by. Henry Meier
The CFPB proposed a regulation yesterday to extend for five years, until July 2020, a rule permitting depository institutions, including credit unions, to estimate certain fees and taxeswhen making disclosures to members making international wire remittances.
Under the Dodd-Frank Act, the CFPBwas required to promulgate regulations mandating that consumers be given detailed information about the cost of an international remittance. In implementing the rule, the CFPBexemptedinstitutions that make 100 or fewer international remittances a year. Nevertheless, the regulation has been among the most closely watched by the credit union industry. Under the proposal, providers of remittances must, among other things, include prepayment disclosures that inform the senderof the transfer amount in the sender’s currency, transfer fees, the total amount of the transaction in the sender’s currency, and an estimate of theexchange rate.
Theyalso must include other feesimposed by entities other than the remittance transfer provider that will be deducted from the amount transferred by the consumer. These fees are almost impossible for depository institutions to ascertain since many of them do not have pre-existing relationships with the institutions that will be receiving the remittances. As a result, depository institutions and credit unions were given the authority to estimate these fees(fees and exchange rates)until January 21, 2015. Themost important part of yesterday’s proposed regulation is that it extends this exception for another five years until 2020.
Once again, remember that this rule only applies toinstitutions that make more than100international remittance transfers a year. Those of you who are impacted should take a look at the actual proposal since the exceptions granted by the CFPBwhile important are limited. One final note, for many credit unions the CFPB has become the institution they love to hate. But, yesterday’s change reflects theBureau atits best, it considers arguments on their merits and does abetter job of explaining its proposed regulations than any agency out there.
