid out in case. Western Union settles

28 with these agents daily via Federal Reserve wire transfer. Thus, in Sonora, Mexico, the

9

Doc. #507763 v.2 [86348.0029]

1 receive agent locates the transaction from the mainframe, pays the recipient in cash using the

2 agent¶s own funds, and then reconciles with Western Union on a daily basis.

3

37. Every Western Union money transfer constitutes interstate and foreign

4 commerce in various ways through the:

5

(i) Use of telephone lines to initiate money transfers by calling Western Union

directly; 6

(ii) Use of telephone lines, and interstate and foreign wires to transmit data and

7

funds electronically from the state where the transfer originates to a Western

Union data processing system to Western Union¶s data processing center

8

located in State C, and ultimately to Mexico; and/or

9

(iii) Use of telephone lines, and interstate and foreign wires to transmit data and

funds to reimburse and settle transactions with Western Union agents, to pay

10

their commissions for sending or receiving and advancing payment for

Western Union money transfers. 11

C. Compensation of Western Union Agents Involves Interstate and Foreign

12

Commerce

13

38. Western Union¶s relationship with its agents is governed by a contract.

14

39. Pursuant to the terms of their contracts, Western Unions pays a commission to

15 the receive agent for each money transfer it pays out. The process of reimbursing the agent

16 for processing the payout to the receiver is referred to as ³settlement.´ Compensation of

17 Western Union agents for their services in processing money transfers also involves

18 interstate and/or foreign commerce. Pursuant to the terms of Western Union¶s contractual

19 agreements with its agents, Western Union settles with each agent at the end of each

20 settlement period. For domestic transactions, commissions are paid monthly by check or

21 ACH. For international transactions, commissions are settled on a ³net´ basis and agents are

22 paid daily via Federal Reserve wire transfers.

23

D. The Threatened Seizures

24

40. Defendant, through his agent Kelly, has informed Western Union that, if the

25 seizure warrant is signed, Defendant will seek for forfeiture person-to-person money

26 transfers of $500 or more that are (1) attempted to be paid out at 26 specified Western Union

27 agent locations in Sonora, Mexico, and that were sent from one of 28 different states,; or (2)

28 that are sent from one of the 28 states to Mexico on or after the day the seizure is initiated,

10

Doc. #507763 v.2 [86348.0029]

1 and that while waiting to be picked up have been subject to the sender¶s or receiver¶s request

2 for a refund, cancellation, or alteration. These transactions will never have been sent to,

3 routed through, or received in Arizona.

4

41. Defendant, through his agent Kelly, has informed Western Union that he will

5 continue to seize money transfers for four weeks. In the past, Defendant has sought ³back-

6 to-back´ seizures that resulted in seizures continuing for a total of eight consecutive weeks.

7

42. In the past, Defendant has seized money transfers sent to or received in

8 Arizona. That is, Defendant seized funds that were being received in Arizona, and have

9 never seized funds from money transfers that were exclusively sent from or received in other

10 states or countries (not Arizona).

11

43. Defendant¶s previous seizures seized (1) funds sent to ³targeted names,´ that

12 is, funds sent to a particular receiver Arizona, (2) funds sent to particular agent locations in

13 Arizona, or (3) funds that were being sent to Arizona from specific states, which Defendant

14 typically refers to as corridor states.

15

44. When law enforcement seizes funds being sent using Western Union, the

16 system Western Union has put in place to respond to such seizures (the ³Western Union

17 system´) will identify such funds when the money transfer transaction is initiated. That is,

18 the funds are ³seized´ when they are sent, not when they are being picked up.

19

45. Unlike money transfers sent to an individual state in the United States, the

20 Western Union system does not have the ability to discriminate between individual states

21 or provinces in a foreign country. This means that Western Union does not have the ability

22 to restrict the seizure of funds being sent to foreign countries to individual states or

23 provinces within that country. Consequently, if Defendant seeks funds sent to Sonora,

24 Mexico, but not specify a particular Western Union agent location in Sonora, the Western

25 Union system will seize all funds sent to Mexico, even if those funds are being sent to a

26 Mexican state other than Sonora.

27

46. Unlike funds seized pursuant to a warrant that seeks seizure of all transfers

28 into a country, the funds that are seized because they are sent to a specified agent location

11

Doc. #507763 v.2 [86348.0029]

1 are seized at the time of pick-up, not when the money transfer is initiated. This is because

2 a person seeking to pick-up money sent to him or her using Western Union is not obligated

3 to pick up the funds at any particular Western Union agent location. In fact, in some

4 cases, the person can pick up the funds at any Western Union agent location anywhere in

5 the world. The effect of this is that if Defendant seeks funds sent to Sonora, Mexico that

6 are picked up at a particular agent location, those funds are not seized until the payout

7 process has begun and the funds are for all intents and purposes located outside the United

8 States in Sonora, Mexico.

9

47. The threatened seizures of money transfers to Mexico that have been subject

10 to a request for a refund, cancellation, or alteration will directly regulate interstate

11 commerce. All requests to alter a Western Union money transfer must be done by calling

12 Western Union¶s customer service center (³CSC´) in Missouri, and all requests to cancel or

13 for a refund must be written. Thus, if, for example, a Western Union customer in California

14 needs to correct the misspelling of the name of a designated recipient located anywhere in

15 Mexico because a Western Union agent accidentally entered the recipient¶s name incorrectly

16 into the computer, the customer must call the CDC in Missouri to effect the change. By

17 regulating such transactions, the Attorney General would be directly regulating interstate

18 commerce.

19

48. The threatened seizure exposes Western Union to potential liability because

20 under certain state laws Western Union has a liability to its customer in an amount equal to

21 the forfeited funds. In fact, if Western Union fails to pay out funds to the designated

22 recipient in violation of its contractual obligations with its customer, Western Union could be

23 subject to potential regulatory sanctions under some state laws. Similarly, if Western Union

24 fails to refund a customers funds, Western Union could be violating some state laws that

25 require Western Union to honor customer refund requests.

26

49. In the past, after the Attorney General has seized funds from Western Union,

27 the senders and/or receivers of those funds are required to go through interrogation by

28 Arizona law enforcement officers (or to provide information to Western Union who is

12

Doc. #507763 v.2 [86348.0029]

1 ordered to then provide it to Arizona law enforcement). The Attorney General is thus

2 projecting his authority beyond Arizona for his overly broad seizure of wholly legitimate

3 money transfers by requiring citizens of foreign states and nations who have never had any

4 contact with Arizona to be interrogated by Arizona law enforcement before releasing the

5 seized funds.

6

50. Finally, consistent with Defendant¶s past practices, Western Union expects

7 Defendant will seize the money transfers to Mexico pursuant to A.R.S. §§ 13-2314 and 13-

8 4201 et seq. A.R.S. § 13-4202, however, explicitly limits Defendant¶s jurisdiction in

9 forfeiture actions to ³property . . . within [the State] at the time of the filing of the action or if

10 the courts of [the State] have in personam jurisdiction of an owner or interest holder in the

11 property.´

12

E. Money Transfers to Mexico

13

51. According to The World Bank, Mexico ranks among the top money transfer

14 recipients in the world.3

15

52. According to The World Bank, in comparison with other recipient countries,

16 which typically receive considerable money transfers from several countries, Mexico has a

17 unique ³bilateral relationship´ with the United States, from which the vast majority of its

18 money transfers, or remittances, originate.

19

53. According to The World Bank, the increasing size of the Mexican population

20 living in the United States has resulted in the rapid increase in the number of potential money

21 transfers, and the growth of money transfers to Mexico is driven primarily by the large

22 number of Mexican workers living in the United States. ³The typical remitter is a hard-

23 working immigrant, documented or undocumented, who wants to improve the life of his or

24 her family and community of origin by providing additional income.´ In fact, The World

25 3 Unless otherwise noted, paragraphs 52-59 of the Complaint are based on the case
26 study published by The World Bank: Raul Hernandez-Coss, The U.S.-Mexico Remittance Corridor, Lessons on Shifting from Informal to Formal Transfer Systems (World Bank
27 Working Paper No. 47, 2005), a copy of which is attached at Exhibit D. According Working Paper No. 47, Mr. Hernandez-Coss is Financial Sector Specialist in the Financial Market
28 Integrity Unit of The World Bank.

13

Doc. #507763 v.2 [86348.0029]

1 Bank reports that nearly one in five Mexican adults receives money from relatives employed

2 in the United States.

3

54. This growth has been so substantial that, according to The World Bank, from

4 1998 to 2003, worker remittances became a increasing important to Mexico¶s economy. In

5 2003, remittances were Mexico¶s second largest source of external finance, second only to

6 oil, surpassing foreign direct investment and tourism. For example, in 2003, remittances to

7 Mexico surpassed $13 billion, approximately 2.2 percent of Mexico¶ gross domestic product.

8

55. According to The World Bank, money transfers from the United States to

9 Mexico (the U.S.-Mexico corridor) is at ³an advanced state of shifting from informal [money

10 transfer systems] to formal [money transfer] systems.´ The World Bank reports that in

11 addition to traditional money transmitters like Western Union and Money Gram, banking

12 institutions, credit unions, debit and credit card companies, microfinance institutions, and

13 rural financial institutions now compete for market share.

14

56. According to a Bank of America August 17, 2004 news release, its remittance

15 service to Mexico grew 67 percent in the first six months of 2004. A copy of the news

16 release is attached as Exhibit E, and available on Bank of America¶s website

17 http://newsroom.bankofamerica.com. In 2004, according to a Wells Fargo June 10, 2004

18 News Release, Wells Fargo partnered with HSBC Mexico to create what it considered ³the

19 largest distribution channel among U.S. banks for consumer remittance customers in

20 Mexico.´ A copy of the news release attached as Exhibit F, and available on its website

21 www.wellsfargo.com/press.

22

57. Among the reasons cited by the World Bank for the transformation of the

23 money transfer market from a largely informal industry to one primarily based on electronic

24 transfers through formal institutions like Western Union includes bilateral initiatives by the

25 United States and Mexican governments and the monetary authorities of the two countries.

26

58. With respect to the cooperative efforts of the United States and Mexican

27 governments, according to The World Bank, ³Mexico has a broad network of bilateral

28 agreements with the United States, including Financial Information Exchange Agreement

14

Doc. #507763 v.2 [86348.0029]

1 and the Memorandum of Understanding for the Exchange of Information on the Cross-

2 Border Movement of Currency and Monetary Instruments.´ The World Bank describes

3 another such effort where the U.S. Federal Reserve System is working to expand its

4 Automated Clearing House to support two-way credit transactions between the United States

5 and Mexico. According to Federal Reserve Board Chairman, Ben S. Bernanke, ³Providing

6 service to Mexico is also an important step for the U.S.-Mexican Partnership for Prosperity,

7 and agreement designed to improve financial linkages between the two countries.´ See

8 Transcripts of Chairman Bernanke¶s remarks given at Access for Immigrants: Learning

9 from Diverse Perspectives conference, Federal Reserve Bank of Chicago, Chicago, Illinois

10 (April 16, 2004) attached as Exhibit G.

11

CLAIMS FOR RELIEF

12

COUNT I COMMERCE CLAUSE

13

59. Western Union incorporates by reference its allegations in Paragraphs 1

14 through 58 as set forth above.

15

60. The assertion of regulatory authority over Sonora transactions and threatened

16 seizures, as described above, would violate the Commerce Clause of the United States

17 Constitution because they would place an intolerable burden on interstate commerce by

18 subjecting interstate money transmissions to the laws of a single State, Arizona.

19

61. For example, the assertion of regulatory authority over Sonora transactions

20 and threatened seizures would violate the Commerce Clause by directly regulating

21 commercial activity outside of Arizona by imposing Arizona¶s forfeiture laws on money

22 transfers that take place entirely outside of Arizona, thus subjecting interstate money

23 transmissions to the laws of a single State, Arizona.

24

62. The assertion of regulatory authority over Sonora transactions and threatened

25 seizures would further violate the Commerce Clause by discriminating against businesses

26 engaged in interstate commerce in 28 States, yet leaving the remaining States free to conduct

27 money transfers to Mexico without interference.

28

15

Doc. #507763 v.2 [86348.0029]

1

63. Less discriminatory and burdensome alternatives are available to preserve any

2 legitimate local interests: the seizure of funds in a manner consistent with Defendant¶s

3 lawful exercise of his jurisdiction would be adequate to preserve any local interests at stake.

4

COUNT II

5

FOREIGN COMMERCE CLAUSE

6

64. Western Union incorporates by reference its allegations in Paragraphs 1

7 through 63 as set forth above.

8

65. Money transfers, as described above, are acts of interstate and/or foreign

9 commerce.

10

66. The assertion of regulatory authority over Sonora transactions and threatened

11 seizures, as described above, would violate the Foreign Commerce Clause of the United

12 States Constitution because they would place an intolerable burden on foreign commerce.

13

67. The assertion of regulatory authority over Sonora transactions and threatened

14 seizures would violate the Foreign Commerce Clause by improperly regulating foreign

15 commerce, a power reserved to the federal government, by enforcing Arizona¶s laws in

16 Mexico.

17

68. The assertion of regulatory authority over Sonora transactions and threatened

18 seizures would further violate the Foreign Commerce Clause by unduly burdening Western

19 Union¶s ability to conduct commercial activities on a international basis via the internet and

20 telephone wires.

21

69. The assertion of regulatory authority over Sonora transactions and threatened

22 seizures would further violate the Foreign Commerce Clause by singling out Western Union

23 and essentially banning it from being able to continue its money transfer business to Sonora,

24 Mexico.

25

70. The assertion of regulatory authority over Sonora transactions and threatened

26 seizures would further violate the Foreign Commerce Clause by improperly regulating

27 foreign commerce, a power reserved to the federal government, by seizing funds that were

28

16

Doc. #507763 v.2 [86348.0029]

1 intended to facilitate lawful foreign commerce and is therefore inimical to the national

2 commerce.

3

4

71.

COUNT III DUE PROCESS
Western Union incorporates by reference its allegations in Paragraphs 1

5 through 70 as set forth above.

6

72. The assertion of regulatory authority over Senora transactions and threatened

7 seizures, as described above, would violate the Due Process Clause of the Fourteenth

8 Amendment to the United States Constitution

9

73. For example, the assertion of regulatory authority over Sonora transactions

10 and threatened seizures would violate the Due Process Clause of the Fourteenth Amendment

11 by improperly extending the money transmitter statutes and forfeiture laws of the State of

12 Arizona beyond state borders and attempt to control commercial activity in other States.

13

74. The assertion of regulatory authority over Sonora transactions and threatened

14 seizures would further violate the Due Process Clause by imposing the laws of the State of

15 Arizona on citizens of other states and foreign nationals who have never had any contact

16 with the State of Arizona and who can have no reasonable expectation of being subject to

17 Arizona law.

18

75. The assertion of regulatory authority over Sonora transactions and threatened

19 seizures would further violate the Due Process Clause by interfering with contracts entered

20 into and performed entirely outside the State of Arizona.

21

76. The threatened seizures would further violate the Due Process Clause because

22 they would improperly seize property located outside the State of Arizona thereby violating

23 the guaranty against deprivation of property without due process of law.

24

COUNT IV

25

VIOLATION OF THE EQUAL PROTECTION CLAUSE

26

77. Western Union incorporates by reference its allegations in Paragraphs 1

27 through 76 as set forth above.

28

17

Doc. #507763 v.2 [86348.0029]

1

78. The assertion of regulatory authority over Sonora transactions and threatened

2 seizures, as described above, violate the Equal Protection Clause of the Fourteenth

3 Amendment of the United States Constitution.

4

79. For example, the assertion of regulatory authority over Sonora transactions

5 and threatened seizures would violate the Equal Protection Clause in that they constitute and

6 arbitrary and irrational classification, singling out Western Union among the numerous

7 entities that send funds to Sonora, Mexico for unfair and unequal treatment.

8

80. The assertion of regulatory authority over Sonora transactions and threatened

9 seizures would further violate the Equal Protection Clause in that they constitute an arbitrary

10 and irrational classification, selecting only 28 states and their citizens for unfair and unequal

11 treatment.

12

81. The assertion of regulatory authority over Sonora transactions and threatened

13 seizures of Western Union transactions is not rationally related to any legitimate government

14 purpose.

15

COUNT V VIOLATION OF THE FIRST AMENDMENT

16

82. Western Union incorporates by reference its allegations in Paragraphs 1

17 through 81 as set forth above.

18

83. The threatened seizure violates the free speech guarantees in the First

19 Amendment to the United States Constitution because it is an impermissible restriction on

20 speech that reaches far beyond the boarders of Arizona.

21

84. Defendant does not have substantial state interest in seizing funds that were

22 neither have been sent to or received in Arizona, but that were being sent to Sonora, Mexico

23 for entirely legitimate purposes, and his doing so does not directly advance any substantial

24 interest, and the restriction is not sufficiently narrowly tailored to achieve any substantial

25 interest.

26

85. The threatened seizure is accompanied by Defendant¶s threat of criminal

27 prosecution if Western Union were to warn its customers that money transfers to Sonora,

28

18

Doc. #507763 v.2 [86348.0029]

1 Mexico would be delayed due to the State of Arizona¶s exercise of extraterritorial

2 jurisdiction over their funds.

3

86. If Western Union were prohibited from informing its customers that their

4 money transfers to Mexico cannot be refunded, cancelled, or altered, or that their money

5 transfers would be delayed and might not arrive at all, every affected customer will lose trust

6 in the credibility, speed, accuracy and reliability of the Western Union name, brand and

7 reputation.

8

87. Western Union will be prevented from exercising its right to Freedom of

9 Speech (albeit commercial speech) and losing its customers and goodwill, or face the risk of

10 prosecution for disclosing the seizure regulation. The overbreadth of the threatened seizure

11 and the threat of criminal sanctions punishes and chills speech protected by the First

12 Amendment.

13

COUNT VI VIOLATION OF 42 U.S.C. § 1983

14

88. Western Union incorporates by reference its allegations in Paragraphs 1

15 through 87 as set forth above.

16

89. Defendant, acting in his official capacity as Attorney General, has asserted

17 authority to regulate money transfers to Sonora, Mexico and have threatened to seize money

18 transfers, all person-to-person money transfers, except for ³Quick Collect wires,´ of $500 or

19 more that are either (1) attempted to be received at 26 specified Western Union agent

20 locations in Sonora, Mexico, and that were sent from 28 different states; or (2) that

21 originated from one of the 28 states, that were sent to Mexico on or after the day the seizure

22 is initiated, and that while waiting to be picked up have been subject to the sender¶s or

23 receiver¶s request for a refund, cancellation, or alteration that are not sent from or received in

24 Arizona. This conduct constitutes state action under color of law.

25

90. The state action deprives Western Union of rights, privileges and immunities

26 guaranteed by the United States Constitution.

27

91. The State of Arizona is bound by these rights, privileges and immunities.

28

19

Doc. #507763 v.2 [86348.0029]

1

92. The state action violates the Commerce, Equal Protection and Due Process

2 Clauses of, and the First and Fourteenth Amendments to the United States Constitution to the

3 injury of Western Union.

4

93. As a result of the State of Arizona¶s violations, Western Union will suffer

5 harm in the form of seized transfer funds, loss of business, loss of good will, damage to its

6 reputation, and contractual and other irreparable harm damages presently incalculable for not

7 delivering the seized funds to its patrons.

8

94. Western Union is the type of plaintiff intended to benefit from the Commerce

9 Clause and the Foreign Commerce Clause of the United States Constitution, and the Equal

10 Protection Clause and the Due Process Clause of the Fourteenth Amendment and the free

11 speech guaranteed by the First Amendment to the United States Constitution.

12

95. The assertion of regulatory authority over Sonora transactions and threatened

13 seizure would deprive Western Union of numerous rights secured by the United States

14 Constitution (as set forth in Counts I-VI) under color of state law, thereby violating 42

15 U.S.C. § 1983.

16

IRREPARABLE INJURY

17

96. Western Union faces the prospect of immediate, severe and irreparable injury

18 once the seizure warrant is issued and becomes effective. By way of example only, the

19 injuries include: (1) the threat of incalculable damages through the permanent loss of

20 customers, damage to its brand name and good will, and potential loss of its relationships

21 with its agents; (2) and the threat of the deprivation of its constitutional rights, including its

22 right to engage in interstate commerce.

23

24

RELIEF REQUESTED

25

1. Western Union respectfully requests that this Court, pursuant to 28 U.S.C. §

26 2201, enter a declaratory judgment stating the seizure of money transfers violates the

27 Commerce Clause and the Foreign Commerce Clause of the United States Constitution,

28 and the Due Process Clause and Equal Protection Clause of the Fourteenth Amendment

20

Doc. #507763 v.2 [86348.0029]

1 and the Freedom of Speech guaranteed by the First Amendment to the United States

2 Constitution, and 42 U.S.C. § 1983.

3

2. Western Union respectfully requests that this Court enter a permanent

4 injunction barring Defendant from:

5

(i) seizing or attempting to seize money transfer funds in Western Union¶s

possession, custody, or control, for any transaction that was not sent from or

6

received in Arizona or that is otherwise outside the scope of Defendant¶s

statutory jurisdiction; 7

(ii) prohibiting or interfering with Western Union¶s compliance with its legal

8

and contractual obligations to deliver transferred funds to the receiver

identified by the sender of money transfers that are not sent from or received

9

in Arizona; and

10

(iii) violating the Commerce Clause, Foreign Commerce Clause, the Due Process

Clause and the Equal Protection Clause of the Fourteenth Amendment, and

11

the right to the Freedom of Speech under the First Amendment by improper

regulation of money transfers and associated banking transactions taking

12

place in interstate and foreign commerce.

13

3. Western Union respectfully requests costs of suit, including reasonable

14 attorney¶ fees under 42 U.S.C. §1988, and all further relief to which it may be entitled.

15

DATED this 19th day of September, 2006.

16

STEPTOE & JOHNSON LLP

17

18

By/s/ FRANCIS J. BURKE, JR.

Francis J. Burke, Jr.

19

Stacey F. Gottlieb

201 East Washington Street, Suite 1600

20

Phoenix, Arizona 85004-2382

21

Attorneys for Western Union Financial Services,

Inc.

22

23

24

25

26

27

28

21

Doc. #507763 v.2 [86348.0029]

 
 1 WO

2

3

4

5

6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8

9 Western Union Financial Services, Inc. )

dba Western Union,

)

10

)

Plaintiffs,

)

11

)

v.

)

12

)

)

13 Terry Goddard, Attorne y General of the )

State of Arizona, and his successors, )

14

)

Defendants.

)

15

)

No. CV-06-2249 -PHX-SMM ORDER

16

17

Plaintiff, in addition to filing its com plaint, motioned the Court for tem porary and

18 permanent injunctive relief. The Court denied the motion for temporary injunctive relief, in

19 part, due to parallel proceedings in Arizona state court raising the same or similar issues. As

20 the parallel proceedings wend their way thr ough state court, Defendants, with Plaintiff’s

21 agreement, have filed numerous extensions to file their Answer and response to the motion

22 for injunctive relief.

23

The state court decisions may affect the proceedings in this case. Additionally, the

24 underlying facts m ay be affected due to the passage of tim e and other circum stances.

25 Therefore,

26

IT IS ORDERED denying without prejudice Plaintiff’s m otion for prelim inary

27 injunctive relief.

28 //

1

IT IS FURTHER ORDERED that Plaintiff may notice or file an amended motion

2 for permanent injunctive relief at such time as the state court litigation concludes, or at such

3 time as it deems necessary to pursue its position in this litigation.

4

DATED this 24th day of September, 2007.

5 6 7 8 9 10 11

12 13 14 15 16 17 18

19

20 21 22 23 24 25

26

27 28

- 2 -

 
 1 WO

2

3

4

5

6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8

9 Western Union Financial Services, Inc., )

)

10

Plaintiff,

)

)

11 v.

)

)

12

)

Terry Goddard, Attorney General of )

13 Arizona,

)

)

14

Defendant.

)

)

15

)

No. CIV 06-2249 -PHX-SMM ORDER

16

The parties have agreed to settle this case and have stipulated to dism iss it. The

17 Honorable Timothy Ryan, Arizona Superior Court Judge, Maricopa County, approved the

18 parties’ settlement on February 24, 2010 in State of Arizona v. Western Union Financia l

19 Services, Inc., CV2010-005807. Based on the parties’ Stipulation to Order of Dism issal

20 (Doc. 110), and good cause appearing for dismissal of this case,

21

IT IS HEREBY ORDERED that this case is dismissed with prejudice, except that

22 this Order of Dismissal shall not prejudice any rights Plaintiff may have to challenge any

23 Geographic Targeting Orders issued after December 7, 2006 or any seizure warrant issued

24 after the date on which this Court dismisses this case.

25

DATED this 10th day of March, 2010.

26

27

28

 
 Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 1 of 10
U.S. District Court DISTRICT OF ARIZONA (Phoenix Division) CIVIL DOCKET FOR CASE #: 2:06−cv−02249−SMM

CLOSED,STD

Western Union Financial Services, Inc v. Goddard Assigned to: Judge Stephen M McNamee Cause: 28:2201 Declaratory Judgment
Plaintiff

Date Filed: 09/19/2006 Date Terminated: 03/10/2010 Jury Demand: None Nature of Suit: 440 Civil Rights: Other Jurisdiction: Federal Question

Western Union Financial Services Incorporated doing business as Western Union

represented by Francis J Burke , Jr. Seyfarth Shaw LLP− Los Angeles, CA − Hope St. 333 S Hope St., Ste. 3900 Los Angeles, CA 90071 310−201−5214 Fax: 310−282−6993 Email: fburke@seyfarth.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stacey Faith Gottlieb Greenberg Traurig LLP 2375 E Camelback Rd Ste 700 Phoenix, AZ 85016 602−445−8000 Fax: 602−445−8100 Email: gottliebs@gtlaw.com ATTORNEY TO BE NOTICED

V.
Defendant
Terry L Goddard in his Official Capacity as Attorney General of the State of Arizona, and his successors

represented by Cameron H Holmes Office of the Attorney General 1275 W Washington St Phoenix, AZ 85007 602−542−8482 Fax: 602−542−7975 Email: cameron.holmes@azag.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Charles R Johnson Office of the Attorney General Civil Division 1275 W Washington Phoenix, AZ 85007 602−542−8492 Fax: 602−542−7975 Email: charles.johnson@azag.gov TERMINATED: 08/05/2009 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Michael King Goodwin Office of the Attorney General Liability Management Section 1275 W Washington

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 2 of 10

Phoenix, AZ 85007−2997 602−542−7674 Fax: 602−542−7644 Email: michael.goodwin@azag.gov ATTORNEY TO BE NOTICED

Stephen Craig Lepley , Office of the Attorney General 1275 W Washington St

Phoenix, AZ 85007 602−542−8501 Fax: 602−542−7975 Email: stephen.lepley@azag.gov ATTORNEY TO BE NOTICED

Movant Torres v Goddard Javier Torres

represented by Mary M Rowland Hughes Socol Piers Resnick &Dym Ltd 70 W Madison St Ste 4000 Chicago, IL 60602 312−580−0100 Fax: 312−580−1994 Email: mrowland@hsplegal.com ATTORNEY TO BE NOTICED

Date Filed 09/19/2006 09/19/2006 09/19/2006 09/19/2006 09/19/2006 09/19/2006 09/19/2006
09/19/2006
09/19/2006

# Docket Text
1 COMPLAINT, filed by Western Union Financial Services, Inc. (Attachments: # 1 # 2 # 3 # 4 # 5 # 6 # 7 # 8 # 9 # 10 # 11)(Gottlieb, Stacey) (Entered: 09/19/2006)
2 MOTION for Preliminary Injunction by Western Union Financial Services, Inc. (Burke, Francis) (Entered: 09/19/2006)
3 MOTION for Temporary Restraining Order by Western Union Financial Services, Inc. (Burke, Francis) (Entered: 09/19/2006)
4 DECLARATION of Support of Application for Temporary Restraining Order and Motion for Preliminary Injunction by Plaintiff Western Union Financial Services, Inc. (Burke, Francis) (Entered: 09/19/2006)
5 Notice re Attorney Certificate Pursuant to Federal Rules of Civil Procedure 65(B)(2) by Western Union Financial Services, Inc (Burke, Francis) (Entered: 09/19/2006)
6 Additional Attachments to Main Document re 3 MOTION for Temporary Restraining Order by Plaintiff Western Union Financial Services, Inc. (Burke, Francis) (Entered: 09/19/2006)
7 Filing fee paid 09/19/06, receipt number PHX048437. This case has been assigned to the Honorable Stephen M. McNamee. All future pleadings or documents should bear the correct case number: CV06−2249−PHX−SMM. Notice of Availability of Magistrate Judge to Exercise Jurisdiction form attached. (ESL) (Entered: 09/19/2006)
8 NOTICE of Hearing on Motion 2 MOTION for Preliminary Injunction, 3 MOTION for Temporary Restraining Order:Motion Hearing set for 9/20/2006 at 01:30 PM in Courtroom 605, 401 West Washington Street, Phoenix, AZ 85003 before Judge Stephen M McNamee. (Burke, Francis) (Entered: 09/19/2006)
9 AMENDED DOCUMENT by Western Union Financial Services, Inc. Amendment to 3 MOTION for Temporary Restraining Order. (Burke, Francis) (Entered: 09/19/2006)

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 3 of 10

09/20/2006 09/20/2006 09/20/2006 09/20/2006
09/21/2006 09/21/2006 09/26/2006 10/03/2006 10/04/2006
10/06/2006 10/10/2006 10/30/2006 11/03/2006 11/08/2006
11/17/2006

10 Summons Issued as to Terry Goddard. (ESL) (Entered: 09/20/2006)
11 Notice re of Filing Supplemental Declaration in Support of Application for Restraining Order and Motion for Preliminary Injunction by Western Union Financial Services, Inc (Gottlieb, Stacey) (Entered: 09/20/2006)
12 DECLARATION of Blaine Newby by Plaintiff Western Union Financial Services, Inc. (Attachments: # 1)(Gottlieb, Stacey) (Entered: 09/20/2006)
13 Minute Entry (text only entry) for proceedings held before Judge Stephen M McNamee : Apr. Francis Burke,Stacey Gottlieb, Mark Newman for pla, Cameron Holmes for dftMotion Hearing held on 9/20/2006 re 3 MOTION for Temporary Restraining Order filed by Western Union Financial Services, Inc, is denied. The plaintiff's complaint and motion for preliminary injunction will remain on the Court's docket. The parties to notify the Court of readiness for hearing on the motion for preliminary injunction. (Court Reporter Gary Moll.) (TCA, ) (Entered: 09/21/2006)
14 TRANSCRIPT DESIGNATION AND ORDER FORM by Western Union Financial Services, Inc for proceedings held on 09/20/2006 before Judge McNamee. (Burke, Francis) (Entered: 09/21/2006)
16 TRANSCRIPT of Temporary Restraining Order Proceedings held on 9/20/06 before Judge Stephen M McNamee. Court Reporter: Gary Moll. (BAS, ) (Entered: 09/26/2006)
17 Notice re State Court Entry of Stay by Western Union Financial Services, Inc (Attachments: # 1)(Burke, Francis) (Entered: 09/26/2006)
18 STIPULATION To Extension of Time to Answer, Move, or Otherwise Plead and to Respond to Motion for Preliminary Injunction [First Request] by Western Union Financial Services, Inc. (Attachments: # 1 Text of Proposed Order)(Burke, Francis) (Entered: 10/03/2006)
19 ORDER granting 18 STIPULATION To Extension of Time to Answer, Move, or Otherwise Plead and to Respond to Motion for Preliminary Injunction. IT IS FURTHER ORDERED THAT dft must file an answer to pla's complaint by 11/10/06 and dft must file its response to pla's Motion for Preliminary Injunction by 11/06/06. Signed by Judge Stephen M McNamee on 10/04/06. (DNH) (Entered: 10/04/2006)
20 Standard Civil Track Initial ORDER . Signed by Judge Stephen M McNamee on 10/5/2006. (TCA, ) (Entered: 10/06/2006)
21 TRANSCRIPT DESIGNATION AND ORDER FORM by non−party to case Racael Cotner of Preston Gates Ellis &Rouvelas Meeds LLP for TRO proceedings held on 9/20/06 before Judge Stephen M McNamee. (BAS, ) (Entered: 10/10/2006)
22 TRANSCRIPT DESIGNATION AND ORDER FORM by AAG Charles R. Johnson by Terry Goddard for proceedings held on 9/20/2006 before Judge McNamee. (Johnson, Charles) (Entered: 10/30/2006)
23 STIPULATION TO EXTEND TIME FOR FILING ANSWER OR OTHER RESPONSIVE PLEADING AND RESPONSE TO MOTION FOR PRELIMINARY INJUNCTION (SECOND REQUEST) by Western Union Financial Services, Inc. (Attachments: # 1)(Gottlieb, Stacey) (Entered: 11/03/2006)
24 ORDER granting re 23 STIPULATION TO EXTEND TIME FOR FILING ANSWER OR OTHER RESPONSIVE PLEADING AND RESPONSE TO MOTION FOR PRELIMINARY INJUNCTION. ORDER that Defendant must file an answer or other responsive pleading to Plaintiff's complaint by 12/8/06 and Defendant must file its response to Plaintiff's Motion for Prelininary Injunction by 12/15/06. Terry Goddard answer due 12/8/2006.. Signed by Judge Stephen M McNamee on 11/7/06. (TLJ) (Entered: 11/08/2006)
25 MOTION to Change Venue/Transfer Case to Related Case by Terry Goddard. (Attachments: # 1 Text of Proposed Order Proposed Order)(Goodwin, Michael) (Entered: 11/17/2006)

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 4 of 10

11/17/2006 12/01/2006
12/04/2006 12/05/2006 12/08/2006
01/02/2007 01/04/2007
01/22/2007 01/22/2007 01/25/2007 02/07/2007 02/13/2007

26 MOTION to Consolidate Cases and TRANSFER RELATED CASE by Javier Torres. (Attachments: # 1 Exhibit A# 2 Exhibit B# 3 Exhibit C)(Rowland, Mary) Modified on 12/4/2006 (LCF, ). INCORRECT EVENT TYPE SELECTED. (Entered: 11/17/2006)
27 ORDERED granting 25 and 26 Defendants' Motion to Transfer Related Case and Plaintiffs' Motion to Transfer Related Case. ORDERED that the Clerk of Court shall provide a copy of this Order to counsel of record in each of the following cases: CV 06−2249−PHX−SMM and CV 06−2482−PHX−PGR. ORDERED that the Clerk of Court shall provide a copy of this Order to United States District Judge Paul G. Rosenblatt. Signed by Judge Stephen M McNamee on 11/29/06. (TLJ) (Entered: 12/01/2006)
28 NOTICE TO FILER OF DEFICIENCY re 26 MOTION to Consolidate Cases and TRANSFER RELATED CASE filed by Javier Torres. Description of deficiency: Incorrect event type selected. (LCF) (Entered: 12/04/2006)
29 STIPULATION to Extension of Time to Answer, Move, or Otherwise Plead and to Respond to Motion for Preliminary Injunction (Second Requests) by Western Union Financial Services, Inc. (Attachments: # 1)(Gottlieb, Stacey) (Entered: 12/05/2006)
30 ORDER granting re 29 STIPULATION to Extension of Time to Answer, Move, or Otherwise Plead and to Respond to Motion for Preliminary Injunction (Second Requests) by Western Union Financial Services, Inc. (Attachments: # 1)(Gottlieb, Stacey) filed by Western Union Financial Services, Inc. Defendant shall have to 1/8/07 to answer, move or otherwise plead and to 1/15/07 to file a response to plaintiff's motion for preliminary injunction.. Signed by Judge Stephen M McNamee on 12/7/06. (DMT, ) (Entered: 12/08/2006)
31 STIPULATION to Extension of Time to Answer, Move, or Otherwise Plead and to Respond to Motion for Preliminary Injunction (Third Requests) by Western Union Financial Services, Inc. (Attachments: # 1 Text of Proposed Order)(Gottlieb, Stacey) (Entered: 01/02/2007)
32 ORDER Granting 31 STIPULATION to Extension of Time to Answer, Move, or Otherwise Plead and to Respond to Motion for Preliminary Injunction (Third Requests) by Western Union Financial Services, Inc. (Attachments: # 1 Text of Proposed Order)(Gottlieb, Stacey) filed by Western Union Financial Services, Inc. Defendants have to 2/9/07 to answer, move or otherwise plead and through 2/16/07 to file response to plaintiff's motion for preliminary injunction. Signed by Judge Stephen M McNamee on 1/3/07. (DMT, ) (Entered: 01/04/2007)
33 Notice re State Court's Entry of Temporary Restraining Order in CV2006−018804 by Western Union Financial Services, Inc (Attachments: # 1)(Gottlieb, Stacey) (Entered: 01/22/2007)
34 Notice re State Court Order Quashing Seizure Warrant and Entry of Preliminary Injunction in SW200−002213 by Western Union Financial Services, Inc (Attachments: # 1 # 2)(Gottlieb, Stacey) (Entered: 01/22/2007)
35 TRANSCRIPT DESIGNATION AND ORDER FORM by non−party David Eldred of Dorsey &Whitney LLP 50 S 6th St Minneapolis MN 55402 for TRO proceedings held on 9/20/06 before Judge Stephen M McNamee. (BAS, ) (Entered: 01/25/2007)
36 STIPULATION to Extension of Time to Answer, Move or Otherwise Plead and to Respond to Motion for Preliminary Injunction by Western Union Financial Services, Inc. (Attachments: # 1 Text of Proposed Order)(Burke, Francis) (Entered: 02/07/2007)
37 ORDER Granting re 36 STIPULATION to Extension of Time to Answer, Move or Otherwise Plead and to Respond to Motion for Preliminary Injunction by Western Union Financial Services, Inc filed by Western Union Financial Services, Inc, Terry Goddard answer due 3/9/2007. Response due 3/16/07 to plaintiff's motion for preliminary injunction.. Signed by Judge Stephen M McNamee on 2/12/07. (DMT, ) (Entered: 02/13/2007)

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 5 of 10

03/09/2007
03/12/2007
03/13/2007 04/19/2007 04/20/2007 06/14/2007
06/15/2007 06/18/2007
08/16/2007 08/21/2007 08/22/2007 09/25/2007 10/26/2007

