A Consumer Financial Protection Bureau (CFPB) rule regulating international money transfers is about to get more heft.
Newly proposed revisions, which the agency says are narrow in focus, creates a comprehensive consumer protection regime for remittance transfers sent by consumers in the United States to individuals and businesses in foreign countries.
“We are dedicated to bringing new protections to consumers who want to send money internationally,” said CFPB Director Richard Cordray. The proposal, he said, “will ensure consumers have continued access to remittance transfer services while making compliance easier for remittance transfer providers.”
Under the final rule, remittance transfer providers will be required to disclose certain fees and taxes, as well as the exchange rate that will apply to the transfer. The rule also provides consumers with error resolution and cancellation rights.
The proposed changes are designed to address the rule’s provisions on:
- Disclosure of Foreign Taxes and Institution Fees: The proposal would provide increased flexibility and guidance with respect to the disclosure of taxes imposed by a foreign country’s central government as well as fees imposed by a recipient’s institution for receiving a remittance transfer in an account.
- Disclosure of Subnational Taxes in Foreign Country: The proposal would require disclosure of foreign taxes imposed by a country’s central government, but would eliminate the requirement to disclose taxes imposed by foreign regional, provincial, state, or other local governments.
- Errors from Incorrect Account Information: Under the proposal, when the provider can demonstrate that the consumer provided an incorrect account number and certain other conditions are satisfied, the provider would be required to attempt to recover the funds but would not bear the cost of funds that cannot be recovered.
The CFPB’s proposed revisions are designed to preserve market competition and consumers’ access to remittance transfer services and to facilitate implementation of and compliance with the rule’s requirements, while maintaining the rule’s valuable new consumer protections and ensuring that those protections can be effectively delivered to consumers.
The Bureau expects to keep the rulemaking narrowly focused on these issues and to complete the rulemaking process on an expedited basis. Though the rule is scheduled to take effect on February 7, 2013, the Bureau is proposing a temporary delay of that date to accommodate the changes in the new proposal.
Consumers transfer tens of billions of dollars from the U.S. to foreign countries each year. Prior to the passage of the Dodd-Frank Act, these international money transfers were generally not covered by existing federal consumer protection regulations. To remedy this, the Dodd-Frank Act expanded the scope of the Electronic Fund Transfer Act to provide protections for remittance transfer senders, and directed that rules implementing certain provisions of the new protections be issued by January 21,