On April 25, 2019, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) published a Request for Information (the “RFI”) related to the Remittance Rule, the Bureau’s existing regulation that implements the Electronic Funds Transfer Act (“EFTA”) as amended by the Dodd-Frank Act. The Remittance Rule requires certain disclosures in the case of remittance payments (electronic funds transfers from the United States to recipients in foreign countries) but only if the transfer is initiated by a financial institution, money transmitter, or other person that provides remittance transfers in the “normal course of business” (each, a “remittance transfer provider”).
The Remittance Rule generally requires that a remittance transfer provider disclose the actual exchange rate and the amount that will be received by the recipient at the time the consumer pays for the remittance transfer. The EFTA contains a temporary exception to that requirement that allows certain insured depository institutions to provide estimated exchange rates and amounts. The temporary exception reflects the fact that banks and credit unions that make remittance transfers using the correspondent banking system cannot always know all of the fees that will be charged by other banks, including fees charged as a result of foreign laws that prevent institutions from knowing the currency exchange rate in advance.
The CFPB exercised its authority to extend the temporary exception until July 2020. The temporary exception expires in July 2020, and the CFPB lacks the statutory authority to extend the exception a second time. The RFI seeks input on how to mitigate the impact of the expiration of the temporary exception. The RFI includes twelve questions related to the expiration of the temporary exception and its expected impact; the Bureau will use input from stakeholders to determine its next steps.
A safe harbor within the Remittance Rule exempts remittance transfer providers that initiate 100 or fewer remittance transfers per year. The RFI asks whether the number of remittance transfers permitted under this “normal course of business” safe harbor should be increased, and also whether an exception for small financial institutions is warranted.
The deadline for submitting comments on the RFI is June 28, 2019.