38 STIPULATION TO EXTEND TIME TO ANSWER, PLEAD RESPOND TO 1 Complaint and 2 MOTION for Preliminary Injunction by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) Modified on 3/13/2007 (DMT, ). INCORRECT EVENT TYPE SELECTED. THIS ENTRY HAS BEEN MODIFIED FROM STIPULATION MISC TO STIPULATION TO EXTEND TIME TO ANSWER (Entered: 03/09/2007)
39 ORDER granting re 38 STIPULATION re 2 MOTION for Preliminary Injunction Extension of time to Answer, Move, or Otherwise Plead and to Respond to Motion for Preliminary Injuntion by Terry Goddard. Dfts have to 4/20/07 to answer, move or otherwise plead and through 4/27/07 to file a response to plaintiff's moton for preliminary injunction.. Signed by Judge Stephen M McNamee on 3/9/07. (DMT, ) (Entered: 03/12/2007)
40 NOTICE TO FILER OF DEFICIENCY re 38 Stipulation filed by Terry Goddard. Description of deficiency: Incorrect document type selected. (DMT, ) (Entered: 03/13/2007)
41 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT Sixth Request by Terry Goddard. (Attachments: # 1 Text of Proposed Order Order)(Johnson, Charles) (Entered: 04/19/2007)
42 ORDER granting re 41 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT. Defendants shall have through June 15, 2007 to answer, move or otherwise plead and through June 22, 2007 to file a response to Plaintiff's Motion for Preliminary Injunction.. Signed by Judge Stephen M McNamee on 4/19/07. (DMT, ) (Entered: 04/20/2007)
43 STIPULATION To Extension of Time to Answer Move, Or Otherwise Plead to the Complaint and to Respond to Motion for Preliminary Injunction(Seventh Requests) by Terry Goddard. (Attachments: # 1 Text of Proposed Order Order)(Johnson, Charles) Modified on 6/15/2007 (DMT, ). INCORRECT EVENT SELECTED. THIS ENTRY HAS BEEN MODIFIED TO INCLUDE "COMPLAINT" (Entered: 06/14/2007)
44 NOTICE TO FILER OF DEFICIENCY re 43 Stipulation filed by Terry Goddard. Description of deficiency: Incorrect document type selected. (DMT, ) (Entered: 06/15/2007)
45 ORDER Granting re 43 STIPULATION To Extension of Time to Answer Move, Or Otherwise Plead to the Complaint and to Respond to Motion for Preliminary Injunction(Seventh Requests) by Terry Goddard. Terry Goddard answer due 8/24/2007 and to 8/31/07 to file response to plaintiff's motion for preliminary injunction.. Signed by Judge Stephen M McNamee on 6/18/07. (DMT, ) (Entered: 06/18/2007)
Notice of request for e−notices by James D. Smith. (Smith, James) (Entered: 08/16/2007)
46 STIPULATION To Extension of Time to Answer, Move, Or otherwise Plead and to Respond to Motion for Preliminary Injunction by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 08/21/2007)
47 ORDER re 46 STIPULATION To Extension of Time to Answer and to Respond to Motion for Preliminary Injunction, Terry Goddard answer due 10/26/2007, response to motion due 11/2/07.. Signed by Judge Stephen M McNamee on 8/22/07. (DMT, ) (Entered: 08/22/2007)
48 ORDER denying without prejudice 2 Motion for Preliminary Injunction. Plaintiff may file an amended motion for permanent injunctive relief at such time as the state court litigation concludes, or as it deems necessary to pursue its position in this litigation.. Signed by Judge Stephen M McNamee on 9/24/07.(DMT, ) (Entered: 09/25/2007)
49 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry Goddard. (Attachments: # 1 Text of Proposed Order Order)(Johnson, Charles) (Entered: 10/26/2007)

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 6 of 10

10/29/2007
11/23/2007 11/27/2007 12/31/2007 01/03/2008 02/04/2008 02/05/2008 02/27/2008 03/03/2008 04/03/2008 04/03/2008
04/04/2008
05/01/2008 05/01/2008 06/04/2008 06/05/2008
07/03/2008

50 ORDER granting re 49 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry Goddard. Terry Goddard answer due 11/26/2007.. Signed by Judge Stephen M McNamee on 10/29/07. (DMT, ) (Entered: 10/29/2007)
51 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry Goddard. (Attachments: # 1 Text of Proposed Order Order)(Johnson, Charles) (Entered: 11/23/2007)
52 ORDER granting re 51 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT. Terry Goddard answer due 1/3/2008.. Signed by Judge Stephen M McNamee on 11/26/07. (DMT, ) (Entered: 11/27/2007)
53 STIPULATION To Extension of Time to Answer, Move, or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 12/31/2007)
54 ORDER granting re 53 STIPULATION To Extension of Time to Answer. Dfts have through 2/4/08 to answer, move or otherwise plead to the complaint.. Signed by Judge Stephen M McNamee on 1/3/08. (DMT, ) (Entered: 01/03/2008)
55 STIPULATION by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 02/04/2008)
56 ORDER granting re 55 STIPULATION, Terry Goddard answer now due 3/4/2008.. Signed by Judge Stephen M McNamee on 2/5/08. (DMT, ) (Entered: 02/05/2008)
57 STIPULATION To Extension of Time to Answer, Move, or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 02/27/2008)
58 ORDER granting re 57 STIPULATION To Extension of Time to Answer, Move, or Otherwise Plead by Terry Goddard. Terry Goddard answer due 4/4/2008.. Signed by Judge Stephen M McNamee on 2/29/08. (DMT, ) (Entered: 03/03/2008)
59 STIPULATION TO EXTENSION OF TIME TO ANSWER, MOVE, OR OTHERWISE PLEAD by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 04/03/2008)
60 ERRATA CORRECTION TO ERRATA IN FILED STIPULATION TO EXTENSION OF TIME TO ANSWER, MOVE, OR OTHERWISE PLEAD (30 days not 60 days) by Defendant Terry Goddard. (Attachments: # 1 Errata)(Johnson, Charles) (Entered: 04/03/2008)
61 ORDER granting re 59 STIPULATION FOR EXTENSION OF TIME TO ANSWER, MOVE, OR OTHERWISE PLEAD, Terry Goddard answer due 5/5/2008 to the complaint.. Signed by Judge Stephen M McNamee on 4/4/08. (DMT, ) (Entered: 04/04/2008)
62 STIPULATION To Extension of Time To Answer, Move, Or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 05/01/2008)
63 ORDER granting re 62 STIPULATION To Extension of Time To Answer. Terry Goddard answer due 6/4/2008.. Signed by Judge Stephen M McNamee on 5/1/08. (DMT, ) (Entered: 05/01/2008)
64 STIPULATION to Extension of Time to Answer, Move, or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 06/04/2008)
65 ORDER granting 64 Stipulation for Extension of Time to Answer, Move or Otherwise Plead. Defendants shall have through July 7, 2008 to answer, move or otherwise plead to the Complaint in this action.. Signed by Judge Stephen M McNamee on 6/5/08. (DMT, ) (Entered: 06/05/2008)
66 Notice re Notice of Arizona Court of Appeals Opinion and Order Vacating Trial Court Order Quashing Seizure Warrant and Preliminary Injunction in Superior

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 7 of 10

07/07/2008 07/08/2008 08/05/2008 08/06/2008 09/05/2008 09/08/2008 10/06/2008 10/07/2008 11/04/2008 11/05/2008 12/02/2008 12/04/2008 01/07/2009 01/08/2009 02/05/2009

Court SW2006−002213 by Terry Goddard (Johnson, Charles) (Entered: 07/03/2008)
67 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry Goddard. (Attachments: # 1 Text of Proposed Order Order)(Johnson, Charles) (Entered: 07/07/2008)
68 ORDER granting 67 Stipulation For Extension of Time To Answer Complaint. Defendants shall have through August 6, 2008 to answer, move or otherwise plead to the Complaint in this action.. Signed by Judge Stephen M McNamee on 7/8/08. (DMT, ) (Entered: 07/08/2008)
69 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry Goddard. (Attachments: # 1 Text of Proposed Order Order)(Johnson, Charles) (Entered: 08/05/2008)
70 ORDER granting 69 Stipulation For Extension of Time To Answer Complaint. ORDERED Defendants shall have through 9/8/08 to answer, move or otherwise plead to the Complaint in this action. Signed by Judge Stephen M McNamee on 8/6/08. (MAP) (Entered: 08/06/2008)
71 STIPULATION To Extension of Time to Answer, Move, Or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order Order)(Johnson, Charles) (Entered: 09/05/2008)
72 ORDER granting 71 Stipulation for Extension of Time: Defendants shall have through 10/08/08 to answer, move or otherwise plead to the Complaint in this action. Signed by Judge Stephen M McNamee on 09/08/08. (DNH) (Entered: 09/08/2008)
73 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 10/06/2008)
74 ORDER granting 73 Stipulation For Extension of Time To Answer Complaint. Dfts shall have through 11/7/08 to answer, move or otherwise plead to the complaint. Signed by Judge Stephen M McNamee on 10/7/2008. (LAD) (Entered: 10/07/2008)
75 STIPULATION To Extension of Time to Answer, Move Or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order Proposed Order)(Johnson, Charles) (Entered: 11/04/2008)
76 ORDER granting 75 Stipulation to Extension of Time to Answer. Defendants shall have through 12/8/08 to answer, move or otherwise plead to the Complaint. Signed by Judge Stephen M McNamee on 11/4/08. (TLJ) (Entered: 11/05/2008)
77 STIPULATION To Extension of Time to Answer, Move, Or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 12/02/2008)
78 ORDER granting the parties' 77 Stipulation : Defendants shall have through January 8, 2009 to answer, move or otherwise plead to the Complaint in this action. Signed by Judge Stephen M McNamee on 12/3/08. (KMG, ) (Entered: 12/04/2008)
79 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 01/07/2009)
80 ORDER granting 79 Stipulation For Extension of Time To Answer Complaint, Terry Goddard answer due 2/9/2009. Signed by Judge Stephen M McNamee on 1/7/2009. (LAD) (Entered: 01/08/2009)
81 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT Twenty Fourth Request by Terry Goddard, Western Union Financial Services, Inc. (Johnson, Charles) Modified on 2/6/2009 (LAD). DOCKET TEXT MODIFIED TO IDENTIFY ADDITIONAL FILER. (Entered: 02/05/2009)

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 8 of 10

02/05/2009 02/06/2009 03/09/2009 03/09/2009 03/10/2009 04/08/2009 04/09/2009 05/07/2009 05/08/2009 06/10/2009 06/12/2009 06/30/2009 07/02/2009

82 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT Twenty Fourth Request by Terry Goddard, Western Union Financial Services, Inc.. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) Modified on 2/6/2009 (LAD). DOCKET TEXT MODIFIED TO IDENTIFY ADDITIONAL FILER. (Entered: 02/05/2009)
83 ORDER granting 82 Stipulation For Extension of Time To Answer Complaint, Terry Goddard answer due 3/11/2009; denying as moot 81 Stipulation For Extension of Time To Answer Complaint. Signed by Judge Stephen M McNamee on 2/6/09. (REW, ) (Entered: 02/06/2009)
84 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT Stipulation to Extension of Time to Answer, Move, or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) Modified on 3/10/2009 INCORRECT PDF DOCUMENT ATTACHED; CORRECT PDF DOCUMENT RE−FILED AS ENTRY #85 (REW, ). (Entered: 03/09/2009)
85 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT Stipulation to Extension of Time to Answer, Move or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 03/09/2009)
86 ORDER granting 85 the parties' Stipulation For Extension of Time To Answer Complaint. Defendants shall have through 4/10/09 to answer, move or otherwise plead to the Complaint in this action. ORDER denying as moot 84 the parties' Stipulation For Extension to Time to Answer, Move or Otherwise Plead. Signed by Judge Stephen M McNamee on 3/10/09. (TLJ) (Entered: 03/10/2009)
87 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT Stipulation to Extension of Time to Answer, Move, or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 04/08/2009)
88 ORDER granting 87 Stipulation For Extension of Time To Answer Complaint :, Terry Goddard answer due 5/11/2009. Signed by Judge Stephen M McNamee on 4/8/09. (TLJ) (Entered: 04/09/2009)
89 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT Stipulation to Extension of Time to Answer, Move, or Otherwise Plead by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 05/07/2009)
90 ORDER:IT IS HEREBY ORDERED GRANTING the parties Stipulation to Extension ofTime to Answer, Move or Otherwise Plead (Doc. 89). Defendants shall have through June10, 2009 to answer, move or otherwise plead to the Complaint in this action.. Signed by Judge Stephen M McNamee on 5/8/2009. (TCA, ) (Entered: 05/08/2009)
91 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Western Union Financial Services, Inc. (Attachments: # 1 Text of Proposed Order Re Stipulation to Extension of Time to Answer or Otherwise Plead)(Tilleman, Karl) (Entered: 06/10/2009)
92 ORDER: granting the parties Stipulation to Extension ofTime to Answer, Move or Otherwise Plead (Doc. 91). Defendants shall have through July10, 2009 to answer, move or otherwise plead to the Complaint in this action.. Signed by Judge Stephen M McNamee on 6/11/2009. (TCA, ) (Entered: 06/12/2009)
93 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT 29th Request by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Johnson, Charles) (Entered: 06/30/2009)
94 ORDER:granting the parties Stipulation to Extension ofTime to Answer, Move or Otherwise Plead (Doc. 93). Defendants shall have throughAugust 10, 2009 to answer, move or otherwise plead to the Complaint in this action.. Signed by Judge Stephen M McNamee on 7/1/2009. (TCA, ) (Entered: 07/02/2009)

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 9 of 10

08/05/2009 08/05/2009
08/06/2009 09/09/2009 09/10/2009 10/06/2009 10/07/2009 11/05/2009 11/09/2009 12/04/2009 12/07/2009 01/06/2010 01/06/2010 02/03/2010 02/04/2010

95 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry Goddard. (Attachments: # 1 Text of Proposed Order)(Holmes, Cameron) (Entered: 08/05/2009)
96 NOTICE of Attorney Substitution: Stephen C. Lepley appearing for Terry Goddard. Attorney Charles R Johnson terminated. (Holmes, Cameron) Modified on 8/5/2009 (SAT). INCORRECT EVENT SELECTED. THIS ENTRY HAS BEEN MODIFIED FROM "NOTICE OF ATTORNEY APPEARANCE/SUBSTITUTION − USA" TO "NOTICE OF ATTORNEY SUBSTITUTION". (Entered: 08/05/2009)
97 ORDER granting 95 Stipulation For Extension of Time To Answer Complaint :Defendants shall have through September 9, 2009 to answwer, move or otherwise plead to the Complaint.. Signed by Judge Stephen M McNamee on 8/5/2009. (TCA, ) (Entered: 08/06/2009)
98 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT Or Otherwise Plead by Western Union Financial Services, Inc. (Attachments: # 1 Text of Proposed Order Re Stipulation to Extension of Time)(Burke, Francis) (Entered: 09/09/2009)
99 ORDER granting the 98 Stipulation For Extension of Time To Answer Complaint, Terry Goddard answer due 10/9/2009. Signed by Judge Stephen M McNamee on 9/10/09. (REW, ) (Entered: 09/10/2009)
100 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry L Goddard. (Attachments: # 1 Text of Proposed Order)(Holmes, Cameron) (Entered: 10/06/2009)
101 ORDER granting 100 Stipulation For Extension of Time To Answer Complaint: Terry L Goddard answer due 11/9/2009. Signed by Judge Stephen M McNamee on 10/7/2009. (LAD) (Entered: 10/07/2009)
102 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry L Goddard. (Attachments: # 1 Text of Proposed Order)(Holmes, Cameron) (Entered: 11/05/2009)
103 ORDER GRANTING the parties Stipulation to Extension ofTime to Answer, Move or Otherwise Plead (Doc. 102). Defendants shall have throughDecember 9, 2009 to answer, move or otherwise plead to the Complaint in this action. Signed by Judge Stephen M McNamee on 11/9/2009. (TCA, ) (Entered: 11/09/2009)
104 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry L Goddard. (Attachments: # 1 Text of Proposed Order)(Holmes, Cameron) (Entered: 12/04/2009)
105 ORDER the parties Stipulation to Extension of Time to Answer,Move or Otherwise Plead (Doc. 104) is GRANTED. Defendants shall have through January 8, 2010 to answer, move or otherwise plead to the Complaint in this action. Signed by Judge Stephen M McNamee on 12/4/2009. (TCA, ) (Entered: 12/07/2009)
106 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry L Goddard. (Attachments: # 1 Text of Proposed Order)(Holmes, Cameron) (Entered: 01/06/2010)
107 ORDER granting 106 Stipulation For Extension of Time To Answer Complaint :Defendants shall have throughFebruary 8, 2010 to answer, move or otherwise plead to the Complaint in this action.. Signed by Judge Stephen M McNamee on 1/6/2010. (TCA, ) (Entered: 01/06/2010)
108 STIPULATION FOR EXTENSION OF TIME TO ANSWER COMPLAINT by Terry L Goddard. (Attachments: # 1 Text of Proposed Order)(Holmes, Cameron) (Entered: 02/03/2010)
109 ORDER granting the parties' 108 Stipulation For Extension of Time To Answer Complaint: Defendants shall have through March 10, 2010 to answer, move or otherwise plead to the Complaint in this action. Signed by Judge Stephen M McNamee on 2/4/10. (KMG) (Entered: 02/04/2010)

Case: 2:06-cv-2249 As of: 02/19/2013 08:23 PM MST 10 of 10

03/09/2010 03/10/2010

110 STIPULATION of Dismissal by Terry L Goddard. (Attachments: # 1 Text of Proposed Order)(Holmes, Cameron) (Entered: 03/09/2010)
111 ORDER re 110 Stipulation to Order of Dismissal, that this case is dismissed with prejudice, except that this Order of Dismissal shall not prejudice any rights Plaintiff may have to challenge any Geographic Targeting Orders issued after December 7, 2006 or any seizure warrant issued after the date on which this Court dismisses this case. Signed by Judge Stephen M McNamee on 03/10/10. (ESL) Modified on 3/10/2010 (JEMB TO INDICATE WO). (Entered: 03/10/2010)

 
 STATE OF ARIZONA, ex rel.

)

ATTORNEY GENERAL

)

TERRY GODDARD,

)

Plaintifl

)

)

)

WESTERN TINION FINANCIAI

)

SERVICES,INC.,

)

Defendant,

)

)

SETTLEMENT AGREEMENT

Western Union Financial Services, Inc., ("Westem Union") a corporation organized under the laws of Colorado, pursuant to authority granted by its Board of Directors, and the State of Atizona ("State") hereby enter into this Settlement Agreement ("Agreement").

Recitals

1. Westem Union offers money transfer and other payment services at over 50,000 agent locations in the United States and over 375,000 locations around the world. In Arizona, Western Union is licensed to do business as a money transmitter under the Arizona Transmitters of Money Act, A,R.S. $$ 6-1201-1242.
2. Western Union conducts its business through "Agents," referred to as "authorized
delegates" in Arizona. See A.R.S. $$ 6-1201(1) and 6-1208. In some foreign countries, such as Mexico, Western Union's Agents enter into agreements with additional locations (sometimes referred to as "subagents") entitling the subagents to offer Westem Union services to the public.

3. Westem Union has developed and implemented a risk-based anti-money laundering ("AML") compliance program that is designed to prevent, dete.ct, and report potential
money laundering activities. In so doing, Western Union has dedicated substantial resources to, among other things: developing transaction monitoring systems to detect potentially suspicious activity; building a team of AML professionals; screening, training, and monitoring its Agents; producing AML policies and manuals; and implementing compliance measures in certain higb-risk geographical areas, including all of Arizona and the area within 200 miles north and south of the United StatesAvlexico border (the
"Southwest Border Area").

4. Prior to the execution of this Agreement, Westem Union requested from the State a
global resolution of all potential regulatory, civil, and criminal actions that could arise from conduct described in the Statement of Admitted Facts, attached hereto as Exhibit A and incorporated herein by this reference, and it also provided the State with a May 8, 2009 report by an independent consulting firm evaluating Westem Union's current AML

compliance program and its planned enhancements of that program ("Report"). The Report concluded that Western Union "has taken extensive steps to fully appreciate its specific risks for money laundering/terrorist financing by tailoring its own risk assessment, identifying both pervasive and Company-specific tfueats and vulnerabilities, and to manage its AML risk by dedicating extensive and skilled resources to those areas that management believes pose the greatest risks (e.g., the Southwest U.S. Border region)."
5. To achieve their cornmon goal of combating money laundering activities in the Southwest Border Area, and to reach a global resolution of all potential regulatory, civil, and criminal actions that could arise from conduct described in the Statement of
Admitted Facts, Western Union and the State are entering into this Agreement.
Settlement
6. Westem Union accepts and acknowledges responsibility for its conduct as set forth in
the Statement of Admitted Facts.
7. Westem Union and the State agree that they will issue a joint public announcement
regarding this Agreement after acceptance of this Agreement by the Maricopa County
Superior Court (the "Courto'). Western Union and the State shall agree on the language of
a press release regarding this Agreement. Westem Union expressly agrees that it shall not, through its attorneys, Board ofDirectors, officers, or authorized spokespersons, make any public statement, including filing or maintaining any civil or regulatory action, contradicting any statement of fact contained in the Statement of Admitted Facts or factual assertions contained in this Agreement. Any such contradictory public statement by Western Union, its attomeys, Board of Directors, officers or authorized spokespersons, shall constitute a breach ofthis Agreement as governed by Paragraph 14
of this Agreement. The decision whether any action or statement by any such person will
be imputed to Westem Union for the purpose of determining whether Westem Union has breached this term of this Agreement shall be in the sole and reasonable discretion of the State. Upon the State's notification in writing to Westem Union of a public statement by any person that in whole or in part is in breach of this term, Westem Union may avoid breach of this Agreement by publicly repudiating such statement within two business days after notification by the State. This paragraph is not intended to apply to any
statement made by any individual in the course of any criminal, regulatory, or civil case initiated by a governmental or private parly against such individual. In addition, consistent with Western Union's obligation not to contradict any statement of fact set for*r in the Statement of Admitted Facts, Westem Union may take good faith positions in litigation involving private parties or governmental agencies. Further, consistent with
such obligation, Western Union may make statements regarding the actions it took to detect and prevent the activities described in the Statement of Admitted Facts.
2953507

8. The State has determined that it could institute a civil forfeiture action pursuant to A.R.S. $$ l3-2314 and 13-4301-4315 against certain funds transfened by and through
Western Union between January 1,2003, and December 31,2007, based on probable cause to believe that there have been violations of A.R.S. S I3-23I7 in excess of the amount referred to in Paragraph 16. The State has further determined that it could pursue
claims for costs and expenses of prosecution and investigation, including the expenses of
overseeing restrictions on Western Union's future conduct.
9. In order to settle any forfeiture claims the Stats may have, as well as any other potential regulatory, civil, and criminal claims or actions that could arise from conduct
described in the Statement of Admitted Facts, including but not limited to claims pursuant to A.R.S. $$ 13-2314 and 13-4301-4315 that arose prior to the date of this Agreement, Western Union has agreed to pay the State the sum of $21,000,000 in reimbursement of the State's costs and expenses of prosecution and investigation and to perform the ofher actions described in this Agreement.
10. The State and Western Union believe that the Southwest Border Area poses special money Iaundering risks associated with criminal activity by drug, human, and weapons smuggling organizations. The problems associated with this criminal activity are regional in nature and are not confined to any single U.S. or Mexican border state. Combating such criminal activity requires cooperation between law enforcement agencies in the U.S. Border States and federal govemment agencies, as well as with lawenforcement authorities in Mexico. The State and Westem Union further believe that the implementation of effective AML compliance programs by financial services providers in the Southwest Border Area and an effective and cooperative working relationship between financial services providers and law enforcement agencies play an important role in enabling law enforcement to successfully combat money laundering and other criminal activity in the Southwest Border Area.
11. Western Union and the State agree to jointly file an Application for Order Approving Settlement and Appointing Monitor, promptly upon execution of this Agreement, in which Western Union agrees to waive and does thereby expressly waive any and all rights to a speedy trial pursuant to the Sixth Amendment to the United States Constitution, the Arizona Constitution, and the Arizona Rules of Criminal Procedure, for
the period that this Agreement is in effect.
12. In entering into this Agreement, Western Union agrees that any violations ofthe
Arizona money laundering laws and related offenses that were not time-barred by the
applicable criminal or civil statutes of limitations as of the date of this Agreement may, in the sole reasonable discretion of the State, be charged against Western Union criminally and/or civilly within six months of the State's declaration of any willful and material breach of this Agreement by Western {Jnion, or any event which renders this Agreement null and void, notwithstanding the expiration of any applicable statute of limitations.
2953507

13. The State agrees to a global resolution of all potential regulatory, civil, and criminal actions that could arise from conduct described in the Statement of Admitted Facts and that, except in the event of a willful and material breach of this Agreement by Western Union, the State will not pursue any investigation or prosecution of Western Union or any ofits current or former parents, subsidiaries, affiliates, successors, assigns, or related entities, or any of its or their current or former directors, officers, or employees (collectively "Westem Union Affiliates"), and will bring no criminal charges or civil claims and will take no regulatory action against Western Union or Western Union Affiliates, including any actions authorized by A.R.S. $$ 6-1201-1242 and 13-2317,
relating to:
13. 1 transactions or events described in or connected to the facts in the Statement of Admitted Facts;
13.2 transactions or events that were the subject of grand jury subpoenas or other State of Arizona subpoenas with which Western Union has complied or complies between January l,2009, and the termination of the Monitor's Engagement;
13.3 transactions or events that were the subject of State of Arizona discovery requests or subpoenas with which Westem Union has complied or complies in any existing civil action against the State that involves Westem Union transactions;
13.4 transactions or events that are the subject of disclosures made by Westem Union pursuant to this Agreement; and
13.5 transactions or events described in or connected to the facts in the State's submissions in Maricopa County Superior Court cases SW2006-002172, SW2006-02213, or CV2006-018804.
The term "Westem Union Affiliates" does not include Western Union authorized delegates or Agents. This paragraph does not prohibit the State from investigating or prosecuting, or from bringing civil claims or regulatory actions against, any Western Union authorized delegate or Agent or the employees of any such authorized delegate or
Agent.
The State's agreement not to take "regulatory action" does not preclude examinations by
the Arizona Department of Financial Institutions ("DFI"). Westem Union agrees that examinations may continue under the statutory examination process. DFI agrees that it will not pusue any appealable agency action or contested case. DFI will provide any
report of an examination of Western Union to the Attomey General and to Western Union. Westem Union also agrees that the Monitor rnay freely provide information to DFI and that the Monitor may receive information from DFI except as restricted by the confidentiality statutes relating to examination reports.

14. Should the State determine in its sole and reasonable discretion that Westem Union has committed a willful and material breach of any provision of this Agreement, the State shall provide written notice to Westem Union of the alleged breach and provide Western Union with ten business days, or longer at the reasonable discretion of the State, in which to make a presentation to the State to demonstrate that no breach has occurred or, to the extent applicable, that the breach was not willful or material or has been cured. The parties hereto expressly understand and agree that should Westem Union fail to make a presentation to the State within such time period after receiving notice, the State may, in
its discretion, conclusively infer that Western Union is in willful and material breach of
this Agreement and invoke any remedy allowed for such a breach under this Agreement. The parties fuither understand and agree that the State's exercise of discretion under this Agreement is not subject to review in any court, tribunal, or otherwise, outside of the
ArizonaAttorney General's Office. In the event of a willful and material breach of this Agreement which results in any civil, criminal, or regulatory proceedings, the State's claims may be premised upon any information provided by or on behalf of Western
Union to the State at anv time.
15. Westem Union and the State understand that this Agreement must be approved by the Court. Should the Court decline to approve this Agreement for any reason, the State and Westem Union are released from any obligation imposed upon them by this Agreement and this Agreement shall be null and void.
16. Westem Union shall transfer $21,000,000 to the Anti-Racketeering Revolving Fund established by A.R.S. $ l3-2314.01 for the benefit of the Arizona Attorney General's Office, the Arizona Department of Public Safety, and the Phoenix Police Department for expenditure as permitted by A.R.S. $ l3-2314.01. Payments shall commence on the first banking day of the first calendar month after Western Union signs this Agreement with an initial payment of $3,000,000 and shall continue with payments of $3,000,000 per month thereafter until the full amount has been paid. Such payment constitutes compensation for the expenses the State has incurred to date in connection with its investigations of Western Union and is the sole financial consideration for the State agreeing not to pursue any claims that could arise from conduct described in the Statement of Admitted Facts. No other amount paid by Westem Union under this agreement is intended to be, nor shall it be construed as, payment for or a payment in lieu of a civil forfeiture, fine, or penalty.
17. Western Union and the State asree that:
17.1 Western Union shall provide to the State, promptly upon the issuance of an Arizona or federal subpoena, summons, court order, or other appropriate legal process, any relevant document, electronic data, or other object in its possession, custody, and/or control concerning matters relating to the State's or a Participating State's investigation of money laundering or other related criminal activity in the Southwest Border Area or to Western Union's compliance with any Arizona criminal or regulatory statute or with this
2953507

Agreement. In addition, Western Union shall provide to any Participating State, as described in Paragraph 23.2.2, promptly upon the issuance of a subpoena under the authority of that state or a federal subpoena; summons; court order; or other appropriate legal process, any relevant document, electronic data, or other object in its possession, custody, and/or control concerning matters relating to that Participating State's investigation of money laundering or other related criminal activity in the Southwest Border Area. Western Union's obligation to provide data pursuant to this Agreement shall at all times be limited to data related to transactions that are sent from or received in the Southwest Border Area or such additional areas of a Participating State as that state requests in writing. Whenever such data is stored in electronic format in the ordinary course of Westem Union's business Western Union shall provide access to such data and reasonable assistance in operating computer and other equipment as necessary to retrieve
and present the data.
17.1.1 Western Union shall include the transaction data described in Paragraph 32.5 of the Monitor Engagement Letter ("Monitor Engagement Letter" or "Engagement Letter"), a copy of which is attached hereto as Exhibit B, and which includes full transaction data relating to all person-to-person transactions sent to or from authorized delegate/Agent locations within the Southwest Border Area from January 1, 2005, to the present and throughout the term of the Monitor's Engagement involving transactions in amounts of $500 or more. in the material to be delivered to the State and the Participating States.
17.1.2 Western Union shall accept the Maricopa County Superior Court stipulation and order, attached hereto as Exhibit C and incorporated herein by this reference, appointing the Monitor and directing Westem Union to produce the data described in Paragraph 17.I and produce that data to the Monitor and to the State without further subpoena or process, and, upon a written request of a Participating State, shall produce such data as may pertain to that state to that state without further subpoena or process.
17.1.3 Westem Union's obligation under this paragraph shall not include the obligation to provide materials or information covered by the attorney-client privilege or the work product doctrine. The State shall not consider Westem Union's withholding of materials or information subject to the attorney-client privilege or the work product doctrine in determining whether Westem Union has fully cooperated with the State.
17 .1.4 The State shall maintain the confidentiality of any materials or information provided by Western Union under this paragraph and shall not provide such material or information to any third party, except to the extent that disclosure is required by law, otherwise authorized by this Agreement, or is in the proper discharge of or otherwise furthers the State's official duties or responsibilities. When the Arizona
Afforney General's Office's duties or responsibilities involve public presentation of
Westem Union data outside of a law enforcement, investigation, or training context, the
2953507

ArizonaAttomey General's Office will not attribute that data specifically to Western Union or will aggregate the data with other money transmitters' data.
17.1.5 Western Union agrees that nothing in this Agreement is intended to place any condition or limitation on the State's statutory or other legal authority to obtain records or information from Western Union. Westem Union further agrces not to assert this Agreement or to assert the State's failure to comply with any aspect of this Agreement in response to any subpoena, administrative request, or other legal action to obtain records or information from Western Union. Western Union agrees that the State remains free to pursue any legal authority that thE State may have to obtain records or information from Westem Union without reference to this Agreement and without proving any fact or circumstance or presenting any information that it would not have been required to prove or present in the absence of this Agreement, in addition to and apart from any rights that the Arizona Attorney General or the State may have to obtain records or information under this Asreement.
17.2 Western Union shall, with respect to transactions that are sent from or received in the Southwest Border Area, in all material respects completely, fully, and timely comply with all legal, record keeping, and reporting obligations imposed on it by
applicable state law; by the Bank Secrecy Act, 3l U.S.C. $$ 5311 through 5330 ("BSA")
and the Bank Secrecy Act implementing regulations; and by the requirements of this Agreement, including, but not limited to, its obligation to maintain its AML Program for the Southwest Border Area, as "Program" is defined in Paragraph 19, and implement additional Program measures recommended by the Monitor in the Southwest Border Area ("Recommendations"), as described in Paragraph 20 of the Monitor Engagement Letter, to the extent required by Paragraphs 18 through 22 and Paragraph 26 ofthe Engagement Lefter.
17.3 Western Union shall dismiss with prejudice its complaints in Western Union Financiql Services, Inc. v. Terry Goddard ex rel. State of Arizona, CV2006-018804, and Western (Jnionv. Terry Goddard, CIV-06-02249-PHX SMM, within ten days of the execution of this Agreement. These dismissals with prejudice shall not prejudice any
rights Western Union may have to challenge any Geographic Targeting Orders issued
after the filing of CV2006-018804 or any seizure warrant issued after the dismissal of CIV-06-02249-PHX SMM. Western Union and the State will simultaneously dismiss
with prejudice State of Arizona ex rel. Terry Goddard v. Western Union Financial S erv ice s, Inc., SW20O6-00217 2.
17.4 Western Union shall withdraw its Motion to Quash Seizure Warrant in
SW2006-002213 and move to vacate the Superior Court Order Quashing September 21, 2006 Seizure Warrant and Preliminary Injunction and move to dismiss that action. The State shall release its seizure for forfeiture of all funds seized in SV/2006-002213 immediately upon vacation of that Order and the granting of Westem Union's motion to
dismiss the action, and will not file a Petition for Certiorari in that matter. Westem
2953s07

Union and the State have agreed on forms of Stipulation and Order to submit to the court, which are included in Exhibit D hereto.
AML Compliance Program
18. The State and Western Union agree that an effective AML compliance program and a
strong partnership between govemment agencies and money services businesses should be informed by the principles described by the Financial Action Task Force in its Guidance on the Risk-Based Approach to Combating Money Laundering and Terrorist Financing ("FATF RBA Guidance").
19. Western Union agrees to commitrnent to full compliance with applicable state law and the Bank Secrecy Act and all of its implementing regulations with respect to the Southwest Border Area. Further, to comply with the BSA, A.R.S. $$ 6-1241 and l3231'1 , andthis Agreemen! Western Union agrees to continue to adhere to Western Union's BSA/AML program measures now in existence or in the process of being implemented in the Southwest Border Area, as described in the Report, incorporated by this reference, consistent with the principles set forth in the FATF RBA Guidance relating to money services businesses, and to implement additional program measrues recommended by an independent Monitor in the Southwest Border Area (the "Recommendations") to the extent required in the Monitor Engagement Lefter. The existing progmm for the Southwest Border Area described in the Report and the Recommendations particular to the Southwest Border Area required in the Implementation Plan created pursuant to the Monitor Engagement Letter ("Implementation Plan") will be collectively termed the "Program." To ensure that its Program for the Southwest Border Area adheres to the principles set forth in the FATF RBA Guidance, to its legal obligations, and to this Agreement, and to coordinate it with the independent actions of the remedial undertaking described in Paragraph 23, Western Union agrees to be overseen by an independent Monitor as described in Paragraphs 20 through 22.
Indenendent Monitor
20. A three-person committee created by the Attomey General for this purpose, including a Western Union representative designated by Westem Union, will select an independent Monitor ("Monitor") by majority vote within sixty calendar days after the signing of this Agreement. In the event the Monitor selected through this process was chosen over the objection of the Western Union appointee to the committee, Westem Union may f,rle a motion with the Couft challenging the selection; provided, however, that the parties agree that: a) such motion may be granted only upon a finding that Western Union has established, by a preponderance of the evidence, that the person selected has demonstrated a bias against Western Union, the money transmitter industry, or its customers; b) the decision of the Court is final; c) the parties expressly waive any rights to appeal the Court's ruling; and d) the period of the Engagement of the Monitor as

set fo(h in Paragraph 22 shall be tolled for all time between the filing of such motion and the final appointment of a Monitor. The committee will consider the qualifications of
candidates provided by Western Union and by the Attorney General. The successful
candidate shall have no less than five years of personal AML compliance or related lawenforcement experience, but will have no prior employment with the Attomey General or
any other Arizona state agency.
The Monitor may not be removed from this Engagement except upon a motion by aparty with the Court; provided, however, that the parties agree that: a) such a motion
will not be made unless the moving party has first provided the Monitor written notice,
setting forth the alleged intentional malfeasance with reasonable specificity, and the Monitor has failed to cure such breach within thirty days after the Monitor received the notice; b) such motion may be granted only upon a finding that the moving party has established, by a preponderance of the evidence, that the Monitor has engaged in intentional malfeasance that is material to the Engagement and that cannot be corrected by any means short of removal; c) the decision of the Court is final; d) the parties expressly waive any rights to appeal the Court's ruling; and e) the period of the Engagement of the Monitor as set forth in Paragraph 22 shall be tolled fOr all time between the filing of such motion and the final appointment of a replacement Monitor.
Westem Union and the State agree that neither the State nor any Westem Union Aff,rliates will hire or enter into any contract with or provide any remuneration to the Monitor for at least five years after the conclusion of this Agreement. Westem Union and the State also agree that no person employed by either of them during the term of this Agreement or for the five years preceding the date of this Agreement shall be eligible to
act as Monitor. If the Monitor resigns or is otherwise unable to fulfill the obligations of the Monitor, a replacement will be selected in the above mrlnner.
21. The Monitor shall evaluate Western Union's compliance with its obligations under this Agreement and the Engagement Letter, review and monitor the effectiveness of Western Union's risk-based AML compliance Program for the Southwest Border Area, and make such Recommendations as the Monitor believes may improve the Program, as
provided in the Engagement Letter.
22. Westem Union and the State agree that the period of Engagement of the Monitor shall end on the end of the forty-first month after the Agreement is fully executed, except that
if at any time after the end of the twenty-ninth month after the Agreement is fully
executed, the Monitor, in the Monitor's sole discretion, certifies that Western Union is in full compliance with the terms of this Agreement and has implemented all of the Recommendations required in the Implementation Plan, and that continuation of the monitored Program is not in the public interest, the Monitor may terminate the
Engagement.

