The CFPB proposed revisions on Tuesday to its international remittance rule as part of an effort to ensure financial institutions have adequate time to provide the required disclosures.
“It is critical that we are able to protect consumers who send money abroad and that we preserve access to such services,” CFPB Director Richard Cordray said. “Today’s proposal would allow banks and credit unions to have more time to resolve certain implementation challenges while maintaining these important, new consumer protections.”
Under the CFPB’s international money transfer rule, providers must disclose fees and offer an opportunity to cancel a transaction. The 2010 Dodd-Frank Act requires that disclosures contain the exchange rate, third-party fees and taxes, the amount of money to be delivered abroad and a disclaimer that additional fees and foreign taxes may apply.
Firms are required to provide the consumer with a receipt with the disclosure information or a proof of payment. The receipt must also specify the date when the money will arrive and how the consumer can report a problem with a transfer.
The rules, however, contain an exception that allows financial institutions to estimate third-party fees and exchange rates when providing money transfer services for accountholders. The CFPB’s proposal, if finalized, would extend the deadline from July 21, 2015, to July 21, 2020.
“If the temporary exception expired in July 2015, some insured institutions have reported that current market conditions would make it impossible to know the exact fees and exchange rates associated with a minority of their remittance transfers,” the CFPB said in a press release. “Without the exemption, these insured institutions report that they would be unable to send some transfers to certain parts of the world that they currently serve. The Bureau believes that this exception is limited, and is not used for most remittances by insured institutions.
Before the passage of the Dodd-Frank Act, international money transfers were not generally covered by federal law. Dodd-Frank expanded the scope of the Electronic Fund Transfer Act to protect remittance providers, and the CFPB issued a final rule in 2012 detailing how remittance providers should treat consumers.