N.Y.’s Federal Home Loan Bank to stop offering money transfers, citing Dodd-Frank rules

The Federal Home Loan Bank of New York announced last week that it would no longer process international remittance transfers as a result of pending regulations under the 2010 Dodd-Frank Act.

“We pride ourselves in being an advances bank for our members,” Alfred A. DelliBovi, the president and CEO of the FHLBNY, said. “International wire transfers are a non-core service we have offered for member lenders in our district. With the looming regulatory hurdles being placed on this service, we have concluded that it is prudent for the Bank to no longer offer this service at year-end.”

Under Dodd-Frank, the Consumer Financial Protection Bureau is required to and has issued rules on international wire transfers that are scheduled to take effect in February. The new rules require remittance transfer providers to provide customers with the appropriate disclosures before and after the time of a wire transfer as well as liability protections covering the actions of a provider’s employees.

The FHLBNY began offering the service on a limited basis in the mid-1990s but chose to make it more widely available due to increased customer demand. In 2006, the bank initially contracted with another bank to process the money transfers but began offering members the ability to process remittance transfers through its 1Linksm system in 2008.