Funding Remedial Undertaking
23. Western Union agrees to implement Westem Union's offer to finance a multi-state border-wide AML efforl, the Program, and the Monitor (collectively referred to as the "Remedial Undertaking"), as follows:
23.1 Western Union shall create an account in the amount of $23,000,000 for non-law enforcement expenses associated with the enhancement of its AML Program for the Southwest Border Area and the Recommendations of the Monitor.
23.L1 Western Union shall transfer $4,000,000 from this account to the Clerk of the Maricopa County Superior Court within thirty days after it signs this
Agreement, for use by the Monitor to fund the Monitor's expenses. The Clerk shall deposit these funds in an interest-bearing account and shall credit all earned interest to the account. If this amount is insufficient to pay all reasonable expenses of the Monitor,
Westem Union will use up to a maximum of $2,000,000 of the balance of the account to fund the Monitor's expenses. If this is still insufficient to pay all reasonable expenses of
the Monitor, the Financial Crimes Task Force's account within the Anti-Racketeering Revolving Fund shall be responsible for any additional Monitor expenses. In the event that any money remains in this fund at the time of the termination of the Monitor's Engagement, the Clerk shall transfer the balance to the Anti-Racketeering Revolving Fund for the benefit of the Financial Crimes Task Force.
23 .l .2 Western Union shall use the balance of the $23,000,000 to enhance the Program by funding Western Union's implementation of the Monitor's
Recommendations or other monitor-approved Program enhancements from August l,
2009, forward; provided, however, that none of these sums may be applied to attorneys' fees, legal costs, or expenses. Western Union shall provide the Monitor with an
accounting of these expenditures and with full access to its records to veriff that Westem
Union has used the funds for that purpose. In the event that this amount is insufficient to fund the implementation of the Monitor's Recommendations, Western Union shall be responsible for any additional expenses of the Program. If, at the time of the termination of the Monitor's Engagement, the Monitor determines that Westem Union has spent less than the $23,000,000 originally placed into the account (including all sums paid to the Monitor pursuant to Paragraph 23.1.1), Westem Union shall transfer the unspent balance to the Anti-Racketeering Revolving Fund for the benefit of the Financial Crimes Task Force.
23.2 In addition, in recognition of the factthat the problems associated with criminal activity in the Southwest Border Area are regional in nature and require cooperation between law enforcement authorities in the four U.S./N4exico border states, and in order to further the mutual interests of Western Union, the State, and the other U.S. border states, Western Union agrees to transfer $50,000,000 to the State Center, a 501(c)(3) entity, to establish a Southwest Border Anti-Money Laundering Alliance Fund

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(the "Alliance Fund") to make grants to law enforcement organizations to combat money laundering and related criminal activity in the Southwest Border Area. The State shall enter into an alliance, to be known as the Southwest Border Anti-Money Laundering Alliance ("Alliance") that shall include the State of Arizona, and, at the election of the Attorney General of each State, may also include the States or the Attorneys General's Offices of Califomia, New Mexico, and Texas.
23.2.1 The Alliance will recommend distributions from the Alliance Fund
for investigations and prosecutions in the Southwest Border Area and related expenses with the goal of reducing money laundering and related criminal activity.
23.2.2 The parties contemplate that Arizona and the Participating States
will draft and enter into a separate agreement setting up the internal functions and
operations of the Southwest Border Anti-Money Laundering Alliance (the "Alliance Governing Agreemenf'), under which they agree to act with regard to the State Center only pursuant to the direction of an Executive Board to an Authorized Representative State, and subject to the terms of that Governing Agreement. Payments by Westem Union under this paragraph shall commence on the first banking day of the first calendar month after such agreement has been signed with an initial payment of $10,000,000, and shall continue with payments of $5,000,000 per month thereafter until the full amount has been paid. U.S. States in the Southwest Border Area other than Arizona will become Participating States ("Participating States") by signing the Alliance Governing Agreement.
23.2.3 A Participating State acquires no rights or obligations enforceable under this Agreement and shall have no authority to declare a breach of this Agreement.
23.2.4 The State makes no representations regarding states'willingness to become Participating States, and whether states do or not is not part of the consideration supporting this Agreement.
Continuine Oblisation to Make Payments
24. Inthe event the State asserts a breach of this Agreement by Western Union, Western Union shall continue to make the payments described in Paragraphs l6 and 23 until such time that the State files a civil or regulatory action or obtains an indictrnent. No funds transferred by Westem Union shall be refunded to Westem Union under any circumstances, including in the event of a breach or asserted breach.
Miscellaneous Provisions
25. Any notice to Western Union under this Agreement shall be in writing and shall be
given by personal delivery, overnight delivery by a recognized delivery service or registered or certified mail, in each case addressed to David Schlapbach, Executive Vice
11

President and General Counsel, Western lJnion, 100 Summit Avenue, Montvale, NJ 07645, with a copy to Arizonasettlement@westemunion.com. Notice shall be effective upon actual receipt by Western Union.
26. Any notice to the State under this Agreement shall be in writing and shall be given
by personal delivery, overnight delivery by a recognized delivery service, or registered or certified mail, in each case addressed to the Attorney General and to the Chief of the Criminal Division for the Attorney General's Office, 1275 West Washington Street,
Phoenix, AZ 85007-2926 . Notice shall be effective upon actual receipt by the State.
27. Western Union agrees that if Westem Union's business operations are sold, whether by sale ofstock, merger, consolidation, sale ofa significant portion ofits assets, or other form of business combination, or otherwise undergoes a direct or indirect change of control within the term of this Agreement, Western Union shall include in any contract embodying such action a provision binding the purchaser/successor to the obligations of
this Agreement.
28. It is understood that this Agreement is binding on Western Union and the State, its agencies, and its subdivisions, including the Arizona Attorney General's Office and the Arizona Department of Financial Institutions. This Agreement specifically does not bind any federal agencies or any other state's authorities. The State agrees to bring the cooperation of Westem Union and its compliance with its other obligations under this Agreement to the attention of any federal, state, or local prosecuting offices or regulatory agencies, if requested by Western Union.
29. Western Union and the State agree that, upon acceptance by the Court, this Agreement will be publicly filed in the Superior Court for Maricopa County as an exhibit to an Application for Order Approving Settlement and Appointing Monitor filed jointly
by the parties.
30. This Agreement sets forth all the terms of the Agreement between Western Union and the State. No modifications or additions shall be valid unless expressly set forth in writing and signed by the State, Westem Union's attorneys, and a duly authorized representative of Western Union. This Agreement supersedes any prior promises, agreements, or conditions between Westem Union and the State.
Acknowledgements:
I, David Schlapbach, the duly authorized representative of Westem Union Financial Services, Inc., hereby expressly acknowledge the following:
(l) that I have read this entire Agreement;
(2)that I have had an opporhrnity to discuss this Agreement fully and freely with Westem Union Financial Services. Inc.'s outside attornevs:

T2

2953507

(3) that Westem Union Financial Services, Inc. fully and completely understands each and every one of the terms of the Agreement; (4) that the Board of Directors of Western Union Financial Services, Inc. has adopted a resolution reflecting that understanding, a copy ofwhich has been provided to the State; (5) that Westem Union Financial Services, Inc. is fully satisfied with the advice and representation provided to it by its attorneys; and (6) that Western Union Financial Services, Inc. has signed this Agreement voluntarily.

Western Unioir Financial Services, Inc.

D^rE -z/r1-/ !-

David Schlapbach

General Counsel for Westem Union Financial Services. Inc.

The undersigned are outside counsel for Western Union Financial Services, Inc. In connection with such representation, we acknowledge that:
(l) we have discussed this Agreement with our client; and
(2) we believe our client completely understands all of the Agreement's terms.

DATE:

DATE;

ond

Un lan Ni'elien hyJ,

Osborn aledon PA,

Keker and Van Nest.'LL

Attorneys for Westem Union Financial Services. Inc.

On Behalf of the STATE OF ARIZONA

T
DATE:
Camerbh H. Holmes Senior Litigation Counsel Financial Remedies Section Crirninal Division
1IJa

EXHIBIT A

Statement of Admitted Facts
1. Westem Union Financial Services, Inc. ("Western Union") is licensed to do business
in Arizona and elsewhere as a money transmitter, also known as a money service business. Western Union conducts its business through "Agents," referred to as authorized delegates in Arizona. See A.R.S. $$ 6-1201(1) and 6-1218. In some foreign countries, such as Mexico, Western Union's Agents enter into agreements with additional locations (sometimes referred to as subagents) entitling the subagents to offer Westem Union services to the public.

2. Westem Union has specific duties imposed by federal and state law to develop,
implement and maintain an effective anti-money laundering program and to comply with
various record keeping and reporting requirements that are designed to assist governmental agencies in detecting and preventing money laundering.

3. An effective anti-money laundering program is, in part, one that is reasonably
designed to prevent the money service business from being used to facilitate money laundering
(recognizing that any reasonably applied controls, including controls implemented as a result of a reasonably implemented risk-based approach, will not identiS and detect all instances of
money laundering).

4. Between 2003 and 2007, Westem Union had data and other information
available to it, which, when viewed as a whole, gave Western Union reason to know that one or more persons employed at the authorized delegate locations in Arizona referred to in paragraph 5 below, aad at the locations referred to in paragraph 7 below, while acting within the scope of their employment and motivated at least in part to benefit Western Union, were knowingly engaged in a pattem of money laundering violations that facilitated human smuggling from Mexico into the United States through Arizona.

5. From 2003-2005 the Westem Union payouts at the eight Arizona locations listed
below totaled $176,735,000 in wires of $500 or more sent to the location from one of the29 States that were the most frequent destinations for persons being smuggled from Mexico into the United States through Arizona. These amounts include both legal and illegal transactions.

LocationA $34,825,000

LocationB $28,706,000

C Location

$28,428,000

D Location

S18.892.000

E Location

$18,702,000

F Location

$16,567,000

G Location

$15,507,000

LocationH 515.108.000

6. Beginning in 2006, Western Union limited money transfer transactions into Arizona
to a maximum of $450. Because smuggling into the United States through Aizona continued, smugglers had their payments wired to other places outside the United States.

7. From 2005-2007, Western Union payouts at the following eight locations outside

the United States totaled 9142,446,000 in wires of $500 or more sent to the location from one of the 29 States that were the most frequent destinations for persons being smuggled into the

United States through Arizona. These amounts include both legal and illegal transactions.

Location I Location J Location K Location L

$36,200,000 $20,666,000 $20,069,000 $19,872,000

M Location

$18,141,000

N Location

$14,654,000

O Location

$ 6,664,000

P Location

S 6.180-000

EXHIBIT B

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MONITOR ENGAGEMENT LETTER

This Monitor Engagernent Letter sets out the purpose and scope of the engagement of Marcy M. Forman, or such cotporate entity that she may choose to create for this purpose, as court-appointed Monitor ("Monitor") for the ongoing evaluation of the southwest Border Area anti-money laundering program of westem union Financial Services, Inc. ('Western Union') pursuant to that certain Setttement Agreement between
westem union and the state of Arizona (*state') dated February I I , 20 l0 (..Agreemenf')-
The actions of the Monitor under this Letter shall be referred to as the "Engagement," The provisions of this Monitor Engagement Letter regarding the Monitor's uuttrotity and duties are to be broadly conshued to give the Monitor independence of the parties and discretion in carrying out the Engagement, and to effectuate the goal of this engagement, namely, confirmation that Western Union has implemented the Recommefldations required under this Monitor Engagement Letter and that Western Union's Program is reasonably designed and executed to detect and prevent rnoney laundering in the Southwest Border Area.
Backsround

l. Western Union offers money transfer services in over 200 countries. Accordingly,

westem union has a large and complex Bank secrecy Act ("BSA") anti-money laundering
(*AML') compliance program that spans all of its locations, including those in the

Southwest Border Area as defined in the Agreement. The Southwest Border Area is the

v

sole geographic focus ofthis Engagement' and references herein to the program, as defined in Paragraph 2, refer to Western Union's AML program in the Soutftwest Border

Atea, as such program may be modified or enhanced as described herein.

2. Prior to the execution of the Agreement, Wesiem Union provided to the State a May

8, 2009 repofi by an independent consulting firm evaluating westem union's present

AML program ("Report"). The Report made a number of recommendations fiat the

consulting firm believes will further enhance Westem Union's AML program. As set forth

in the Agreement, westem union has agreed to maintain its AML program for the

southwest Border Area and to implement in the $outhwest Border Area additional

program measurcs recommended by a Monitor ("Recommandations") to the extent

required in this Monitor Engagement Letter. The existing program for the Southwest

Border Area described in the Report and the Recommendations particular to the Soutlrwest

Border Area required in the Implementation plan created pursuant to this Monitor

Engagement Letter will be termed the "Program." To ensure that its Program adheres to

the principles enunciated in the Financial Action Task Force Risk-Based Approach to

combating Money Laundering and renorist Financing ("FATF RBA Guidance'), to its

legal obligations, to the Agreement, and to this Monitor Engagement Letter, western

Union has agreed to be overseen by an independent Monitor for a flexible period of time

ending between the end of the twenty-ninth month after the Agreement is fully executed

\r'

and the end of the forty-first month after the Agreement is fully executed.

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Gqnerel Provisions

3. Hirins Authoritv and Compgnsation. The Monitor shall have the authority to
employ or contact for the services of personnel, including but not limited to legal counsel, consultants, investigators, and experts, that the Monitor deems reasonably necessary to assist in the proper discharge ofthe Monitor's duties as specified herein. Westem Union and the State shall have the opportunity to prform routine conflicts checks on individuals or entities the Monitor proposes to engage and, within two weeks, shall advise the Moniior
if any conflicts exist, The Monitor shall not €ngage any individual or entity as to which
Westem Union or the State reasonably beliwes a conflict of interest exists and provides a
statement of reasons to that effect. Furthermore, because the number of firms capable of
providing audit services to Western Union is severely limited, the Monitor shall not employ Emst and Young, KPMG, Deloitte LLP, or PricewaterhouseCoopers without the written consent of Westem Union. The reasonable compensation and expenses of the Monitor, and any persons hired or engaged by the Monitor pursuant to his or her authority under the Agreement and this Monito,r Engagement Letter, shall be paid through an a@ount as ordered by the Maricopa County Superior Court ("Court"). The Monitor shall be compensated in accodance with his or her tlpical hourly rate or a reasonable fee determined by the Monitor and approved by the Court and shall proceed as described in this Court's Appointment Order. The Monitor may hire or engage personnel at their respective typical hourly rates or a reasonable fee determined by the Monitor. The Monitor and Monitor's staJf shall be entitled to reimbursement for travel expenses (including airfare, car rental, hotels and meals) at their actual cost. The Monitor will ensure that travel is undertaken at reasonable facilities that are not more expensive for nongovemment employees than facilities custonary to career govemment employees taveling on official business. The Monitor may also procure insurance reasonably necessary to protect the Monitor and all persons whom the Monitor shall engage from risks ordinarily insured against by professional service providers. Premiums associated with such
insurance shall be reimbursed at their actual cost,

4. No Affiliptigp. The Monitor is not, and shall not be treated for any puqpose as, an

officer, employee, agent, or affiliate of Westem Union or the State. The Monitor shall not

owe any fiduciary duties or other duties or obligations of any kind to Western Union's

directors, officers, employees, shareholders, bondholders, or creditors, orto the State.

Neither Western Union or its Affiliates, as defined in the Agreement, nor the State shall

ceuse any personal benefit to the Monitor during the Monitor's Engagement or for a period

of five yearc cornmencing on the last day ofthe Monitor's Engagement by employnent,

engagement, Brft, or othenruise. Western Union, its Affrliates and tbe State shall not
employ or engage any entity or individual hired or engaged by the Monitor to fulfill its

responsibilities during the Moniior's Engagement, either directly or indirecfly, for a period

of five years, eornmencing on the date that the entity's or individual's engagement

commences, unless the other party agrees in writing. The Monitor shall not employ any

person who has been an employee of the Arizona Attomey General's Office within the past

V

five years, or who has provided testimony, affidavits or otherwise participated

295t513
fnfi[ +lulrc

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substantively in litigation against Western Union. At the conclusion of the Monitor's Engagement any equipment or other properly purchased by the Monitor shall become the prop€rty of the State, provided that any data or other information contained on any such equipment shall be subject to the provisions ofParagraph 9.
5. No Attorney-Client Reletionshio. The Monitor shall be independent of Western
Union and the State, and no attorney-client relationship shall be formed between them. Westem Union shall not claim any work product privilege as to documents created by the Monitor or by any agent$ of the Monitor.
6, Indemnilication. Westem Union shall provide an appropriate indemnification
agreement to the Monitor with respect to any claims arising out of the performance of the Monitor's duties by the Monitor or by any person employed or engaged by the Monitor in the coursc of the Monitor's performance hereunder.
'1. No Defense Premised on Monitor's Findings. Western Union agrees that the
Monitor's findings do not constitute a defense to any action that the State may elect to bring against Westem Union, as permitted by the Agreement.
8, Coqperation. Western Union shall direct its directors, officers, employeeso agents,
and consultants to cooperate with the Monitor in the execution of his or her duties. If, in the Monitor's judgment a director, officer, employee, agent, or consultant of Western Union fails to cooperate with the Monitor, tle Monitor shall notifr Western Union and the State. The Monitor may evaluate Westem Union's response to the uncooperative party in
evaluating Western Union's cooperation under the Agreement, Further, Westem Union agrees lhat any director, officer, employee, agent, or consultant may communicate with the Monitor directly and that no director, officer, employee, agent or consultant shall be penalized in any way for providing infonnation to the Monitor. Any director, officer, employee, agcnt, or consultant communicating with the Monitor may request that the Monitor keep confidential from Westem Union the fact ond substance of their communication, and the Monitor shall comply with any such request.
g. Confrdentialitv, During the course of the Engagement, the Monitor may have
access to or receive Westem Union proprietary information or trade secrets that are not otherwise in the public domain through no breach by Monitor of this Letter ('Confidential Information"). The Monitor agrees not to disclose any Confidential Infonnation to anyone other than the Court or the State to carry out the terms of the Engagement. The Monitor also agrees to ensure that any party whom the Monitor engages hereunder shall agree to the same restriction. Within thirty (30) days afterthe termination of the Engagement, the Monitor and any pafty whom the Monitor engages hereunder shall return to Westem Union all documents received from Western Union or containing any Confidential Information or confinn to Westem Union in writing that all such documents have been destroyed. This Monitor Engagement Letter does not require any law enforcernent agency or prosecutor's office or person employed or engaged by them to return or destroy any document or

29535 t3
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information. The State shall mainain the confidentiality of any materials or information provided by Westem Union under this paragraph and shall not provide such material or information to any third parly, except to the extent that disclosure is required by law, otherwise authorized by this Agreement, or is in the proper discharge of or otherwise
furthers the State's oflicial duties or responsibilities.

Monitor's Terms of Ensasement
10. Core Functions. The Monitotwill perform fourcore functions:
l0.l open and maintain an account for the receipt of payments from Westem
Union via the clerk of the Court and fo'r the payment and accounting for all Monitor
expenses;

10.2 assernble and direct a staff of personnel that the Monitor deems reasonably
necessary to assist in the proper discharge of the Monitor's duties;

10.3 determine whether Western Union is in compliance with the terms of the

Agreement and ttris Monitor Engagement Letter and submit an Implementation Plan;

progress reports for each six-month period beginning after the Monitor submits the

Implementation Plan, and in each six-month period thereafter until ilre end of the forty-first

month after the Agreement is fully executed, or until this Engagement is terminated early

v

as provided in the Agreement; and a final evaluation in a Final Report; and

10.4 include in each report s detailed financial accounting of all of the Monitor's

activities and expenses to date and of all Western Union expenses beginning August l,

2009 that ttre Monitor has determined were made to implement the Recommendations or to

enhance the Program, as described in Paragraph 23.1.2 of the Agreement.

l.I

Work,Pla+, Within ninety (90) days after the commencement of the Monitor's

Engagement, the Monitor shall prepare a written work plan. To conduct an effective initial

review, the Monitor's initial work plan shall include such steps as are necessary to develop

an understanding of the facts and circumstances sunounding the Program, including a

review and verification of the Risk Assessrnent, as defined in Paragraph 14, and the

tansaction data that reflects these facts and circumstances. The Monitor shall submit the

work plan to the State and Western Union for review. If Western Union or the State

objects to any part of the work plan, the Monitor, Westem Union, and the State shall use

best efforts to reach a resolution agreeable to all parties, but the State shall, in its sole

discretion, determine the matter.

12. The Monitor shall provide all work plans, the Implementation Plan, periodic
reports, the Final Report and any other reports to Western Union and to the State.

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13. Initial Review. In connection with the Monitor's responsibility to determine
whether the Program is generally effective in detecting deterring, and preventing money laundering and to evaluate Westem Union's preparation to implement the Recornmendations described in this Monitor Engagernent Letter, the Monitor shall conduct an initial review and prepare an Implementation Plan evaluating the areas described below.
14. Risk Aseessment- A cornprehensive risk assessment is the foundation of the risk-
based compliance program described in the FATF RBA Guidance. Within thirly (30) days after the commencement of the Engagemenl Westem Union will provide the Monitor with a risk assessment f'Risk Assessment") for the Southwest Border Area that identifies geogmphic areas, Agents (as defined in the Agreement), consumers, transactions, products, ser,rices, and points of consumer interaction that are most susceptible to money laundering activities, and will identifr any transaction data upon which any portion of the risk assessment is based. The Risk Assessment will compare transaction data relating to locations at different parts of the Southwest Border Area to identify similarities and differences and to examine changes over time to better identiff potential money laundering
patterns that span the area or move from one part ofit to another in response to changing circumstances. Westem Union will update the Risk Assessment as nscessary throughout
the Engagement, including but not limited to at the request of the Monitor, to address
changes in these risks, Its updates will also identify any transaction data upon which any portion of the Risk Assessment is based and show changes, tend lines, and specific examples. The Monitor's evaluation of the Risk Assessment will also be conducted on a
regular basis throughout the Engagement.
15. The Monitor shall regularly evaluate, using the FATF RBA Guidance, the Risk
Assessmeflt to determine whether it identifies products, sewices, geographic locations, transactions, categories of consumers, and points of consumer interaction, including Agent locations that are most susceptible to money laundering activities in the Southwest Border Area. The Monitor's evaluation will regulady monitor and compare transaction data from the entire Southwest Border Area to tack changes and predict firrther or future changes. Iu evaluating the Risk Assessment, the Monitor shall take into account whether Western Union has considered the nature, scale, and complexity of its business; the initial and ongoing due diligence or monitoring conducted on its Agents; its distribution channels; its consumer, product and activity profilel the capabilities of its electronic monitoring systems; and the volume and size of transactions. The Monitor will test Western Union's comparisons of transaotion data relating to locations in different parts of the Southwest Border Area to evaluate and assess the Risk Assessment's identification of similarities and differences and to confirm changes over time that may be related to potential money laundering pattems. The Monitor shall also evaluate whether Westem Union has reasonably incorporated in the Risk Assessment the risk categories identified in the FATF RBA Guidance and in this MonitorEngagement Letter. In addition, the Monitor shall evaluate Westem Union's policies and procedures for updating the Risk Assessmento in partioular the sfength of the connection between the process for updating the Risk Assessment and the transaction data and the degree to which the Risk Assessment reflects

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larger ftends and activities aoross the entire Southwest Border Area and not limited to smaller geographical subsets of that area. The Monitor shall work with Westem Union's risk assessment personnel to establish an organic and fle:rible approach to regular risk assessment that is firmly founded on fansaction data relatiug to the entire Southwest Border Area and therefore highly rcsponsive to changes in the risk circumstances.
16. Evrluation of Prosram Fnnctlons. Giving regard to the principles enunciated in
the FATF RBA Guidelines and the provisions of this Monitor Engagement Letter, and the Risk Assessment for the Southwest Border Area as reflected in Western Union's and the Monitor's analysis of the transaction data, the Monitor's evaluation of Western Union's Program shall consider Western Union's preparation to implement the Recommendations described in this Monitor Engagement Letter and whether t}e Program:
I6.l provides for adequate oversight and confiols ofAgents, consutners,
transactions, products, services, and geographic areas that are more vulnerable to abuse by money launderers and otler criminals;

16.2 provides for regular review of the risk assessment and risk management
processes;

16.3 designates adequate personnel responsible for managing an effective risk-
based AML compliance program;

16,4 ensures that adequate controls are in place before a new product or service is
offered;

16.5 contains channels for infonning senior management of compliance
initiatives, compliance deficiencies, corrective actions, and filing of suspicious activity
reports;

16.6 provides for program continuity despite changes in corporate structure or
personnel;

16.7 meets all applicable regulatory record keeping and reporting requirements
andprovides channels for informingpersonnel of changes in legal requirements;

16.8 implements risk-based policies, procedures, and processes as appropriate;

16.9 provides for adequate supervision of Western Union personnel who handle
transactions, complete reports, gant exemptions, monitor for suspicious activity, or participate in any otherway in Western Union's Program;

16.10 provides for periodic internal evaluations of whether Western Union

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personnel are adhering !o written AML policies, procedures, and processes;

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16.11 incorporates AML compliance into job descriptions and performance evaluations of appropriate personnel;

16.12 provides for appropriate initial and refresher training to be given to appropriate personnel ;
16.13 provides for appropriate initial and refresher taining for Agents to be given
at appropriate intervals;
16.14 provides for on-site and AML compliance reviews and mystery shopping of
Agents when appropriate, and

16.15 ensures that AML compliance personnel are involved in all final decisions regarding disciplinary actions taken against Agents ifsuch action includes probation,
suspension, or termination.
17. Evalustion of Prosram Intesrity, The Monitor shall evaluate tlre integrity of
Westem Union's Program based on the principles enunciated in the FATF RBA Guidance, other appropriate industry standards, the Report, and this Monitor Bngagement Letter. The Monitor's initial evaluation of the Program's integrity shall consider Western Union's preparation to implement flre measures described in this Monitor Engagement Letter and whether:

17.1 Westem Union designates an individual or individuals at the executive level
with responsibility for the Program, provides such individual(s) with appropriate reporting
lines within the corporate structure and sufficient acc€ss to Western Union's Board of
Directors and senior management, and allots adequate resources and authority to such
individual(s) to ensure compliance with Westem Union's legal obligations, the Agreernent,
and this Monitor Engagement Letter;

17.2 senior management makes reasonable efforts to sreate a culture of
compliance within Western Union to encourage personnel at all levels to adhere to AML
policies, procedures, and processes; and

17.3 Westem Union employs suffrcient numbers of AML compliance personnel,
including personnel with direct oversight of Agents and personnel assigted to analysis firnctions, particularly transaction data analysis.

Imnlementation Plsn.

18. The Monitor shall issue a written Implementation Plan within one hundred eighty

(180) days after the commencement of the Monitor's Engagement setting forth the

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Monitor's evaluation and making such Recommendations as are reasonably designed to

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implanent or improve the Program. The Monitor may extend the time period for issuance of the Implementation Plan with prior written approval of the Stats and Westem Union.
19. The Implementation Plan shall describe the Monitor's evaluation of Western
Union's perforlnance in the areas described herein. The report shall include the Monitor's methodolory, transaction data and other information relied upon, and the basis for evaluation. The Monitor shall formulate his or her conclusions and Recommendations based on, among other things:

19.1 rwiew of documents as the Monitor deems necessary, including all the
policies and procedurm relating to the Progfam, the Report, and the documents and materials cited in the Report;

19.2 meetings with and interviews of employees, officers, and directors of
Westem Union, and any olher relevant persons, including representatives of the State, as the Monitor deems necessary;

19.3 on-site observation of Westem Union' risk assessment and manasement
systems;

19.4 analyses oftransaction data; studies of long-term and short-term border-wide
trends, changes, and compadsoos based on the transaction data; and testing ofthe
Program; and
\-/ 19.5 consideration of any written submissions from the State or from Westem
Union specifically directed to the Monitor (with a copy to the other party) for the purpose of being considered for the Monitor's Implementation Plan.
20. Identification gt-Prgsram Recommendstions. In formulating Recommendations
for the Implementation Plan, the Monitor may consider any additional measures he or she deems worthy of evaluation, and shall;

20.1 consider all measures mentioned in the Report, whether mentioned as
recommendations or otherwise; all measures listed in Paragraph 23 ot 24; and all measures suggested by Western Union, whether Western Union suggests the measure as an addition to the above measures or as a potential substihrtion for any of the above measures designed to accomplish the same or similar purpose in a way or by a method more acceptable to
Westem Union. Fot each such measure in Paragraph 23, the Monitor shall either accept it as a Recommendation or provide reasons not to do so, and shall provide some estimate of
the cost of its implementation in the Southwest Border Area;

20,2 consider and, as the Monitor deems necessary, solicit and accept input from

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Western Union, from the State, and from the Alliance-Appointed StaJf, of the Southwest Border Anti-Money Laundering Alliance, The Monitor shall conduot his or her inquiries

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regarding the evaluation of potential Recommendations in an open and transparent process,
working in collaboration with Western Union, tle State, and the Alliance-Appointed Staff.
In order to place the Participating States in a position to provide optimal consultation to ttre
Monitor and improve the quality of the Program, tle Monitor will provide the AllianceAppointed Staffwith information derived from the access described in Paragraph 32 and
Western Union transaction data., including the data described in Paragraph 32.5, in the event that the Alliance-Appointed Staflhas not obtained it independently.

20.3 with respect to any Recommendation the Monitor int,ends to include in its
Implementation Plan, consider costs, reasonable altematives, and 0echnical and other feasibility, in addition to potential benefits;

20,4 in the Implementation Plul set forth why each Recommendation is
potentially attainable and reasonably designed to implement or irnprove the Program and the Monitor's considerations relating to cost, feasibility, and expected benefit;
20.5 in the Implementation Plan, set forth for each Recommendation, to the extent
practicable in the context of that Rccommendation:

20.5.1 the specific action(s) to be taken by Westem Union;

20.5.2 any measurablc outcomes, to the ext,ent possible in the form of

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transaction det& that are expected or required;

20.5.3 any measurable outcomes that will provide a useful gauge to evaluate

the value of continued implementation of the Recornmendation or its discontinuation in the

event that it is not achieving desirable results;

20.5.4 the time frarne or mileposts relevant to its implementation, evaluation of success, or discontinuation, particularly referring to the timing of expected changes in transaction data that would indicate continuation or discontinuation.
2l' If after participating in the Recommendation identification process and reviewing
the specifics of the Monitor's Recommendations in the Implementation Plan, Westem Union beliwes that any Recommendation in the Implementation Plan is not feasible or is unrcasonably costly in relation to the expected benefit, or that the benefit identified by the Monitor as the expected benefit is unlikely, Western Union may make a presentation,
within thify (30) days of receiving the implementation plan. The presentation shall
If include all of the following or state in writing that the requirement is not applicable-
Westem Union makes such a presentation, its obligation to begin implementation of the
Recommendation at issue, if any, will be delayed until the matter is resolved pursuant to
Paragraph 22:

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2l-l provide to the Monitor and the State a written explanation of the reason for
its objection to the Monitor's Recommendation;

21.2 propose in writing to the Monitor and the State an altemative Policy' procedure or system designed to achieve the same objective or'ffiposw:;fitplaifrifrg +*yi'*
altemative is preferablo and the factual basis for this belief;

21.3 provide to the Monitor and tlre State transaction data to support its assertions
and any other factual materials it believes support its objections or position; and

21.4 point out additional hansaction data or materials that could be assembled or
analysis that could be performed that it believes would support its position and/or suggest delay in the implementation of the Reoommendation until such transaction data or materials can be assembled and evaluated or such analysis can be performed.

22. Upon a presentation as described in Paragraph 2l with r€spect to any
Recommendation, Western Union and the Monitor shall, for no more than thirty (30) days,

make best efforts to reach an agreement on the Recommendation and/or the proposed
allemative, if any, or upon a method by which the efficacy of the Recommendation and/or

any proposed alternative may be tested, suoh as by analysis ofadditional or different

transacfion data. Such agreement may include (i) the Monitor deleting the

Recommendation from the Implementation Plan, (ii) the Monitor modifring the

Recommendation, or (iii) the Monitor replacing the Recommendation with an altemative

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Recommendation. If Westem Union and the Monitor are unable to agree on the

Recommendation or an altemative proposal within such time, Westem Union shall submit

the issue and supporting docurnentation in writing to the State within forty (40) days after

Western Union's presentation pursuant to Paragraph 21. The State and Westem Union

shall make best efforts to reach an agreement. The State and Westem Union may seek and

consider the opinions of Attomeys General of other U.S. states in the Southwest Border

Area as part of this process. If the State agrees with the Monitor that the Recommendation
if is appropriate, after the State hears and considers Western Union's objections and,

solicited and provided, the opinions of Attomeys General of other U.S. states in the Southwest Border Areq the Monitor will continue to include the Recommendation as pad

of the Implementation Plan. If the State agrees with Westem Union that the particulm Recommendation is inappropriate, in whole or in part, the Recommendation will be deleted

from the Monitor's Recommendations or will continue to be included only as modified by

agreement between the State, in consultation with the Attomeys General of the affected

states, and Westem Union.

Presumed Prseram Measures

23, The following measures will beoome Recommendations unless the Monitor, with

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input from Westem Union and the State, determines that it is not technically feasible or would not improve the Program:

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23.1 western union's E$sting Measures. As described in the Report,
westem union p.es"ntly maintains or is in the process of implementing a BSA/AML
progfam that addresses organizational sttucture and govemance, Agent selection and taining, Agent monitoring and response, a transaction monitoring program, and a Suspicious Activity Report ("SAR") reporting progxam, ffnong other things. As part of its
altr progmm, Westem Union has been focusing extensive efforts on the Southwest
Border Area in order to address specific risks associated with illegal activity in that geographic region, such as cross-border drug trafficking and human smuggling from Mexico into the United States. These include potential use of Western Union sen'ioes by human smugglers ('boyotes") to obtain payment from sponsors of persons being smuggled illegally into the United States. These efforts extend to all U.S. and Mexican states on both sides of the border, and particularly to the Southwest Border Area. These efforts include:
23.1 . I enhancing transaction moniioring (through the implementation of a new
automated transaction monitoring application).
23.1 .2 developing the ability to aggregate consumer trarsactions to identify unusual activity on a real-time basis (lhrough its Real Time Risk Assessment initiative).
23.1.3 providing more resources, guidance, and compliance-related materials (such as AML haining tools) to its Agents through the deployment of an enhanced Web site.
23.1.4 continuing to acknowtedge that "Western Union's AML Program must include prooedures for conducting reasonable, risk-based due diligence on potential and
existing foreign Agents and counterparties to help ensure that such foreign agents and countelparties are not themselves complicit in illegal activity involving its products and
services, and that the foreign agent or foreigfr counterpaty has appropriate AML controls in place to guard against the abuse of the MSB's products and services," to enforce due diligence in that regard, and to monitor foreign Agents to "help ensure that the foreign Agents are not themselves complicit in illegal activity involving Western Unionos products and services and the foreigrr Agents' customers, employees, or contractors are not able to abuse such products and services," as described in the Repot.
23.1.5 implementing Transaotion Risk Index ("TR[") model variables and formulas (specihcally in the way some factors are weighted to impact the overall TRI risk score) to more strategically mitigate the risks associated with certain geographies (e.g., Arizona) and "red flags" such as structuring, sharing of consumer identifying information, high volume, high frequency; and SARs filed by Western Union on tansactions facilitated by/through the Agent
23.1.6 enhancing existing disciplinary procedures to include more concrete metrics
designed to limit discretion/subjectivity in the disciplinary process.
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23.1.7 adding scenarios customized to bansactions fscilitated in the Southwest Border Area to the interdiction decision matrix.

23.1.8 developing, to the ext€nt reasonably feasible, Real Time Risk Assessment
that will provide the ability to block noncornpliant transactions before they are processed,
so that when a transaction violates established business ruleq a'bop-up screen" will
immediately notify the Agent that the transaction cannot be completed,

23.1.9 implementing "Galactic ID" (aggregated identity component bits) designed
to assigr consumers with unique identification numbers accordingto the identifying information provided by the consumer,

23,l.lO monitoring hansaction data involving all transaotions (i.e., starting at $.01), fed into wirewatch+ and sorted by consumer, through the creation of 'hffinities."
23.l.ll developing an enhanced application to monitor transactions using new,
easier to update and modiff technologr to allow Western Union to more efficiently tune
the softrvare and create rules designed to detect new mon€,y laundering patterns as they are identified, and to balance risk better by prioritizing suspicious activity by risk level.

23.2 Presently Planned or.Considered Meas+-Les. In addition to the above
measures, Westem Union either now plans to implement, or the Report identified, a number ofpotential improvements or enhancements as worthy of oonsideration. Each such potential improvement or enhancement is included by this reference.
24, Additional Southwest Border Arer Measures. In addition to the above
measures, to the extent that they are not included above, the Monitor may, in the Monitor's discretion, make any of the following measures with regard to Southwest Border Area activities and Agents Recommendations, whether ornot Westem Union has been implementing them in the past or has plans to do so:

24.1 providing sufficient security for on-site reviewers so that no Agent location
is exempted from on-site review by security concems.

24,2 Making direct inquiries into whether a transaction is being conducted on
behalf of another percon in states and for transactions in which state law calls for identification ofpersons on whose behalfthe transaction is being conducted, such as
Arizona, and taking reasonable measures to verif the identity of any such p€rson.

243 building into its ARMOR and WireWatch+ tools consideration of some or all

the following as risk factors, in addition to other risk factors: seasonal patterns consistent

with criminal prooeeds, e.g., mariiuana growing season, seasonal illegal immigration;

send-to-receive ratio that is not consistent with other Agents in the locale or is consistent

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with participation in criminal activity; seasonal business fluctuation that is not consistent

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with other Agents in the locale or is consistent with participation in criminal activity; ratio
of questionable or anomalous customers to customers who are not in such groups is out of
the norm for comparable locations; ratio of questionable or anomalous transactions to transactions that are not in such sets is out ofthe norm for comparable locations.
24.4 assigning the final Agent approval process to a department that engages in
risk management and is independent from the sales and marketing function.
24.5 where legally permitted, running credit and criminal background checks on
all controlling persons of Agent applicants who own or control at least ten percent (10%)
of the Agents in the United States and to the extent possible in Mexico- For the purposes of
determining the percentage controlled by any one person, that person's interest shall be aggregated with the interest ofany other person controlled by that person or an officer, paf,fier, or agent of that person, or by a spouse, parent, or child of that person.
24.6 risk-ranking Western Union's Agents in the Southwest Border Area and, for
the highest risk five per cent (57o) ofthern, providing annual enhanced examination ofthe
Agent's transaction data history and transaction data integrity, confidential sampling of
questioned aspects of the Agent's services, and on-sik and off-site contact with the Agent. Whenever Western Union terminates an Agent for AML compliance reasons, it will not allow any conholling person of that Agent to be a controlling person at any Western Union Agent for at least three yeas thereafter.
24.7 subjecting Arizona authorized delegates to annual criminal checks and
declining or removing an Agent if a criminal backgound check reveals that the applicant has been convicted o[ or pleaded guilty or no contest to, any felony charge within the last
seven years or any felony charge involving money laundering, the financing ofterrorism or terorist organizations, or the provision ofmaterial support to terrorists or terrorist
organizations at any time. Westem Union will develop a system to control employee sign-
ons to its money transmittal syst€m at all localions in the Southwest Border Area to prevent any person from transacting Western Union business unless they are accurately signed on using their oorrect name.
24.8 incorporating enhanced controls for the higher risk Southwest Border Area
Agent locations identified as among the top five per cmt (5o/o) of high risk locations, including:

24.8.1 proactive contact with high volume customers to deiermine the reason
for the transactions, the customer's relationship to the sender or receiver, and the source of
funds.

