CFPB Issues Statement on Remittance Rule Supervisory and Enforcement Practices
The CFPB recently published a policy statement outlining its position with respect to the enforcement and supervision of its Remittance Rule (Rule), which implements the requirements for remittance transfers under the Electronic Fund Transfer Act (EFTA), as a result of challenges raised by the COVID-19 pandemic.
A “remittance transfer” under the Rule generally includes an electronic transfer of money from a consumer in the United States to a person or business in a foreign country, and the CFPB identified that access to this type of money transfer is particularly important in our current environment and that it wants to allow remittance transfer providers to focus their efforts on ensuring that consumers have such access. The Rule requires, among other things, that remittance transfer providers give certain disclosures to consumers before they pay for the transfer.
The disclosures must include the exact costs of remittance transfers. However, there is a temporary exception under the current Rule to allow insured institutions to provide estimates of the exchange rate and covered third-party fees instead of exact amounts. This exception is set to expire on July 21, 2020, but in December 2019, the CFPB proposed amendments to the Rule to adopt permanent exceptions to allow for estimates to be provided under certain conditions.
Although the CFPB anticipates issuing a final rule with these permanent exceptions in May of this year, to take effect by the expiration of the temporary exception, the CFPB has stated that some insured institutions currently covered by the temporary exception likely will not be covered under the permanent exceptions. These institutions, therefore, would need to begin providing exact third-party fee and exchange rate information as of July 21, 2020, an endeavor likely to be a challenge in light of the COVID-19 pandemic.
To mitigate these burdens posed by the current state of emergency, the CFPB announced in its policy statement that it will take a “flexible enforcement and supervisory approach” to the Rule for remittance transfers occurring between July 21, 2020, and January 1, 2021. Specifically, the CFPB stated that, for such transfers, it does not intend to cite in an examination or initiate an enforcement action against any insured institution that is newly subject to the exact cost requirements after the temporary exception expires for continuing to provide estimates in connection with those transfers (as currently permitted under the temporary exception) and thus not complying with the new exact cost requirements during that time. Nevertheless, the CFPB indicated that institutions that will be subject to the exact cost requirements as a result of the temporary exception expiration on July 21, 2020, should still work towards implementing procedures that allow them to meet the new requirements as permitted by their capacity.
WBK covered the CFPB’s Notice of Proposed Rulemaking on the related proposed amendments to the Rule here.
