Regulation

NAFCU urges CFPB to lower safe harbor threshold for remittance transfers

Remittance Money transferThe National Association of Federal Credit Unions urged the CFPB on Tuesday to lower the safe harbor threshold for remittance transfers to reduce the regulatory burden on credit unions that only offer the service on a limited basis.

In January, the CFPB released a proposed rule that would define which nonbank entities would be considered larger participants in the international money transfer market.

NAFCU said that while the CFPB’s proposal “creates a more level playing field” for institutions already subject to remittance regulations, the existing remittance rule remains “cost prohibitive.”

“The regulatory burdens imposed by the remittance transfer rule on credit unions have already, and will continue to, lead to a significant reduction in consumers’ access to remittance transfer services,” NAFCU Regulatory Affairs Counsel Angela Meyster said. “Many credit unions, already facing growing and substantial compliance burdens, have or will be forced to discontinue their remittance programs, and those that continue to offer remittances will be forced to significantly increase their members’ fees to access remittance services.”

Meyster said the 100-transfer safe harbor, which excludes institutions that make fewer than 100 remittance transfers per year, is too low.

“The CFPB should increase the 100-transfer limit to provide a meaningful safe harbor for those institutions that do not complete these transfers in their normal course of business,” Meyster said. “Such an increase would not be detrimental to consumers and would still preserve a competitive environment.”

The American Bankers Association expressed similar concerns to the CFPB in its comment letter, which urged the regulator to lower the safe harbor threshold for larger remittance providers.

The ABA said the agency’s defined first tier, the largest remittance providers subject to the bureau’s supervisory authority, accounted for approximately 75 percent of the market, adding that the rule, in effect, would apply to only the largest providers.

“ABA believes setting the threshold at one million transfers annually in fact undercuts the Bureau’s stated purposes for establishing its authority over larger providers in the market,” the ABA said in its letter. “Without discussing all the nuances that the Bureau proposes for determining coverage, such as the elements of averaging over three years and other complex calculations to determine whether or not a provider is subject to the Bureau’s supervisory authority, the proposed threshold itself is too high.”

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