24.8.2 enhanced systematic controls and transaction data integrity at the

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point of payment.

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24.8.3 suffrcient programmatic conhols to form a reasonable belief that
Westem Union knows the fue identity of each customer who receives more than $500 in a
fiansaction or totaling $1,000 or more in any one day at such a location at the time the
customer conducts the transaction or during a back-end review of the customer's pattern of
activity, to include measures to assure that these authorized delegates/Agents: Identiry, veri$, and enter into the transaction data record the identity of each such customer conducting or attempting to conduct a fiansaction at or above $500 by physical examination of ihe customer's identification document(s) at the time the transaction is being conduoted, to include the following informationl the name and social security or
taxpayer identification number, if any, of the individual presenting the transaction and the
person and the entity on whose behalfthe transaction is to be effected; the type and number ofthe customer's photographic ideirtification; the customer's current occupation; and the custome,r's current residential address.
24.8.4 accwately identifying United States authorized delegate employees whohave access to Western Union's money transmittal system by obtaining full name, address, phone, date and place of birth, valid photographic govemment-issued identification, and social security number, screening all such employees through E-verify, and taking sufficient additional measures to assure that such authorized delegate enrployees are not present in the United States in violation of Federal immigration laws.
249 impleme,nting enhanced identification requirements for senders or receivers
within the Southwest Border Area whose transactions:
\-/
?A,9.1 aggegate to amounts grealer than $3,000 over a rolling five-day pe,riod; or
249.2 aggregate to amounts more than $25,000 during any l2-month period. In each such transaction or series of transactions Westem Union will obtain the following information: the name and social security or taxpayer identification number, if any, of the individual presenting the transaction and the pen;on and the entity on whose behalf the tansaction is to be effected; the type and number of the customer's photographic identification; the customer's current occupation; and the customer's current residential
address.
24.10 implementing a data entry assistanc€ and blocking system for the purpose of
asswing the acfllracy and consistenry of its transaction data, to include recognition and rejection of entries that are not in a correct format, such as a purported Social Security Nurnber or foreign voter identification number that is not in a format that is correct for that type ofidentification, and, to the extent practical, an automated assistance program that populates transaction data fields with names of cities and states to prevent their being entered as non-standard abbreviations or spelled inconectly.
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2+.ll to the extent lawful, offering no service to transfer value, whether by money
transmittal or otherwise, to Agents within the Southwest Border Area by which arnounts
over $500 are rnade available for payment to the recipient less than twenty-foru (24) hours
after the transaction is initiated by the sender at any time during which the Arizona
Attorney General's oflicr does not have a Geographic Targeting order in effect. The
Monitor shall not include this as a Recommendation unless the Arizona Attomey General
conftrms that other money transmitters in the Southwest Border Area will also agree to
similarly limit their services.

25. Imnlementation of Recommendations. Within sixty (60) days after receiving the
Monitor's Implementation Plan, or, with regard to any Recommendation added afterthe Monitor first delivers the Implementation Plan, within sixty (60) days ofnotice of the addition of such new Recomnendation, Western Union shall adopt and begin development and implementation of all Recommendations in the Implementation Plan that are mutually acccptable to both the Monitor and Western Union, except that with respect to Recommendations that Western Union seeks reconsideration pursuant to Paragraph 21, initiation of implementation will not be requhed until the matter is resolvcd pursuant to
Paragraph 22.

26, Additiqn rnd Deletio4 of Rggommendgtions. The Monitor shall allow flexibility

for Westem Union to adjust its internal systems and confiols, to respond to changes in risk

conditions, and in particular to respond to tactical changes made by money launderers in

their efforts to avoid Westem Union's AML efforts. Accordingly, the Monitormay add or

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delete Recommendations after the Monitor first delivers the Implementation Plan, using

the process described in Paragraphs 18-22 for inclusion of new Recommendations in the

Implementation Plan. Whenever the Monitor adds or deletes a Recommendation, the

Monitor shall immediately provide written notice to Westem Union and the State.

Compliance with this Monitor Engagement Letter reguires compliance with all

Recommendations in the Implementation Plan. The timing of compliance with

Recommendations added after the initial delivery of the Implementation Plan shall be as

desmibed in Paragraph 25.

Investisation of Potential BreectgE
27. At any time during the course of the Engagemen! should the Monitor discover any
evidence indioating that Western Union, or its directors, officers, or employees have breached any provision of the Agreement, including by failure or refusal to implement a required Recommendation, the Monitor shall notiS Western Union and the State, unless the Monitor in his or her discretion determines notification directly to the State alone is necessary and appropriate. The Monitor shall provide the State any and all information relating to the evidence ofalleged breach(es). This paragraph shall not preclude the Monitor from discussing any matter directly with the State.
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28. If at any time during the course of the Engagement, the Monitor discovers evidence
of a potential violation by Westem Union of money laundering laws in the Southwest Border Area that occuned after the date of the Agreement, the Monitor shall have the discretion to investigate and report to the State and Westem Union about the matter. At the sole and reasonable discretion of the State, the State may direct the Monitor to discontinue the investigation to allow for a govemment investigation to comm€nce.
29. Western Union agrees that during the Engagemen! the Monitor shall review
activities and transaction data relating to activities that occurred prior to the date ofthe Agreement for the purpose of informing himself or herself of the facts relevant to the development of Recommendations, the evaluation of Western Union's Risk Assessmen! the deterrnination ofthe advisability ofpotential Recommendations, and the determination of the efficacy of Recommendations during the course of the Engagement in their historical context.

Periodic Reviews and Final Renort
30. The Monitor shall undercake periodic reviews every six months, commencing when
the Monitor submits the Implementation Plan, to further monitor and evaluate compliance with this Monitor Engagement Letter and determine whether Westem Union's Program is reasonably designed and effectively implemented to detec! deter, and prevent money laundering.

1. 3

With regard to the periodic reviews and Final Repott, the requirements set forth

above for the Implementation Plan shall apply, except for the following modifications:

.l 3 I The pedodic reviews will not require a work plan, but will instead be
periodic evaluations of the Program and its effectivcness and Westem Union's progress in implementing the Recommendations required under this Monitor Engagement Letter, and shall include analysis oftransaction data relevant to the effrcacy ofthe required Recommendations, whether Recommendations should be added to or deleted from the Implementation Plan based on transaction data or on changes in the risk circumstances, and empirical tests ofthe effectivcness ofthe Program;

31,2 In the discretion of the Monitor, the Monitor may designate any periodic

review after the end of the twenty-ninth month after the Agreement is fully executed, as the

Final Report if the Monitor certifies that the conditions provided in the Agreement for

early termination are present, In making its determination whether Western Union has

complied with all of the terms of the Agreemen! consistent with the principles enunciated

in the FATF RBA Guidance, the Monitor's evaluafion ofthe Program shall acknowledge

that Western Union cannot be expected to detect and/orprevent all illicit uses of its

services, that Westem Union's ability to detect and deler money laundering can sometimes

v

be necessarily limited, and that information about risks is not always robust or freely available. The Monitor shall bear in mind that a money services business may act in good

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faith to take reasonable and considered steps to prevent money laundering, and document
the rationale for its decisions, and yet still be abused by persons engaged in illicit activity, If the Monitor rnakes no cefiification of early compliancq the Monitot will make his or her
Final Report on the last day of the forty-first month afrer the Agreement is fully executed.

3 1.3 The Monitor shall prepare a written work plan for a Final Report and submit
it to the State and Western Union for comment at least sixty (60) days prior to issuing the
Final Report. tf Westem Union or the State objects to any part of the work plan, the
Monitor, Western Union, and the State shall use best efforts to reach a resolution agreeable
to all parties, but the Sute shall, in its sole dissretion, determine the matt€r. If the Monitor
elects to terminate this Engagement before the end of the forty-first month after the Agreement is fully executed, the Monitor's Final Report must certiry that Western Union has implemented all of the Recommendations required under this Monitor Engagement Leffer and thaL in the Monitor's opinion and based on the evaluation described in Paragraph 31.2, the Program is reasonably designed and effectively implemented to deter, detect and prevent money laundering.

Acc,e$s to Information

32. Westem Union shall cooperate fully with the Mbnitor, and lhe Monitor shall have

the authority to take such reasonable steps, in his or her view, as may be necessary to be

fully informed about the operations of Western Union within lhe scope of his or her

responsibilities under this Engagemenl To that end, if requested by the Monitor, Westem

\r

Union shall provide the Monitor:

32,1 access to all files, books, r@ords, personnel, transaction and other data and
facilities that fall within the scope of responsibilities of the Monitor under this
Engagement;

32.2 the right to interview any director, officer, employee, agent, or consultant of
Westem Union and to pafticipate in any meeting, olher than meetings protected by the attomey-client privilege, concerning any matter within or relating to the scope of the Monitor's responsibilities under this Engagemen[

32.3 the right to observe Westem Union business operations that fall within the
scope of responsibilities of the Monitor under this Engagement;

32.4 open access to information relating to the risk involved in its credit card,

stored value, and phone transactions to permit evaluation ofthe productlservice risk ofnew

or innovative products or services offered by Western Union in the Southwest Border

Areq particularly, but not lirnited to, products or services that may inherently favor a

degree of anonymity or can readily cross intemational borders, such as online money

v

transmittals, stored value cards or otler devices, money orders, and money transmittals by
mobile phone;

t7

2953J13

nn{. ilb,h"

f4F C

TEL :3012519490

Feb 15, 10 15 :34 No .001 P. 18

32.5 full transaction data relating to all person-to-person transactions sent to or
from authorized delegate,/Agent locations within the Southwest Border Area from January
l, 2005, to the present and throughout the term of this Engagement involving transactions
in amounts of $500 or more; and

32.6 to the extent pracficablg acc,ess to Western Union transaotion data in near
real time.
33. In the event that the Monitor seeks ascess to information, documents, records, data,
facilities and/or employees that Western Union seeks to withhold from the Monitor based on a claim of attomey-client privilege or on the attomey work product doctrine, Western Union shall promptly provide written notice of this determination and documentation of its claim to the Monitor and the State. Suoh notic€ and documentation shall include a general description ofthe nature oflhe information, documents, rec,ords, data, facilities and/or employees that are being withheld, as well as the basis for ths claim. Except as provided in this Paragraplr, Westem Union shall not withhold from the Monitor any information, documents, records, data, facilities and/or employees on the basis of an attomey-client privilege or the attomey work product doctrine.
34. If after providing documentation as described in Paragraph 33, Western Union
agrees to provide the Monitor with aocess to the requested information, documents,
rec,ords, data, facilities and/or employees, the Monitor and the State will agree:

34.1 not to assert that Western Union's provision of such materials in any way
constitutes a waiver by Westem Union of the attorney-client privilege and/or the work product doctrine;

34,2 that the production of such materials provides no ground to obtain other
documents, materials, or infonnation; and

34.3 to maintain the confidentiality of such materials and not to provide them to
any third party, except to the extent that disclosure is required by law or may be necessary in furtherance of the Monitor's or the State's discharge of his, her, or its official duties and responsibilities.

35. Except insofar as material is subject to Western Union's attorney-client privilege

and/or work product dootrine, Westerrl Union and the Monitor shall not withhold from the

State any documents or information on the basis of any privitege or work product claims.

Failure of any Western Union direotor, officer, or employee to cooperate with the Monitor

may, in the sole discretion of the Monitor, serve as a basis for the Monitor to refer the non-

cooperating individual to Westem Union for consideration of whether such director,

officer, or employee has in fact faited to cooperate with the Monitor and, if so, whether

\l

such non-cooperation warrants disciplinary action.

18

2953513 t I
ilir{. ll*tlto

l'4FC

TEL :5012519490

Feb 15,10 13:55 N0.001 P.19

36. The Monitor shall take appropriate steps to maintain the confidentiality of any
information entrusted to him or her while executing his or her duties under the Engagement and shall share such information only with the State, appropriate investigative agencies, and individuals or entities hired by him or her. The Monitor shall also take appropriate steps to ensure that any consultants, entities, and/or individuals engaged by him or her to assist with thc duties unde.r the Engagement shall maintain the confidentiality of information obtained while executing his or her duties.
37. Any report or information that is provided to the State or to Western Union by the
Monitor that is filed with the Court shall be filed under seal upon a proper showing by a parly. The State and Western Union shall maintain the confidentiality of all such
information provided to thern by the Monitor, including the periodic reports described in
this Monitor Engagement Letter, except to the extent that disclosure may be necessary by the State in connection with the disoharge of its official duties.
38. The headings and titles in this Monitor Engagement Letter are for ease of reference
only and shall not be used to constme or lirnit the text.
39. In the event of a conflict between the Monitor Engagement Letter and the
Agreement, the terms of the Agreement shall control.
40. if ResignationlDismissal. In the event of the death or disability of the Monitor (or,
the Monitor is a corporate entity, the Monitor's principal), Western Union and the State shall proceed as described Section 20 of the Agreement. Monitor may resign at any time upon no less than 60 days written notice to botb Westem Union and the State. If the Monitor resigns, Monitor shall be entitled to all fces and reimbursements provided for hereunder up to the effective date of the Monitor's resignation.

/'l\, 'fi4"* Accepted l.M.t

an,dtAagrAeIg/d

Fl'

t. frA*w Forman, Monitor
Dared: tlxItt I to

\J

l9

29s35r3

EXHIBIT C

TERRY GODDARD, Attorney General Firm Bar No. 14000 Timothy A. Nelson #016274 Cameron H. Holmes #004983 1275 West Washington Street Phoenix, Arizona 85007 -2926 Telephone: 602 542-8482 Attorneys for the STATE
IN THE SUPERIOR COURT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF MARICOPA

IN THE MATTER OF: WESTERN UNION FINANCIAL SERVICES. INC.

Case No:
JOINT APPLICATION FOR ORDER APPROVING SETTLEMENT AND APPOINTING MONITOR

The State of Arizona er rel. TERRY GODDARD, Attomey General (o'State"), and WESTERN UNION FINANCIAL SERVICES, INC., ("Westem Union"), respectfully apply for an order approving a settlement and appointing a monitor. This Application is supported by the accompanying Memorandum of Points and Authorities.
MEMORANDUM OF POINTS AND AUTHORITIES
L INTRODUCTION.
The State and Western Union have agreed that the public interest would be served by
their entering a Settlement Agreement ("Agreement"), attached hereto as Exhibit l,r and that one term of that Agreement is the presence of a Monitor to evaluate Westem Union's compliance with the terms of that Agreement. The Agteement contemplates that Westem Union will fund an extensive anti-money laundering Undertaking in the Southwest Border Area, and that the Monitor will determine what amount Westem Union has expended
t Capitalized terms used in this Application have the meaning defined in the Agreement.

during the course of the Monitor's Engagement to implement the Recommendations made by the Monitor. The Monitor's engagement will be lengthy; Westem Union has agreed to waive and has waived any and all rights to a speedy trial pursuant to the Sixth Amendment
to the United States Constitution, the Arizona Constitution, and the Arizona Rules of Criminal Procedure, for the period that the Agreement is in effect. The State and Western
Union request the appointment of a Monitor to attain the primary goal of this action, i.e., returning the State and Western Union to a productive partnership in preventing money laundering.
II. THE APPOINTMENT OF AN OFFICER OF THE COURT WOULD
PROVIDE EFFICIENT ADMINISTRATION OF THE AGREEMENT.
The Agreement calls for payments to the State and to the Clerk of the Courl to fund an independent Monitor with substantial duties relating to evaluating and improving Western Union's anti-money laundering efforts. The duties assigned to the Monitor require the engagement and supervision of substantial personnel. Creation of a Monitor account permits the payment of the necessaly expenses from this fund, places these expenditures under the supervision of this Court, and facilitates detailed and unified accounting for such payments.
The Monitor's duties under the Agreement and Western Union's duties to the State under the Agreement call for substantial information exchange. In the event that there are
differing points of view on these matters, the presence of a Monitor will obviate direct
Court involvement.
III. THIS COURT HAS PLENTIFUL AUTHORITY TO MAKE THE
SUGGESTED APPOINTMENT ORDER.
The contemplated appointee would operate in conformance with the Agreement and Monitor Engagement Letter, attached hereto as Exhibit 2,tobe approved by the Court, defining the appointee's role and duties. The Arizona Constitution provides that "[]udges of the superior court may appoint court commissioners, masters and referees in their
29535t7

respective counties, who shall have such powers and perform such duties as may be
provided by law or by rule of the Supreme Court." Ariz. Const. art. VI, $ 24. Arizona
courts have used special masters since before statehood. Grand Canyon R. Co. v. Treat,12 Ari2.69,95 P. 187 (Ariz. 1908) (special master to sell property of railroad company). In addition to the sweeping Constitutional authority, this Court has the general legislative grant of authority under A.R. S. S 12-123, "Jurisdiction and powers," stating, in pertinent
part, "8. The court, and the judges thereof shall have all powers and may issue all writs necessary to the complete exercise of its jurisdiction."
The authority to appoint a special master was discussed in State v. Tackman, 183 Ariz. 236, 902 P .2d 13a0 (App. 1994), review denied. There, a Superior Court judge appointed a special master to help determine the rights to restitution in a racketeering case involving trafficking in stolen property. The court gave its strong support to the trial
judge: "Even if the constitutional reference were not clear, we would find sufficient basis
for Judge Portley's actions in the court's 'inherent power and discretion to adopt special, individualized procedures designed to promote the ends ofjustice in each case that comes beforethem.' Hedlundv. Sheldon,LT3 Ari2.143,146,840P.2d 1008, 1011(1992)." 183 Ariz. at 238-39, 902 P .2d at 1342-43.
The State and Westem Union request entry of an order approving the Agreement and appointing a Monitor to perform the functions described in the accompanying Settlement Agreement and Monitor Engagement letter, summarized as follows:
l) open and maintain an account for the receipt of payments from Western
Union via the Clerk of the Court and for the payment and accounting for all Monitor
expenses;
2) assemble and direct a staffoflegal counsel, consultants, investigators,
experts, and any other personnel reasonably necessary to assist in the proper discharge of the Monitor's duties;
3) determine whether Western Union is in compliance with the terms of the
Settlement Agreement and its implementing Monitor Engagement Letter and submit an Implementation Plan, periodic reports every six months beginning six months
29535t7

after the Monitor submits the Implementation Plan, until the Engagement is terminated as provided in the Agreement, and a final evaluation in a Final Report;
4) include in each report a detailed financial accounting of all of the Monitor's
activities and expenses to date and of all Western Union expenses that the Monitor has determined were made to implement the Program Recommendations or to enhance the Program, as described in Paragraph 23.I.2 of the Agreement.
5) cooperate with reasonable requests for information or assistance from any
state or federal law enforcement agency, from the ArizonaDepartment of Financial Institutions, or from Westem Union consistent with the Monitor Engagement Letter.
IV. CONCLUSION.
The State and Western Union respectfully request this Court to enter the proposed order submitted herewith.
f\
RESPECTFULLY SUBMITTED thiS t[' day of February,20l0.
TERRY GODDARD Attorney General
By Ctrief Deputy Attomey General 127 5 W. Washington Street Phoenix, Arizona 85007
Attorneys for the State of Arizona
OSBORN MALEDON, P.A.
2929Xlorth Central Avenue, Suite 2100 Phoehix. Arizona 85012-2793 Attorneys for Westem Union Financial Services, lnc.
2953517

ORIGINAL filed this February,20l0, with:

day of

CLERK OF THE SUPERIOR COURT Maricopa County 201 West Jefferson Phoenix, Arizona 85003

COPY of the foregoing hand-delivered

this _

day of February,20l0,to:

HON. TIM RYAN Judge ofthe Superior Court
101 West Jefferson
Phoenix, AZ 85003

COPY of the foregoing hand-delivered
_ this day of February, 2010, to:
Timothy A. Nelson Chief Deputy Attorney General Office of the Attorney General 1275 W. Washington Phoenix. Arizona 85007

Larry Hammond Osborn Maledon, P.A. 2929N. Central Avenue. Suite 2100 Phoenix. AZ85012-2793

EXHIBIT 1

STATE OF ARIZONA, exr€l.

)

ATTORNEY GENERAL

)

TERRY GODDARD,

)

Plaintiff,

)

)

v.

)

WESTERN UNION FINANCIAL

I

SERVICES,INC.,

Defendant-

)

)

SETTLEMENT AGREEMENT

Westem Union Financial Services, Inc., ("Western Union") a corporation organized under the laws of Colorado, pursuant to authority gpnted by its Board of Direclors, and the State of Arizona ("State") hereby enter into this Settlement Agreement ("Agreement').

Recitals
l. Westem Union offers money transfer and other payment services at over 50,000 agent
locations in the United States and over 375,000 locations around the world. In Arizona, Western Union is licensed to do business as a money transmitter under the Arizona Transmitters of Money Act, A.R.S. $$ 6-1201-1242.
2. Western Union conducts its business through "Agents," referred to as "authorized
delegates" in Arizona. ,See A.R.S. $$ 6-1201(l) and 6-1208. In some foreign countries, such as Mexico, Westem lJnion's Agents enter into agreements with additional locations (sometimes referred to as "subagents") entitling the subagents to offer Western Union services to the public.

3. Westem Union has developed and implemented a risk-based antimoney laundering ("AML") compliance program that is designed to preven! dete.pt, and report potential
money laundering activities. In so doing, Western Union has dedicated substantial resources to, among other things: developing transaction monitoring systems to detect
potentially suspicious activity; building a team ofAML professionals; screening, training, and monitoring its Agents; producing AML policies and manuals; and implementing
compliance measures in certain high-risk geographical areas, including all of Arizona and the area within 200 miles north and south of the United StatesAvlexico border (the "Southwest Border Area").
4. Prior to the execution of this Agreement, Westem Union requested from the State a global resolution of all potential regulatory, civil, and criminal actions that could arise from conduct described in the Statement ofAdmitted Facts, attached hereto as Exhibit A and incorporated herein by this reference, and it also provided the State with a May 8, 2009 report by an independent consulting firm evaluating Westem Union's current AML

compliance program and its planned enhancements of that program ("Report"). The Report concluded that Westem Union "has taken extensive steps to fully appreciate its specific risks for money laundering/terrorist financing by tailoring its own risk assessment, identifuing both pervasive and Company-specific threats and vulnerabilities, and to manage its AML risk by dedicating extensive and skilled resources to those areas that management believes pose the greatest risks (e.g., the Southwest U.S. Border region)."
5. To achieve their cornmon goal of combating money laundering activities in the Southwest Border Area, and to reach a global resolution of all potential regulatory, civil,
and criminal actions that could arise from conduct described in the Statement of
Admitted Facts, Western Union and the State are entering into this Agreement.
Settlement
6. Westem Union acoepts and acknowledges responsibility for its conduct as set forth in
the Statement of Admitted Facts.
7. Westem Union and the State agree that they will issue a joint public announcement
regarding this Agreement after acceptance of this Agreement by the Maricopa County
Superior Court (the o'Court"). Western Union and the State shall agree on the language of a press release regarding this Agreement. Westem Union expressly agrees that it shall
not, through its attomeys, Board of Directors, officers, or authorized spokespersons, make any public statement, including filing or maintaining any civil or regulatory action, contradicting any statement of fact contained in the Statement of Admitted Facts or factual assertions contained in this Agreement. Any such contradictory public statement by Western Union, its attorneys, Board of Directors, ofFtcers or authorized spokespersons, shall constitute a breach of this Agreement as governed by Paragraph 14
of this Agreement. The decision whether any action or statement by any such person will
be imputed to Western Union for the purpose of determining whether Westem Union has breached this term of this Agreement shall be in the sole and reasonable discretion of the State. Upon the State's notification in writing to Westem Union of a public statement by any pemon that in whole or in part is in breach of this term, Western Union may avoid breach of this Agreement by publicly repudiating such statement within two busi:ress days after notification by the State. This paragraph is not intended to apply to any
statement made by any individual in the course of any criminal, regulatory, or civil case initiated by a governmental or private party against such individual. In addition, consistent with Westem Union's obligation not to contradict any statement of fact set forth in the Statement of Admitted Facts, Western Union may take good faith positions in litigation involving private parties or governmental agencies. Further, consistent with such obligation, Westem Union may make statements regarding the actions it took to
detect and prevent the activities described in the Statement of Admitted Facts.

8. The State has determined that it could institute a civil forfeiture action pursuant to

A.R.S. $$ 13-2314 and 13-4301-4315 against
'Vy'estern Union between January I, 2003 , and

cerlain funds Decemb er 3t

transfened by and through , 20A7 , based on probable

cause to believe that there have been violations of A.R.S. E 13-2317 in excess of the

amount referred to in Paragraph 16. The State has further determined that it could pursue

claims for costs and expenses of prosecution and investigation, including the expenses of

overseeing restrictions on Westem Union's future conduct.

9. In order to settle any forfeiture claims the State may have, as well as any other
potential regulatory, civil, and criminal claims or actions that could arise from conduct described in the Statement of Admitted Facts, including but not limited to claims pursuant to A.R.S. $$ l3-2314 and l3-4301-4315 that arose prior to the date of this Agreement, Western Union has agreed to pay the State the sum of $21,000,000 in reimbursement of the State's costs and expenses of prosecution and investigation and to perform the other actions described in this Agreement.

10. The State and Western Union believe that the Southwest Border Area poses special money laundering risks associated with criminal activify by drug human, and weapons smuggling organizations. The problems associated with this criminal activity are regional in nature and are not confined to any single U.S. or Mexican border state. Combating such criminal activity requires cooperation between law enforcement agencies in the U.S. Border States and federal govemment agencies, as well as with law enforcement authorities in Mexico. The State and Western Union further believe that the implementation of effective AML compliance programs by financial services providers in the Southwest Border Area and an effective and cooperative working relationship between financial services providers and law enforcement agencies play an important role in enabling law enforcement to successfully combat money laundering and other criminal activity in the Southwest Border Area.

11. Westem Union and the State agree to jointly file an Application for Order Approving Settlement and Appointing Monitor, promptly upon execution of this Agreement, in which Westem Union agrees to waive and does thereby expressly waive any and all rights to a speedy trial pursuant to the Sixth Amendment to the United States Constitution, the Arizona Constitution, and the Arizona Rules of Criminal Procedure, for
the period that this Agreement is in eflect.

12. In entering into this Agreement, Westem Union agrees that any violations of the Arizona money laundering laws and related offenses that were not time-barred by the applicable criminal or civil statutes of limitations as of the date of this Agreement may, in the sole reasonable discretion of the State, be charged against Westem Union criminally and/or civilly within six months of the State's declaration of any willful and material breach of this Agreement by Westem lJnion, or any event which renders this Agreement null and void, notwithstanding the expiration of any applicable statute of limitations.

13. The State agrees to a global resolution of all potential regulatory, civil, and criminal actions that could arise from conduct described in the Statement of Admitted Facts and that except in the event of a willful and material breach of this Agreement by Western Union, the State will not pursue any investigation or prosecution of Western Union or any ofits current or former parents, subsidiaries, affiliates, successors, assigns, or related entities, or any of its or their curent or former directors, officers, or employees (collectively "Western Union Affiliates"), and will bring no criminal charges or civil claims and will take no regulatory action against Western Union or Western Union Affiliates, including any actions authorized by A.R.S. $$ 6-1201-1242 and1.3'2317,
relating to:
13.1 transactions or events described in or connected to the facts in t}te Statement of Admitted Facts;
13.2 transactions or events thatwerethe subject ofgrandjury subpoenas or other State of Arizona subpoenas with which Western Union has complied or complies between January 1,2009, and the termination of the Monitor's Engagement;
13.3 transactions or events thatwerethe subject of State of Arizona discovery requests or subpoenas with which Western Union has complied or complies in any existing civil action against the State that involves Westem Union transactions;
13.4 transactions or events that are the subject of disclosures made by Western Union pursuant to this A$eemenq and
13.5 transactions or events described in or connected to the facts in the State's submissions in Maricopa County Superior Court cases SW2006-002172, SW2006-022I3, or CV2006-018804.
The term "Western Union Affiliates" does not include Western Union authorized delegates or Agents. This paragraph does not prohibit the State from investigating or prosecuting, or from bringing civil claims or regulatory actions against, any Western Union authorized delegate or Agent or the employees of any such autlorized delegate or
Agent.
The State's agreement not to take "regulatory action" does not preclude examinations by
the Arizona Department of Financial Institutions ("DFI"). Western Union agrees that examinations may continue under t}te statutory examination process. DFI agrees that it will not pursue any appealable agency action or contested case. DFI will provide any
report of an examination of Western Union to the Attomey General and to Western Union. Western Union also agrees that the Monitor may freely provide inforrnation to DFI and that the Monitor may receive information from DFI except as restricted by the confi dentiality statutes relating to examination reports.

14. Should the State determine in its sole and reasonable discretion that Westem Union has committed a willful and material breach of any provision of this Agreement the State shall provide written notice to Western Union ofthe alleged breach and provide Westem Union with ten business days, or longer at the reasonable discretion ofthe State, in which to make a presentation to the State to demonstrate that no breach has occurred or, to the extent applicable, that the breach was not willful or material or has been cured. The parties hereto expressly understand and agree that should'Western Union fail to make a presentation to the State within such time period after receiving notice, the State rnay, in
its discretion, conclusively infer that Western Union is in willful and material breach of
this Agreement and invoke any remedy allowed for such a breach under this Agreement. The panies firther understand and agree that the State's exercise of discretion under this Agreement is not subject to review in any court, kibunal, or otherwise, outside of the
Arizona Attorney General's Offrce. In the event of a willful and material breach of this Agreement which results in any civil, criminal, or regrrlatory proceedings, the State's
claims may be premised upon any information provided by or on behalf of Western Union to the State at any time.
15. Westem Union and the State understand that this Agreement must be approved by the Court. Should the Court decline to approve this Agreement for any reason, the State and Westem Union are released from any.obligation imposed upon them by this Agreement and this Agreement shall be null and void-
16. Western Union shall transfer $21,000,000 to the Anti-Racketeering Revolving Fund established by A.R.S. $ 13-2314.01 for the benefit of the Arizona Attorney General's Office, the Arizona Department of Public Safety, and the Phoenix Police Departrnent for expenditure as permitted by A.R.S. $ 13-2314.01. Payments shall commence on the first banking day of the first calendar month after Western Union signs this Agreement with an initial payment of $3,000,000 and shall continue with payments of $3,000,000 per month thereafter until the full amount has been paid. Such payment constitutes compensation for the expenses the State has incurred to date in connection with its investigations of Westem Union and is the sole financial consideration for the State agreeing not to pursue any claims that could arise from conduct described in the Statement of Admitted Facts. No other amount paid by Western Union under this agreement is intended to be, nor shall it be construed as, payment for or a payment in lieu of a civil forfeiture, fine, or penalty-
17. Western Union and the State agree that:
17.1 Western Union shall provide to the State, promptly upon the issuance of an Arizona or federal subpoena, summons, court order, or other appropriate legal process, any relevant document, electronic data, or other object in its possession, custody, and/or control concerning matters relating to the State's or a Participating State's investigation of money laundering or other related criminal activity in the Southwest Border Area or to Western Union's compliance with any Arizona criminal or regulatory statute or wittr this

Agteement. In addition, Westem Union shall provide to any Participating State, as described in Paragraph 23.2.2, promptly upon the issuance of a subpoena under the authority of that state or a federal subpoena; suilrmons; court order; or other appropriate legal process, any relevant document, electronic data, or other object in its possession, custody, and/or control conceming matters relating to that Participating State's investigation of money laundering or other related criminal activity in the Southwest Border Area. Westem Union's obligation to provide data pursuant to this Agreement shall at all times be limited to data related to transactions that are sent from or received in the Southwest Border Area or such additional areas of a Participating State as that state requests in writing. Whenever such data is stored in electonic format in the ordinary course of Western Union's business Western Union shall provide access to such data and reasonable assistance in operating computer and other equipment as necessary to retrieve
and present the da1a.
I 17. I . Westem Union shall include the transaction data described in
Paragraph 32.5 of the Monitor Engagement Letter ("Monitor Engagement Letter" or "Engagement Letter"), a copy of which is attached hereto as Exhibit B, and which includes full transaction data relating to all person-to-person transactions sent to or from
authorized delegate/Agent locations within the Southwest Border Area from January l,
2005, to the present and throughout the term of the Monitor's Engagement involving transactions in amounts of $500 or more, in the material to be delivered to the State and the Participating States.
17.1.2 Western Union shall accept the Maricopa County Superior Court stipulation and order, attached hereto as Exhibit C and incorporated herein by this reference, appointing the Monitor and directing Westem Union to produce the data described in Paragraph 17,1 and produce that data to the Monitor and to the State without fruther subpoena or process, and, upon a written request of a Participating State, shall produce such data as may pertain to that state to that state without further subpoena or process.
17.1.3 Westem Union's obligation under this paragraph shall not include the obligation to provide materials or information covered by the attorney-client privilege or the work product doctrine, The State shall not consider Western Union's withholding of materials or information subject to the attorney-client privilege or the work product doctrine in determining whether Westem Union has fully cooperated with the State.
17.1.4 The State shall maintain the confidentiality of any materials or information provided by Western Union under this paragraph and shall not provide such material or information to any third party, except to the extent that disclosure is required by law, otherwise authorized by this Agreemenl or is in the proper discharge of or otherwise furthers the State's official duties or responsibilities. When the Arizona
Afforney General's Offrce's duties or responsibilities involve public presentation of
Westem Union data outside of a law enforcement, investigation, or training contexl the
6

Arizona Attorney General's Office will not attribute that data specifically to Western Union or will aggregate the datawith other money kansmitters' data.
17. 1. 5 Western Union agrees that nothing in this Agreement is intended to place
any condition or limitation on the Statels statutory or other legal authority to obtain records or information from Western Union. Western Union further agrees not to assert this Agreement or to assert the State's failure to comply with any aspect of this Agreement in response to any subpoena, administrative request, or other legal action to obtain records or information from Western Union. Western Union agrees that the State remains free to pursue any legal authority that the State may have to obtain records or information from Western Union without reference to this Agreement and without proving any fact or circumstance or presenting any information that it would not have been required to prove or present in the absence of this Agreement, in addition to and apart from any rights that the Arizona Attorney General or the State may have to obtain records or information under this Agreement.
17.2 Western Union shall, with respect to transactions that are sent from or received in the Southwest Border Area" in all material respects completely, futly, and timely comply with all legal, record keeping, and reporting obligations imposed on it by
applicable state law; by the Bank Secrecy Act, 3l U.S.C. $$ 531 I through 5330 ("BSA")
and the Bank Secrecy Act implementing regulations; and by the requirements of this Agreement including, but not limited to, its obligation to maintain its AML Program for the Southwest Border Area, as "Program" is defined in Paragraph 19, and implement additional Program measures recommended by the Monitor in the Southwest Border Area ("Recommendations"), as described in Paragraph 20 of the Monitor Engagement Letter, to the extent required by Paragraphs 18 through 22 andParagraph 26 of the Engagement Letter.
I7 .3 Western Union shall dismiss with prejudice its complaints in Western Union
Financial Services, Inc. v. Terry Goddard ex rel. State of Arizona, CV2006-018E04, and Western Unionv. Terry Goddard, CIV-06-02249-PHX SMM, within ten days of the execution of this Agreement. These dismissals with prejudice shall not prejudice any rights Western Union may have to challenge any Geographic Targeting Orders issued
after the filing of CV2006-018804 or any seizure warrant issued after the dismissal of CIV-06-02249-PHX SMM. Westem Union and the State will simultaneously dismiss with prejudice State of Arizona ex rel. Terry Goddard v. Western Union Firuncial
S e rv ice s, Inc., SW200 6 -0021 7 2.
17.4 Western Union shall withdraw its Motion to Quash Seizure Warrant in
SW2006-002213 and move to vacate the Superior Court Order Quashing September 21, 2006 Seizure Warrant and Preliminary Injunction and move to dismiss that action. The State shall release its seizure for forfeiture of all funds seized in SW2006-002213 immediately upon vacation of that Order and the granting of Western Union's motion to
dismiss the action. and witl not file a Petition for Certiorari in that matter. Western

