MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

1. “Money Services Businesses- Access to the Banking System” Presented to The FDIC Committee on Economic Inclusion Tom Haider MoneyGram International October 24, 2007 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

2. MoneyGram International Our Purpose: “To help people and businesses by providing affordable, reliable and convenient payment services.” 2 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

3. MoneyGram International Table of Contents • Company Overview • Security vs. Economic Inclusion – Are they Mutually Exclusive? • Bank Discontinuance • Next Steps 3 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

4. MoneyGram International • Payment services company conducting business in 170 countries through more than 138,000 locations • Core products • Money transfers • Money orders • Official checks • Publicly traded on NYSE • $2 billon market cap • Founded in 1940 as Travelers Express – a money order company • Merged with MoneyGram in 1998 • MoneyGram started by American Express in 1989 • Headquartered in Minneapolis 4 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

5. MoneyGram International Money Transfers • Consumers • Recent immigrants who want to send money home to their families • Debtors who need to pay overdue loan to avoid collection action • People who need funds in an emergency • Average industry transaction is $300 • Sellers • MoneyGram’s services are sold through a network of “agent” locations • Agents include banks, supermarkets, convenience stores, post offices, and “mom and pop” retailers • 138,000+ agent locations in 170 countries • Fees • Consumers can send up to $1,000 to many countries for a flat fee of about $10 • A foreign exchange between 1 to 2% is applied to most currency conversions 5 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

6. Global Agent Partners 6 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

7. MoneyGram International Money Orders • Definition • Payment instrument used in lieu of a personal check to pay regular bills, like rent and utilities • Average face amount is $150 • Consumers • Low and fixed income • Individuals who cannot maintain a bank account • Renters whose landlords require payment by money order • Small merchants who convert cash to money orders to reduce crime • Sellers • Many of the same entities that sell money transfers • 55,000 retail locations in all 50 states • Fees • Fee is determined by the seller • Retail average is less than $1 7 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

8. Security / Anti - Money Laundering vs. Economic Inclusion How can the two interests be brought into balance to better achieve everyone’s goals? Economic Inclusion Security / Anti-Money Laundering 8 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

9. Security / Anti – Money Laundering vs. Economic Inclusion Key Constituencies • Law enforcement agencies • Regulators • Elected officials Key Issues for MSBs • Compliance and training • Transaction analysis and reporting • Licensing and regulation Security/Anti-Money LaunderingEconomic Inclusion • Key Constituencies • Consumer groups • International development programs • Elected officials Key Issues for MSBs • Reduce cost of service • Consumer disclosures • Increase agent network to make service more easily available and expand service delivery methods 9 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

10. Security / Anti – Money Laundering MoneyGram Action • Know Your Agent • Background screening of all agent applicants • Ongoing training and testing of all agents • In-person reviews of select agents • On-line, computer based refresher training • Compliance Program set-up • Continuous investment in technology and staffing • Multi-million $ transaction analysis and OFAC screening systems • 5% of global workforce dedicated to compliance/regulatory issues 10 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

11. Security / Anti – Money Laundering MoneyGram Action • Licensed and regulated by 48 State Banking Departments • IRS is primary regulator for Bank Secrecy Act compliance • MoneyGram and agents examined by States and IRS • Close cooperation with law enforcement • 38,000+ SARs/year • 4,000+ CTRs/year • 4,500+ information requests/year • Regular joint-training programs 11 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

12. MoneyGram Anti-Money Laundering Tools Agent Agent Background Checks Transaction Information Tools from MoneyGram to Agent Transaction Information Tools from MoneyGram to Agent MGITransaction Analysis and OFAC Screening On-Site Reviews Training Tools from MoneyGram to Agent Transaction Information Transaction Information Tools from MoneyGram to Agent Compliance Program Set-up Agent Agent 12 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

13. How Do MSBs Detect Suspicious Activity? MoneyGram Agent Agent Agent Bad Guy Bad Guy Bad Guy Consumers = Individual structuring transactions in small amounts at multiple locations. MoneyGram will detect and file SAR/CTR = Individuals working together to structure transactions may be detected by agent. Regardless whether agent detects, MoneyGram will detect and communicate with agent to ensure filing of SAR/CTR 13 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

