The CFPB issued a final rule on international remittance transfers on Tuesday, extending the effective date of the rule to Oct. 28, thereby giving financial institutions an additional six months to comply.
The final rule issued on Tuesday amends the final rules issued by the agency in the past year. The CFPB modified the original proposal to make optional, under certain circumstances, the requirement to disclose fees imposed by the recipient’s institution and the requirement to disclose taxes collected by an institution other than the remittance transfer provider.
Additionally, the rule revises error resolution provisions applicable when a remittance transfer is not delivered to the recipient because the sender provided insufficient or inaccurate information to require the provider to refund funds provided by the sender or resend the transfer at no cost to the sender, though the provider may collect third-party fees for resending the transfer.
“The Bureau noted that commenters had argued that fees imposed and taxes collected on the remittance transfer by a person other than the remittance transfer provider may not be known at the time the sender authorizes the remittance transfer and that this lack of knowledge could result in the provider disclosing misleading information to the sender,” the CFPB said in its final rule. “The Bureau also acknowledged that smaller institutions might not have the resources to obtain or monitor information about foreign tax laws or fees charged by unrelated financial institutions and that providers might not know whether a recipient had agreed to pay such fees or how much the recipient may have agreed to pay.”
The National Association of Federal Credit Unions praised the CFPB for cutting back foreign-tax disclosures.
“We appreciate that the CFPB scaled back these requirements and eased some aspects of the 2012 rule,” NAFCU President and CEO Fred Becker said. “However, the rule still imposes several costly requirements, and we remain concerned that many credit unions will either leave the market or sharply reduce their presence. Finally, we believe that the exemption for credit unions, which applies only to those institutions facilitating up to 100 remittances a year, remains far too low.”
Dodd-Frank mandated the implementation of consumer protection measures for remittance transfers sent by U.S. consumers to foreign businesses and individuals. Under the remittance transfer rule, transfer providers must disclose fees and taxes associated with the transfer, as well as a reasonable estimate of how much the recipient may receive. Consumers will also be given error resolution and cancellation rights.
“We are dedicated to protecting consumers who send money abroad and to preserving their access to these services,” CFPB Director Richard Cordray said. “[This] final rule achieves these goals by maintaining the rule’s crucial new consumer protections while facilitating compliance for providers of remittance transfers.”