When the Consumer Financial Protection Bureau (CFPB) released its remittance transfer (i.e., international money transfer) final rule in February, the agency also published a notice of proposed rulemaking seeking comment on whether to provide a safe harbor to exempt institutions from the rule if they transmitted 25 or fewer remittance transfers per year.
The comment period closed April 9, 2012, and the CFPB issued the supplemental final Aug. 7, increasing the proposed 25 transfers to 100 transfers per year. The regulation goes into effect Feb. 7, 2013.
The CFPB’s final rule provides a new safe harbor clarifying when a person provides remittance transfers in the “normal course of business” for purposes of determining whether a “person” falls under the definition of “remittance transfer provider.”
Remember, the definition of a remittance transfer provider is a person who provides remittance transfers in the normal course of business. And, under Regulation E, a person means a natural person or an organization, including a corporation, partnership, cooperative, association, and so on.
The final rule states that if an institution:
►Provides 100 or fewer remittance transfers in the previous calendar year and provides 100 or fewer remittance transfers in the current calendar year, then the institution is deemed not to be providing remittance transfers for a consumer in the “normal course of its business” and is exempt from the rule.
►Crosses the 100-transfer threshold, and is then providing remittance transfers for a consumer in the normal course of its business, the final rule permits a “reasonable time period” (not to exceed six months) to begin complying with the remittance transfer rule (subpart B of Reg E).
Also note that the proposed safe harbor was located in the staff commentary to the rule. The final safe harbor is included in regulatory text, with further guidance in the commentary.
The August final rule also modifies several aspects of the February final rule regarding remittance transfers that are scheduled before the date of transfer, including preauthorized remittance transfers:
►When a sender schedules a one-time transfer or the first in a series of preauthorized remittance transfers five or more business days before the date of transfer, the final rule permits remittance transfer providers to estimate certain information in the prepayment disclosure and the receipt provided when payment is made.
If estimates are provided under this exception, the provider generally must give the sender an additional receipt with accurate figures after the transfer is made.
►For subsequent preauthorized remittance transfers, the final rule generally eliminates the requirement that a remittance transfer provider mail or otherwise deliver a prepayment disclosure for each subsequent transfer, unless certain specified information has changed.
However, the final rule generally requires a remittance transfer provider to provide accurate receipts after subsequent transfers are made.
The August final rule also modifies the disclosure requirements for remittance transfers scheduled at least three business days before the date of transfer and for preauthorized remittance transfers.
The final rule generally requires disclosure of the date of transfer on the initial receipt and on any subsequent receipts provided with respect to a particular transfer.
For subsequent preauthorized remittance transfers, the final rule also requires the remittance transfer provider to disclose the future date or dates the remittance transfer provider will execute subsequent transfers in the series.
The final rule permits providers to describe on a receipt both the three-business-day and 30-minute cancellation periods, and either describe the transfers to which each deadline applies or, alternatively, use a checkbox or other method to designate which cancellation period is applicable to the transfer.
The final rule does not change the three-business-day cancellation period for these transfers.
Please stay tuned—more information will be forthcoming in CUNA’s CompBlog and in CUNA’s e-Guide to Federal Laws and Regulations, where we’ll be creating a separate section to house information on remittance transfer requirements.
VALERIE MOSS is CUNA’s director of compliance information.