A “remittance transfer” is defined broadly to include all electronic transfers of funds to designated recipients located in foreign countries that are initiated by a consumer in the United States utilizing a remittance transfer provider’s services. A “remittance transfer provider” is defined as any entity providing remittance transfers in the “normal course of business,” and does not depend upon whether the consumer holds an account with the remittance transfer provider. Remittance transfer providers include banks, thrifts, credit unions and money transmitters.
Starting October 28, 2013, federal law will provide new protections, including new rights to see more information about the transfer, resolve complaints or mistakes, and cancel transfers after they've been requested.
Download ICBA Summary of the CFPB Final Rules Regarding Remittance Transfers
While the April 2013 Final Rule provides much needed relief for community banks, there are still a number of steps that policymakers can take to encourage remittance transfer growth among community banks:
- Increase the safe harbor threshold to encourage community banks to cultivate greater remittance transfer volumes.
- Exclude from the definition of “remittance transfer” funds transfers not destined to a natural person outside the United States or that are of large dollar amounts.
- Incorporate the temporary exchange rate estimates (which expire in 2015) into a permanent provision.
- Promote open network transactions such as wire and ACH transfers as a fast and cost-effective alternative for remittance transfers and develop requirements that reflect the functionality and capabilities of open network systems.
On January 20, 2012, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule that amended Regulation E, which implements the Electronic Fund Transfer Act. On December 31, 2012, the CFPB delayed the effective date of the final rule and re-proposed certain provisions. This action was prompted by concerns raised by ICBA and other financial institutions that the January 2012 rule, would have led community banks to either discontinue or drastically limit the availability of this service and thereby limit consumer access.
On April 30, 2013, the CFPB issued a final rule that revises several provisions of the remittance transfers rule that were problematic and unworkable for community banks. In the final rule, disclosures of foreign taxes and recipient bank fees, which were required under the prior rules, are optional. Additionally, banks are no longer liable for an uncollectable loss if the consumer provides an incorrect account number, routing number or international identifier.
Staff contacts: Cary Whaley