Remittance Transfer Rule Takes Effect Oct. 28

Know your responsibilities regarding tax and fee disclosures, disclaimers, and error resolution.

July 10, 2013

In February 2012, the Consumer Financial Protection Bureau (CFPB) published amendments to Regulation E (Electronic Fund Transfer Act) to provide new protections to consumers who send remittance transfers (international money transfers) to consumers or businesses in foreign countries.

The Reg E amendments (12 CFR Part 1005, Subpart B) implement Dodd-Frank Act requirements and cover credit unions, banks, and money transmitters that provide remittance transfer services to consumers. The rule doesn’t apply to institutions that consistently provide 100 or fewer remittance transfers each year, and it excludes from coverage small dollar transfers of $15 or less.

The rule was originally scheduled to take effect Feb. 7, 2013. In November 2012, the CFPB announced plans to delay the effective date and to consider:

Providing additional flexibility regarding the disclosure of foreign taxes, as well as fees imposed by a designated recipient’s institution for receiving a remittance transfer in an account;

Revising the error resolution provisions that apply when a remittance transfer isn’t delivered to a designated recipient because the sender provided incorrect or insufficient information, particularly when a sender provides an incorrect account number and that incorrect account number results in the funds being deposited in the wrong account; and

►Temporarily delaying the rule’s effective date.

CUNA advocated for these changes and several others that would benefit credit unions offering international money transfer services.

The CFPB issued a final rule to address these issues on April 30, 2013. The Federal Register published the rule on May 22, 2013. 

The remittance transfer rule will now take effect on Oct. 28, 2013.

Disclosure of fees, foreign taxes

A remittance transfer provider must disclose its own fees, and “covered third-party fees” such as those charged by an agent (e.g., pick-up location for the provider) or intermediary institution (e.g., in connection with a wire transfer).


A "remittance transfer provider" is a "person" who provides remittance transfer services to consumers in the normal course of business (i.e., person provides more than 100 remittance transfers a year).

Remittance transfer providers generally will be required to disclose the exchange rate and fees associated with a transfer.

CFPB rules also require remittance transfer providers to investigate disputes and remedy errors.

A "remittance transfer" is an electronic funds transfer (e.g., international wire transfer, cross-border automated clearinghouse transaction) requested by a sender (i.e., consumer in the U.S.) for a designated recipient (in a foreign country) that is sent by a remittance transfer provider.

CFPB rules exclude from coverage small dollar transfers of $15 or less.

But the 2013 final rule generally eliminates the requirement to disclose fees imposed by a designated recipient’s institution. Those fee disclosures will be optional.

Fees charged by the recipient institution will be considered “noncovered third-party fees” unless the institution is acting as an agent of the remittance transfer provider. The CFPB staff commentary to the regulation provides additional examples of covered and noncovered third-party fees. See comment 30(h) .

The CFPB also eliminated the requirement to disclose foreign taxes and include them in the calculation of the disclosed amount the designated party will receive.

A remittance transfer provider need only disclose taxes it’s required to collect in connection with the transfer. Disclosure of taxes collected by a person other than the remittance transfer provider will be optional.

In place of these two former requirements, the rule requires providers to include disclaimers on the prepayment disclosure and receipt (or the combined disclosure) provided to senders of remittance transfers indicating that the recipient may receive less than the disclosed total amount due to fees charged by the recipient’s financial institution and foreign taxes.

In addition, the rule permits providers to disclose these fees and taxes, or a reasonable estimate of these figures, as part of the new required disclaimer.

Appendix A to the rule includes amended model forms reflecting the updated language.

Redefining ‘error’ obligations

Remittance transfer providers must investigate and resolve errors when a sender provides a notice of an error within 180 days of the promised date of delivery of a remittance transfer.

The definition of “error” under the rule includes the failure to make available to a designated recipient the amount of currency stated in the disclosure provided to the sender. A provider would be obligated to either resend the transfer or refund the sender the total amount of the remittance transfer, regardless of whether it could recover the funds.

The 2013 rule creates an exception from the 2012 final rule’s error provisions for certain situations in which a sender provides an incorrect account number or recipient institution identifier (e.g., routing number, Canadian transit number, International Bank Account Number, etc.) and that mistake results in the transfer being deposited in the account of someone other than the designated recipient.

In such cases, the provider would not be liable to resend or refund the funds if all of the following apply:

The provider can demonstrate that the sender provided an incorrect account number or recipient institution identifier to the provider in connection with the remittance transfer;

The provider used a reasonably available means to verify that the recipient institution identifier provided by the sender corresponded to the recipient institution name provided by the sender;

The provider gave notice to the sender before the sender paid for the remittance transfer that, in the event the sender provided an incorrect account number or recipient institution identifier, the sender could lose the transfer amount;

The incorrect account number or recipient institution identifier resulted in the deposit of the remittance transfer into an account that isn’t the designated recipient’s account; and

The provider promptly used reasonable efforts to recover the amount intended for the designated recipient.

The exception won’t apply when the failure to make funds available is the result of a mistake by the provider, or due to incorrect or insufficient information the sender provides other than an incorrect account number or incorrect foreign recipient institution number (e.g., the wrong name of the recipient institution).

The 2013 final rule also streamlines error resolution procedures in other situations where a sender’s provision of incorrect or incomplete information results in an error under the rule.

This article is only a snapshot of the rule changes. For more information, visit CUNA’s e-Guide to Federal Laws and Regulations at

VALERIE Y. MOSS is CUNA’s senior director of compliance analysis. Contact CUNA’s compliance department at