CFPB: 2014 International Remittance Transfers Proposed Rule 

Executive Summary

 
Executive Summary

•  The Consumer Financial Protection Bureau (CFPB) recently issued a proposed rule to modify its international remittance transfers rule. The proposal would extend for an additional five years a temporary provision that permits federally-insured credit unions and other depository institutions to estimate certain pricing disclosures, and make other clarifications. This temporary provision is set to expire on July 21, 2015.

•  Also, the proposal would make several clarifications and technical corrections, including to:

     1. Consider whether U.S. military installations abroad should be considered being located in a U.S. state or a foreign country for purposes of the remittance rule;

     2. Clarify that transfers from accounts primarily used for personal, family, or household purposes would be subject to the remittance rule, but transfers from non-consumer accounts would not be subject to the rule;

     3. Clarify that faxes are considered writings and would not be subject to additional requirements for electronic disclosures; and, separately, in certain circumstances, a remittance transfer provider may conduct the transaction orally and entirely by telephone after receiving a remittance inquiry from a consumer in writing (e.g., if a sender physically abroad a U.S. branch of a sender’s institution attempts to initiate a transfer by first sending a mailed letter, and further communication by letter may be impractical.); and

     4. Clarify that a provider’s failure to deliver a transfer by the disclosed date of availability is not an error if such failure was caused by a delay related to a necessary investigation or other action to address BSA, OFAC, or similar requirements; and, separately, to clarify remedies for certain errors.

•  The proposed effective date will be 30 days after publication of a final rule in the Federal Register.

•  CUNA continues to advocate to the CFPB to improve the remittance rule for credit unions. We are interested in how these proposed changes would affect the processing of international funds transfers at credit unions, corporate credit unions, and other payment providers.

•  Comments for the proposed rule are due to the CFPB by June 6, 2014 (extended from May 27); please submit your comments to CUNA by June 2.

•  If you have any questions or comments, please contact CUNA Assistant General Counsel for Regulatory Research Dennis Tsang at dtsang@cuna.com.

•  For further details, please see the CFPB’s proposed rule.


Further Background

Temporary Exception for Estimates

Currently, a remittance provider that is a federally-insured credit union or other depository institution may estimate certain third-party fees and exchange rates if the transfer is sent from the sender’s account with the provider, and the provider is not able to determine exact amounts for reasons outside of its control.

The provider may provide estimates for: 1) the exchange rate used by the provider; 2) the total amount that will be transferred to the designated recipient inclusive of any covered third-party fees imposed; 3) any covered third-party fees; and 4) the amount that will be received by the designated recipient (after deducting covered third-party fees). (The amounts and fees would be in the currency in which the funds will be received.)

Proposed Clarification of Remedies

Under the proposal, in the case of an error that occurred because the consumer sender provided incorrect or insufficient information with the transfer, the provider shall provide the remedies required within three business days of providing the report required, except that the provider may agree to the sender’s request, upon receiving the results of the error investigation, that the funds be applied towards a new transfer, rather than be refunded, if the provider has not processed a refund. The provider may deduct from the amount refunded or applied towards a new transfer any fees actually imposed or taxes actually collected as part of the first unsuccessful transfer attempt, but may not deduct its own fee.

In addition, regarding the amount appropriate to resolve the error, when the amount that was disclosed was received by the designated recipient before the provider determines the appropriate remedy for an error, no additional amounts are required to resolve the error after the provider refunds fees and taxes paid by the sender.

Website Disclosure

The agency also proposes to clarify how a provider would disclose the name, toll-free telephone number(s), and web site of the CFPB.

1. General - Is your credit union considering not providing international fund transfers because of the CFPB remittance rule? What are the biggest hurdles to comply with the remittance rule?
2. Temporary Exception – Does your credit union currently use the temporary exception to estimate certain disclosures under the remittance rule? Do you support extending the temporary exception for an additional five years?
3. Military Installations Abroad – Should U.S. military installations abroad be considered being located in a U.S. state or a foreign country? Based on previous information from the CFPB, the agency noted that U.S. military bases located in other countries are generally considered to be located on U.S. soil, and therefore exempt from the remittance transfer rule. If military installations abroad were considered to be located in a foreign country, the remittance rule would apply to transfers sent from the U.S. to institutions located on military bases; however, the remittance rule would not apply to transfers sent from these military installations to recipients in the surrounding foreign country.
4. Other Clarifications – Does your credit union have any comments on the proposed clarifications and technical corrections with the remittance rule?
5. Effective Date – Do you believe the proposed effective date of 30 days would be sufficient time for your credit union to implement these proposed changes?
6. Other Comments – Does your credit union have any other concerns, comments, or suggestions concerning the CFPB remittance rule? For example, do you have any outstanding questions that were not addressed by the regulation and staff commentary that have created problems in complying with the rule?
7. (Optional) What is your credit union's asset size?
8. (Optional) Please provide information about yourself and your credit union.
Thank you for your input and time - CUNA Regulatory Advocacy Team