WASHINGTON– The Consumer Financial Protection Bureau (Bureau) has issued a Notice of Proposed Rulemaking (NPRM) relating to its Remittance Rule.
The CFPB said the rule generally requires companies that provide remittance transfers in the normal course of business disclose to consumers certain fees and the exchange rates that apply to transfers. The rule also includes an exception that allows certain banks and credit unions to estimate certain fee and exchange rate information instead of disclosing exact amounts in certain circumstances, but this exception expires by statute in July 2020, the CFPB added.
“The NPRM proposes to allow certain banks and credit unions to continue to provide estimates under certain conditions where it could be economically infeasible for these institutions to provide exact disclosures,” the CFPB said. “This could preserve consumers’ ability to send remittances from their bank accounts to certain destinations and reduce the compliance burden for banks and credit unions.”
In addition, the Bureau said it is proposing to increase the safe harbor threshold that determines whether a company makes remittance transfers in the normal course of its business and is subject to the rule. Under the NPRM, companies making 500 or fewer transfers annually in the current and prior calendar years would not be subject to the rule. This would 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.
NAFCU Response
“Consumers deserve to receive remittance transfer services from institutions that they trust and that are not just out for profits, and we are pleased the CFPB has increased the safe harbor transaction threshold to 500,” said NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt. “Under the current remittance rule, a number of credit unions have effectively been prevented from offering remittance transfer services because of the high compliance costs and associated burdens. While the proposal’s increase to the transaction threshold for compliance purposes fell short of NAFCU’s recommendations, it will provide relief to credit unions. NAFCU will continue to push for credit unions, as community-based lenders, to be exempt from the rule altogether.”
Comment Period & More Information
The public will have 45 days to comment after publication of the NPRM in the Federal Register.
The NPRM is available here.