Accuity—part of BankersAccuity, a provider of global payment routing data and anti-money laundering screening software and services—released an industry report earlier this month examining the impact of Dodd-Frank’s remittance transfer rules.
The 2010 Dodd-Frank Act established new standards for remittance transfers—or money transfers from the U.S. to a foreign country. Under the rules, companies are required to disclose to consumers the exchange rate, taxes and fees, fees charged abroad by intermediaries or agents, a disclaimer that fees and foreign taxes may apply and the amount to be delivered abroad.
The disclosures must be issued to the sender before payment for the transfer. Companies are also required to provide a receipt that includes the same information from the first disclosure or a proof of payment, as well as the date when the money will arrive and how the consumers can report a problem with a transfer.
Accuity’s report, part of its ongoing Viewpoint series, said the new rules will increase costs and complexity for most institutions. An institution may also be forced to absorb costs if a payment has to be refunded or resent as a result of error.
The report also said the new rules increase pressure on the front end for banks, money service businesses and payment agents to ensure the customer has supplied complete and accurate bank routing details for each transaction, requiring more efficient validation policies and payment processing procedures.
Banks that develop more efficient procedures, however, could find that it is a competitive advantage.
“Even for banks that have historically accepted repair fees and costs as the price of good customer service, Section 1073 can mean re-examining every aspect of payment validation and workflow,” Sarkis Akmakjian, the associate director of product management at Accuity, said. “But developing better payment processing can also mean smoother transactions, faster processing and more unified customer service—exactly what institutions need in today’s competitive landscape.”