CFPB Finalizes Remittance Rule
The CFPB has allowed financial institutions more time to comply with its revised remittance rule, which requires providers to disclose certain third-party fees and any exchange rate that will apply to the transfer of funds.
The CFPB’s final rule extends the temporary exception by five years until July 21, 2020. The rule was originally proposed in April.
“The Dodd-Frank Wall Street Reform and Consumer Protection Act contains an exception that explicitly allows federally insured financial institutions, like banks and credit unions, to estimate third-party fees and exchange rates when providing remittance transfers to their account holders for which they cannot determine exact amounts,” the CFPB said in a press release Friday. “Insured institutions can only use this exception when they cannot determine the exact amounts for reasons beyond their control.”
Credit union trade organizations welcomed the revisions but expressed continued concern with the rule’s annual threshold of 100 transactions.
“NAFCU welcomes the extension and our members are happy to see the bureau explicitly specify that U.S. military installations located abroad are states for the purposes of the remittance rule,” Director of Regulatory Affairs Michael Coleman said.
“NAFCU and our members, however, remain concerned about the overall rule and the incredible burden it places on any credit union facilitating more than 100 remittances yearly for its members. As it stands, this rule is pushing credit unions out of the market,” he added.
Mary Dunn, CUNA senior vice president and deputy general counsel, shared a similar view.
“We don’t feel that the CFPB has gone nearly far enough in providing an exemption for credit unions under the remittance law,” Dunn said on Monday during CUNA’s weekly press call. “There is an exemption of a 100 transfers per year but we think this is far too small a figure.”
In announcing the extension, the CFPB said if the temporary exception expired in July 2015, current market conditions would make it impossible for insured institutions to know the exact fees and exchange rates associated with a minority of their remittance transfers.
However, the CFPB also said it is not able to authorize any extension past July 21, 2020. The bureau said financial institutions can use the additional five years to develop “reasonable ways to provide consumers with exact fees and exchange rates for all remittance disclosures.”
“It is critical that consumers can send money abroad safely,” CFPB Director Richard Cordray said. “Today’s final rule will help ensure these changes are implemented smoothly and that consumers will be well-protected during that process.”