When the final remittance transfer rule amending Regulation Ewas released by the Consumer Financial Protection Bureau inFebruary, many credit unions assumed it did not apply to theirinstitutions. In fact, the rule may apply to most credit unions, asit governs all outgoing international wire transfers andinternational ACH transactions.

It's not unusual for a reader to want to skip over thedefinitions portion of a newly published rule. For this regulation,however, it's incredibly important that credit unions not pass overthe definitions. They hold the answer to whether or not aparticular credit union is subject to enforcement of the rule,which governs the type and the timing of the disclosures a creditunion must provide to members using its remittance transferservices.

Domestic wire transfers are, so far, not a part of theregulation. Neither are international transfers under $15. Alsoimportant to note is that international wire transfers initiated bya business are not subject to the final rules governing remittancetransfers.

Remittance transfer is defined by the CFPB as “the electronictransfer of funds requested by a sender to a designated recipientthat is sent by a remittance transfer provider.” The definition ofremittance transfer includes outgoing international wire transfersand international ACH transactions and can even apply to onlinebill pay if a credit union's system uses electronic means to pay aninternational biller.

Prepaid cards, as well, may be included in the rules if thecredit union is sending a loaded prepaid card to a designatedrecipient in a foreign country.

The remittance transfer final rules apply to all credit unionsthat issue remittance transfers “in the normal course of business.”Unfortunately, we will have to wait for another final rule until wecan definitively know what constitutes “in the normal course ofbusiness.”

The CFPB issued a concurrent proposed rule with the final ruleto request comment on what constitutes “in the normal course ofbusiness.” The CFPB is proposing that the safe harbor fordetermining “in the normal course of business” is 25 remittancetransfers in the previous calendar year and no more than 25 in thecurrent year.

So, what are the rules and what steps must credit unions take tocomply with them?

Work Closely with Remittance TransferVendors

Some credit unions rely on third-party vendors to performinternational money transfers. Recognizable vendors include WesternUnion, MoneyGram, WOCCU's IRnet and Worldwide Remit.

Coopera, a sister company of PolicyWorks that helps creditunions implement remittance services specifically for Hispanicmembers, has advised credit unions to work closely with thesevendors to ensure they are on track to comply with the new rules asof Feb. 7, 2013.

Although only one party must provide the disclosures mandated bythe final rules, both are ultimately responsible according to theCFPB.

Develop Disclosures

The new rules call for two types of disclosures that must besupplied to remittance transfer senders: 1) Pre-payment and 2)Receipt. The two disclosures may be combined into one; however, youmust still provide proof of payment after receipt of the fee forthe transfer.

Model forms for these disclosures are available from theCFPB's website. Anytime a regulatory agency provides modelforms, it's a very good idea to use them rather than craft your ownfrom scratch. The remittance transfer hard-copy disclosures can beprovided on any size of paper, but the print must be in at least8-point font.

Disclosures must be provided in English. However, if a creditunion advertises its remittance transfer services in anotherlanguage, it must also be prepared to provide the disclosures inthe same language as its marketing collateral.

Because the CFPB understands that exchange rates may be unknownto a provider, estimates are allowable for certain components ofthe remittance transfer disclosures.

Pre-payment disclosures must be provided in a retainable formatso the consumer can keep them among their records. Therefore, ifthe disclosure is provided electronically, the member must be ableto print it. The only exception is the oral disclosure, which canbe provided only if the sender has initiated the transfer with aphone call or via a mobile application or text message.

Receipts must include the latest date in the foreign country onwhich the funds will be available. This date can not be presentedas an estimate or a range, but credit unions are allowed to add“May be available sooner” to the receipt.

Another important component to the receipt is the inclusion ofthe sender's rights regarding error resolution and cancellationpolicies, as well as a statement that the sender can contact theCFPB with questions or complaints.

The rule provides various options on how you may receiverequests for remittance transfers and deliver the disclosures. Tosimply the process for your credit union, you may want to considerlimiting the ways in which you receive requests for outgoinginternational wires or ACH transactions. This will help streamlinethe procedures that you need to develop for delivery of the properdisclosures in the manner required by the rule.

Draft Policies and Procedures

As is true with any regulation imposed on a credit union, properpolicies and procedures must be developed to ensure all staffadheres to the rules.

In the case of remittance transfers, the CFPB has mandated thatfinancial institutions develop policies and procedures for errorresolution, and they must adhere to the timelines outlined by theCFPB.

Your credit union should also have policies and procedurescovering the methods to receive remittance transfer requests aswell as deliver disclosures. Sample policies and procedures areavailable to credit union staff from tools like PolicyAid,PolicyWorks' online library of customizable templates.

Give the CFPB Your Thoughts

The final rules on remittance transfers are the first finalrules issued by the CFPB with a director in 2012. That said, theyaren't quite “final” just yet. The CFPB issued a proposed rule withthe final rule seeking comment on what constitutes “in the normalcourse of business” and how to handle preauthorized transfers underthe new rules.

It will be important to stay on top of the rules as they arepublished. If you want to do more than observe, you can participatein the shaping of the final rules by providing comment to the CFPBby April 9.

AndreaStritzke is vice president of regulatory compliance forPolicyWorks in DesMoines, Iowa.