Demystifying the Dodd – Frank Remittance Transfer Rule
By Dominic Suszek, CEO, BSA Radar
Customer Communication is Key to Compliance
In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act became law. Many of the details were unclear when Dodd-Frank was enacted two years ago. But today it is clear that the core principles of consumer protection embedded in Dodd-Frank are setting the direction for the financial services industry. Financial institutions that don’t take an aggressive approach to compliance may be at risk of being left behind.
The Remittance Transfer Rule
Consumers in the United States send billions of dollars abroad each year. These transactions are referred to as “remittance transfers” and are subject to a new Dodd-Frank rule that takes effect on February 7, 2013. The remittance transfer rule requires companies that provide remittance transfers to give their customers certain disclosures and establishes cancellation and error resolution procedures. Many consider the remittance transfer rule to be the most complex piece of legislation seen in the banking industry in modern times. Indeed, not since Regulation CC in 1987 has there been such an intricate redefinition of banking terms affecting consumers.
The remittance transfer rule applies to most international remittance transfers sent by people or companies regardless of the purpose of the transaction. As a result, the rule impacts all segments of the financial services industry — from commercial banks to private equity funds – that execute 100 remittance transfers or more per calendar year. But it’s not just banks that must be in compliance; consumers must be in compliance as well. Remittance transfers over $15 requested by consumers in theUnited Statesand sent to people or companies in foreign countries are also affected.
The rule affects the following:
- Electronic wire transfers
- Outgoing international ACH transactions
- Online bill payments that a sender schedules in advance as long as they are sent by a person to a party located in a foreign country
- Transactions originated by money transmitters
- Additions of funds to prepaid cards, and mobile device transfers.
