CFPB Proposes Changes to Remittance Rule
On December 6, 2019, the CFPB published a Notice of Proposed Rulemaking (NPRM) in the Federal Register to solicit comments on the proposed amendments to its Remittance Rule (Rule), which implements the requirements for remittance transfers under the Electronic Fund Transfer Act (EFTA). Comments must be received on or before January 21, 2020.
For purposes of the Rule, a “remittance transfer” generally means an electronic transfer of money from a consumer in the United States to a person or business in a foreign country. The Rule requires remittance transfer providers to give certain disclosures to consumers before they pay for remittance transfers. Among other things, the disclosures must contain the price of a remittance transfer, the exchange rate, the amount to be delivered to a recipient, and the date of availability.
Under the current Rule, there is a temporary exception, which is set to expire on July 21, 2020, that allows insured institutions to provide estimates of the exchange rate and covered third-party fees instead of exact amounts. With respect to the exchange rate, the CFPB is proposing to adopt a permanent exception that would permit insured institutions to estimate the exchange rate for a remittance transfer to a particular country if, among other things, the recipient will receive funds in the country’s local currency and the insured institution made 1,000 or fewer remittance transfers in the prior calendar year to that country when the recipients received funds in the country’s local currency. Additionally, regarding covered third-party fees, the CFPB is proposing to adopt a permanent exception that would permit insured institutions to estimate covered third-party fees for a remittance transfer to a particular recipient’s institution if, among other things, the insured institution made 500 or fewer remittance transfers to that recipient’s institution in the prior calendar year.
Moreover, the Rule currently provides a safe harbor which states that a person is not deemed to be providing remittance transfers for a consumer in the normal course of its business if the person provided 100 or fewer remittance transfers in the previous calendar year and provides 100 or fewer remittance transfers in the current calendar. As stated in the NPRM, the CFPB is proposing to increase the safe harbor threshold from 100 annual remittance transfers to 500 annual transfers.
Further, the CFPB is seeking comments on the Rule’s permanent exception that permits providers to use estimates for transfers to certain countries, including the process for adding countries to the CFPB’s safe harbor countries list.