Union and the State have agreed on forms of Stipulation and Order to submit to the coutt, which are included in Exhibit D hereto.
AML Compliance Program
18. The State and Western Union agree that an effective AML compliance program and a
strong partnership between government agencies and money services businesses should be informed by the principles described by the Financial Action Task Force in its Guidance on the Risk-Based Approach to Combating Money Laundering and Terrorist Financing ("FATF RBA Guidance").
19. Western Union agrees to commitment to full compliance with applicable state law and the Bank Secrecy Act and all of its implementing regulations with respect to the Southwest Border Area. Further, to comply with the BSA, A.R.S. $$ 6-1241 and 132317, and,this Agreemen! Western Union agrees to continue to adhere to Western Union's BSA/AML program measures now in existence or in the process of being implemented in the Southwest Border Area, as described in the Report, incorporated by this reference, consistent with the principles set forth in the FATF RBA Guidance relating to money services businesses, and to implement additional program measures recommended by an independent Monitor in the Southwest Border Area (the o'Recommendations") to the extent required in the Monitor Engagement Letter. The existing program for the Southwest Border Area described in the Report and the Recommendations particular to the Southwest Border Area required in the Implementation Plan created pursuant to the Monitor Engagement Letter ("Implementation Plan") will be collectively termed the "Program." To ensure that its Program for the Southwest Border Area adheres to the principles set forth in the FATF RBA Guidance, to its legal obligations, and to this Agreement, and to coordinate it with the independent actions of the remedial undertaking described in Paragraph 23, Western Union agrees to be overseen by an independent Monitor as described in Paragraphs 20 through22.
Independent Monitor
20. Athree-person committee created by the Attomey General for this pu{pose, including a Western Union representative designated by Western Union, will select an independent Monitor ("Monitor") by majority vote within sixty calendar days after the
signing of this Agreement. In the event the Monitor selected through this process was chosen over the objection of the Western Union appointee to the committee, Western Union may file a motion with the Court challenging the selection; provided, however, that the parties agree that: a) such motion may be granted only upon a finding that Westem Union has established by a preponderance of the evidence, that the person selected has demonstrated a bias against Western Union, the money transmitter industry, or its customers; b) the decision of the Court is final; c) the parties expressly waive any rights to appeal the Court's ruling; and d) the period of the Engagement of the Monitor as

set forth in Paragraph 22 shall be tolled for all time between the filing of such motion and
the final appointment of a Monitor. The committee will consider the qualifications of
candidates provided by Westem Union and by the Attorney General. The successful
candidate shall have no less than five years of personal AML compliance or related lawenforcement experience, but will have no prior employment with the Attomey General or
any other Arizona state agency.
The Monitor may not be removed from this Engagement except upon a motion by aparty with the Court; provided" however, thatthe parties agree that: a) such a motion will not be made unless the moving parry has first provided the Monitor written notice, setting for*r the alleged intentional malfeasance with reasonable specificity, and the Monitor has failed to cure such breach within thrry days after the Monitor received the notice; b) such motion may be granted only upon a finding that the moving party has established, by a preponderance of the evidence, that the Monitor has engaged in intentional malfeasance that is material to the Engagement and that cannot be corrected by any means short of removal; c) the decision of the Court is final; d) the parties expressly waive any rights to appeal the Court's ruling; and e) the period of the Engagement of the Monitor as set forth in Paragraph 22 shall be tolled fOr all time between the filing of such motion and the final appointment of a replacement Monitor.
Western Union and the State agree that neither the State nor any Western Union Affiliates will hire or enter into any conhact with or provide any remuneration to the Monitor for at least five years after the conclusion of this Agreement. Westem Union and the State also agree that no person employed by either of them during the term of this Agreement or for the five years preceding the date of this Agreement shall be eligible to
act as Monitor. If the Monitor resigns or is otherwise unable to firlfill the obligations of the Monitor, a replacement will be selected in the above manner.
21. The Monitor shall evaluate Western Union's compliance with its obligations under
this Agreement and the Engagement Letter, review and monitor the effectiveness of Western l-Inion's risk-based AML compliance Program for the Southwest Border Area,
and make such Recommendations as the Monitor believes may improve the Program, as provided in the Engagement Letter.
22. Western Union and the State agree that the period of Engagement of the Monitor shall end on the end of the forty-first month after the Agreement is fully executed, except that if, at any time after the end of the twenty-ninth month after the Agreement is fully executed,.the Monitor, in the Monitor's sole discretion, certifies that Westem Union is in full compliance with the terms of this Agreement and has implemented all of the Recommendations required in the Implementation Plan, and that continuation of the monitored Program is not in the public interest, the Monitor may terminate the
Engagement.
2953507

Fundins Remedial Undertaking
23. Westem Union agrees to implement Western Union's offer to finance a multi-state border-wide AML effor! the Program, and the Monitor (collectively referred to as the "Remedial Undertaking"), as follows :
23.1 Western Union shall create an account in the amount of $23,000,000 for non-law enforcement expenses associated with the enhancement of its AML Program for the Southwest Border Area and the Recommendations of the Monitor.
23.1.1 Westem Union shall transfer $4,000,000 from this account to the Clerk of the Maricopa County Superior Court within thrry dayg after it signs this Agreement, for use by the Monitor to firnd the Monitor's expenses. The Clerk shall deposit these funds in an interest-bearing account and shall credit all earned interest to *le
account. If this amount is insufficient to pay all reasonable expenses of the Monitor, Western Union will use up to a maximum of $2,000,000 of the balance of the account to fund the Monitor's expenses. If this is still insufficient to pay all reasonable expenses of
the Monitor, the Financial Crimes Task Force's account within the Anti-Racketeering Revolving Fund shall be responsible for any additional Monitor expenses. In the event that any money remains in this fund at the time of the termination of the Monitor's Engagement, the Clerk shall transfer the balance to the Anti-Racketeering Revolving Fund for the benefit of the Financial Crimes Task Force.
23.I.2 Western Union shall use the balance of the $23,000,000 to enhance the Program by funding Westem Union's implementation of the Monitor's
Recommendations or other monitor-approved Program enhancements from August l,
2009, forward; provided, howevet, that none of these sums may be applied to attomeys' fees, legal costs, or expenses. Western Union shall provide the Monitor with an accounting of these expenditures and with full access to its records to verify that Westem Union has used the funds for that purpose. In the event that this amount is insufficient to fund the implementation of the Monitor's Recommendations, Western Union shall be
responsible for any additional expenses of the Program. I{ at the time of the termination
of the Monitor's Engagement, the Monitor determines that Westem Union has spent less than the $23,000,000 originally placed into the account (including all sums paid to the Monitor pursuant to Paragraph 23.1.1), Westem Union shall transfer the unspent balance to the Anti-Racketeering Revolving Fund for the benefit of the Financial Crimes Task
Force.
23.2 In addition, in recognition of the fact that the problems associated with criminal activity in the Southwest Border Area are regional in nature and require cooperation between law enforcement autlorities in the four U.S./Nfexico border states, and in order to firrtler the mutual interests of Western Union, the State, and the other U.S. border states, Western Union agrees to transfer $50,000,000 to the State Center, a 501(c)(3) entity, to estabtish a Southwest Border Anti-Money Laundering Alliance Fund

10

2953507

(the "Alliance Fund") to make grants to law enforcement organizations to combat money laundering and related criminal activity in the Southwest Border Area. The State shall enter into an alliance, to be known as the Southwest Border Anti-Money Laundering Alliance ("Alliance") that shall include the State of Arizon4 and, at the election ofthe Attorney General of each State, may also include the States or the Attorneys General's Offices of California, New Mexico, and Texas.
23.2.1 T\e Alliance will recommend distributions from the Alliance Fund
for investigations and prosecutions in the Southwest Border Area and related expenses with the goal of reducing money laundering and related criminal activity.
23.2.2 The parties contemplate that Arizona and the Participating States
will draft and enter into a separate agreement setting up the internal frrnctions and
operations of the Southwest Border Anti-Money Laundering Alliance (the "Alliance Goveming Agreement"), under which they agree to act with regard to the State Center only pursuantto the direction of an Executive Board to an Authorized Representative State, and subject to the terms of that Governing Agreement. Payments by Western Union under this paragraph shall commence on the first banking day of the first calendar month after such agreement has been signed with an initial payment of $ 10,000,000, and shall continue with payments of $5,000,000 per month thereafter until the full amount has been paid. U.S. States in the Southwest Border Area other than Arizona will become Participating States ('?articipating States") by signing the Alliance Governing Agreemenl.
23.2.3 AParticipating State acquires no rights or obligations enforceable under this Agreement and shall have no authority to declare a breach of this Agreement.
23.2.4 The State makes no representations regarding states' willingness to become Participating States, and whether states do or not is not part of the consideration supporting this Agreement.
Continuins Obligation to Make Pavments
24. lnthe event the State asserts a breach of this Agreement by Western Union" Western Union shall continue to make the payments described in Paragraphs 16 and 23 until such time that the State files a civil or regulatory action or obtains an indictrnent. No firnds transferred by Western Union shall be refunded to Western Union under any circumstances, including in the event of a breach or asserted breach.
Miscellaneous Provisions
25. Any notice to Western Union under this Agreement shall be in writing and shall be given by personal delivery, ovemight delivery by a recognized delivery service or registered or certified mail, in each case addressed to David Schlapbach, Executive Vice

President and General Counsel, Western Union, 100 Summit Avenue, Montvale, NJ 07645, with a copy to Arizonasettlement@westernunion.com. Notice shall be effective upon actual receipt by Westem Union.
26. Any notice to the State under this Agreement shall be in writing and shall be given
by personal delivery, overnight delivery by a recognized delivery service, or registered or certified mail, in each case addressed to the Attomey General and to the Chief of the Criminal Division for the Attorney General's Office, 1275 West Washington Street,
Phoenix, AZ 85007-2926 . Notice shall be effective upon actual receipt by the State.
27. Western Union agrees that if Westem Union's business operations are sold, whether by sale of stoclq merger, consolidation., sale of a significant portion of its assets, or other
form of business combination, or otherwise undergoes a direct or indirect change of
control within the term of this Agreement, Western Union shall include in any contract
embodying such action a provision binding the purchaser/successor to the obligations of
this Agreement.
28. It is understood that this Agreement is binding on Western Union and the State, its agencies, and its suMivisions, including the Arizona Attorney General's Office and tlre Arizona Department of Financial Institutions. This Agreement specifically does not bind any federal agencies or any other state's authorities. The State agrees to bring the cooperation of Western Union and its compliance with its other obligations under this Agreement to the attention of any federal, state, or local prosecuting offices or regulatory agencies, if requested by Westem Union.
29. Western Union and the State agree that, upon acceptance by the Court, this Agreement will be publicly filed in the Superior Court for Maricopa County as an exhibit to an Application for Order Approving Settlement and Appointing Monitor filed jointly
by the parties.
30. This Agreement sets forth all the terms of the Agreement between Westem Union and the State. No modifications or additions shall be valid unless expressly set forth in writing and signed by the State, \Mestem Union's attomeys, and a duly authorized representative of Westem Union. This Agreement supersedes any prior promises, agreements, or conditions between Westem Union and the State.
Acknowledgements:
I, David Schlapbach, the duly authorized representative of Western Union Financial Services, Inc., hereby expressly acknowledge the following:
(l) that I have read this entire Agreement; (2) that I have had an opportunity to discuss this Agreement fully and freely with
Western Union Financial Services. Inc.'s outside attomeys:
t2

(3) that Westem Union Financial Services, Inc. fully and completely understands each
and every one of the terms of the Agreement; (4) that the Board of Directors of Western Union Financial Services, Inc. has adopted a resolution reflecting that understanding, a copy of which has been provided to the State; (5) that Westem Union Financial Services, Inc. is fully satisfied with the advice and representation provided to it by its attomeys; and (6) that Westem Union Financial Services, lnc. has signed this Agreement voluntarily.

Western Unioh Financial Seryices. Inc.

DATE:

General Counsel for Westem Union Financial Services. Inc.

The undersigned are outside counsel for Western Union Financial Services, Inc. In connection with such representation, we acknowledge that:
(1) we have discussed this Agreement with our client; and
@ we believe our client completely understands all of the Agreement's terms.
DATE:

lan l.ri'etidr tlttt" hfi,

Osborn Maledon PAu

Keker and Van Nest,'LL

Attorneys for Western Union Financial Services. Inc.

On Behalf of the STATE OF ARIZONA

T

Camerbh H. Holmes Senior Litigation Counsel Financial Remedies Section Criminal Division
tItJ

2953507

EXHIBIT A

Statement of Admitfed Facts
l. Western Union Financial Services, Inc. ("Western Union") is licensed to do business
in Arizona and elsewhere as a money transmitter, also known as a money service business. Westem Union conducts its business through "Agents," referred to as authorized delegates in Arizona. See A.R.S. $$ 6-1201(l) and 6-1218. In some forergn countries, such as Mexico, Westem Union's Agents enter into agreements with additional locations (sometimes referred to as subagents) entitling the subagents to offer Westem Union services to the public.

2. Westem Union has specific duties imposed by federal and state law to develop,
implement andmaintain an effective anti-money launderingprogram andto comply with
various record keeping and reporting requirements ttrat are designed to assist gover::mental agencies in detecting and preventing money larmdering.

3. An effective anti-money laundering prograrn is, in pmt one that is reasonably
designedto preventthe money service business from beingusedto facilitate money laundering
(recognizing that any reasonably applied controls, including controls implemented as a result of a reasonably implemented risk-based approaclr, will not identifi and detect all instances of
money laundering).

4. Between 2003 and 2007, Western Union had data and other information
available to it, which, when viewed as a whole, gave Western Union reason to know that one or more persons employed at the authorized delegate locations in Arizona referred to in paragraph 5 below, and at the locatiors referred to in paragraph 7 below, while acting within the scope oftheir employment and motivated at least in part to benefit Westem Union, were knowingly engaged in a pattem of money laundering violations that facilitated human
smuggling from Mexico into the United States throughArizona-

5. From 2003-2005 the Western Union payouts at the eight Arizona locations listed

below totaled $176,735,000 in wires of $500 or more sent to the location from one of the 29 States that were the most frequent destinations for persons being smuggled from Mexico into the United States tluough Arizona. These amounts include both legal and illegal transactions.

LocationA $34,825,000

LocationB $28,706,000

C Location

$28,428,000

LocationD $18,892,000

E Location

$18,702,000

F Location

$16,567,000

G Location

$i5,507,000

LocationH $15,108,000

6. Beginning in 2006, V/estem Union limited money transfer transactions into Arizona
to a maximum of $450. Because smuggling into the United States through Arizona continued, smugglers had their payments wired to otler places outside the United States.

7. From 2005-2007, Westem Union payouts at the following eight locations outside
the United States totaled 8142,446,A00 in wires of $500 or more sent to the location from one of the 29 States that were tle most frequent destinations for persons being smuggled into the

United States through Arizona. These amounts include both legal and illegal transactions.

Location I Location J Location K Location L

$36,200,000 $20,666,000 $20,069,000 $19,872,000

LocationM $18,141,000

LocationN $14,654,000

O Location

$ 6,664,000

P Location

$ 6,180,000

EXHIBIT B

MONITOR ENGAGEMENT LETTER
This Monitor Engagement Letter sets out the pu{pose and scope of the engagement of Marcy M. Forman, or such corporate entity that she may choose to create for this pulpose, as court-appointed Monitor ("Monitor") for the ongoing evaluation of the Southwest Border Area anti-money laundering Program of Western Union Financial Services, Inc. ("Westem Union") pursuant to that certain Settlement Agreement between Westem Union and the State of Arizona ("State") dated February 11, 2010 ("Agreement"). The actions of the Monitor under this Letter shall be referred to as the "Engagement." The provisions of this Monitor Engagement Letter regarding the Monitor's authority and duties are to be broadly construed to give the Monitor independence of the parties and discretion in carrying out the Engagemen! and to effectuate the goal of this engagement, namely, confirmation that Westem Union has implemented the Recommendations required under this Monitor Engagement Letter and that Westem Union's Program is reasonably designed and executed to detect and prevent money laundering in the Southwest Border Area.
Background
1. Western Union offers money transfer services in over 200 countries. Accordingly,
Western Union has a large and complex Bank Secrecy Act ("BSA") anti-money laundering ("AML") compliance program that spans all of its locations, including those in the Southwest Border Area as defined in the Agreement. The Southwest Border Area is the sole geographic focus of this Engagement, and references herein to the Program, as defined in Paragraph 2, refer to Western Union's AML program in the Southwest Border Area, as such program may be modified or enhanced as described herein.
2. Prior to the execution of the Agreement, Western Union provided to the State a May
8, 2009 report by an independent consulting firm evaluating Western Union's present AML program ("Report'). The Report made a number of recommendations that the
consulting firm believes will further enhance Westem Union's AML program. As set forth in the Agreement, Westem Union has agreed to maintain its AML program for the
Southwest Border Area and to implement in the Southwest Border Area additional program measures recommended by a Monitor ("Recommendations") to the extent required in this Monitor Engagement Letter. The existing pro$am for the Southwest Border Area described in the Report and the Recommendations particular to the Southwest Border Area required in the Implementation Plan created pursuant to this Monitor
Engagement Letter will be termed the'?rogram." To ensure that its Program adheres to
the principles enunciated in the Financial Action Task Force Risk-Based Approach to Combating Money Laundering and Terrorist Financing (*FATF RBA Guidance"), to its legal obligations, to the Agreement, and to this Monitor Engagement Letter, Westem Union has agreed to be overseen by an independent Monitor for a flexible period of time ending between the end of the twenty-ninth month after the Agreement is fully executed and the end of the forty-first month after the Agreement is fully executed.

General Provisions
3. Hirins Authoritv and Comnensation. The Monitor shall have the authority to
employ or contract for the services of persomel, including but not limited to legal counsel, consultants, investigators, and experts, that the Monitor deems reasonably necessary to assist in the proper discharge of the Monitor's duties as specified herein. Westem Union and the State shall have the opportunity to perform routine conflicts checks on individuals or entities the Monitor proposes to engage and, within two weeks, shall advise the Monitor
if any conflicts exist. The Monitor shall not engage any individual or entity as to which Western Union or the State reasonably believes a conflict of interest exists and provides a statement of reasons to that effect. Furthermore, because t}te number of firms capable of providing audit services to Western Union is severely limited, the Monitor shall not employ Emst and Young, KPMG, Deloitte LLP, or PricewaterhouseCoopers without the written consent of Westem Union. The reasonable compensation and expenses of the Monitor, and any persons hired or engaged by the Monitor pursuant to his or her authority under the Agreement and this Monitor Engagement Letter, shall be paid through an account as ordered by the Maricopa County Superior Court ("Court"). The Monitor shall be compensated in accordance with his or her typical hourly rate or a reasonable fee determined by the Monitor and approved by the Court, and shall proceed as described in this Court's Appoinhnent Order. The Monitor may hire or engage personnel at their respective typical hourly rates or a reasonable fee determined by the Monitor. The Monitor and Monitor's staff shall be entitled to reimbursement for travel expenses (including airfare, car rental, hotels and meals) at their actual cost. The Monitor will ensure that
travel is undertaken at reasonable facilities that are not more expensive for nongovemment employees than facilities customary to career government employees traveling on official business. The Monitor may also procure insurance reasonably necessary to protect the Monitor and all persons whom the Monitor shall engage from risks ordinarily insured against by professional service providers. Premiums associated with such insurance shall be reimbursed at their actual cost.
4. No Affiliation. The Monitor is not, and shall not be treated for any pu4)ose as, an
officer, employee, agent, or affiliate of Western Union or the State. The Monitor shall not owe any fiduciary duties or other duties or obligations of any kind to Western Union's directors, officers, employees, shareholders, bondholders, or creditors, or to the State. Neither Westem Union or its Affiliates, as defined in the Agreement, nor the State shall cause any personal benefit to the Monitor during the Monitor's Engagement or for a period of five years commencing on the last day of the Monitor's Engagement, by employrnent, engagement, gift, or otherwise. Western Union, its Affiliates and the State shall not
employ or engage any entity or individual hired or engaged by the Monitor to fulfill its
responsibilities during the Monitor's Engagement, either directly or indirectly, for a period of five years, commencing on the date that the entity's or individual's engagement commences, unless the other party agrees in writing, The Monitor shall not employ any person who has been an employee of the Arizona Attorney General's Office within the past five years, or who has provided testimony, affidavits or otherwise participated
2953513

substantively in litigation against Westem Union. At tlre conclusion of the Monitor's Engagement any equipment or other property purchased by the Monitor shall become the properfy of the State, provided that any data or other information contained on any such
equipment shall be subject to the provisions of Paragraph 9.
5. No Attornev-Client Relationshin. The Monitor shall be independent of Western
Union and the State, and no attorney-client relationship shall be formed between them, Westem Union shall not claim any work product privilege as to documents created by the Monitor or by any agents of the Monitor.
6. Indemnilication. Western Union shall provide an appropriate indemnification
agreement to the Monitor with respect to any claims arising out of the performance of the Monitor's duties by the Monitor or by any person employed or engaged by the Monitor in the course of the Monitor's performance hereunder.
7. No Defense Premised on Monitor's Findings. Western Union agrees that the
Monitor's findings do not constitute a defense to any action that the State may elect to bring against Western Union, as permitted by the Agreement.
8. Cooperation. Westem Union shall direct its directors, officers, employees, agents,
and consultants to cooperate with the Monitor in the execution of his or her duties. If, in the Monitor's judgment a director, officer, employee, agent, or consultant of Western Union fails to cooperate with the Monitor, the Monitor shall notifr Western Union and the State. The Monitor may evaluate Western Union's response to the uncooperative party in evaluating Westem Union's cooperation under the Agteement. Further, Western Union agrees that any director, officer, employee, agent, or consultant may communicate with the Monitor directly and that no director, officer, employee, agent, or consultant shall be penalized in any way for providing information to the Monitor. Any director, officer, employee, agent, or consultant communicating with the Monitor may request that the Monitor keep confidential from Westem Union the fact and substance of their communication, and the Monitor shall comply with any such request.
9. Confidentialitv. During the course of the Engagement the Monitor may have
access to or receive Western Union proprietary information or trade secrets that are not otherwise in the public domain tlrough no breach by Monitor of this Letter ("Confidential Information"). The Monitor agrees not to disclose any Confidential Information to anyone other than the Court or the State to carry out the terms of the Engagement. The Monitor also agrees to ensure that any party whom the Monitor engages hereunder shall agree to the
same restriction. Within thirty (30) days after the termination of the Engagement, tle
Monitor and any party whom the Monitor engages hereundei shall retum to Western Union all documents received from Western Union or containing any Confidential Information or confirm to Western Union in writing that all such documents have been destroyed. This Monitor Engagement Letter does not require any law enforcement agency or prosecutor's office or person employed or engaged by them to retum or destroy any document or
2953513

information. The State shall maintain the confidentiality of any materials or information provided by Western Union under this paragraph and shall not provide such material or information to any third party, except to the extent that disclosure is required by law, otherwise authorized by this Agreement, or is in the proper discharge of or otherwise furthers the State's official duties or responsibilities.
Monitor's Terms of Enqaqement
10. Core Functions. The Monitor will perform four core functions:
10.1 open and maintain an account for the receipt of payments from Western
Union via the clerk of the Court and for the payment and accounting for all Monitor
expenses;
10.2 assemble and direct a staff of personnel that the Monitor deems reasonably
necessary to assist in the proper discharge of the Monitor's duties;
10.3 determine whether Western Union is in compliance with the terms of the
Agreement and this Monitor Engagement Letter and submit an knplementation Plan; progress reports for each six-month period beginning after the Monitor submits the Implementation Plan, and in each six-month period thereafter until the end of the forty-first month after the Agreement is fully executed, or until this Engagement is terminated early as provided in the Agreement; and a final evaluation in a Final Report; and
10.4 include in each report a detailed financial accounting of all of the Monitor's
activities and expenses to date and of all Western Union expenses beginning August 1, 2009 that the Monitor has determined were made to implement the Recommendations or to enhance the Program, as described in Paragraphz3.l.z of the Agreement.
11. Work Plan. Within ninety (90) days after the commencement of the Monitor's
Engagement, the Monitor shall prepare a written work plan. To conduct an effective initial review, the Monitor's initial work plan shall include such steps as are necessary to develop an understanding of the facts and circumstances surrounding the Program, including a review and verification of the Risk Assessment, as defined in Paragraph 14, and the transaction data that reflects these facts and circumstances. The Monitor shall submit the work plan to the State and Western Union for review. If Westem Union or the State objects to any part of the work plan, the Monitor, Western Union, and the State shall use best efforts to reach a resolution agreeable to all parties, but the State shall, in its sole
discretion, determine the matter.
lZ. The Monitor shall provide all work plans, the Implementation Plan, periodic
reports, the Final Report, and any other reports to Westem Union and to the State.
29s3513

13. Initial Review. In connection with the Monitor's responsibility to detetmine
whether the Program is generally effective in detecting, deterring, and preventing money laundering and to evaluate Westem Union's preparation to implement the Recommendations described in this Monitor Engagement Letter, the Monitor shall conduct an initial review and prepare an Implementation Plan evaluating the areas described below.
14. Risk Assessment. A comprehensive risk assessment is the foundation of the risk-
based compliance program described in the FATF RBA Guidance. Within thirty (30) days
after the cofirmencement of the Engagement, Western Union will provide the Monitor with
a risk assessment ("Risk Assessment") for the Southwest Border Area that identifies geographic areas, Agents (as defined in the Agreement), consumers, transactions, products, services, and points of consumer interaction that are most susceptible to money laundering
activities, and will identify any transaction data upon which any portion of the risk assessment is based. The Risk Assessment will compare transaction data relating to locations at different parts of the Southwest Border Area to identifr similarities and differences and to examine changes over time to better identiff potential money laundering
pattems that span the area or move from one part of it to another in response to changing circumstances. Western Union will update the Risk Assessment as necessary throughout the Engagement, including but not limited to at the request of the Monitor, to adfuess
changes in these risks. Its updates will also identif any transaction data upon which any
portion of the Risk Assessment is based and show changes, trend lines, and specific
examples. The Monitor's evaluation of the Risk Assessment will also be conducted on a
regular basis throughout the Engagement.
15. The Monitor shall regularly evaluate, using the FATF RBA Guidance, the Risk
Assessment to determine whether it identifies products, services, geographic locations, transactions, categories of consumers, and points of consumer interaction, including Agent
locations that are most susceptible to money laundering activities in the Southwest Border
Area. The Monitor's evaluation will regularly monitor and compare transaction data from
the entire Southwest Border Area to track changes and predict further or future changes. In evaluating the Risk Assessmen! the Monitor shall take into account whether Westem Union has considered the nature, scale, and complexity of its business; the initial and ongoing due diligence or monitoring conducted on its Agents; its distribution channels; its consumer, product, and activity profile; the capabilities of its electronic monitoring
systems; and the volume and size of hansactions. The Monitor will test Western Union's
comparisons of transaction data relating to locations in different parts of the Southwest Border Area to evaluate and assess the Risk Assessment's identification of similarities and differences and to confirm changes over time that may be related to potential money laundering pattems. The Monitor shall also evaluate whether Western Union has reasonably incorporated in the Risk Assessment the risk categories identified in the FATF RBA Guidance and in this Monitor Engagement Letter. In addition, the Monitor shall evaluate Western Union's policies and procedures for updating the Risk Assessment, in particular the strength of the connection between the process for updating the Risk Assessment and the transaction data and the degree to which the Risk Assessment reflects
29s3slj

larger trends and activities across the entire Southwest Border Area and not limited to smaller geographical subsets of that area. The Monitor shall work with Western Union's risk assessment personnel to establish an organic and flexible approach to regular risk assessment that is firmly founded on transaction data relating to the entire Southwest Border Area and therefore highly responsive to changes in the risk circumstances.
16. Evaluation of Program Functions. Giving regard to the principles enunciated in
the FATF RBA Guidelines and the provisions of this Monitor Engagement Letter, and the Risk Assessment for the Southwest Border Area as reflected in Western Union's and the Monitor's analysis of the transaction data, the Monitor's evaluation of Western Union's Program shall consider Western Union's preparation to implement the Recommendations described in this Monitor Engagement Letter and whether the Program:
16.1 provides for adequate oversight and controls of Agents, consumers,
transactions, products, services, and geographic areas that are more vulnerable to abuse by money launderers and other criminals;
16.2 provides for regular review of the risk assessment and risk management
processes;
16.3 designates adequate personnel responsible for managing an effective risk-
based AML compliance program;
16.4 ensures that adequate controls are in place before a new product or service is
offered;
16.5 contains charurels for informing senior management of compliance
initiatives, compliance deficiencies, corrective actions, and filing of suspicious activity
reports;
16.6 provides for program continuity despite changes in corporate structure or
personnel;
16.7 meets all applicable regulatory record keeping and reporting requirements
and provides charurels for informing personnel of changes in legal requirements;
16.8 implements risk-based policies, procedures, and processes as appropriate;
16.9 provides for adequate supervision of Western Union personnel who handle
transactions, complete reports, grant exemptions, monitor for suspicious activity, or participate in any other way in Western Union's Program;
16.10 provides for periodic internal evaluations of whether Western Union personnel are adhering to written AML policies, procedures, and processes;
29s3513

I 16.1 incorporates AML compliance into job descriptions and performance
evaluations of appropriate personnel;
16.12 provides for appropriate initial and refreshertraining to be given to
appropriate personnel;
16.13 provides for appropriate initial and refresher kaining for Agents to be given at appropriate intervals;
16.14 provides for on-site and AML compliance reviews and mystery shopping of
Agents when appropriate, and
16.15 ensures that AML compliance personnel are involved in all final decisions regarding disciplinary actions taken against Agents if such action includes probation,
suspension, or termination.
17. Evaluation of Prosram Intesritv. The Monitor shall evaluate the integrity of
Westem Union's Program based on the principles enunciated in the FATF RBA Guidance, other appropriate industry standards, the Report, and this Monitor Engagement Letter. The Monitor's initial evaluation of the Program's integrity shall consider Western Union's preparation to implement the measures described in this Monitor Engagement Letter and
whether:
17.l Western Union designates an individual or individuals at the executive level
with responsibility for the Program, provides such individual(s) with appropriate reporting
lines within the corporate structure and sufficient access to Western Union's Board of
Directors and senior management, and allots adequate resources and authority to such individual(s) to ensure compliance with Western Union's legal obligations, the Agreement, and this Monitor Engagement Letter;
.2 I7 senior management makes reasonable efforts to create a culture of
compliance within Western Union to encourage personnel at all levels to adhere to AML
policies, procedures, and processes; and
17.3 Western Union employs sufficient numbers of AML compliance personnel,
including personnel with direct oversight of Agents and personnel assigned to analysis functions, particularly transaction data analysis.
Implementation Plan.
18. The Monitor shall issue a written Implementation Plan within one hundred eighty (180) days after the commencement of the Monitor's Engagement setting forth the Monitor's evaluation and makins such Recommendations as are reasonably designed to
2953s13

implement or improve the Program. The Monitor may extend the time period for issuance of the Implementation Plan with prior written approval of the State and Western Union.
19. The Implementation Plan shall describe the Monitor's evaluation of Western
Union's performance in the areas described herein. The report shall include the Monitor's methodology, transaction data and other information relied upon, and the basis for evaluation, The Monitor shall formulate his or her conclusions and Recommendations based on, among other things:
19.1 review of documents as the Monitor deems necessary, including all the
policies and procedures relating to the Program, the Report, and the documents and materials cited in the Report;
19.2 meetings with and interviews of employees, officers, and directors of
Western Union, and any other relevant persons, including representatives of the State, as the Monitor deems necessarv:
19.3 on-site observation of Westem Union' risk assessment and management
systems;
19.4 analyses of transaction data; studies of long-term and short-term border-wide
trends, changes, and comparisons based on the transaction data; and testing ofthe
Program; and
19.5 consideration of any written submissions from the State or from Westem
Union specifically directed to the Monitor (with a copy to the other party) for the purpose of being considered for the Monitor's Implementation Plan.
20. Identification of Prosram Recommendations. In formulating Recommendations
for the Implementation Plan, the Monitor may consider any additional measures he or she deems worthy of evaluation, and shall:
20.1 consider all measures mentioned in the Report, whether mentioned as
recommendations or otherwise; all measures listed in Paragraph 23 or 24; and all measures suggested by Westem Union, whether Western Union suggests the measure as an addition to the above measures of as a potential substitution for any of the above measures designed to accomplish the same or similar purpose in a way or by a method more acceptable to
Western Union. For each such measure in Paragraph 23, the Monitor shall either accept it as a Recommendation or provide reasons not to do so, and shall provide some estimate of
the cost of its implementation in the Southwest Border Area;
20.2 consider and, as the Monitor deems necessary, solicit and accept input from
Western Union, from the State, and from the Alliance-Appointed Stafl of the Southwest Border Anti-Money Laundering Alliance. The Monitor shall conduct his or her inquiries
2951513

regarding the evaluation of potential Recommendations in an open and transparent process, working in collaboration with Western Union, the State, and the Alliance-Appointed Staff. In order to place the Participating States in a position to provide optimal consultation to the
Monitor and improve the quality of the Program, the Monitor will provide the Alliance-
Appointed Staff with information derived from the access described in Paragraph 32 and Western Union transaction data, including the data described in Paragraph 32.5, in the event that the Alliance-Appointed Staff has not obtained it independently.
20.3 with respect to any Recommendation the Monitor intends to include in its
Implementation Plan, consider costs, reasonable alternatives, and technical and other feasibility, in addition to potential benefits;
20.4 in the Implementation Plan, set forth why each Recommendation is
potentially attainable and reasonably designed to implement or improve the Program and the Monitor's considerations relating to cost, feasibility, and expected benefit;
70.5 in the Implementation Plan, set forth for each Recommendation, to the extent
practicable in the context of that Recommendation:
20.5.1 the specific action(s) to be taken by Western Union;
20.5.2 any measurable outcomes, to the extent possible in the form of
transaction data, that are expected or required;
20.5.3 any measurable outcomes that will provide a useful gauge to evaluate
the value of continued implementation of the Recommendation or its discontinuation in the event that it is not achieving desirable results;
20.5.4 the time frame or mileposts relevant to its implementation, evaluation of success, or discontinuation, particularly referring to the timing of expected
changes in transaction data that would indicate continuation or discontinuation.
21. If after participating in the Recommendation identification process and reviewing
the specifics of the Monitor's Recommendations in the Implementation Plan, Western Union believes that any Recommendation in the Implementation Plan is not feasible or is unreasonably costly in relation to the expected benefit, or that the benefit identified by the Monitor as the expected benefit is unlikely, Westem Union may make a presentation, within thirty (30) days of receiving the implementation plan. The presentation shall
include all of the following or state in writing that the requirement is not applicable. If
Westem Union makes such a presentation, its obligation to begin implementation of the
Recommendation at issue, if any, will be delayed until the matter is resolved pursuant to
Pnagraph22:
29535r3

2l.l provide to the Monitor and the State a written explanation of the reason for
its objection to the Monitor's Recommendation;
21.2 propose in writing to the Monitor and the State an altemative policy,
procedure or system desigrred to achieve the same objective or pu4)ose, explaining why its alternative is preferable and the factual basis for this belief;
2I.3 provide to the Monitor and the State transaction data to support its assertions
and any other factual materials it believes support its objections or position; and
21.4 point out additional transaction data or materials that could be assembled or
analysis that could be performed that it believes would support its position and/or suggest delay in the implementation of the Recommendation until such fransaction data or materials can be assembled and evaluated or such analysis can be performed.
22. Upon a presentation as described in Paragraph 21 with respect to any
Recommendation, Westem Union and the Monitor shall, for no more than thirty (30) days, make best efforts to reach an agreement on the Recommendation and/or the proposed
altemative, if any, or upon a method by which the efficacy of the Recommendation and/or
any proposed alternative may be tested, such as by analysis of additional or different transaction data. Such agreement may include (i) the Monitor deleting the Recommendation from the Implementation Plan, (ii) the Monitor modifying the Recommendation, or (iii) the Monitor replacing the Recommendation with an altemative
Recommendation. If Westem Union and the Monitor are unable to agree on the
Recommendation or an altemative proposal within such time, Westem Union shall submit the issue and supporting documentation in writing to the State within forty (40) days after
'Western Union's presentation pursuant to Paragraph 2l.The State and Western Union
shall make best efforts to reach an agreement. The State and Western Union may seek and consider the opinions of Attorneys General of other U.S. states in the Southwest Border
Area as part of this process. If the State agrees with the Monitor that the Recommendation
if is appropriate, after the State hears and considers Westem Union's objections and,
solicited and provided, the opinions of Attomeys General of other U.S. states in the
Southwest Border Area, the Monitor will continue to include the Recommendation as part ofthe Implementation Plan. If the State agrees with Westem Union that the particular Recommendation is inappropriate, in whole or in part, the Recommendation will be deleted from the Monitor's Recommendations or will continue to be included only as modifred by
agreement between the State, in consultation with the Attorneys General of the affected states, and Westem Union.
Presumed Proqram Measures
23. The following measures will become Recommendations unless the Monitor, with
input from Western Union and the State, determines that it is not technically feasible or would not improve the Program:

10

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23.1 Western Union's ExistingMeasures. As described in the Report,
Western Union presently maintains or is in the process of implementing a BSA/AML program that addresses organizational structure and governance, Agent selection and haining, Agent monitoring and response, a transaction monitoring program, and a Suspicious Activity Report ("SAR") reporting program, among other things. As part of its AML program, Western Union has been focusing extensive efforts on the Southwest Border Area in order to address specific risks associated with illegal activity in that geographic region, such as cross-border drug trafficking and human smuggling from Mexico into the United States. These include potential use of Western Union services by human smugglers ("coyotes") to obtain pa)4rnent from sponsors of persons being smuggled illegally into the United States. These efforts extend to all U.S. and Mexican states on both sides of the border, and particularly to the Southwest Border Area. These efforts include:
23.1.1 enhancing transaction monitoring (through the implementation of a new automated transaction monitoring application).
23.I.2 developing the ability to aggregate consumer transactions to identify unusual activity on a real-time basis (through its Real Time Risk Assessment initiative).
23.1.3 providing more resources, guidance, and compliance-related materials (such as AML training tools) to its Agents through the deployment of an enhanced Web site.
23 . 1 .4 continuing to acknowledge that "Westem Union's AML Program must include procedures for conducting reasonable, risk-based due diligence on potential and
existing foreign Agents and counterparties to help ensure that such foreign agents and counterparties are not themselves complicit in illegal activity involving its products and
services, and that the foreign agent or foreign counterparty has appropriate AML controls in place to guard against the abuse of the MSB's products and services," to enforce due diligence in that regard, and to monitor foreign Agents to "help ensure that the foreigt Agents are not themselves complicit in illegal activity involving Westem Union's products and services and the foreign Agents' customers, employees, or contractors axe not able to
abuse such products and services," as described in the Report.
23.1.5 implementing Transaction Risk Index (*TR[") model variables and formulas (specifically in the way some factors are weighted to impact the o-verall TRI risk score) to more shategically mitigate the risks associated with certain geographies (e.g., Arizona) and "red flags" such as structuring, sharing of consumer identifuing information, high volume, high frequency, and SARs filed by Western Union on transactions facilitated by/through
the Agent.
23.1.6 enhancing existing disciplinary procedures to include more concrete metrics designed to limit discretion/subjectivity in the disciplinary process.
2953513

23.1.7 addins scenarios customized to transactions facilitated in the Southwest Border Area to the interdiction decision matrix.
23.1.8 developing, to the extent reasonably feasible, Real Time Risk Assessment
that will provide the ability to block noncompliant transactions before they are processed, so that when a transaction violates established business rules, a "pop-up screen" will immediately noti$ the Agent that the transaction cannot be completed.
23.1.9 implementing "Galactic ID" (aggregated identity component bits) designed to assign consumers with unique identification numbers according to the identiffing
information provided by the consumer.
23.1.10 monitoring transaction data involving all transactions (i.e., starting at $.01), fed into WireWatch+ and sorted by Consumer, through the creation of "Affinities."
23.l.ll developing an enhanced application to monitor transactions using new,
easier to update and modifu technology to allow Westem Union to more efficiently tune the software and create rules desigrred to detect new money laundering pattems as they are identified, and to balance risk better by prioritizing suspicious activity by risk level.
23.2 Presently Planned or Considered Measures. In addition to the above
measures, Western Union either now plans to implement, or the Report identified, a number of potential improvements or enhancements as worthy of consideration. Each such potential improvement or enhancement is included by this reference.
24. Additional Southwest Border Area Measures. In addition to the above
measlues, to the extent that they are not included above, the Monitor may, in the Monitor's discretion, make any of the following measures with regard to Southwest Border Area activities and Agents Recommendations, whether or not Westem Union has been implementing them in the past or has plans to do so:
24.1 providing sufficient security for on-site reviewers so that no Agent location
is exempted from on-site review by security concems.
24.2 Making direct inquiries into whether a transaction is being conducted on
behalfofanotherperson in states and fortransactions inwhich state law calls for identification ofpersons on whose behalfthe transaction is being conducted, such as Arizona, and taking reasonable measures to veri$ the identity of any such person.
24.3 building into its ARMOR and WireWatch+ tools consideration of some or all
the following as risk factors, in addition to other risk factors: seasonal pattems consistent with criminal proceeds, e.g., marijuana growing season, seasonal illegal immigration; send-to-receive ratio that is not consistent with other Agents in the locale or is consistent with participation in criminal activity; seasonal business fluctuation that is not consistent

t2

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with other Agents in the locale or is consistent with participation in criminal activity; ratio
of questionable or anomalous customers to customers who are not in such groups is out of
the norm for comparable locations; ratio of questionable or anomalous hansactions to transactions that are not in such sets is out of the norm for comparable locations.
24.4 assigning the final Agent approval process to a departrnent that engages in
risk management and is independent from the sales and marketing firnction.
24.5 where legally permitted, running credit and criminal background checks on
all controlling persons of Agent applicants who own or control at least ten percent (10%)
of the Agents in the United States and to the extent possible in Mexico. For the purposes of
determining the percentage controlled by any one person, that person's interest shall be aggregated with the interest of any other person controlled by that person or an officer, parfirer, or agent ofthat person, or by a spouse, parent, or child ofthat person.
24.6 risk-ranking Westem Union's Agents in the Southwest Border Area and, for
the highest risk five per cent (5%) of them, providing annual enhanced examination of the
Agent's transaction data history and transaction data integrity, confidential sampling of
questioned aspects of the Agent's services, and on-site and off-site contact with the Agent. Whenever Western Union terminates an Agent for AML compliance reasons, it will not allow any controlling person of that Agent to be a controlling person at any Western Union Agent for at least three years thereafter.
24-7 subjecting Arizona authorized delegates to annual criminal checks and
declining or removing an Agent if a criminal background check reveals that the applicant has been convicted of, or pleaded guilty or no contest to, any felony charge within the last seven years or any felony charge involving money laundering, the financing of terrorism or terrorist organizations, or the provision ofmaterial support to terrorists or terrorist organizations at any time. Western Union will develop a system to control employee sign-
ons to its money transmittal system at all locations in the Southwest Border Area to prevent any person from transacting Westem Union business unless they are accurately signed on using their correct name.
24.8 incorporating enhanced controls for the higher risk Southwest Border Area
Agent locations identified as €Imong the top five per cent (5%) of high risk locations, including:
24.8.1 proactive contact with high volume customers to determine the reason
for the transactions, the customer's relationship to the sender or receiver, and the source of
funds.
24.8.2 enhanced systematic controls and transaction data integrity at the point of payment.

