The Consumer Financial Protection Bureau (CFPB) has updated its international money transfer rule to make the transfer process easier for institutions that handle 100 or fewer remittances a year.
“We recognize that in regulations, one size does not necessarily fit all,” said CFPB Director Richard Cordray. “The final remittance rule will protect the overwhelming majority of consumers while making the process easier for community banks, credit unions and other small providers that do not send many remittance transfers.”
The rule, which will take effect Feb. 7, 2013, implements new protections that require remittance transfer providers to disclose fees upfront, as well as the exchange rate and the amount to be received by the recipient.
Disclosures must generally be provided when the consumer first requests a transfer and again when payment is made. The rule also provides consumers with error resolution and cancellation rights.
The Bureau concluded that those institutions that consistently conduct 100 or fewer remittance transfers per year do not provide transfers in the “normal course of business” and therefore are not subject to the new requirements.
However, if a company that provided 100 or fewer remittance transfers in the previous year provides more than 100 remittance transfers in the current year, the rule provides a reasonable transition period to come into compliance.
The final rule also adjusts certain rules regarding remittance transfers that consumers schedule several days in advance of the transfer. The changes are designed to address concerns that remittance transfer providers might stop offering transfers scheduled in advance due to concerns about compliance costs under the new requirements.
Consumers transfer tens of billions of dollars from the United States to foreign countries each year. Prior to the passage of the Dodd-Frank Act, these international money transfers were generally excluded from 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 senders of remittance transfers.