Fixing the International Remittance Rule

We’ll continue to push to expand the exemption level for CUs.

February 18, 2013

CUNA’s top regulatory advocacy priority is to help achieve an environment that will let credit unions focus on serving their members and implement their own business strategies.

While there are a number of regulatory requirements that need to be improved, one of the rules that has been the subject of tenacious advocacy efforts is the Consumer Financial Protection Bureau’s (CFPB) international remittance regulation.

As required by Congress, the rule covers several areas: prepayment, receipts, combined-disclosure requirements, cancellation rights, error-resolution, and sender liability when problems arise. The final rule includes an exemption, but the agency could go further in minimizing the impact of the rule on credit unions.

This is why CUNA has continually pressed for a higher exemption level, which is currently at 100 international remittance transfers per year. The agency originally set the exemption level at 25 transfers per year, but CUNA urged the CFPB to revisit that issue. In August 2012, the CFPB raised the exemption to the current level of 100.

Between 80% and 90% of credit unions offering international remittance transfers would be excluded from compliance based on the exemption level, according to the CFPB. CUNA maintains, however, that a more appropriate exemption level is 1,000 transfers per year.

Many credit unions either don’t charge for the service or charge far less than banks and other providers, which is why a more expansive exemption for credit unions is justified and why we’ll continue to push for it.

Working with the state leagues, CUNA Council members, and other credit unions, CUNA formed an International Remittances Working Group.

In October, CFPB Director Richard Cordray invited the group to meet with him and his senior staff to discuss continuing concerns. And in late November—even though the rule was set to take effect on Feb. 7, 2013—the agency announced it was reopening the rule to look at concerns in three areas we had raised:

1. Errors resulting from incorrect account numbers provided by consumers who send remittance transfers. The agency proposed that if the provider (such as a credit union) could show that the consumer provided the incorrect account number, the provider would be required to attempt to recover the funds but would not be liable for the funds if those efforts were unsuccessful.

2. Disclosure of certain foreign taxes and third-party fees. The agency proposed to let providers base fee disclosures on published fee schedules and to provide further guidance on these disclosures.

3. Disclosure of regional and local taxes. The new proposal would limit the requirement to disclose foreign taxes imposed on remittance transfers to national taxes, excluding taxes that may be imposed by subnational jurisdictions of foreign countries.

Also, the CFPB extended the effective date of the final rule until 90 days after the agency finalizes the new proposal. The new effective date is expected during the spring.

We’re advocating for ample compliance time, in recognition of the fact that many vendors may need additional time to get ready.

These are important developments, but we’ll also continue to martial combined advocacy efforts to seek as much improvement as possible to the rule, including the exemption level, before it takes effect. 

MARY MITCHELL DUNN is senior vice president/deputy general counsel for CUNA’s regulatory affairs department. Contact her at 202-508-6736.