IJ

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24.8.3 sufficient programmatic controls to form a reasonable belief that Western Union knows the true identity of each customer who receives more than $500 in a transaction or totaling $1,000 or more in any one day at such a location at the time the
customer conducts the hansaction or druing a back-end review of the customer's pattern of
activity, to include measures to assure that these authorized delegates/Agents: Identiff, verifr, and enter into the kansaction data record the identity of each such customer conducting or attempting to conduct a transaction at or above $500 by physical examination of the customer's identification document(s) at the time the transaction is being conducted, to include the following information: the name and social security or taxpayer identification number, if any, of the individual presenting the transaction and the person and the entrty on whose behalf the transaction is to be effected; the type and number of the customer's photographic identification; the customer's current occupatiory and the
customer's cunent residential address.

24.8.4 accurately identifying United States authorized delegate employees who have access to Western Union's money transmittal system by obtaining full name, address, phone, date and place ofbirth, valid photographic government-issued identification, and social security number, screening all such employees through E-verify, and taking sufficient additional measures to assure that such authorized delegate employees are not present in the United States in violation of Federal immigration laws.
24.9 implementing enhanced identification requirements for senders or receivers
within the Southwest Border Area whose transactions:

period; or

24.9.1 aggregate to amounts greater than $3,000 over a rolling five-day

24.9.2 aggregate to amounts more than $25,000 during any 12-month period.
In each such transaction or series of transactions Westem Union will obtain the following information: the name and social security or taxpayer identification number, if any, of the
individual presenting the transaction and the person and the entity on whose behalf the transaction is to be effected; the type and number of the customer's photographic identification; the customer's current occupation; and the customer's current residential
address.
24.10 implementing a data entry assistance and blocking system for the purpose of
assuring the accuracy and consistency of its transaction data, to include recognition and rejection ofentries that are not in a correct format, such as a purported Social Security Number or foreign voter identification number that is not in a format that is correct for that type of identification, and, to the extent practical, an automated assistance program that populates transaction data fields with names of cities and states to prevent their being entered as non-standard abbreviations or spelled incorrectly.

14

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24.11 to the extent lawful, offering no service to transfer value, whether by money transmittal or otherwise, to Agents within the Southwest Border Area by which amounts over $500 are made available for payment to the recipient less than twenty-four (24) hours after the transaction is initiated by the sender at any time during which the Arizona Attomey General's Office does not have a Geographic Targeting Order in effect. The Monitor shall not include this as a Recommendation unless the Arizona Attomey General
confirms that other money transmitters in the Southwest Border Area will also agree to
similarly limit their services.
25. Implementation of Recommendations. Within sixfy (60) days after receiving the
Monitor's Implementation Plan, or, with regard to any Recommendation added after the Monitor first delivers the Implementation Plan, within six$ (60) days of notice of the addition of such new Recommendation, Westem Union shall adopt and begin development and implementation of all Recommendations in the Implementation Plan that are mutually acceptable to both the Monitor and Westem Union, except that with respect to Recommendations that Western Union seeks reconsideration pursuant to Paragraph 21,
initiation of implementation will not be required until the matter is resolved pursuant to
Paragraph22.
26. Addition and Deletion of Recommendations. The Monitor shall allow flexibility
for Western Union to adjust its internal systems and controls, to respond to changes in risk conditions, and in particular to respond to tactical changes made by money launderers in their efforts to avoid Westem Union's AML efforts. Accordingly, the Monitor may add or delete Recommendations after the Monitor first delivers the Implementation Plan, using the process described in Paragraphs 18-22 for inclusion of new Recommendations in the Implementation Plan. Whenever the Monitor adds or deletes a Recommendation, the Monitor shall immediately provide written notice to Western Union and the State. Compliance with this Monitor Engagement Letter requires compliance with all Recommendations in the Implementation Plan. The timing of compliance with Recommendations added after the initial delivery of the Implementation Plan shall be as described in Paragraph 25.
lnvestigation of Potential Breaches
,27 At any time during the course of the Engagement, should the Monitor discover any
evidence indicating that Western Union, or its directors, offtcers, or employees have breached any provision of the Agreement, including by failure or refusal to implement a
required Recommendation, the Monitor shall notiff Western Union and the State, unless the Monitor in his or her discretion determines notification directly to the State alone is necessary and appropriate. The Monitor shall provide the State any and all information relating to the evidence ofalleged breach(es). This paragraph shall not preclude the Monitor from discussing any matter directly with the State.

15

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28. If at any time during the course of the Engagemento the Monitor discovers evidence
of a potential violation by Westem Union of money laundering laws in the Southwest Border Area that occurred after the date of the Agreement, the Monitor shall have the discretion to investigate and report to the State and Western Union about the matter. At the sole and reasonable discretion of the State, the State may direct the Monitor to discontinue the investigation to allow for a government investigation to commence.
29. Western Union agrees that during the Engagement, the Monitor shall review
activities and transaction data relating to activities that occurred prior to the date ofthe Agreement for the purpose of informing himself or herself of the facts relevant to the development of Recommendations, the evaluation of Westem Union's Risk Assessment, the determination of the advisability of potential Recommendations, and the determination of the efficacy of Recommendations during the course of the Engagement in their historical context.
Periodic Reviews and Final Report
30. The Monitor shall undertake periodic reviews every six months, commencing when
the Monitor submits the Implementation Plan, to further monitor and evaluate compliance with this Monitor Engagement Letter and determine whether Westem Union's Program is reasonably designed and effectively implemented to detect, deter, and prevent money laundering.
31. With regard to the periodic reviews and Final Repor! the requirements set forth
above for the Implementation Plan shall apply, except for the following modifications:
3l.l The periodic reviews will not require a work plan, but will instead be
periodic evaluations of the Program and its effectiveness and Westem Union's progress in implementing the Recommendations required under this Monitor Engagement Letter, and shall include analysis oftransaction data rslevant to the efficacy ofthe required Recommendations, whether Recommendations should be added to or deleted from the Implementation Plan based on transaction data or on changes in the risk circumstances, and empirical tests of the effectiveness of the Program;
31.2 In the discretion of the Monitor, the Monitor may designate any periodic
review after the end of the twenty-ninth month after the Agreement is fully executed, as the Final Report if the Monitor certifies that the conditions provided in the Agreement for early termination are present. In making its determination whether Westem Union has complied with all of the terms of the Agreement, consistent with the principles enunciated in the FATF RBA Guidance, the Monitor's evaluation of the Program shall acknowledge that Western Union cannot be expected to detect and/or prevent all illicit uses of its services, that Western Union's ability to detect and deter money laundering can sometimes be necessarily limited, and that information about risks is not always robust or freely available. The Monitor shall bear in mind that a money services business may act in good

l6

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faith to take reasonable and considered steps to prevent money laundering, and document
the rationale for its decisions, and yet still be abused by persons engaged in illicit activity. If the Monitor makes no certification of early compliance, the Monitor will make his or her Final Report on the last day of the forty-fnst month after the Agreement is fully executed.
31.3 The Monitor shall prepare a written work plan for a Final Report and submit
it to the State and Western Union for comment at least sixty (60) days prior to issuing the
Final Report. If Western Union or the State objects to any part of the work plan, the
Monitor, Westem Union, and the State shall use best efforts to reach a resolution agreeable
to all parties, but the State shall, in its sole discretion, determine the matter. If the Monitor elects to terminate this Engagement before the end of the forty-first month after the Agreement is fully executed, the Monitor's Final Report must certify that Western Union has implemented all of the Recommendations required under this Monitor Engagement Letter and that, in the Monitor's opinion and based on the evaluation described in Paragraph 3l.2,the Program is reasonably designed and effectively implemented to deter,
detect, and prevent money laundering.
Access to Information
32. Western Union shall cooperate fully with the Monitor, and the Monitor shall have
the authority to take such reasonable steps, in his or her view, as may be necessary to be fully informed about the operations of Western Union within the scope of his or her
responsibilities under this Engagement. To that end, if requested by the Monitor, Western
Union shall provide the Monitor:
32.L access to all files, books, records, personnel, transaction and other data, and
facilities that fall within the scope of responsibilities of the Monitor under this
Engagement;
32.2 the right to interview any director, officer, employee, agent, or consultant of
Westem Union and to participate in any meeting, other than meetings protected by the attorney-client privilege, concerning any matter within or relating to the scope of the Monitor's responsibilities under this Engagement;
32.3 the right to observe Western Union business operations that fall within the
scope of responsibilities of the Monitor under this Engagement;
32.4 open access to information relating to the risk involved in its credit card,
stored value, and phone transactions to permit evaluation of the producVservice risk of new or innovative products or services offered by Westein Union in the Southwest Border Area, particularly, but not limited to, products or services that may inherently favor a degree of anonymity or can readily cross international borders, such as online money transmittals, stored value cards or other devices, money orders, and money transmittals by mobile phone;

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32.5 full transaction data relating to all person-to-person transactions sent to or
from authorized delegate/Agent locations within the Southwest Border Area from January
l, 2005, to the present and throughout the term of this Engagement involving transactions
in amounts of $500 or more: and
32.6 to the extent practicable, access to Western Union transaction data in near
real time.
33. In the event that the Monitor seeks access to information, documents, records, data,
facilities and/or employees that Western Union seeks to withhold from the Monitor based on a claim of attorney-client privilege or on the attorney work product doctrine, Westem Union shall promptly provide written notice of this determination and documentation of its claim to the Monitor and the State. Such notice and documentation shall include a general description of the nature of the information, documents, records, data, facilities and/or employees that are being withheld, as well as the basis for the claim. Except as provided in this Paragraph, Western Union shall not withhold from the Monitor any information, documents, records, data, facilities and/or employees on the basis of an attorney-client privilege or the attomey work product doctrine.
34. If after providing documentation as described in Paragraph 33, Westem Union
agrees to provide the Monitor with access to the requested information, documents,
records, data, facilities and/or employees, the Monitor and the State will agree:
34.1 not to assert that Western Union's provision of such materials in any way
constitutes a waiver by Western Union of the attorney-client privilege and/or the work product doctrine;
34.2 that the production of such materials provides no ground to obtain other
documents, materials, or information; and
34.3 to maintain the confidentiality of such materials and not to provide them to
any third party, except to the extent that disclosure is required by law or may be necessary in furtherance of the Monitor's or the State's discharge of his, her, or its official duties and responsibilities.
35. Except insofar as material is subject to Westem Union's attorney-client privilege
and/or work product doctrine, Western Union and the Monitor shall not withhold from the State any documents or information on the basis of any privilege or work product claims. Failure of any WeStern Union director, officer, or employee to cooperate with the Monitor may, in the sole discretion of the Monitor, serve as a basis for the Monitor to refer the noncooperating individual to Westem Union for consideration of whether such director,
officer, or employee has in fact failed to cooperate with the Monitor and, if so, whether
such non-cooperation warrants disciplinary action.

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36. The Monitor shall take appropriate steps to maintain the confidentiality of any
information entrusted to him or her while executing his or her duties under the Engagement and shall share such information only with the State, appropriate investigative agencies, and individuals or entities hired by him or her. The Monitor shall also take appropriate steps to ensure that any consultants, entities, and/or individuals engaged by him or her to assist with the duties under the Engagement shall maintain the confidentiality of information obtained while executing his or her duties,
37. Any report or information that is provided to the State or to Western Union by the
Monitor that is filed with the Court shall be filed under seal upon a proper showing by a party. The State and Western Union shall maintain the confidentiality of all such information provided to them by the Monitor, including the periodic reports described in this Monitor Engagement Letter, except to the extent that disclosure may be necessary by the State in connection with the discharge of its official duties.
38. The headings and titles in this Monitor Engagement Letter are for ease of reference
only and shall not be used to construe or limit the text.
39. In the event of a conflict between the Monitor Engagement Letter and the
Agreement, the terms of the Agreement shall control.
40. if Resignation/Dismissal. In the event of the death or disability of the Monitor (or,
the Monitor is a corporate entity, the Monitor's principal), Western Union and the State shall proceed as described Section 20 of the Agreement. Monitor may resign at any time upon no less than 60 days written notice to both Western Union and the State. If the Monitor resigns, Monitor shall be entitled to all fees and reimbursements provided for hereunder up to the effective date of the Monitor's resignation.
Accepted and agreed
Marcy M. Forman, Monitor
Dated:

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EXHIBIT C

TERRY GODDARD, Attorney General
FirmBarNo. 14000 Timothy A. Nelson #016274
Cameron H. Holmes #004983 1275 West Washington Street Phoenix, Arizona 85007 -2926 Telephone: 602 542-8482 Attornevs for the STAIE
IN TIIE SUPERIOR COT]RT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF' MARICOPA

IN THE MATTER OF: WESTERN TJNION FINAI\CIAL SERVICES. INC.

Case No:
JOINT APPLICATION F'OR ORDER APPROVING SETTLEMENT ATID APPOINTING MONITOR

The State of Arizona ex rel. TERRY GODDARD, Attorney General ("State"), and WESTERN TINION FINANCIAL SERVICBS, INC., ("Western Union"), respectfully apply for an order approving a settlement and appointing a monitor. This Application is supported by the accompanying Memorandum of Points and Authorities.
MEMORANDUM OF POINTS AND AUTHORITIES
L INTRODUCTION.
The State and Western Union have agreed that the public interest would be served by their entering a Settlement Agreement ("Agreement"), attached hereto as Exhibit 1,r and that one term of that Agreement is the presence of a Monitor to evaluate Western Union's compliance with the terms of that Agreement. The Agreement contemplates that Westem
Union will fund an extensive anti-money laundering Undertaking in the Southwest Border Area, and that the Monitor will determine what amount Western Union has expended
t Capitalized terms used in this Application have the meaning defined in the Agreement.

during fhe course of the Monitor's Engagement to implement the Recommendations made
by the Monitor. The Monitor's engagement will be lengthy; Western Union has agreed to
waive and has waived any and all rights to a speedy trial pwsuant to the Sixth Amendment
to the United States Constitution, the Arizona Constitution, and the Arizona Rules of
Criminal Procedure, for the period that the Agreement is in effect. The State and Westem Union request the appointnent of a Monitor to attain the primary goal of this actiotl i.e., retuming the State and Westem Union to a productive partnership in preventing money
laundering.
tr. THE APPOINTMENT OF AII OFFICER OF THE COIIRT WOT]LD
PROVIDE EX'FICIENT ADMINISTRATION OF THE AGREEMENT.
The Agreement calls for payments to the State andto the Clerk of the Court to fund an independent Monitor with substantial duties relating to evaluating and improving Western Union's anti-money laundering efforts. The duties assigned to the Monitor require the engagement and supervision of substantial personnel. Creation of a Monitor account permits the payment of the necessary expenses from this firnd, places these expenditures under the supervision of this Court, and facilitates detailed and unified accounting for such payments.
The Monitor's duties under the Agreement and Westem Union's duties to the State under the Agreement call for substantial information exchange. ln the event that there are
differing points of view on these matters, the presence of a Monitor will obviate direct
Court involvement.
[L THIS COTJRT HAS PLENTIFUL AUTHORITY TO MAKE THE
SUGGESTED APPOINTMENT ORDER.
The contemplated appointee would operate in conformance with the Agreement and Monitor Engagement Letter, attached hereto as Exhibit 2, to be approved by the Court, defining the appointee's role and duties. The Arizona Constitution provides that "[]udges of the superior court may appoint court commissioners, masters and referees in their
2953517

respective counties, who shall have such powers and perform such duties as may be
provided by law or by rule of the Supreme Court." Ariz. Const' art. VI, $ 24. Arizona
courts have used special masters since before statehood. Grand Canyon R. Co. v. Treat, 12
Ari2.69,95 P. 187 (AIiz. 1908) (special master to sell property of railroad company)' ln
addition to the sweeping Constitutional authority, this Court has the general legislative
grant of authority under A.R.S. E l2-l23, "Jurisdiction andpowers," stating, in pertinent part, '.3. The court, and the judges thereof, shall have all powers and may issue all writs necessary to tlre complete exercise of its jurisdiction."
The authority to appoint a special master was discusse d tn State v. Taclonan, I83 Ai2.236, g02P.2d 1340 (App. 1994), revian denied. There, a Superior Court judge appointed a special master to help determine the rights to restitution in a racketeering case involving trafficking in stolen property. The court gave its stong support to the trial judge: "Even if the constitutional reference were not clear, we would find sufficient basis for Judge Portley's actions in the court's 'inherent power and discretion to adopt special, individualized procedures desigrred to promote the ends ofjustice in each case that comes
before them.' Hedlund v. Sheldon,173 Aiz. 143,146,840 P.2d 1008, 1011 (1992)'" 183
Ariz. at 238-39, 902 P.2d at 1 3 42-43. The State and Western Union request entry of an order approving the Agreement and
appointing a Monitor to perform the functions described in the accompanying Settlement Agreement and Monitor Engagement letter, summarized as follows:
1) open and maintain an account for the receipt of payments frorn Western
Union via the Clerk of the Court and for the payment and accounting for all Monitor
expenses;
2) assemble and direct a staff of legal counsel, consultants, investigators,
experts, and any other personnel reasonably necessary to assist in the proper discharge of the Monitor's duties;
3) determine whether western union is in compliance with the terms of the
Settlement Agreement and its implementing Monitor Engagement Letter and submit an Implementation Plan, periodic reports every six months beginning six months
2953517

after the Monitor submits the Implementation Plan, until the Engagement is terminated as provided in the Agreement and a final evaluation in a Final Report;
4) include in each report a detailed financial accounting of all of the Monitor's
activities and expenses to date and of all Western Union expenses that the Monitor has determined were made to implement the Program Recommendations or to enhance the Program, as described in Paragraphz3.l.2 of the Agreement.
5) cooperate with reasonable requests for information or assistance from any
state or federal law enforcement agency, from the Arizona Department of Financial lnstitutions, or from Western Union consistent with the Monitor Engagement Letter.
IV. CONCLUSION.
The State and Western Union respectfully request this Court to enter the proposed order submitted herewith.
RESPECTFLiLLY SLIBMITTED this day ofFebruary,2010.
TERRY GODDARD Attomev General
By Timothv A. Nelson Chief Deputy Attorney General I27 5 W. Washington Street Phoenix, Arizona 85007
Attomeys for the State of Arizona
OSBORN MALEDON. P.A.
Ptt
Larrv Hammond 2929 North Cenkal Avenue, Suite 2100 Phoenix, Arizona 850 12-27 93 Attomeys for Western Union Financial Services, Inc.
2953517

ORIGINAL fiIedthis February,2010, with:

day of

CLERK OF TI{E SUPEzuOR COURT Maricopa County
201 West Jefferson Phoenix, Arizona 85003

COPY of the foregoing hand-delivered

this

day ofFebruary,20l0, to:

HON. TIM RYAN Judge of the Superior Court
101 West Jefferson Phoenix, A285003

COPY of the foregoing hand-delivered
_ thi. day of February, 2010, to:

Timothy A. Nelson Chief Deputy Attorney General Office of the Attorney General lZ75 W. Washington Phoenix, Arizona 85007

Larry Hammond Osbom Maledon, P.A. 2929 N. Central Avenue, Suite 2100 Phoenix, A'2, 850L2-27 93

29535t7

IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA

IN THE MATTER OF: WESTERN UNION F'INANCIAL SERVICES. INC.

Case No:
ORDER APPROVING SETTLEMENT AND APPOINTING MONITOR

The State of Arizona ex rel. TERRY GODDARD, Attorney General ("State"), and WESTERN UNION FINANCIAL SERVICES, INC. ("Westem Union"), having applied for the appointment of a Monitor, and whereas:
1) The State and Westem Union have agreed that the public interest would be
served by their entering a Settlement Agreement ("Agreement").r One of the terms of that Agreement is the appointment of a Monitor.
2) The Agreement calls for payments by Western Union to the State and for an
independent Monitor with substantial duties relating to evaluating and improving Westem Union's anti-money laundering efforts.
3) The duties the Agreement assigns to the Monitor require the engagement and
supervision of substantial personnel, and creation by the Court of a Monitor account that permits the payment of the Monitor's necessary expenses from that account under the
Agreement.
4) The Monitor's duties under the Agreement and Western Union's duties to the
State under the Agreement call for substantial information exchange. The Court finds that the transaction data that Westem Union is required to produce in Paragraph 17 of the Agreement and in Paragraph 32.5 of the Monitor Engagement Letter implementing the
'Capitalized terms used in this Order have the meaning defined in the Agreement.

Agreement, which includes full transaction data relating to all person-to-person

transactions sent to or from authorized delegate/Agent locations within the Southwest

Border Area from January 1,2005, to the present and throughout the term of the

Monitor's Engagement involving transactions in amounts of $500 or more, is reasonable

in scope because:
a) it is reasonably necessary for the Monitor and the State to understand the

context of present transaction data and to know what effect the Monitor's

Recommendations are having or that other additional or different Recommendations

would be likely to have;
b) the same materials and transaction data are relevant to the investigation of

money laundering for the same reason, because the success of Westem Union's

Undertaking, including the Monitor's Program, is part of the investigation of Westem

Union;
c)

the Monitor may provide data to representatives of the Southwest Border

states to allow the Monitor to elicit information from the states necessary for the Monitor

to determine what Recommendations are appropriate;
d) the State must have access to comprehensive data to determine whether

Western Union is in full compliance withthe border-wide duties imposed on Westem

Union by the Agreement.
5) This Court has authority to enter this Order under Ariz. Const. art. VI, $ 24,

the Rules of Civil Procedure, A.R.S. $$ 12-123, and A.R.S. $ 13-2314.

2953519

GOOD CAUSE APPEARING,IT IS ORDERED: APPOINTMENT OF MOMTOR

That Marcy Forman, or such corporate entity that she may choose to create for this

pulpose, is appointed as Monitor, with direction and authority to accomplish the

following:

1) open and maintain an account for the receipt of payments from Western

via Union

the Clerk of the Court and for the payment and accounting for all Monitor

expenses;
2) assemble and direct any personnel reasonably necessary to assist in the proper discharge of the Monitor's duties;
3) determine whether Western Union is in compliance with the terms of the

Agreement and its implementing Monitor Engagement Letter and submit an

Implementation Plan, periodic reports and a final evaluation in a Final Report, all

pursuant to the terms of the Agreement and Monitor Engagement Letter;
4) include in each report a detailed financial accounting of all of the Monitor's
activities and expenses to date and of all Westem Union expenses that the Monitor has

determined were made to implement the Program Recommendations or to enhance the

Program, as described in Paragraph 23.t.2 of the Agreement;
5) cooperate with reasonable requests for information or assistance from any
Southwest Border Area law enforcement agency, from the Arizona Departrnent of Financial Institutions, or from Westem Union consistent with the Monitor Engagement

Letter. That the Monitor shall prepare and serve such reports as are required by the Monitor
Engagement Letter, as agreed to between the State and Western Union in the Agreement, or as required by the Court. Before filing any such reports with the Court, the Monitor

29s3519

shall submit a draft thereof to counsel for all parties for the purpose of receiving their
That within ten days after being served with notice of the filing of a repor! any party may serve written objections thereto or requests that all or portions of the report be filed under seal upon the other parties. Application to the Court for action upon the report and upon objections thereto or requests relating to sealing shall be by motion and upon notice as prescribed in Rule 6(c), Ariz. R. Civ. P. TERMS OF ENGAGEMENT As particularizations of the above five obligations:
l) Monitor's Account
The Monitor shall open an account at a financial institution that does
business in Arizona (the "Monitor's Accounf') through which the Monitor will conduct
all Monitor business.
b. The Clerk of the Court will transfer funds into the Monitor's Account as
directed by the Court, starting with an immediate deposit of $1,500,000 for start-up expenses and replenished thereafter based on the Monitor's periodic reports.
c. The Monitor shall have exclusive control over the Monitor's Accorurt, and
shall be responsible for the expenditure and auditing of the Monitor's Account as the Monitor uses those funds to carry out this Court's orders.
d. The Monitor shall file with the Court every six months a detailed financial
accounting of all of the Monitor's activities and expenses to date, including an inventory of all property purchased, rented, or leased with Monitor's Account funds.
e. The Monitor shall, as needed, apply to the Court for subsequent orders
replenishing the Monitor's Account. ln each such application, the Monitor shall request
2953s19

such additional monies as the Monitor projects will be needed before the Monitor's next application, if any.
2) Employment terms
The Monitor shall take charge of the Monitor operation in general for the entire period of the Monitor's Engagement, as described in the Agreement and, in particular:
a. The Monitor shall have the authority to employ or contract for the services
of personnel, including but not limited to legal counsel, consultants, investigators, and
experts, that the Monitor deems reasonably necessary to assist in the proper discharge of the Monitor's duties as specified in the Monitor Engagement Letter. While the Monitor
must provide Westem Union and the State an opportunity to perform routine conflicts
checks on individuals or entities the Monitor proposes to engage, if neither asserts a reasonable belief that a conflict exists within two weeks, the Monitor may proceed to
engage that person.
b. The Monitor shall have authority to set reasonable compensation and
expenses of the persons engaged by the Monitor. The Monitor may consult with the parties or any other person on hiring, but retains ultimate control of hiring, subject to the terms of the Agreement and the Monitor Engagement Letter. While the Court expects the Monitor and the persons engaged by the Monitor to provide services on a schedule similar to that of a senior Maricopa County employee with regard to hours, sick leave, and vacation days, it is within the reasonable discretion of the Monitor to engage people on a part time or hourly basis, as well.
c. The Monitor and any persons hired or engaged by the Monitor shall be paid
through the Monitor's Account, as with all other Monitor expenses. The Monitor may hire or engage personnel at their respective typical hourly rates or a reasonable fee determined by the Monitor.
2953519

d. The Court approves the Monitor's annual compensation of $300,000 per
year, from which the Monitor shall pay any health care, health or life insurance, and other
employee-related benefi ts.
e. The Monitor and Monitor's staff are entitled to reimbursement from the
Monitor's Account for travel expenses at no higher rate than in accordance with federal employee travel reimbursement policies.
f. The Monitor shall serve until the expiration of the Monitor's Engagement as
If described in the Agreement, or until relieved by the Court after an evidentiary hearing.
the Monitor chooses to resign prior to such expiration, the Monitor shall provide sixty (60) days written notice to the parties and the Court to provide time to retain a
replacement.
g. At the conclusion of the Monitor's Engagement, any equipment or other
property purchased by the Monitor shall become the property of the State and the Monitor
shall anange to have it all delivered to the State's representative with a current version of
the inventory that the Monitor has periodically produced to the Coud. SETTLEMENT AGREEMENT
IT IS FURTHER ORDERED accepting and approving the Agreement in all respects, including, but not limited to, and accepting Western Union's waivers in
ll Paragraphs and 12 therein.
FUNDS IT IS FURTHER ORDERED that Western Union shall:
l) Transfer $21,000,000 to the fund established pursuant to A.R.S. $ 13-2314.01
for the benefit of the Arizona Attorney General's Office, Arizona Department of Public Safety, and Phoenix Police Department for expenditure for investigations and prosecutions of money laundering in the Southwest Border Area, and related expenses as
29535t9

permitted by A.R.S. $ 13-2314.01, commencing on the first banking day of the first calendar month after it signs this Agreement with an initial payment of $3,000,000 and continuing monthly installments of $3,000,000 until the full amount has been paid, except in the event of the filing of an action or prosecution after a breach, as described in the
Agreement;
2) Commit $23,000,000 for the non-law enforcement expenses of Western
Union's Undertaking, as described in the Agreement, and promptly transfer $4,000,000 of
that amount to the Clerk of the Court for use in paying the expenses of the Monitor as directed by the Court.
IT IS FURTHER ORDERED that the Clerk of the Court shall create a separate interest bearing account for this $4,000,000 and shall add the interest to the account as it
accrues- ln the event that any money remains in this fund at the time of the termination of the Monitor's Engagemen! the Clerk will transfer the balance to the fund established
pursuant to A.R.S. $ l3-2314.01 for the benefrt of the Financial Crimes Task Force.
TURN OVER TO MONITORAND STATES IT IS FURTHER ORDERED that Westem Union, upon service of this Order upon
them, shall deliver to the Monitor or the Monitor's duly authorized agent, and to the State, the materials described in Paragraph 17.1 ofthe Agreement and the data described in Paragraphs 32.4 and 32.5 of the Monitor Engagement Letter implementing the Agreement, which includes full transaction data relating to all person-to-person transactions sent to or from authorized delegate/Agent locations within the Southwest Border Area from January 1, 2005, to the present and throughout the term ofthe Monitor's Engagement involving transactions in amounts of $500 or more.
IT IS FURTHER ORDERED that Westem Union, upon the written request of any Participating State, as that term is defined in Paragraph 23.2.2 of the Agreement, shall
2953519

deliver to that state such materials described in Paragraph 17.1 of the Agfeement, which includes full transaction data relating to all person-to-person transactions sent to or from authorized delegate/Agent locations within the Southwest Border Atea, or such additional
areas of the Participating State as that state requests in writing, from January l, 2005, to
the present and throughout the term of the Monitor Engagement involving tansactions in amounts of $500 or more, as may pertain to that requesting state.
IT IS FURTTIER ORDERED that Western Union shall supply the transaction data
to the State and to the Participating States in the manner described in Paragraph 32.6 of the Monitor Engagement Letter, Exhibit B to the Agreement, if and to the extent indicated
by the conditions stated in the Monitor Engagement Letter. INFORMA'TION SHARING
In order to preserve the privacy of the data and information involved:
1) All transaction data or investigative information that is received pursuant to
this Order by an agency represented on the Executive Board may be shared with another
law enforcement or prosecutive agency only if such other law enforcement or prosecutive
agency agrces to keep such transaction data or investigative information confidential to the maximum extent permissible under law.
2> No agency represented on the Executive Board shall disclose such
transaction data or investigative information pursuant to a request by a non-law
enforcement person or entity other than the Monitor if that agency obtained the information or material pursuant to an agreement that it would be kept in confidence to
the extent permissible by the applicable state laws or unless disclosure is required by a court of competent jurisdiction.
3) To the extent permitted by the respective public records laws applicable to
any agency represented on the Executive Board, information produced pursuant to this
2953519

Order that is exchanged between the Monitor and such agencies, or among such agencies,

will be considered by the Monitor and by the agencies to be law enforcement

investigatory materials and/or otherwise confidential and exempt from disclosure under

the applicable public records laws.
4) Subject to the above, information about the finances of the Monitor shall be

made public to the maximum extent perrnitted by law, unless release of the information

could compromise ongoing law enforcement investigations, law enforcement sources, law

enforcement methods, or the safety of law enforcement personnel.

INDEMNIFICATION

IT IS FURTFIER ORDERED approving the indemnification agreement between

Western Union and the Monitor.

PAYMENTS

IT IS FURTHER ORDERED that the Monitor and all personnel hired or

contracted with by the Monitor as herein authorized are entitled to reasonable

compensation for the performance of duties pursuant to this order and for expenses

incurred by them, as limited by the Monitor Engagement Letter and approved by the

Court, which shall be paid out of the Monitor's Account established pursuant to this

Order. The Monitor shall serve on the parties each request for replenishment of the

Monitor's Account, with the first such request filed no more than sixty days after the date

of this Order. The Monitor shall not increase the rates used as the base for such requests

without prior approval of the Court.

DATED this

day of February,2010.

THE HONORABLE TIM RYAN MARICOPA COUNTY SUPERIOR COURT JI-IDGE

2953519

ORIGINAL and TWO COPIES lodged

_ this

day of February, 2010, with:

HON. TIM RYAN Judge ofthe Superior Court Phoenix, AZ 85003

COPY of the foregoing mailed this
_day of February,2Ol0, to:

And upon signing and filing of the
Order, conformed copies were mailed to the above in addition to the following individuals :
Timothy Nelson Offrce of the Attorney General 1275 W. Washington Phoenix, Arizona 85007
LarryHammond Osbom Maledon, P.A. 2929 N. Central Avenue, Suite 2100 Phoenix, AZ85012-2793
Monitor Marcv M. Forman

l0

29535r9

EXHIBIT I)

TERRY GODDARD Attorney General (Firm State Bar No. 14000) CAMERON H. HOLMES, #004983 Assistant Attorney General Financial Remedies Section 1275 West Washington Street Phoenix, Arizona 85007 Telephone: (602) 542-8482 Attomeys for the STATE CRMRacketeerin g@ azag. gov
KARL M. TILLEMAN, #013435 201F. Washington, Suite 1600 Phoenix, A285004 Telephone: (602) 257 -5244 Attomeys for Western Union Financial Services, Inc.
IN THE SIPERIOR COURT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF MARICOPA

IN THE MATTER OF:
MONIES DESCRIBED IN APPENDIX ONE TO TI{E SUPPORTING AFFIDAVIT

NO. SW 2006-002213
STIPULATION RE: ORDER VACATING ORDER QUASHING SEPTEMBER 21, 2006 SEIZURE WARRANT AFID PRELIMINARY INJUNCTION, RELEASE OF SEIZED PROPERTY, AND DISMISSAL OF'TIIIS ACTION

In order to resolve all outstanding matters between the Parties, and as part of
and in furtherance of the Settlement Agreement dated November ,2009, the State of Arizona (State) and Western Union Financial Services, Inc. (Western Union)
stipulate as follows: Western Union stipulates to:

(i) Move to vacate this Court's prior Order Quashing September 2L, 2006 Seizure
Warrant and Preliminary Injunction; (ii) Move to replace the prior Order Quashing September 21,2006 Seizure Warant and Preliminary Injunction with the Findings of Fact and Conclusions of Law and Order in
the accompanying Order Vacating Order Quashing September 21, 2006 Seizure
Warrant and Preliminary Injunction and Dismissing Action; and
(iii) Move to dismiss this action.

Western Union hereby so moves with regard to each of the above.

The State stipulates to:

(i) Release its Seizure for Forfeiture of all property seized for forfeiture in SW2006-
10
0022L3 effective immediately upon vacation of the Order Quashing Septembet 2I,
l1
2006 Seizure Warrant and Preliminary Injunction and the granting of Western Union's
t2
Motion to Dismiss this action; and

IJ (ii) Refrain from petitioning the United States Supreme Court for a Writ of Certiorari
t4 in this matter.

l5

The State hereby provides notice that it hereby releases its Seizure for Forfeiture

t6 of all property seized for forfeiture in SW2006-0022I3.

t7

RESPECTFULLY SUBMITTED this

of February,2010.

l8

-dSaTyEPTOE & JOHNSON LLP

19

By

Karl M. Tilleman #013435

2l

201F. Washington, Suite 1600

Phoenix, A285004
22
Attomeys for Western Union

Financial Services, Inc.

25 29s4574

TERRY GODDARD Attornev General

By Cameron H. Holmes #004983 Assistant Attorney General 1275 W Washington Phoenix, Arizona 85007 Attorneys for the State

ORIGINAL of the foregoing STIPULATION electronically filed with the Arizona Superior Court
for Maricopa County this_ day of February, 2010,

_ l0 Copy ofthe foregoing STIPULATION

hand-delivered this

day of February, 2010, to:

ll The Honorable Eileen Willett

12 Maricopa County Superior Court Judge

201 West Jefferson 4thFloor- Suite B l3 Phoenix, AZ85O03

l4

l5

16

1',l

18
l9

2l

24 25
2954s7 4

TERRY GODDARD Attorney General (Firm State Bar No. 14000) CAMERON H. HOLMES, #004983 Assistant Attorney General Financial Remedies Section 1275 West Washington Street Phoenix, Arizona 85007 Telephone: (602) 542-8482 Attorneys for the STATE CRMRacketeerins@azas. eov
KARL M. TILLEMAN, #0I3435 201E. Washington, Suite 1600 Phoenix, A285004 Telephone: (602) 257 -5244 Attorneys for Westem Union Financial Services, Inc.
1l
IN THE SUPERIORCOURT OF T}IE STATE OF ARIZONA
IN AND FOR THE COLTNTY OF MARICOPA

IN TTIE MATTER OF:

NO. SW 2006-A02213

MONIES DESCRIBED IN APPENDIX ONE TO THE SUPPORTING ATFIDAVIT

OR.DER VACATING ORDER QUASIIING SEPTEMBER 21,2AA6 SEIZURE WARRANT AND PRELIMINARY INJUNCTION AI\D DISMISSING ACTION

On January 9, 2007, this Court entered an order (i) quashing the State's

September 2I, 2006 seizure warrant ("Seizure 'Warrant") regarding certain person-to-
L)
person money transfers of $500 or more sent through Westem Union agents to

24
locations in Sonora, Mexico; and (ii) enjoining the State from issuing any future seizure

25

directed at firnds in Western Union's "possession, custody or control" (the

2954646

The Arizona Court of Appeals vacated the Order on July l, 2008. See 219 Aiz.