14. Security/Anti – Money Laundering CHALLENGE – Regulatory Compliance • Complexity of complying with different interpretations of Federal anti-money laundering laws - Bank Secrecy Act, OFAC Regulations and USA Patriot Act - by 48 State Banking Departments 14 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

15. Security/Anti – Money Laundering SOLUTION – Federal Licensing • Establish an optional Federal regulator for MSBs that can provide uniformity and efficiencies in compliance 15 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

16. Security/Anti – Money Laundering CHALLENGE - MSB Definitions • Anti-money laundering laws treat all MSBs the same • Who’s the MSB? • MoneyGram • American Express • Hilton Hotels • Carlson Wagonlit Travel • Albertsons • Jackson Hewitt Tax Service • Bob’s Deli • Objective standards are now overshadowed by complex and often confusing risk-based, subjective requirements 16 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

17. Security/Anti – Money Laundering SOLUTION - Re-define MSB • Re-define MSBs to facilitate compliance by agents • Treasury Secretary Paulson and FinCEN Director Fries have stated their intent to re-examine the MSB definition • Treasury should adopt a “rules based” approach – not “principles based” – for smaller agents • Rules will improve compliance if MSB service is only an ancillary part of agents’ business • Policies and procedures should not be the priority 17 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

18. Security / Anti – Money Laundering vs. Economic Inclusion Key Constituencies • Law enforcement agencies • Regulators • Elected officials Key Issues for MSBs • Compliance and training • Transaction analysis and reporting • Licensing and regulation Security/Anti-Money LaunderingEconomic Inclusion • Key Constituencies • Consumer groups • International development programs • Elected officials Key Issues for MSBs • Reduce cost of service • Consumer disclosures • Increase agent network to make service more easily available and expand service delivery methods 18 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

19. Economic Inclusion MoneyGram Action Consumer Cost • Fees and exchange rates have dropped significantly • Simplified pricing has replaced multiple pricing tiers with a flat fee of $9.99 for transactions up to $1000 for Mexico and Latin America, and up to $500 to most other destinations 19 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

20. MoneyGram’s Average Fee Per Transaction 20 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

21. MoneyGram’s Average Foreign Exchange Rate to Mexico 21 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

22. 45% 40% 35% 30% 25% 20% 15% 10% MoneyGram 5% Banco De Mexico reported overall volume changes 0% Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q1 2007 Q2 2007 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q4 2006 Transaction Volume Growth Trends to Mexico 22 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

23. Money Transmitters’ Price Tag Send Agent Commission $_____ Receive Agent Commission $_____ AML Compliance $_____ Bank Fees for Transmitter and Agent $_____ Training $_____ PC and Telecommunication for Agent $_____ Signs, Forms, Receipts $_____ Economic Inclusion Consumer Cost • Fees are about as low as they can go without regulatory streamlining 23 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

24. Economic Inclusion MoneyGram Action Consumer Disclosures and Services • Senders receive a receipt showing • Amount paid • Transaction fee • Exchange rate • Amount of local currency their recipient will be paid • Senders receive free calling card to notify recipient • Receivers can pick up transaction within minutes after sent • Free, multi-lingual customer service available 24x7 24 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

25. Economic Inclusion MoneyGram Action Service Availability • MoneyGram’s agent network rapidly expanding globally to provide greater consumer convenience • Network is the key to providing consumers with service when and where they want it • Network provides consistency in pricing – MoneyGram receivers are never charged a fee • Network provides consumers certainty that funds will be available • Amount is guaranteed • Funds can be picked up within minutes of being sent 25 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

26. 138,000 MoneyGram’s Global Network Expansion • MoneyGram has invested heavily in building a high-quality agent network 26 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

27. 5,500 5,500 11,300 11,300 +205% +205% +205% +205% 28,400 28,400 28,000 28,000 37,800 37,800 29,400 29,400 4,100 4,100 +33% +33% +33% +33% +5% +5% +5% +5% 9,900 9,900 +241% +241% +241% +241% 16,500 16,500 4,000 4,000 9,500 9,500 20,500 20,500 4,700 4,700 11,400 11,400 +24% +24% +17.5% +17.5% +20% +20% +24% +24% +17.5% +17.5% +20% +20% Legend: Legend: Black = June 2006 Black = June 2006 30% year - over - year growth Ø Blue = June 2007 Blue = June 2007 Global Network Expansion 27 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

