The February 7, 2013 effective date for the CFPB’s final rule regarding new disclosure, error resolution rights and cancellation policies for international remittance transfers is fast approaching. There remains a good deal of uncertainty surrounding the rule and many questions linger. In fact, there are so many questions that in August thirty-two members of Congress wrote the CFPB requesting a two year delay in implementing the rule. This request was denied, and efforts continue to clarify the scope and requirements of the rule. On October 16, the CFPB conducted a webinar during which the requirements of the rule were discussed and many questions addressed. During the webinar, a website and phone number were also provided through which the Bureau will attempt to answer questions. We have provided that contact information below.
Is Your Bank Acting as a “Remittance Transfer Provider”?
In order to comply with the rule, one should first determine whether the bank is a “remittance transfer provider” as defined in the rule. A remittance transfer provider is any person who conducts remittance transfers for a consumer to a foreign location “in the normal course of business” whether or not the consumer holds an account with the remittance provider. Banks that conduct only a small number of foreign remittance transfers per year will be exempt from the rule as this service will not be considered to be provided “in the normal course of business”.
To make this initial determination, if a bank provided 100 or fewer covered remittance transfers during the previous calendar year, then the bank will not be considered to be a provider of covered transfers during the normal course of business and will not be required to comply with the rule. However, if subsequently it is discovered that more than 100 remittance transfers were provided in the current calendar year, a bank will have a period of six months or less to begin complying with the rule. The 100 total remittance transfers is a total of all remittance transfers provided; it is not separated by transfer type.
What Is a Remittance Transfer?
A remittance transfer covered by the rule is any transfer of electronic funds made in an amount greater than $15 by a consumer in the United States and sent to a recipient in a foreign country by a remittance transfer provider. This is a very broad definition and has created some confusion. Specific facts attendant to each specific foreign transfer are important to consider. Select examples of transfers covered by the rule include: (1) any request to send money from a bank to an account located in a foreign country; (2) international consumer wire transfers; (3) certain addition of funds to a reloadable prepaid card by a participant in a prepaid card program if the bank sends the prepaid card or funds to a foreign country; (4) international ACH transactions; and (5) certain pre-scheduled online bill payments or other electronic payments.
If the transfer is requested by a business, then such transfer would not be covered because the rule applies only to transactions initiated by a consumer. It is important to note, however, that a transfer initiated by a consumer and sent to a foreign business recipient would be covered. Prepaid cards will only be covered if the bank is directly involved in sending the card or the funds to a foreign country. If a consumer buys a prepaid card from your bank in the United States and your bank gives or mails the card directly to the consumer located in the United States, then that prepaid card will not be covered as it is not sent to a foreign country and the bank would have no way to know whether the consumer will send the card abroad.
In order to determine whether your bank falls under the definition of a remittance transfer provider, we suggest that you create a list of all of the services offered, provided by, or processed through your bank that could potentially fall under the category of an international remittance transfer. Then, determine the transaction volume per month for each type of transaction.
If, based upon the transaction analysis above, the conclusion is reached that your bank falls under the definition of remittance transfer provider, the next step you should take is to review your current disclosures and contact your vendors for assistance in preparing or modifying your disclosures in accordance with the rule. Modify your Reg E policies and procedures and record keeping requirements to reflect the new rules and associated changes. We will be providing members with an update for your MRCG or MSRCG Compliance Manual. This template can be tailored to reflect each bank’s actual practices. The next step will be to conduct training for all appropriate employees and prepare the notices required to be displayed at physical locations and on your website.
CFPB Contact Information
The telephone number to the CFPB’s Office of Regulation is (202)-435-7700 and the email address for questions is RemittanceRule@CFPB.gov. At the annual meetings, we will further discuss options for compliance and answer any questions you may have.