337, I99 P.3d 592. The Arizona Supreme Court granted Western Union's petition for

revierv in part, and on June 3, 2009, vacated the Court of Appeals' Opinion. See 220

Ari2.567,208 P.3d 218. The Supreme Court held that the Due Process Clause of the

United States Constitution prohibited this Court from asserting in remjurisdiction over

Westem Union money transfers from senders in states other than Arizona to recipients

outside Arizona. See id. at ![ 1, 208 P.3d at2l9. The Supreme Court then remanded to this Court "for further proceedings consistent with this opinion." Id. atl43, 208 P.3d

at227.
9
Based on the parties' settlement of this matter, and in accordance with the
10
Supreme Court's opinion and mandate to this Court, the parties stipulate as follows: (i)
1l
vacating this Court's prior Order, (ii) replacing the prior Order with the below
t2
"Findings of Fact" and "Conclusions of Law," and (iii) dismissing this action.
t?
Therefore, having accepted the parties' accompanying "stipulation to
I4 Withdrawal of Motion to Quash and to Order Vacating Order Quashing September 21,
15 2006 Seizure Warrant and Preliminary Injunctiono Release of Seized Property, and
l6 Dismissal of this Action," and good cause appearing, the Court enters the following

I7 findings of fact and conclusions of law:

l8
FINDINGS OF'FACT
t9
1. The Seizure Warrant orders that "Any peace officer in the State of

Arizona seize all of the property described in Appendix One to the affidavit for

*y 2l
forfeihrre pursuant to A.R.S. $$ l3-4301 et seq. and L3-2314 by

means provided in

2. A.R.S. $ 13-4306." Seizure Wa:rant at

Appendix One to the Seizure Warrant

describes the properly as "[a]ll Western Union money transfers" that meet all of the

1A foltowing criteria: person-to-person money transfers in amounts of $500 or more,

excluding all Quick Collect wires, that are presented for payout and/or are in the

process of being paid out at any of 26 Western Union identified agent locations in

2954646

Sonora Mexico, that were sent from any one of the following 29 states: California,

Arizona, New York, Florida, Illinois, Georgia, New Jersey, North Carolina, Virginia,
Tennessee, Maryland, Texas; Nevada, South Carolina, Ohio, Pennsylvania,

Washington, Alabama, Indiana, Oregon, Colorado, Minnesot4 Utah, Connecticut,

Michigan, Massachusetts, Wisconsin, Kentucky and Delaware. .Id. Appendix One.

The Motion to Quash challenged the Seizure Warrant to the extent that it required the seizure of money transfers that met alt of the above criteria, except the Motion to Quash did not challenge the seizure of money transfers that were sent from Arizona. The

money transfers at issue in the Motion to Quash are referred to herein as the "Money

Transfers." The senders or recipients or owners or interest holders, within the meaning
i0
il of A.R.S. $ 13-4301 et seq-, in the Money Transfers are referred to herein as the
"Customers."

12

2. The Seizure Warrant provided that upon Western Union's identification

13
of a money transfer that fit the criteria above, Western Union was required to "prevent

IA
the transaction from being paid from its system and cause the transaction to be 'force

t5 paid' to a detention account . . . excepting funds released from the seizure for forfeiture

16 by the seizing agency during the period." Seizure Warrant at3-4.

17

3. The Seizure Warrant became effective September 22, 2006. On

l8 September 25,2006, this Court entered an Order For Immediate Stay Of September 21,

l9 2006 Seizure Warrant, which ordered, among other things, that "The Seizure Wanant is

STAYED in every respect until further notice of this Court."

2l

4. The State has not established in personam jurisdiction over the

Customers.
5.

The Money Transfers originated in another state by someone who has

.A not been shou.n to be an Arizona resident and are directed to a recipient in a foreigt

country who also has not been shown to be an Arizona resident.
25
6. The "stipulation to Withdrawal of Motion to Quash and to Order

Vacating Order Quashing September 21, 2006 Seizure Warrant and, Preliminary

Injunction, etc." includes the State's Notice of Release of Seizure for Forfeiture relating

to all property seized pursuant to the Seizure Warrant, and the Seizure Warrant expired

by its own terms in October, 2006.

CONCLUSIONS OF LAW

l.

The State has released its Seizure for Forfeiture of all properry seized

pursuant to the Seizure Warrant, leaving no res to sustain the Court's jurisdiction in this

in rem action.

2.

Westem Union has standing to challenge the Seizure Warrant.

3. The Supreme Court has found that the Seizure Warrant's assertion of in

rem jtxisdiction over the Money Transfers is unconstitutional under the Due Process
l0

Clause of the United States Constitution.
ll

NOW TIIEREFORE, it is hereby ORDERED, ADJUDGED and DECREED that:

12

1. The Order Quashing September 2I, 2006 Seizure Warrant Seizure

I3
Warrant and Preliminary Injunction is vacated and Western Union's Motion to Dismiss

14
this action is granted,

l5

2. The in rem Seizure Warrant that was the subject of the intervention by

16 Western Union in this SW action has expired by its terms and is constitutionally

1n unenforceable as it relates to the Money Transfers.

18

3. The State having released its Seizure for Forfeiture ofall property seized

t9 pursuant to the Seizure Warrant, no property seized pursuant to the Seizure Wanant is
henceforth subject to any seizure for forfeiture and therefore is not within the

2l jurisdiction of this Court.
4. This action is dismissed.

_ DATED this

day of

2010.

MAzuCOPA COUNTY SUPERIOR COURT JUDGE

EXHIBIT 2

MONITOR ENGAGEMENT LETTER

This Monitor Engagement Letter sets out the pqpose and scope of the engagement

\./

of Marcy M. Forman, or such corporate entity that she may choose to create for this

purpose, as court-appointed Monitor ("Monitor') for the ongoing evaluation of the

Southwest BorderArea anti-money laundering Program of Westem Union Financial

Senrices, Inc. ('Western Union') pursuant to that certain Settlement Agreem€nt between

westem union and the $tate of Arizona (,.state') dated February I l, 2bl0 (. Agreemenf).

The actions ofthe Monitor under this Letter shall be referred to as the "Engagement." The provisions of this Monitor Engagement Letter regarding the Monitor's uuttroety and duties

are to be broadly construed to give the Monitor independence of the parties and discretion

in carrying out the Engagement, and to effectuate thi goal of this engagement, namely,

confirmation that Western Union has implemented the Recommendations required under

this Monitor Engagement Letter and that Westem Union's Program is reasonably designed

and executed to deteot and prevent money laundering in the Southwest Border Area.

Backsround

l. Western Union offers money transfer services in over 200 countries. Accordingly,

Western Union has a large and complex Bank Secrecy Act ("BSA") anti-money taunO-'ering (*AML') compliance program that spans all of its locations, including those inthe

Southwest Border Area as defined in the Agreement. The Southwest Borcier Area is the

v

sole geographic focus of this Engagemen! and references herein to the program, as defured in Paragraph 2, refer to Westem Union's AIvIL program in the Southwest Border

Area, as such program may be modified or enhanced as described herein-

2- Prior to the execution of the Agreement, Westem Union provided to the State a May
8' 2009 report by an independent consulting firm evaluating Westem Union's present AML program ("Report"). The Report made a number of recommendations that the
consulting firm believes will further enhance Western Union's AML program. As set forth in theAgreemen! westem union has agreed to maintain its AML ptog.u- for the
Southwest Border Area and to implement in the Southwest Border Area additional program measur€s recommended by a Monitor ("Recommendations") to the extent required in this Monitor Engagement Letter. The existing program for the Southwest
Border Area described in the Report and the Recommendations particular to the Soutlwest Border Area required in the Implementation Plan created pursuant to this Monitor
Engagement Letter will be termed the'?rogram." To ensure that its Program adheres to the principles enunciated in the Financial Action Task Force Risk-Based Approach to combatingMoneyLaundering and TenoristFinancing ('FATF RBA Guidance"), to its
legal obligations, to the Agreement, and to this Monitor Engagement Letter, western Union has agreed to be oversern by an independent Monitor for a flexible period of time ending betwegn the end of the twenty-ninth month after the Agreement is fUty executed and the end ofthe forly-first month after the Agreement is fully executed.

nn( alatl

Generel Provisions

3. Hirinq Authority snd Compg.nsation. The Monitor shall have the authority to

employ or contract for the services ofpersonnel, including but not limited to legal counsel,

consultants, investigators, and experts, that the Monitor deems reasonably necessary to

assist in the proper discharge ofthe Monitor's duties as specified herein. Western Union

and the State shall have the opportunity to perform routine conflicts checks on individuals

or entities the Monitorpropos€s to engage and, within two weeks, shall advise the Monitor

if any conflicts exist. The Monitor shall not engage any individual or entity as to which

Westem Union orthe State reasonably beliwes a conflict of interest exists and provides a

statement ofreasons to that effect. Furthermore, because the number of firms capable of

providing audit services to Westem Union is severely limited, the Monitor shall not

employ Ernst and Young, KPMG, Deloitte LLP, or PricewaterhouseCoopers without the

written consent of Westem Union. The reasonable compensation and expenses of the

Monitor, and any percons hired or engaged by the Monitor pursuant to his or her authority

under the Agreement and this Monitor Engagement Letter, shall be paid tlrrough an

account as ordered by the Maricopa County Superior Court ("Court"). The Monitor shall

be compensated in accordance with his or her typical hourly rate or a reasonable fee

determined by the Monitor and approved by the Court, and shall proceed as described in

this court's Appointment order. The Monitor may hire or engage personnel at their

respective typical hourly rates or a reasonable fee determined by the Monitor. The Monitor

and Monitor's staffshall be entitled to reimbursement fortravel expenses (including

airfare, cm rental, hotels and meals) at their actual cost. The Monitor will ensure that

\./

travel is undertaken at reasonable facilities that are not more expensive for non-

govemm€nt employees than facilities customary to career govemment employees traveling

on official business. The Monitor may also procure insurance reasonably necessary to

protect the Moniior and all persons whom the Monitor shall engage from risks ordinarily

insured against by professional service providers. Premiums associated with such

insurance shall be reimbursed at their actual cost.

4. No Affiliati-o,n The Monitor is not, and shall not be treated for any purpose as, an

officer, employee, agent, or afliliate of Westem Union or the State. The Monitor shall not

owe any fiduciary duties or other duties or obligations of any kind to Westem Union's

directors, officers, employees, shareholders, bondholders, or creditors, or to the State.

Neither Western Union or its Affiliates, as defined in the Agreement, nor the State shall

cause any personal benefit to the Monitor during the Monitor's Engagement or for a period

of five yeaxs commencing on the last day of the Monitor's Engagement, by employment,

engagement, gift, or otherwise. Western Union, is Affiliates and the State shall not

employ or engage any entity or individual hired or engaged by the Monitor to fulfill its

responsibilities during the Monitor's Engagement, either directly or indirectly; for a period

of five years, c€mmencing on the date that the entity's or individual's engagement

commences, unless the other party agrees in writing. The Monitor shall not employ any

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person who has been an employee of the Arizona Atlorney General's Office within the past five years, or who has provided testimony, affidavits or otherwise participated

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substantively in litigation against Western Union. At the conclusion of the Monitor's

Engagement any equipment or other property purchased by the Monitor shall become the prop€rly ofthe State, provided that any data or other information contained on any such

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equipment shall be subject to tlre provisions of Paragraph 9.

5. No Attornev-Client Relationship. The Monitor shall be independent of Western

Union and the Statg and no attomey-client relationship shall be formed between them.

Western Union shall not claim any work product privilege as to documents created by the

Monitor orby any agents of the Monitor.

6. Indemniflcation. Western Union shall provide an appropriate indemnification
agreement to the Monitor with respect to any claims arising out of the performance of the Monitor's duties by the Monitor or by any person employed or engage.d by the Monitor in the cowse ofthe Morritor's performance hereunder.

7. No Defense Premised on MonitoJlq TindigFs. Western Union agrces that the
Monitor's findings do not constitute a defense to any action that the Staie may elect to bring against Western Union, as permitted by the Agreement,

8, 9Qgneration. \Mestem Union shall direct its directors, officrcrs, employees, agents,
and consultants to cooperate wittr the Monitor in the execution of his or her duties. If, in

the Monitor's judgmenf, a director, ofFrcer, employee, agent, or consultant of Westem

Union fails to cooperate with the Monitor, the Monitor shall notify Western Union and the

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State. The Monitor may evaluate Westem Union's response to the uncooperative party in

evaluating Westem Union's cooperation under the Agreement. Further, Western Union

agr€es that any director, office& employee, agent, or consultant may conrmunicate with the

Monitor directly and that no director, officer, employee, agent, or consultant shall be

penalized in any way for providing information to the Monitor. Any director, officer,

employee, agent, or consultant communicating with the Monitor may reguest that the

Monitor keep confidential from Westem Union the fact and substance of their

communication, and the Monitor shall comply with any such request.

9. Confid.entialitv. Dwing the course of the Engagement the Monitor may have
acc€ss to or receive Western Union proprietary information or trade secrets that are not otherwise in the public domain through no breach by Monitor of this Letter ("Confidential Information'). The Monitor agrees not to disclose any Confidential Information to anyone
other than the Court or the State to carry out the terms of the Engagement. The Monitor
also agrees to ensure that any parly whom the Monitor engages hereunder shall agree to the same reshiction. Within thifiy (30) days after the termination of the Engagemenl the Monitor and any party whom the Monitor engages herzunder shall retum to Western Union all documents received from Westem Union or containing any Confidential Information or confirm to Western Union in writing that all such documents have been destroyed, This Monitor Engagement Lefter does not require any law enforcement agency or prosecutor's office or person employed or engaged by them to retum or destroy any document or

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information. The State shall maintain the confidentiality of any materials or information provided by WEstem Union under this paragraph and shall not provide such material or information to any third parly, except to the extent that disclosure is required by law, othe,lrruise authorized by this Agreeme,nt, or is in the proper discharge of or otlenuise furthers the State's official duties or responsibilities.
Monitor's Terms of Eneaeenent
10. Core Functions. The Monitor will perform four core functions:
10.1 open and maintain an account for the receipt of payments from WestEm
Union via the clerk of the Court and for the payment and accounting for all Monitor
expenses;
10.2 assemble and direct a staff of personnel that the Monitor deems reasonably
neoess&ry to assist in the proper discharge of the Monitor's duties;
10.3 determine whether Western Union is in compliance with the terms of the
Agreement and this Monitor Engagement Letter and submit an Implementation Plan; progress reports for eash six-month period beginning after the Monitor submits the Implementation Plan, and in each six-month period thereafter until the end of the forty-first month after the Agreement is fully executed, or until this Engagement is terminated early as provided in the Agreement; and a final evaluation in a Final Report; and
\-/ 10.4 include in each report a detailed financial accounting of all of the Monitor's
activities and expenses to date and of all Westem Union expenses beginning August l,
2009 that the Monitor has determined were made to implement the Recommendations or to enhance the Program, as desmibed in Paragraph 23.1.2 of the Agreement.
11. lVork Plan. Within ninety (90) days after the commencement of the Monitor's
Engagement, the Monitor shall prepare a written work plan. To conduct an effective initial review, the Monitor's initial wor{< plan shall include such steps as are necessary to develop an understanding of the facts and circumstances surrounding the Program, including a review and verification of the Risk Assessment, as defined in Paragraph 14, and the tansaction data that reflects these facts and circumstances. The Monitor shall submit the work plan to the State and Western Union for review. If Westem Union or the State objects to any part of the work plan, the Monitor, Westem Union, and the State shall use best efforts to reach a resolution agreeable to all parties, but the State shall, in its sole
discretion, determine the matter.
12. The Monitor shall provide all work plans, ttre Imptementation Plan, periodic
reports, the Final Repott, and any other reports to Westem Union and to the State.
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13. Initial Revlew. In connection with the Monitor's responsibility to determine

whethor the Program is generally effective in detecting detering, and preventing money

laundering and to evaluate Western Union's preparation to implement the

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Recommendations described in this Monitor Engagement Letter, the Monitor shall conduct an initial review and prepare an Implanentation Plan evaluating the areas described below.

14. RIsk Assessment A comprehensive risk assessment is the foundation of the riski
based compliance program described in the FATF RBA Guidance. Within thirly (30) days after the conrmencement of the Engagemenf Westem Union will provide the Monitor with
a risk assessment (*Risk Assessment") for the Southwest Border Area that identifies

geographic areas, Agents (as defined in the Agreement), consumers, transactions, products,
selices, and points of eonsumer interaction that are most susceptible to money laundering activities, and will identiff any transaction data upon which any portion of the risk assessment is based, The Risk Assessment will compare transaction data relating to locations at differentparts of the Southwest Border Area to identify similarities and differences and to examine changes over time to better identify potential'money laundering patterns that span the area or move from one part of it to anoth€r in response to changing circumstances. Western Union will update the Risk Assessment as necessary throughout the Engagement, including but not limited to at the request of the Monitor, to address changes in these risks. Its updates will also identiff any transaction data upon which any portion of the Risk Assessment is based and show changes, trend lines, and specific examples. The Monitor's evaluation of the Risk Assessment will also be conducted on a

regular basis throughout the Engagement.

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15. The Monitor shall regularly evaluate, using the FATF RBA Guidance, the Risk

Assessment to determine whether it identifies products, selices, geographic locations,

transactions, categories of consumers, and points of consumer interaction, including Agent locations that are most susceptible to money laundering activities in the Southwest Border
Area. The Monitor's evaluation will regularly monitor and compare transaction data from the entire Southwest Border Area to hack changes and predict further or fuhre changes.

In evaluating the Risk Assessment, the Monitor shall take into aecount whether'Westem Union has considered the nature, soale, and complexity of its business; the initial and

ongoing due diligence or monitoring conducted on its Agents; its distribution channels; its consumer, product and activity profile; the capabilities of its electronic monitoring
systems; and the volume and size of transactions. The Monitor will test Western Union's

comparisons of transaction data relating to locations in different parts of the Southwest

Border Area to evaluate and assess the Risk Assessment's identification of similarities and

differences and to confirm changes over time that may be related to potential money laundering patterns. The Monitor shall also evaluate whether Westem Union has

reasonably incorporated in the Risk Assessment the risk categories identified in the FATF

RBA Guidance and in this Monitor Engagement Letter. In addition, the Monitor shall

evaluate Westem Union's policies and procedures for updating the Risk Assessmenl in

particular the strength of the connection between the process for updating the Risk

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Assessment and the transaction data and the degree to which the Risk Assessment reflects

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largef tre[rds and activities flcross the entire Southwest Border Area and not limited to smaller geographical subsets ofthat area. The Monitor shall work with Westem Union's risk assessment personnel to establish an organic and flexible approach to regular risk assessment that is firmly founded on hansaption data relating to the entire Southwest Border Area and therefore higbly responsive to changes in the risk circumstances,
16. Evaluation of Prosram Functions. Giving regard to the principles enunciated in
the FATF RBA Guidelines and the provisions of this Monitor Engagement Letter, and the Risk Assessment for the Southwest Border Area as reflected in Westem Union's and the Monitor's analysis of the transaction data" the Monitor's evaluation of Westem Union's Program shall consider Westem Union's preparation to implementthe Recommendations described in this Monitor Engagement Letter and whether the Program:

16.1 provides for adequate oversight and confiols of Agents, consumers,
transactions, products, serices, and geographic areas that are more vulnerable to abuse by money launderers and other criminals;

16,2 provides for regular review of the risk assessment and risk management
processes;

16.3 designates adequate personnel responsible for managing an effective risk-
based AML compliance program;

16.4 ensures that adequate conhols are in place before a new product or service is
offered;

16.5 contains channels for informing senior management of compliance
initiatives, compliance deficiencies, corrective actions, and filing of suspicious activity
repofts;

16.6 provides for program continuity despite changes in corporate structure or
personnel;

16.7 mets all applicable regulatory record keeping and reporting requirements
and provides channels for informing personnel of changes in legal requirements;

16.8 implements risk-based policies, procedures, and processes as appropriate;

16.9 provides for adequate supervision of Western Union personnel who handle
transactionso compleie reputs, grsnt exernptions, monitor for suspicious activity, or participate in any other way in Western Union's Program;

16.l0 provides for periodic intemal waluations of whether Western Union

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personnel are adhering !o written AML policies, procedures, and processes;

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16.11 incorporates AML compliance into job descriptions and perfiormance
evaluations of appropriate personnel;

16.12 provides for appropriate initial and reftesher training to be given to appropriate personnel ;
16. 13 provides for appropriate initial and refresher training for Agents to be given at appropriate intervals;
16.14 provides for on-site and AML compliance reviews and mystery shopping of
Agents when appropriate, and

16.15 ensures that AML compliance personnel are involved in all final decisions regarding disciplinary actions Aken against Agents if such action includes probation,
suspension, or termination.
17. EvaluatioJ gf,Froeram Inteerity. The Monitor shall evaluate the integrity of
Western Union's Program based on the principles enunciated in the FATF RBA Guidance, other appropriate industry standards, the Report, and this Monitor Engagement Letter. The Monitor's initial evaluation of the Program's integrity shall consider Western Union's preparation to implement the measures desuibed in this Monitor Engagement Letter and whether: \-l
17.l Western Union designates an individual or individuals at the executive level
with responsibility for the Program, provides such individual(s) with appropriate reporting
lines within the corporate sffucture and suffrcient acc€ss to Western Union's Board of
Directors and senior management, and allots adequate resourrces and authority to such individual(s) to ensure compliance with Westem Union's legal obligations, the Agreement and this Monitor Engagement Letter;
I7,2 senior management makes reasonable efforts to create a culture of
compliance within Western Union to encourage personnel at all levels to adhere to AML
policies, procedures, and processes; and
17.3 Western Union employs sufficient numbers of AML compliance personnel,
including personnel with direct oversight of Agents and personnel assigned to analysis functions, particularly transaction data analysis.

Imnlementation Plsn.

18. The Monitor shall issue a written Implementation Plan within one hundred eighty

(1S0) days after the commencement of the Monitor's Engagement setting forth the

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Monitor's evaluation and making such Recommendations as are reasonably designed to

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implement or improve the Program. The Monitor may extend the time period for issuance of the Implementation PIan with prior written approval of the State and Westem Union.
19. The Implementation Plan shall describe the Monitor's evaluation of Westem
Union's performance in the areas described herein. The report shall include the Monitor's methodolory, tansaction data and other information relied upon, and the basis for evaluation. The Monitor shall formulate his or her conclusions and Recommendations based on, arnong other things:

19.1 review of documents as the Monitot deems necessary, including all the
policies and procedwes relating to the Program, the Repor! and the documents and materials cited in the Report;

19.2 meetings with and interviews of employees, offic.ers, and directors of
Western Union, and any other rclevant p€rsons, including rcpresentatives of the State, as the Monitor deems necesssry;

19.3 on-site observation of $y'estem Union' risk assessment and management
systems;

19.4 analyses of transaction data; studies of long-term and short-term border-wide

hends, changes, and comparisons based on the transaction data; and testing of the

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Program; and

19.5 consideration of any written submissions from the State or from Westem

Union specifically directed to the Monitor (with a copy to the other par'ty) for the purpose

of being considered for the Monitor's Implementation Plan.

20. Identiflcation of Pro.gram Recommendatio4p. In formulating Recommendations
for the Implementation Plan, the Monitcr may consider any additional measures he or she deems wordry of evaluation, and shall:

2A,I consider all measures mentioned in the Report, whether mentioned as
recommendations or otherwise; all measures listed in Paragraph 23 or 24: and all measures
suggested by Western Union, whether Western Union suggests the measure as an addition to the above measures or as a potential substitution for any of the above mcasures designed to accomplish lhe same or similar purpose in a way or by a method more acceptable to
Westem Union. For each such measure in Paragraph 23,the Monitor shall either accept it as a Recommendation or provide rsasons not to do so, and shall provide some estimate of
the cost of its implementation in the Southwest Border Area;

20.2 consider and, as the Monitor deems nccessary, solicit and accept input from

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Western Union, from the State, and from the Alliance-Appointed Staff, of the Southwest Border Anti-Money Laundering Alliance. The Monitor shall conduct his or her inquiries

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regarding the evaluation of potential Recommendations in an opcn and transparent process,

working in oollaboration with Western Union, the State, and the Alliance-Appointed Staff.

In order to place the Participating States in a position to provide optimal consultation to the

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Monitor and improve the quality of the Program, tlre Monitor will provide the AllianceAppointed Staffwith information derived from the access described in Paragraph 32 and

Weslem Union transaction data, including the data described in Paragraph 32.5, in the

event that the Alliance-Appointed Staffhas not obtained it independently.

20.3 with respect to any Recommendation the Monitor intends to include in its
Implementation Plan, consider costs, rsasonable alternatives, and technical and other feasibility, in addition to potential benefits;

24,4 in the Implementation Plan, set forth why each Recommendation is
potentially attainable and reasonably designed to implement or improve the Program and the Monitor's considerations relating to cost, feasibility, and expected benefit;

20.5 in the Implementation Plan, set forth for each Recommendation, to the extent
practicable in the context ofthat Recommendation:

20.5.1 the specific action(s) to be taken by Westem Union;

20.5.2 any measurable outcomes, to the extent possible in the form of
transaction dat4 that are expected or rcquired;
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20.5.3 any measurable outcomes that will provide a useful gauge to evaluate
the value of continued implementation of the Recommendation or its discontinuation in the event that it is not achieving desirable results;

20.5,4 the time frame or mileposts relevant to its implementation, evaluetion of success, or discontinuation, particularly refening to the timing of expected
changes in transaction data that would indicate continuation or discontinuation.
?1. If after participating in the Recommendation identification process and reviewing
the specifics of the Monitor's Recommendations in the Implementation Plan, Western Union believes that any Recommendation in the Implementation Plan is not feasible or is unreasonably costly in relation to the expeoted benefit, or that the benelit identified by the Monitor as the expected benefit is unlikely, Westem Union may make a presentation, within tltirty (30) days of receiving the implementation plan. The presentation shall
If include all of the following or state in writing that the requirement is not applicable.
Westem Union makes such a presentation, its obligation to begin implementation of the
Recommendation at issue, if any, will be delayed until the mattcr is resolved pursuant to
Paragraph 22:

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2l.l provide to the Monitor and the State a written explanation of the reason for
its objection to the Monitor's Recommendation;
*ff.ts 21.2 propose in writing to the Monitor and the State an altemative policy,
procedure or system designed to achieve the same objective or'purpos€r€iip'lainirE alternative is preferable and the factual basis for this belief;
21.3 provide to the Monitor and the State transaction data to support its assertions
and any other fachral materials it believes supporl its objections or position; and
2L4 point out additional tansaction data or materials that could be assembled or
analysis that could be performed that it believes would support its position and/or suggest delay in the implementation ofthe Recommendation until such transaction data or materials can be assembled and evaluated or such analysis can be performed-
22. Upon a presentation as described in Paragraph 2l with respect to any
Recommendation, Western Union and the Monitor shall, for no mor€ than thifly (30) days,
make best efforts to reach an agreement on the Recommendation and/or the proposed
alternative, if any, or upon a method by which the eflicacy of the Recommendation and/or
any proposed altemative may be tested, such as by analysis of additional or different transaction data. Such agreement may include (i) the Monilor deleting the
Recommendation from the Implementation Plan, (ii) the Monitor modiffing the Recommendation, or (iii) the Monitor replacing the Recommendation with an alternative Recommendation, If Western Union and the Monitor are unable to agree on the Recommendation or an altemative proposal within such time, Western Union shall submit the issue and supporting documentation in writing to the State within forty (40) days after
Western Union's presentation pursuant to Paragraph 21. The State and Western Union shall make best efforts to reach an agrcement. The State and Western Union may seek and consider the opinions of Attorneys General of otherU.S. states in the Southwest Border
Area as part of this process. If ttre State agrees with the Monitor that the Recommendation
if is appro'priate, after the State hears and considers Western Union's objections and,
solicited and provided the opinions of Attomeys General of other U.S. states in the Southwest Border Are4 the Monitor will continue to include the Recommendation as part of the Implementation PIan. If the State agrees with Westem Union that the particular
Recommendation is inappropriate, in whole or in part, the Recommendation will be dele0ed from the Monitor's Recommendations or will continue to be included only as modified by
agreement between the State, in consultation with the Attomeys General of the affected states, and Westem Union.
Presumed Prosram Measures
23. The following measures will become Recommendations unless the Monitor, with
input from Westem Union and the State, determines that it is not technically feasible or would not improve the Program:

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23,1 l{estern Union's Existing Measureq, As described in the Report,
Westem Union piesently maintains or is in the process of implementing aBSA/AML
program that addresses organizational structure and govemance, Agent selection and training, Agent monitoring and response, a transaction rnonitoring progtam, and a Suspicious Activity Report (*SAR') reporting program, smong other things' As part of its AML program, Westem Union has been focusing extensive efforts onthe Southwest Border Area in order to address specific risks associated with illegal activity in that geographic region, such as cross-border drug trafficking and human smuggling from Mexico into the United Ststes. These include potential use of Western Union services by human smugglers ("coyotes") to obtain payment from sponsors of persons being smuggled illegally into the United States. These efforts extend to all U.S. and Mexican states on both sides of the border, and particularly to the Southwest Border Area. These efforts include;
23.1.1 enhancing transaction monitoring (througlr the implementation of a new automated haasaction monitoring applioation).
23.1.2 developing the abitity to aggregate consumer transactions to identify unusual activity on a rcal-time basis (through its Real Time Risk Assessment initiative).
23.1 .3 providing more resources, guidance, and compliance-related materials (such as AML taining tools) to its Agents through the deployment of an enhanced Web site.
23.1.4 continuing to acknowledge that "Western Union's AML Program must include procedures for conducting reasonable, risk-based due diligence on potential and existing foreign Agenb and counterparties to help ensure that such foreign agents and counterparties are not themselves complicit in illegal activity involving its products and services, and that the foreign agent or foreign courterpaffy has appropriate AML controls in place to guard against the abuse of the MSB's products and services," to enforce due diligence in that regard, and to monitor foreigrr Agents to "help ensure that the foreign Agents are not themselves complicit in illegal activity involving Westerx Union's products and services and the foreign Ageirts' customers, employees, or contractors af,e not able to
abuse such products and sewices," as described in the Repon.
23.1.5 implementing Transaotion Risk Index ("TRI') model variables and formulas (specifically in the way some factors are weighted t,o impact the overall TRI risk score) to more shategically mitigate the risks associated with certain geographies (e.9,, Arizona) and "red flags" such as structuring, sharing of consumer identiffing information, high volume, high frequenc]; and SAFs filed by Western Union on transactions facilitated by/through
the Agent.
23.1.6 enhancing existing disciplinary procedures to include more concrete metrics designed to limit discretion/subjectivity in the disciplinary process.
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23.1.7 adding scenarios customizod to hansactions facilitated in the Southwest Border Area to the interdiction decision mafrix.

23.1.8 developing, to the extent reasonably feasible, Real Time Risk Assessment
that will provide the ability to block noncompliant fiansaetions before they are processed, so that when a ftansaction violates established business rules, a'?op-up screeni'will immediately notiS the Agent that the fiansaction cannot be completed.
23.r.9 implementing "Galactic ID' (aggregated identity component bits) designed
to assign Qonsumerc with unique identification numbers according to the identiffing information provided by the consumer.

23.1.10 monitoring fansaction data involving all ffansactions (i.e., starting at $.01),
fed into WireWatch+ and sorted by Consumer, through the ueation of "AfIinities."

23.1.11 developing an enhanced application to monitor transactions using new, easier to update and modiS technolory to allow Western Union to more efficiently tune the software and create rules designed to detect new money laundering patterns as they are identified, and to balance risk better by prioritizing suspicious activrty by risk level.

23.2 Presentlv Planned or Considered MeaF+_res. In addition to the above

measures, Westem Union either now plans to implement, or the Report identified, a

number ofpotential improvements or enhancement$ as worthy of consideration. Each such

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potential improvement or enhancement is included by this reference.

24, Additional Southlyest Border Area Measures, In addition to the above
measures, to the extent that they are not included above, the Monitor may, in the Monitor's discretion, make any of the following measures with regard to Southwest Border Area activities and Agents Recommendations, whether or not Westem Union has been implementing them in the past or has plans to do so:

24.I providing sufficient security for on-site reviewers so that no Agent location
is exempted from on-site review by security conoerns.

24,2 Making direct inquiries into whether a ftansaclion is being conducted on
behalf of another person in states and for transactions in which state law calls for identification ofpersons on whose behalfthe transaction is being conducted, such as Arizona, and taking reasonable measures to veriff the identity of any such person.

24.3 building into its ARMOR and WireWatch+ tools consideration of some or all

the following as risk factors, in addition to other risk factors: seasonal pattems consistent

with criminal proceeds, e.g., marijuana growing season, seasonal illegal immigration;

send-to-receive ratio that is not consistent with other Agents in the locale or is consistent

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with participation in criminal activity; seasonal business fluctuation that is not consistent

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with other Agents in the locale or is consistent with participation in criminal activity; ratio
of questionable or anomalous customers to customers who are not in such groups is out of
the norm for comparable looations; ratio of questionable or anomalous transactions to
transactions that are not in such sets is out of the norm for comparable locations.

24.4 assigning tlre final Agent approval process to a department that engages in
risk management and is independent from the sales and marketing function.

24,5 where legally permitted, running credit and criminal background checks on
all controlling persons of Agent applicants who own or conffol at least ten percent (100/o)
of the Agents in the United States and to the extent possible in Mexico. Forthe purposes of
determining the percentage controlled by any one percon, that person's interest shall be aggregated with the interest ofany other person controlled by that person or an offtcer,
partner, or agent ofthat person, or by a spouse, parento or child ofthat person.

24.6 risk-ranking Western Union's Agents in the Southwest Border Area and, for
the highest risk five per cent (57o) of thern, providing annual enhanced examination of the
Agent's hansaction data history and fransaction data integrity, confidential sampling of
questioned aspects of the Agent's services, and on-site and off-site contact with the Agent.
Whenever Westem Union terminates an Agent for AML compliance reasons, it will not allow any controlling person of that Agent to be a contolling person at any Western Union
Agent for at least three years thereafter,

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24.7 subjecting Arizona authorized delegates to annual criminal checks and

declining or removing an Agent if a criminal background check reveals that the applicant

has been convieted of, or pleaded guilty or no contest to, any felony charge within the last

seven years or any felony charge involving money laundering, the financing of terrorism or

terorist organizations, or the provision of material support to tefforists or terorist

organizations at any time. Westem Union will develop a system to conlrol employee sign-

ons to its money transmittal system at all locations in the Southwest Border Area to prevent

any person from transacting Western Union business unless they are accurately signed on

using their coneot name.

24.8 incorporating enhanced confols for the higher risk Southwest Border Area
Agent locations identified as among the top five per cent (5%) of high risk locations, including:

24.8.1 proactive contact with high volume customers to determine the reason
for the transactions, the customer's relationship to the sender or receiver, and the source of
funds.

24.8.zenhanced systematic controls and transaction data integrity at the

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point of payment.

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24.8.3 sufficient prograrnmatic confrols to form a reasonable belief that Western Union knows the true identity of each customer who receives more than $500 in a transaction or totaling $1,000 or more in any one day at such a location at the time the
customer conducts the transaction or during a back-end review of the customer's pattern of
activity, to include measures to assure that these authorized delegates/Agents: Identifr, veriff, and enter into the transaction data record the identity of each such customer conducting or attempting to conduct a transaction at or above $500 by physical examination of the customer's identification document(s) at the time the transaction is being eonducted, to include the following information: the name and social security or taxpayer identification number, if any, of the individual presenting the transaction and the
person and the entity on whose behalfthe tmnsaction is to be effected; the type and number of the customer's photographic identification; the customer's current occupation; and the
customer's current residential address.

24.8.4 accurately identi$ing United States authorized delegate employees who have acc€ss to Western Union's money transmittal system by obtaining full name, address, phone, date and place ofbirth, valid photographic government-issued identification, and social security number, screening all such employees through E-veriff, and taking sufficient additional measures to assure that such authorized delegate
employees are not present in the United States in violation of Federal immigration laws.

24.9 implementing enhanced identification requirements for senders or receivers

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within the Southwest Border Area whose tansactions:

24.9.1 aggegate to arnounts greater than $3,000 over a rolling five-day

period; or

24.9.2 aggregate to amounts more than $25,000 during any l2-month period.
In each such transaction or series of transastions Westem Union will obtain the following information: the name and social security ortaxpayer identification numbero if any, ofthe
individual prese,nting the transaction and the person and the entity on whose behalf the transaction is to be effected; the type and number of the customer's photographic identification; the customer's current occupation; and the customer's current residential
address,

24.10 implementing a data entry assistance and blocking system for the purpose of
assuring the accuracy and consistency ofits transaction data, to include recognition and
rejection of entries that are not in a correct format, such as a purported Social Security Number or foreign voter identification numberthat is not in a format that is correct for that type of identification, and, to the extent practical, an automated assistance program that populates transaction data fields with names of cities and states to prevent their being entered as non-standard abbreviations or spelled inconectly.
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24.11 to the extent lawful, offering no service to transfer value, whether by money transmittal or othenrise, to Agenb within the Southwest Border Area by which amounts over $500 are made available for payment to the recipient less than twenty-four (24) hours after the transaction is initiated by the sender at any time during which the Arizona Attorney Generalos OfIice does not have a Geographic Targeting Order in effect. The Monitor shall not include this as a Recomrnendation unless the Arizona Attorney General
confirms that other money transmitters in the Southwest Border Area will also agree to
similarly limit their services.

25. Imolementation of Recomnendatlons. Within sixfy (60) days after receiving the
Monitor's Implementation Plan, or, with regard to any Recommendation added after the Monitor first delivers the Implementation Plan, within sixty (60) days of notice of the addition of such new Recommendation, Western Union shall adopt and begin development and implementation of all Recommendations in the Implementation Plan that are mutually
aoceptable to both the Monitor and Western Union, except that with respect to
Recommendations that Westem Union seelcs reconsideration pursuant to Paragmph 21,
initiation of implementation will not be required until the matter is resolved pursuant to Paragaph22.

