WASHINGTON – The Consumer Financial Protection Bureau has issued a final rule covering remittances transfers.
The Remittance Rule imposes requirements on entities that send international money transfers, or remittance transfers, on behalf of consumers.
Among its requirements, the rule mandates that remittance transfer providers generally must disclose the exact exchange rate, the amount of certain fees, and the amount expected to be delivered to the recipient. The rule also allows for depository institutions to estimate certain fees and exchange rate information under certain circumstances, but by statute, this provision expires in July 2020, the CFPB said.
“The final rule allows certain banks and credit unions to continue to provide estimates of the exchange rate and certain fees under certain conditions. This could preserve consumers’ ability to send remittances from their bank accounts to certain countries or recipient institutions,” the CFPB sad. “The final rule also increases the threshold that determines whether an entity makes remittance transfers in the normal course of its business and is subject to the rule. Entities making 500 or fewer transfers annually in the current and prior calendar years would not be subject to the rule. This will reduce the burden on over 400 banks and almost 250 credit unions that send a relatively small number of remittances—less than .06% of all remittances.
Last month, the Bureau also announced regulatory flexibility as a result of the impact the pandemic is having on consumers’ finances.
“Because many consumers rely on remittance transfer providers to send money from the United States to their families and friends abroad, the Bureau took action to minimize the impact of the pandemic on the remittances market by enabling insured institutions to continue to focus on the immediate needs of their customers. The final rule will further provide regulatory certainty that will continue to enable consumers to send money to their family and friends overseas during the pandemic and beyond,” the CFPB said.
NAFCU shared concerns about the final rule.
“While the rule is a step in the right direction, the increase in the transaction threshold fell short of NAFCU’s recommendations,” said NAFCU Director of Regulatory Affairs Ann Kossachev. “More so, the rule failed to expand the exemption on fee estimates at a time when credit unions are in need of regulatory relief. To date, a number of credit unions have effectively been prevented from offering remittance transfer services because of the high compliance costs and associated burdens. NAFCU will continue to advocate for the Bureau to exempt credit unions from this onerous and costly rule altogether.”
The rule is available here.