28. Economic Inclusion MoneyGram Action Service Availability • Partnering with banks around the world • U.S. • 2,500+ US Bancorp locations • International • Standard Bank in Africa; ICBC in China; Bank Pekao in Poland; Bank of Ireland; Privat Bank in Romania; Rosbank in Russia; etc. 28 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

29. Colombia Brazil • Banco Davivienda Ecuador • Banco del Pichincha • Banco del Austro • Banco del Pacifico • Cooperativa de Ahorro Peru • Banco Financiero del Peru • FENACREP Bolivia Banco Nacional de Bolivia • Banco Itau • Banco Bankpar Paraguay • Banco Integracion Uruguay • Exprinter Argentina Banco Itau Buen Ayre • Banco Piano South American Banking Relationships 29 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

30. Honduras Honduras Belize Belize • • Banco Banco Atlantida Atlantida • • Belize Bank Belize Bank • • BGA BGA • • Banco Banco Mercantil Mercantil Guatemala Guatemala • • Federacion Federacion de de Cooperativas Cooperativas • • Banco de Banco de Desarrollo Desarrollo Rural Rural de de Ahorro Ahorro y y Credito Credito • • Banco Industrial Banco Industrial • • Banco Banco Fichosa Fichosa • • FENACOAC FENACOAC Nicaragua Nicaragua • • Banco de la Banco de la El Salvador El Salvador Producci Producci ó ó n n • • Banco Agricola Banco Agricola Comercial Comercial • • Central Central Cooperativa Cooperativa • • Banco Banco Cuscatlan Cuscatlan de de Ahorro Ahorro y y Credito Credito • • FEDECACES FEDECACES • • Banco Banco Uno Uno Nicaragua Nicaragua Costa Rica Costa Rica • • ScotiaBank ScotiaBank El Salvador El Salvador • • Banco de San Jose Banco de San Jose • • FEDECREDITO FEDECREDITO • • Banco De Costa Rica Banco De Costa Rica • • Banco Banco ProAmerica ProAmerica • • Banco BANEX Banco BANEX Central American Banking Relationships 30 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

31. Economic Inclusion Bank Discontinuance • Solving the Bank Discontinuance problem will improve the availability of MSB services • MSB industry - working with bank trade groups - has drafted legislation to address the problem • Regulatory support of legislation will increase the chance of success • Why is legislation needed? • Guidance issued in April 2005 by FinCEN and Federal Banking Agencies did not solve the problem • FFIEC’s BSA/AML Examination Manual does not provide clear examples of when banks do not need to review an MSB’s BSA/AML program 31 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

32. Economic Inclusion Banks and MSBs Working Together • MoneyGram seeking opportunities to partner with more banks • Money Orders • Money Transfers • Regulators can help by reducing banks’ concerns with MSB accounts • Money transfers can help migrants become banked consumers 32 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

33. Bank Money Transmitter Partners with Bank Economic Inclusion Steps for migrants to become banked Bank/MoneyGram Agent MoneyGram Agent Migrant Becomes Banked and Remits at Bank which is now a MoneyGram Agent Migrant Becomes Remitter Migrant Becomes Employed New Migrant Arrives in US 33 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

34. Security/Anti – Money Laundering vs. Economic Inclusion MGI recommends the Committee on Economic Inclusion • Seek greater uniformity, consistency, and clarity in the regulation of MSBs by allowing MSBs to opt for a federal license • Encourage Treasury to revise the definition of MSBs to facilitate compliance by agents, focusing on a rules-based approach for smaller agents • Encourage greater partnerships and linkages between MSBs and banks • Address the critical issue of MSB banking relationships through further regulatory guidance or Congressional action 34 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.

35. Security/Anti – Money Laundering vs. Economic Inclusion Conclusion • MSBs provide vital services to consumers • MSBs work with banks around the world • Money transfer fees have dropped significantly • The regulatory environment influences the ability of MSBs to serve consumers • A balance is needed between ensuring that our nation’s interests are protected through strong AML regulation, while at the same time making sure MSBs are able to serve their consumers 35 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.