CFPB extends remittance transfer exception for five years

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 taxes when making disclosures to members making international wire remittances.

Under the Dodd-Frank Act, the CFPB was required to promulgate regulations mandating that consumers be given detailed information about the cost of an international remittance.  In implementing the rule, the CFPB exempted institutions 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 sender of 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 the exchange rate.

They also must include other fees imposed 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.  The most 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 to institutions that make more than 100 international remittance transfers a year.  Those of you who are impacted should take a look at the actual proposal since the exceptions granted by the CFPB while 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 the Bureau at its best, it considers arguments on their merits and does a better job of explaining its proposed regulations than any agency out there.

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