WASHINGTON–The Consumer Financial Protection Bureau said it has taken steps to ensure consumers will be able to continue to send remittance transfers without disruption during the COVID-19 pandemic.
In order to minimize the impact of the pandemic on the remittances market, the Bureau said it has issued a policy statement that will enable insured institutions to continue to focus on the immediate needs of their customers by taking a flexible approach to the Bureau’s supervision and enforcement of remittance transfers.
The Bureau noted it proposed amendments to the Remittance Rule in December 2019 in part to address the effects of the expiration of that temporary exception and expects to issue a final rule in May.
“Section 919 of the Electronic Fund Transfer Act (EFTA), as implemented by the Bureau’s Remittance Rule, requires a remittance transfer provider to disclose certain information to consumers who send remittance transfers, including information related to the exact costs of a transfer,” the CFPB said. “The statute also provides insured institutions a temporary exception to that requirement which allows them to disclose estimated exchange rates and certain third-party fees, instead of exact amounts, in some circumstances. By statute, that temporary exception will expire on July 21 of this year.”
Some Challenges Expected
The Bureau said it expects that after the temporary exception expires, some insured institutions that currently disclose estimates under the temporary exception may have challenges disclosing actual costs and thus without intervention may cease providing remittance services to their customers.
For international remittance transfers that occur on or after July 21, 2020 and before Jan. 1, 2021, the policy statement states the Bureau will neither cite supervisory violations nor initiate enforcement actions against insured institutions for continuing to provide estimates to consumers under the temporary exception, instead of actual amounts.
The statement can be found here.
Suspended Enforcements
The Bureau had earlier said it is suspending supervisory and enforcement action against certain remittance transfer providers under the temporary fee and exchange rate exception.
NAFCU noted it has continuously pushed the CFPB to reduce the remittance rule’s burden on credit unions and said this policy statement will prevent negative operational impacts on credit unions that offer remittance services.
The Bureau last year issued proposal related to its remittance rule to address the expiration of the temporary exception as well as the safe harbor threshold. Although NAFCU had previously urged the Bureau to adopt an even larger change, the proposed rule included an increase to the safe harbor threshold from its current level of 100 transfers in the previous and current calendar year to 500 transfers, NAFCU said.