The CFPB proposed a rule last week that would allow the agency to oversee certain nonbank international remittance providers for the first time.
“The CFPB’s Remittance Rule provides strong consumer protections like better disclosures and the correction of errors,” CFPB Director Richard Cordray said. “Today’s proposed rule would help us provide oversight across the entire market so consumers get the protections they deserve.”
Before the passage of the 2010 Dodd-Frank Act, international money transfers were generally not covered by consumer protection laws. Under the Dodd-Frank Act, however, the scope of the Electronic Fund Transfer Act was expanded to provide protections for consumers who use the service.
The CFPB already has the authority to supervise the largest banks and credit unions that provide remittance services.
Under the proposed rule, nonbank remittance providers that process more than one million international money transfers would be subject to the CFPB’s supervision. According to the CFPB, approximately nonbank providers transfer approximately $50 billion each year through international money transfers—the rule would impact approximately 25 of the largest nonbank providers.
In October, the CFPB’s remittance rule, which implements new consumer protections for remittance transfers, took effect. Under the proposal examiners would be granted the authority to assess nonbank remittance providers for compliance.