26, Addltion and Deletlon o,tR,eg.ommendations. The Monitor shall allow flexibility

for Western Union to adjust its internal systems and controls, to respond to changes in risk

conditions, and in particular to respond to tactical changes made by money launderers in

v

their efforts to avoid Western Union's AML efforts. Accordingly, the Monitor may add or delete Recommendations after the Monitor first delivers the Implementation Plan, using

the process described in Paragraphs 18-22 for inclusion of new Recommendations in the

Implementation Plan. Whenever the Monitor adds or deletes a Recommendation, the

Monitor shall immediately provide written notice to westem Union and the State.

Compliance with this Monitor Engagement Letter requires compliance with all

Recommendations in the Implementation Plan. The timing of compliance with

Recommendations added after the initial delivery of the Implementation Plan shall be as

described in Paragraph 25.

Invcstigstion of Potential Bresches
27. At any time during the course of the Engagement, should the Monitor discover any
evidence indicating that'Westem Union, or its directors, offrcers, or employees have breached any provision of the Agreemenf including by failure or refusal to implement a
required Recommendation, the Monitor shall notiff Westem Union and the State, rmtess the Monitor in his or her discretion determines notification directly to the State alone is necessary and appropriate. The Monitor shall provide the State any and all information
relating to the evidence of alleged breach(es). This paragraph shall not preclude the Monitor from discussing any matter directly with the State.

29535 r 3
ntu# dbl,o

28. If at any time during the course of the Engagement, the Monitor discovers evidence
of a potential violation by Westem Union of money laundering laws in the Southwest Border Area that occuned after the date of the Agreemeng the Monitor shall have the discretion to investigate and report to the State and Western Union about the mattef , At the sole and reasonable discretion of the State, the State may direct the Monitor to discontinue the investigation to allow for a govemment investigation to commence.
29. Westem Union aglees that during the Engagemen! the Monitor shall review
activities and hansaotion data relating to activities that occurred prior to the date ofthe Agteement for the purpose of infonning himself or herself of the facts relevant to the development of Recommendations, the evaluation of Western Union's Risk AssessmenL the determination of the advisability ofpotential Recommendations, and the determination of the effrcacy of Recommendations during the course ofthe Engagement in their historical context.

Periodic Reviews rnd Final Renort
30. The Monitor shall undertake periodic reviews every six months, commencing when
the Monitor submits the Implementation Plan, to further monitor and evaluate compliance with this Monitor Engagement Leffer and determine whether Westem Union's Program is reasonably designed and effectively implemented to detec! deter, and prevent money laundering.

31. With regard to the periodic reviews and Final Report, the requirements set forth
above for the Implementafion Plan shall apply, except for the following modifications:

31.1 The periodic reviews will not require a work plan, but will instead be
periodic evaluationsof the Program and its effectiveness and Westem Union's progress in implementing the Recommendations required under this Monitor Engagement Letter, and shall include analysis of hansaction data relevant to the efficary of the required Recommendations, whether Recommendations should be added to or deleted from the Implementation Plan based on transaction data or on changes in the risk circumstances, and empirical tests ofthe effectiveness of the Program;

31.2 In the discretion of the Monitor, the Monitor may designate any periodic

review after the end of the twenty-ninth month after the Agreement is fully executed, as the

Final Report ifthe Monitor certifies that the conditions provided in the Agreement for

early termination are present. In making its determination whether Westem Union has

complied with all of the terms of the Agreemen! consistent with the principles enunciated

in the F.ATF RBA Guidance, the Monitor's evaluation of the Program shall acknowledge

that Western Union cannot be expected to detect and/or prevent all illicit uses of its

services, that Weslern Union's ability to detect and deter money laundering csn sometimes

be necessarily limited, and that information about risks is not always robust or freely

\r/

available. The Monitor shall bear in mind that a money services business may act in good

l6

2e535 t3

mm{, *lxfto

faith to take reasonable and considered steps to pr€vent money lautdering, and document
the mtionale for its decisions, and yet still be abused by persons engaged in illicit activity. If the Monitor makes no certification of early compliance, the Monitor will make his or her Final Report on the last day of the forly-first month after the Agreement is fully executed.
3 1.3 The Monitor shall prepare a written work plan for a Final Report and submit
it to *re State and Westem Union for comment at least sixty (60) days prior to issuing the Final Report. IfVestem Union or the State objects to any part of the work plan, the Monitor, Western Union, and the State shall use best efforts to reach a resolution agreeable
to all parties, but the State shall, in its sole discretion, determine the matter. If the Monitor elects to terminate this Engagement before the end of the forty-frst month after the Agreement is fully executed, the Monitor's Final Report must certifl that Western Union has implemented all ofthe Recommendations required under this Monitor Engagement Letter and that in the Monitor's opinion and based on the evaluation described in
Paragraph 31.2, the Program is reasonably designed and effectively implemented to deter, detect, and prevent money laundering.

Access to Information

32. TVestem Union shall cooperate fully with the Mbnitor, and the Monitor shall have

the authority to take such reasonable steps, in his or her view, as may be necessary to be

fully informed about the operations of Western Union within the scope of his or her

responsibilities under this Engagement. To that end, if requested by the Monitor, Western

\r

Union shall provide the Monitor:

32,1 access to all files, books, r@ords, personnel, transaction and other data, and
facilities that fall within the scope of responsibilities of the Monitor under this
Engagement;

32.2 the right to interview any director, officer, employee, agent, or consultant of
Western Union and to parlicipate in any meeting, otherthan meetings protected by the attorney-client privilege, concerning any maffer within or relating to the scope of the Monitor's responsibilities under this Engagement;

32.3 the right to observe Westem Union business operations that fall within the
scope ofresponsibilities of the Monitor under this Engagement;

32.4 open access to information relating to the risk involved in its credit card,

stored value, and phone transactions to permit evaluation of the producVservice risk ofnew

or innovative products or seryices offered by Westem Union in the Southwest Border

Area, particularly, but not limited to, produets or services that may inherently favor a

degree of anonymity or can readily cross intemational borders, such as online money

v

transmittals, stored value cards or other devices, money orders, and money transmitlals by mobile phone;

29535t3
fnnf' Pb,ft"

32.5 futl nansaction data relating to all person-to-person transactions sent to or
from authorized delegate/Agent locations within the Southwest Border Area from January
l, 2005, to the present and throughout the term of this Engagement involving hansactions
in amounts of $500 or more: and

32.6 to the extent practioable, access !o Western Union transaction data in near
real time.
33. In the event that the Moniior seeks access to information, documents, records, data,
facilities and/or employees that Western Union seeks to withhold from the Monitor based on a claim of attorney-client privilege or on the attorney work product doctrine, Westem Union shall promptly pmvide written notice of this determination and documentation of its claim to the Monitor and the State, Such notice and documentation shall include a general description ofthe nature of the information, documents, records, data, facilities and/or employees that are being withheld, as well as the basis forthe claim. Except as provided in this Paragraph, Western Union shall not withhold from the Monitor any information, documents, records, data, facilities and/or employees on the basis of an attorney-client privilege or the attomey work prcduct doctrine.
34. If after providing documentation as described in Paragraph 33, Westem Union
agre€s to provide the Monitor with access to the requested information, documents,
records, data, facilities and/or employees, the Monitor and the State will agree: \./
34.1 not to assert that Western Union's provision of such materials in any way
constitutes a waiver by Westem Union of the auomey-client privilege and/or the work product doctrine;

34,2 that the production of such materials provides no ground to obtain other
documents, materials, or information; and

34.3 to maintain the confidentiality of such materials and not to provide them to
any third party, except to the extent that disclosure is required by law or may be necessary in fuitherance of the Monitor's orthe State's discharge of his, her, or its official duties and responsibilities.

35. Except insofar as material is subject to Western Union's attorney-client pivilege

and/or work product doctrine, Westem Union and the Monitor shall not withhold from the

State any documents or information on the basis of any privilege or work product claims.

Failure of any Western Union director, offieer, or employee to cooperat€ with the Monitor

may, in the sole discretion of the Monitoro serve as a basis for the Monitor to refer the non-

cooperating individual to Westem Union for consideration of whether such director,

v

officer, or employee has in fact failed to cooperate with the Monitor and, if so, whether
such non-cooperation warrants disciplinary action.

18

2953513
ilt,rN{. il*tlp

36. The Monitor shall take appropriate steps to maintain the confidentialiff of any
information entrusted to him or her while executing his or her duties under the Engagement and shall share such information only with the State, appropriate investigative agencies, and individuals or entities hired by him or her. The Monitor shall also take appropriate steps to ensure that any consultants, entities, and/or individuals engaged by him or her to assist with the duties underthe Engagement shall maintain the confidentiality of information obtained while exeouting his or her duties
37. Any report or information that is provided to the State or to Western Union by the
Monitor that is filed with the Court shall be filed under seal upon a proper showing by a party. The State and Westem Union shall maintain the confidentiality of all such information provided to them by the Monitor, including the periodic reports described in this Monitor Engagement Letter, exc€pt to the extent that disclosure may be necessary by the State in connection with the disoharge of its official duties.
38. The headings and titles in this Monitor Engagement Letter are for ease of reference
only and shall not be used to constue or limit the text.
39. In the event of a conflict between the Monitor Engagement Letter and the
Agreement, the terms of the Agreement shall conftol.
40. if Resignation/Dismissal. In the event of the death or disability of the Monitor (or,
the Monitor is a corporate entity, the Monitor's principal), Western Union and the State shall proceed as described Section 20 of the Agreement. Monitor may resign at any time upon no less than 60 days written notice to both Westem Union and the State. If the Monitor resigns, Monitor shall be entitled to all fees and reimbursements provided for hereunder up to the effective date of the Monitor's resignation.

Accepted and agregd

H..t *.,

/l'

l/
1,,,^^-

It
Dated: &lsrt lto

\.r'

19

2953513

Indemnification
Agreement

David Schl.Dbach I ErecutiveVice President and General Counsel

Marcy M. Forman 14322 Car*vrightWay North Potomac, MD 20878

February I1,2010

Dear Ms. Forman:
As you know, Western Union Financial Services, Inc. ("Western Union"), and the State of Arizona ("Arizona") are currently involved in the negotiation of a Settlement Agreement, which contemplates your acting as an independent Monitor of Western Union's anti-money laundering program. As cunently structured, the settlement also contemplates: (1) an agreement among Arizona, the State of Califomia, the State of New Mexico, and the Office of the Attorney General for tle State of Texas, which forms the Southwest Border Anti-Money Laundering Alliance ("Alliance") for the purpose of enhancing money laundering investigations and prosecutions in the Southwest Border Area ( "Alliance Governing Agreement") ; (2) an agreement between the Center for State Enforcement ofAntitrust and Consumer Protection Laws, Inc., a wisconsin nonprofit corporation (the "state center"), and an Authorized Representative of the Executive Board of the Alliance, for the purpose of administering the funds ofthe Alliance ( "State Center Agreement"); and (3) an agreement between the States ofCalifornia, New Mexico, and Texas and Western Union for the purpose of implementing portions of the Settlement Agreement ("Multistate Cooperation Agreement"). The Settlement Agreement must be approved by the Maricopa County Superior Courl
In consideration of your agreement to act as Monitor under the terms of the Settlement Agreement and Monitor Engagement Letter (the "Letter"), Western Union agrees to defend, indemnifo, and hold you harmless from and against any claims by third parties arising out ofany ofyour acts or omissions in the course of your duties as Monitor. Further, Westem Union agrees to defend, indemnifl, and hold harmless any person whom you may employ to assist you in the performance ofyour duties as Monitor from any claims by third parties arising out of such person's acts or omissions in the course of their duties assisting you as Monitor. "Third parties" refers to any person or entity who is not a party to the Settlement Agreement or any of the documents related to the Settlement Agreement, including the Alliance Governing Agreement, the State Center Agreement, and the Multistate Cooperation Agreement. The indemnification obligation set forth above includes the obligation to pay (a) reasonable attomeys' fees, court costs, expenses and the costs ofappeal you or your colleagues may incur in defending a covered claim and (b) any money you or your colleagues may ultimately be ordered to pay resulting from a covered claim.
Finally, Western Union agrees to pay you your salary and/or other compensation due to you under the terms ofthe Letter should an injunction or other court order prevent you from performing your duties thereunder throueh no fault ofvour own.

Very truly yours,
-Etl^d^oL
David Schlapbach Executive Vice President and General Counsel

100 Summit Avenue I Montvale, NJ 07645

201-253-5635 I 201'2636384 Fax I david'schlapbach@westernunion.com

CERI'IFIED COPY

IN TIIE SUPERIOR COURT OF THE STATE OF ARIZONA ,.F I L E D IN AIID FOR THE COUNTY OF'MARICOPA
By

F l>j

IN THE MATTER OF: WESTERII UNION FINANCIAL SERVICES. INC.

In caseNo:{,( fnrsL '
ORDER APPROVING SETTLEMENT AND APPOINTING MONITOR

The State of Arizona ex rel. TERRY GODDARD, Attomey General ("State"), and WESTERN IINION FINANCIAL SERVICES, INC. ("Westem Union"), having applied for the appointment of a Monitor, and whereas:
l) The State and'Western Union have agreed that the public interest would be
served by their entering a Settlement Agreement ('Agreement").r One of the terms of that Agreement is the appointment of a Monitor.
2) The Agreement calls for payments by Western Union to the State and for an
independent Monitor with substantial duties relating to evaluating and improving Western Union' s anti-money laundering efforts.
3) The duties the Agreement assigns to the Monitor require the engagement and
supervision of substantial personnel, and creation by the Court of a Monitor account that permits the payment of the Monitor's necessary expenses from that account under the Agreement.
4) The Monitor's duties under the Agreement and Western Union's duties to the
State under the Agreement call for substantial information exchange. The Court finds that the transaction data that Western Union is required to produce in Paragraph l7 of the Agreement and in Paragraph 32.5 of the Monitor Engagement Letter implementing the
' Capitalized terms used in this Order have the meaning defined in the Agreement.

Agreement, which includes full transaction data relating to all person-to-person transactions sent to or from authorized delegate/Agent locations within the Southwest Border Area from January I,2005, to the present and tfuoughout the term of the Monitor's Engagement involving transactions in amounts of $500 or more, is reasonable in scope because:
a) it is reasonably necessary for the Monitor and the State to understand the
context of present transaction data and to know what effect the Monitor's Recommendations are having or that other additional or different Recommendations would be likely to have;
b) the same materials and transaction data are relevant to the investigation of
money laundering for the sarne reason, because the success of Westem Union's Undertaking, including the Monitor's Program, is part of the investigation of Western Union;
c) the Monitor may provide data to representatives of the Southwest Border
states to allow the Monitor to elicit information from the states necessary for the Monitor to determine what Recommendations are appropriate;
d) the State must have access to comprehensive data to determine whether
Westem Union is in fuIl compliance with the border-wide duties imposed on Western Union by the Agreement.
5) This Court has authority to enter this Order under Ariz. Const. art. VI, $ 24,
the Rules of Civil Procedure, A.R.S. $$ 12-123, and A.R.S. $ 13-2314.
29s3st9

GOOD CAUSE APPEARING,IT IS ORDERED: APPOINTMENT OF MONITOR

That Marcy Forman, or such corporate entity that she may choose to create for this

pulpose, is appointed as Monitor, with direction and authority to accomplish the

following:

1) open and maintain an account for the receipt of payments from Western

via Union

the Clerk of the Court and for the payment and accounting for all Monitor

expenses;
2) assemble and direct any personnel reasonably necessary to assist in the proper discharge of the Monitor's duties;
3) determine whether Western Union is in compliance with the terms of the

Agreement and its implementing Monitor Engagement Letter and submit an Implementation Plan, periodic reports and a final evaluation in a Final Report, all

pursuant to the terms of the Agreement and Monitor Engagement Letter;
4) include in each report a detailed financial accounting of all of the Monitor's

activities and expenses to date and of all Westem Union expenses that the Monitor has

determined were made to implement the Program Recommendations or to enhance the

Program, as described in Paragraph 23.L2 of the Agreement;
5) cooperate with reasonable requests for information or assistance from any
Southwest Border Area law enforcement agency, from the Arizona Departrnent of Financial Institutions, or from Western Union consistent with the Monitor Engagement

Letter. That the Monitor shall prepare and serve such reports as are required by the Monitor

Engagement Letter, as agreed to between the State and Westem Union in the Agreement, or as required by the Court. Before filing any such reports with the Court, the Monitor

29s3st9

shall submit a draft thereof to counsel for all parties for the purpose of receiving their suggestions.
That within ten days after being served with notice of the filing of a report, any party may serve written objections thereto or requests that all or portions of the report be filed under seal upon the other parties. Application to the Court for action upon the report and upon objections thereto or requests relating to sealing shall be by motion and upon notice as prescribed in Rule 6(c), Ariz. R. Civ. P. TERMS OF'ENGAGEMENT As particularizations of the above five obligations:
l) Monitor's Account a. The Monitor shall open an account at a financial institution that does
business in Arizona (the "Monitor's Account") through which the Monitor will conduct
all Monitor business.
b. The Clerk of the Court will transfer fimds into the Monitor's Account as
directed by the Court, starting with an immediate deposit of $ 1,500,000 for start-up expenses and replenished thereafter based on the Monitor's periodic reports.
c. The Monitor shall have exclusive control over the Monitor's Account, and
shall be responsible for the expenditure and auditing of the Monitor's Account as the Monitor uses those firnds to carry out this Court's orders.
d. The Monitor shall file with the Court every six months a detailed financial
accounting of all of the Monitor's activities and expenses to date, including an inventory of all property purchased, rented, or leased with Monitor's Account funds.
e. The Monitor shall, as needed, apply to the Court for subsequent orders
replenishing the Monitor's Account. In each such application, the Monitor shall request
2953519

such additional monies as the Monitor projects will be needed before the Monitor's next application, if any.
2) Employment terms
The Monitor shall take charge of the Monitor operation in general for the entire period of the Monitor's Engagement, as described in the Agreement, and, in particular:
a. The Monitor shall have the authority to employ or contract for the services
of personnel, including but not limited to legal counsel, consultants, investigators, and
experts, that the Monitor deems reasonably necessary to assist in the proper discharge of the Monitor's duties as specif,red in the Monitor Engagement Letter. While the Monitor
must provide Westem Union and the State an opportunity to perform routine conflicts
checks on individuals or entities the Monitor proposes to engage, if neither asserts a reasonable belief that a conflict exists within two weeks, the Monitor may proceed to
engage that person.
b. The Monitor shall have authority to set reasonable compensation and
expenses of the persons engaged by the Monitor, The Monitor may consult with the parties or any other person on hiring, but retains ultimate conffol of hiring, subject to the terms of the Agreement and the Monitor Engagement Letter. While the Court expects the Monitor and the persons engaged by the Monitor to provide services on a schedule similar to that of a senior Maricopa County employee with regard to hours, sick leave, and vacation days, it is within the reasonable discretion of the Monitor to engage people on a part time or hourly basis, as well.
c. The Monitor and any persons hired or engaged by the Monitor shall be paid
through the Monitor's Account, as with all other Monitor expenses. The Monitor may hire or engage personnel at their respective typical hourly rates or a reasonable fee determined bv the Monitor.
2953519

d. The Court approves the Monitor's annual compensation of $300,000 per
year, from which the Monitor shall pay any health care, health or life insurance, and other
employee-related benefits.
e. The Monitor and Monitor's staff are entitled to reimbursement from the
Monitor's Account for travel expenses at no higher rate than in accordance with federal employee travel reimbursement policies.
f. The Monitor shall serve until the expiration of the Monitor's Engagement as described in the Agreement, or until relieved by the Court after an evidentiary hearing. If
the Monitor chooses to resign prior to such expiration, the Monitor shall provide sixty (60) days written notice to the parties and the Court to provide time to retain a
replacement.
g. At the conclusion of the Monitor's Engagement, any equipment or other
property purchased by the Monitor shall become the property of the State and the Monitor
shall arrange to have it all delivered to the State's representative with a current version of
the inventory that the Monitor has periodically produced to the Court. SETTLEMENT AGREEMENT
IT IS FURTTfiR ORDERED accepting and approving the Agreement in all respects, including, but not limited to, and accepting Western Union's waivers in
ll Paragraphs and 12 therein.
FUNDS IT IS FIIRTI{ER ORDERED that Western Union shall:
l) Transfer $21,000,000 to the frrnd established pursuant to A.R.S. $ 13-2314.01
for the benefit of the Arizona Attorney General's Office, Arizona Department of Public Safety, and Phoenix Police Department for expenditure for investigations and prosecutions of money laundering in the Southwest Border Area, and related expenses as
2953519

permitted by A.R.S. $ 13-2314.01, commencing on the first banking day of the first calendar month after it signs this Agreement with an initial payment of $3,000,000 and continuing monthly installments of $3,000,000 until the full amount has been paid, except in the event ofthe filing of an action or prosecution after a breach, as described in the Agreement;
2) Commit $23,000,000 for the non-law enforcement expenses of Westem
Union's Undertaking, as described in the Agreement, and promptly transfer $4,000,000 of
that amount to the Clerk of the Court for use in paying the expenses of the Monitor as directed by the Court.
IT IS FURTHER ORDERED that the Clerk of the Court shall create a separate interest bearing account for this $4,000,000 and shall add the interest to the account as it accrues. In the event that any money remains in this fund at the time of the termination of the Monitor's Engagement, the Clerk will transfer the balance to the fund established pursuanttoA.R.S. $ 13-2314.01 forthebenefitoftheFinancialCrimesTaskForce. TURN OVER TO MONITOR AND STATES
IT IS FURTHER ORDERED that Western Union, upon service of this Order upon them, shall deliver to the Monitor or the Monitor's duly authorized agent, and to the State, the materials described in Paragraph I 7. 1 of the Agreement and the data described in Paragraphs 32.4 and 32.5 of the Monitor Engagement Letter implementing the Agreement, which includes full transaction data relating to all person-to-person transactions sent to or from authorized delegateiAgent locations within the Southwest Border Area from January 1,2005, to the present and throughout the term of the Monitor's Engagement involving transactions in amounts of $500 or more.
IT IS FURTHER ORDERED that Western lJnion, upon the written request of any Participating State, as that term is defined in Paragraph 23.2.2 of the Agreement, shall
2953519

deliver to that state such materials described in Paragraph 17.1 of the Agreement, which includes fuIl transaction data relating to all person-to-person transactions sent to or from authorized delegate/Agent locations within the Southwest Border Area, or such additional
areas of the Participating State as that state requests in writing, from January l, 2005, to
the present and throughout the term of the Monitor Engagement involving transactions in amounts of $500 or more, as may pertain to that requesting state.
IT IS FI-IRTIIER ORDERED that Western Union shall supply the transaction data
to the State and to the Participating States in the manner described in Paragraph 32.6 of the Monitor Engagement Letter, Exhibit B to the Agreement, if and to the extent indicated
by the conditions stated in the Monitor Engagement Letter. INFORMATION SIIARING
In order to preserve the privacy of the data and information involved:
1) All hansaction data or investigative information that is received pursuant to
this Order by an agency represented on the Executive Board may be shared with another
law enforcement or prosecutive agency only if such other law enforcement or prosecutive
agency agrees to keep such transaction data or investigative information confidential to the maximum extent permissible under law.
2) No agency represented on the Executive Board shall disclose such
transaction data or investigative information pwsuant to a request by a non-law
enforcement person or entity other than the Monitor if that agency obtained the information or material pursuant to an agreement that it would be kept in confidence to
the extent permissible by the applicable state laws or unless disclosure is required by a court of competent jurisdiction.
3) To the extent permitted by the respective public records laws applicable to
any agency represented on the Executive Board, information produced pursuant to this
2953519

Order that is exchanged between the Monitor and such agencies, or among such agencies, will be considered by the Monitor and by the agencies to be law enforcement investigatory materials and/or otherwise confidential and exempt from disclosure under the applicable public records laws.
4) Subject to the above, information about the finances of the Monitor shall be
made public to the maximum extent permitted by law, unless release of the information could compromise ongoing law enforcement investigations, law enforcement sources, law enforcement methods, or the safety of law enforcement personnel.
INDEMNIFICATION IT IS FURTT{ER ORDERED approving the indemnification agreement between
Western Union and the Monitor. PAYMENTS
IT IS FIIRTIIER ORDERED that the Monitor and all personnel hired or contracted with by the Monitor as herein authorized are entitled to reasonable compensation for the performance ofduties pursuant to this order and for expenses incurred by them, as limited by the Monitor Engagement Letter and approved by the Court, which shall be paid out of the Monitor's Account established pursuant to this Order. The Monitor shall serve on the parties each request for replenishment of the Monitor's Account, with the first such request filed no more than sixty days after the date of this Order. The Monitor shall not increase the rates used as the base for such requests without prior approval of the Court.
DATED thr. TL++Jday of February,2o10.

THE HONO
fii4tffi$ ][r'uo|:f,'"ffi'iiffint is a rurl.true and conect c'pv MAzuCOPA
', ?z;;l#5'#

ERIOR COURT JUDGE
2953519

ORIGINAL and TWO COPIES lodged

_ this

day of February, 2010, with:

HON. TIM RYAN Judge ofthe Superior Court Phoenix, A285003

COPY of the foregoing mailed this
_day of February,20l0, to:

And upon signing and filing of the
Order, conformed copies were mailed to the above in addition to the following individuals :
TimothyNelson Office of the Attorney General 1275W. Washington Phoenix, Arizona 85007
LarryHammond Osborn Maledon, P.A. 2929 N. Central Avenue, Suite 2100 Phoenix, AZ850l2-2793
Monitor Marcv M. Forman

10

29535t9

Indemnification
Agreement

David Schlapbach I ExecutiveVice Presidert and General Counsel

Marcy M. Forman 14322 Cart\+right Way North Potomac, MD 20878

February I l,2010

Dear Ms. Forman:
As you know, Western Union Financia[ Services, Inc. ("Western Union"), and the State of
Arizona ("Arizona") are currently involved in the negotiation of a Settlement Agreement, which contemplates your acting as an independent Monitor of Western Union's anti-money laundering program.
As currently structured, the settlement also contemplates: (1) an agrerirment among Arizona, the State of
California, the State of New Mexico, and the Office of the Attorney General for the State of Texas, which forms the Southwest Border Anfi-Money Laundering Alliance ("Alliance") for the purpose of enhancing money laundering investigations and prosecutions in the Southwest Border Area ( "Alliance Goveming Agreement") ; (2) an agreement betw€en the Center for State Enforcement of Antitrust and Consumer Protection Laws, Inc., a Wisconsin nonprofit corporation (the "State Center"), and an Authorized Representative ofthe Executive Board of the Alliance, for the purpose of administering the funds ofthe Alliance ( "State Center Agreement"); and (3) an agreement between the States of Califomia, New Mexico, and Texas and Western Union for the purpose of implementing portions of the Settlement Agreement ("Multistate Cooperation Agreement"). The Settlement Agreement must be approved by the Maricopa County Superior Court.
In consideration of your agreement to act as Monitor under the terms of the Settlement Agreement and Monitor Engagement Letter (the "Letter"), Western Union agrees to defend, indemnifo, and hold you harmless from and against any claims by third parties arising out ofany ofyour acts or omissions in the course of your duties as Monltor. Further, Western Union agrees to defend, indemnifo and hold harmless any person whom you may employ to assist you in the performance ofyour duties as
Monitor from any claims by third parties arising out of such person's acts or omissions in the course of
their duties assisting you as Monitor. "Third parties" refers to any person or entity who is not a party to the Settlement Agreernent or any of the documents related to the Settlement Agreement, including the Alliance Governing Agreement, the State Center Agreement, and the Multistate Cooperation Agreement. The indemnification obligation set forth above includes the obligation to pay (a) reasonable attomeys' fees, court costs, expcnses and the costs ofappeal you or your colleagues may incur in defending a covered claim and (b) any money you or your colleagues may ultimately be ordered to pay resulting from a covered claim.
Finally, Western Union agrees to pay you your salary and/or other compensation due to you
under the terms of the ktter should an injunction or other court order prevent you from performing your
duties thereunder through no fault ofyour own.

Very truly yours,
-J4t4il^oL
David Schlapbach Executive Vice President and General Counsel

100 Summit Avenue I Montvale, NJ 07645

201-263-5635 | 201-263-6384 Fax I david schlapbach@westemunion.com

EXIIIBIT D

TERRY GODDARD Attorney General (Firm State Bar No. 14000) CAMERON H. HOLMES, #004983 Assistant Attorney General Financial Remedies Section 1275 West Washington Street Phoenix, Arizona 85007 Telephone: (602) 542-8482 Arrorneys for the STATE CRMRacke teering@azag. gov
KARL M. TILLEMAN, #013435
2OlF.. Washington, Suite 1600
Phoenix, A285004 Telephone : (602) 257 -52M Attorneys for Western Union Financial Services, Inc.
IN THE SUPERIOR COURT OFTHE STATE OFARIZONA
IN AND FOR THE COUNTY OF MARICOPA

IN TFIE MATTER OF:

) NO. SW 2006-002213

)

)

MONIES DESCRIBED IN APPENDIX )

ONE TO THE SUPPORTING

)

AFFIDAVIT

)

)

)

)

STIPUI.ATION RE: ORDER VACATING ORDBR QUASHING SEPTEMBER 21, 2006 SEIZURE WARRANT AND PR.ELIMINARY INJUNCTION, RELEASE OF SBIZED PROPERTY, AND DISMISSAL OFTHIS ACTION

)

In order to resolve all outstanding matters between the Parties, and as part of and in furtherance of the Settlement Agreement dated February 11,2010, the State of Arizona (State) and Western Union Financial Services, Inc. (Western Union) stipulate
as follows: Western Union stipuiates to;

(i) Move to vacate this Court's prior Order Quashing September 21, 2006 Seizure

,!, Warrant and Preliminary Injunction;

J (ii) Move to replace the prior Order Quashing September 27,2006 Seizure Warrant and Preliminary Injunction with the Findings of Fact and Conclusions of law and Order in

5 the accompanying Order Vacating Order Quashing September 2J., 2006 Seizure
6 Warrant and Preliminary Injunction and Dismissing Action; and
(iii) Move to dismiss this action.

Westem Union hereby so moves with regard to each of the above.
8
The State stipulates to:
9
(i) Release its Seizure for Forfeiture of all property seized for forfeiture in SW2006-
10
002213 effective immediately upon vacation of the Order Quashing September 21,
ll 2006 Seizure Warrant and Preliminary Injunction and the granting of Western Union's

Motion to Dismiss this action; and
(ii) Refrain from petitioning the United States Supreme Court for a Writ of Certiorari
14
in this matter.

The State hereby provides notice that it hereby releases its Seizure for Forfeiture 16 of all property seized for forfeiture in SW2006-0022I3.

17

RESPECTFULLY SUBMITTED this 9th dav of March.2010.

18
STEPTOE & JOHNSON LLP
19

Karl M. Tilleman #013435

2l

20'1.8. Washington, Suite 1600

Phoenix, AZ850O4

Attorneys for Western Union

Financial Services, Inc.

24

295457 4

TERRY GODDARD AttorneY General
Ccrt.tt-tt t /+-t-ce</ 6 f gytarL Vl/e*lat rutl /t'rt',is'ol
Cameron H. Holmes #004983

Assistant Attorney General

5

127 5 W Washington Phoenix,

Arizona 85007

6

Attorneys for the State

ORIGINAL of the foregoing STIPULATION filed with the Arizona Superior Court for Maricopa County this 9'o day of March, 2010.

COPY of the foregoing STIPULATION 10 hand-delivered this 9'h day of March, 2010, to:
l1
The Honorable Eileen Willett 72 Maricopa County Superior Court Judge
201 West Jefferson 4th Floor. Suite B l3 Phoenix, AZ 85003
L4
COPY of the foregoing hand-delivered 15 and e-mailed this 9'n day of March, 2010 to
l6 Cameron H. Holmes t'l Senior Litigation Counsel
Attorney General's Office 18 L275 W Washington Street
Phoenix, Arizona 85007
19
Attorneys for Terry Goddard and The State of Arizona
a1

25 2954574

GGPV
TERRY GODDARD Attorney General (Firm State Bar No. 14000) CAMERON H. HOLMES, #004983 Assistant Attorney General Financial Remedies Section 1275 West Washington Street Phoenix, Arizona85007 Telephone: (602) 542-8482 Attorneys for the STATE CRMRacketeering@azag. gov
KARI- M. TTLLEMAN, #013435 201E. Washington, Suite 1.600 Phoenix, AZ85OA4 Telephone : (602) 257 - 5244 Attorneys for Western Union Financial Services, Inc.

IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA

IN TT{E MATTER OF:

)

)

)

MONIES DESCRIBED IN APPENDIX )

ONE TO THE SUPPORTING

)

AFFIDAVIT

)

)

)

I

NO. SW 2006-002213
ORDER VACATING ORDER QUASHING SETTIEMBER 2I,2OO6 SEIZURE WARRANT AND PRELIMINARY INJUNCTIO N AND DISMISSING ACTION

.l'l

On January 9,200'1, this Court entered an order (i) quashing the State's

September 2I, 20A6 seizure warrant ("Seizure Warrant") regarding certain person-to-
z)
person money transfers of $500 or more sent through Western Union agents to
1A
locations in Sonora, Mexico; and (ii) enjoining the State from issuing any future seizure

warrants directed at funds in Western Union's "possession, custody or control" (the

"Order").

The Arizona Court of Appeals vacated the Order on July 1, 2008. See 219 Atiz.
337, 199 P.3d 592. The Arizona Supreme Court granted Westem Union's petition for
review in part, and on June 3, 2009, vacated the Court of Appeals' Opinion. See 22A
4ti2.567,208 P.3d 218. The Supreme Court held that the Due Process Clause of the
United States Constitution prohibited this Court from asserting in remjurisdiction over
Western Union money transfers from senders in states other than Arizona to recipients
outside Arizona. See id. at ll 1, 208 P.3d at 219. The Supreme Court then remanded to
this Court "for further proceedings consistent with this opinion." Id. atIl43, 208 P.3d
at227.
Based on the parties' settlement of this matter, and in accordance with the
10
Supreme Court's opinion and mandate to this Court, the parties stipulate as follows: (i)
1l
vacating this Court's prior Order, (ii) replacing the prior Order with the below
72
"Findings of Fact" and "Conclusions of Law," and (iii) dismissing this action.
t3
Therefore, having accepted the parties' accompanying "Stipulation to
I4
Withdrawal of Motion to Quash and to Order Vacating Order Quashing September 21,
15 2006 Seizure Warrant and Preliminary Injunction, Release of Seized Property, and 16 Dismissal of this Action," and good cause appearing, the Court enters the following
LI findings of fact and conclusions of law:
18
FINDINGS OF FACT
19
1. The Seizure Warrant orders that "Any peace officer in the State of
Arizona seize all of the property described in Appendix One to the affidavit for
2l forfeiture pursuant to A.R.S. gg 13-4301 et seq. and 73-2374 by any means provided in
2. A.R.S. $ 13-4306." Selzure {4qant at Appendix One to the Seizure Warrant
describes the property as "[a]ll Westem Union money transfers" that meet all of the
1ll
following criteria: person-to-person money transfers in amounts of $500 or more, excluding all Quick Collect wires, that are presented for payout and/or are in the process of being paid out at any of 26 Western Union identified agent locations in

Sonora Mexico, that were sent from any one of the following 29 states: California,

Arizona, New York, Florida, Illinois, Georgia, New Jersey, North Carolina, Virginia,
Tennessee, Maryland, Texas, Nevada, South Carolina, Ohio, Pennsylvania,

Washington, Alabama, Indiana, Oregon, Colorado, Minnesota, Utah, Connecticut,
Michigan, Massachusetts, Wisconsin, Kentucky and Delaware. Id. Appendix One.

The Motion to Quash challenged the Seizure Warrant to the extent that it required the

seizure of money transfers that met all of the above criteria, except the Motion to Quash

did not challenge the seizure of money transfers that were sent from Arizona. The

money transfers at issue in the Motion to Quash are referred to herein as the "Money
Transfers." The senders or recipients or owners or interest holders, within the meaning
10
of A.R.S. $ 13-4301 et seq., in the Money Transfers are referred to herein as the
l1 "Customers."
2. The Seizure Warrant provided that upon Westem Union's identification

of a money transfer that fit the criteria above, Western Union was required to "prevent 14 the transaction from being paid from its system and cause the transaction to be'force

paid' to a detention account . . . excepting funds released from the seizure for forfeiture

t6 by the seizing agency during the period." Seizure Warrant at3-4.

I7

3. The Seizure Warrant became effective September 22, 2006. On

18 September 25,2m6,this Court entered an Order For Immediate Stay Of September 21,

19 2006 Seizure Warrant, which ordered, among other things, that "The Seizure Warrant is

STAYED in every respect until further notice of this Court."

2L

4. The State has not established in personam jurisdiction over the

Customers.
5.

The Money Transfers originated in another state by someone who has

not been shown to be an Arizona resident and are directed to a recipient in a foreign

country who also has not been shown to be an Arizona resident.

6.

The

"Stipulation
.'

to

Withdrawal

of

Motion

to

Quash

and

to

Order

Vacating Order Quashing September 2!, 2006 Seizure Warrant and Preliminary

Injunction, etc." includes the State's Notice of Release of Seizure for Forfeiture relating

to all property seized pursuant to the Seizure Warrant, and the Seizure Wanant expired

by its own terms in October, 2006.

CONCLUSIONS OF I.AW
1. The State has released its Seizure for Forfeiture of all property seized

pursuant to the Seizure Warrant, leaving no res to sustain the Court's jurisdiction in this

in rem action.

2.

Western Union has standing to challenge the Seizure Wanant.

3. The Supreme Court has found that the Seizure Warrant's assertion of rn

ren jurisdiction over the Money Transfers is unconstitutional under the Due Process
10

Clause of the United States Constitution.
ll

NOWTHEREFORE, it is hereby ORDERED, ADJUDGED and DECREED that:

72

1. The Order Quashing September 21, 2006 Seizure Warrant Seizure

Warrant and Preliminary Injunction is vacated and Western Union's Motion to Dismiss
t4 this action is granted.
2. The in rem Setzure Warrant that was the subject of the intervention by
16 Western Union in this SW action has expired by its terms and is constitutionally

unenforceable as it relates to the Money Transfers.

18

3. The State having released its Seizure for Forfeiture of all property seized

19 pursuant to the Seizure Warrant, no property seized pursuant to the Seizure Warrant is
henceforth subject to any seizure for forfeiture and therefore is not within the

21 jurisdiction of this Court.

4. This action is dismissed.

or DArED ttris t lr+a"y

$-lABul ,zor0.

25

MARICOPA

SUPERIOR COURT JUDGE

cswY**.,