In January 2012, the Consumer Financial Protection Bureau (CFPB) amended Regulation E and its official interpretation to provide new protections to consumers who send remittance transfers to other consumers or businesses in foreign countries. The amendments implement statutory requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The new rules will take effect on Feb. 7, 2013.
The rules cover most entities that offer remittance transfers, including credit unions, banks, and money transmitters. Remittance transfer providers will generally be required to disclose the exchange rate and all fees associated with a transfer so consumers know exactly how much money will be received on the other end (the rule provides model disclosures). The rule also requires remittance transfer providers to investigate disputes and remedy errors.
The rules apply to remittance transfers if they:
This includes many types of transfers, including international wire transfers and automated clearinghouse (ACH) transactions. Providers must offer the disclosures in English and in each of the foreign languages they principally use to advertise, solicit, or market these services. Consumers will have up to 30 minutes to cancel a remittance transfer request.
The rule contains a partial exemption from some of the disclosure requirements for federally-insured institutions until 2015.
This temporary exemption would allow federally-insured credit unions initiating international wire and ACH transactions for consumers to provide estimates of applicable exchange rates, fees, and taxes correspondent foreign banks and governments impose instead of providing consumers with the exact amounts in local currency. Even with the partial exemption, credit unions still will have to comply with the rule’s other requirements such as error resolution
and liability for acts of “agents” provisions. Credit unions must still provide consumers with disclosures that estimate likely exchange rates, fees, and taxes.
The CFPB also is seeking comment on whether to make changes to the new rules, including an exemption for companies that don’t provide remittance transfers in the normal course of their business (e.g., 25 or fewer international consumer-initiated electronic fund transfers per year).
The proposal also addressed how to apply the rules when a consumer schedules a remittance transfer many days in advance. Comments are due by April 9, 2012.
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