Thursday, August 9, 2012
CFPB embeds 'safe harbor' into money transfer rule
The Consumer Financial Protection Bureau' will give certain financial service providers "safe harbor" exemption status from the new international money transfer rules. Community banks, credit unions and financial institutions that provide less than 100 international money transfers per year will not have to notify consumers of fee disclosures, exchange rates and the actual monetary amounts that money transfer recipients receive.
"The bureau concluded that those institutions that consistently conduct 100 or fewer remittance transfers per year do not provide transfers in the 'normal course of business' and therefore are not subject to the new requirements," the CFPB said.
The agency added that if service providers surpass the 100 international remittance threshold in a given year, the rule provides a maximum transition period of six months for businesses to comply with the rule.
The final remittance rule, which takes effect Feb. 7, 2013, updates Regulation E of the Electronic Fund Transfer Act, as mandated by the Dodd-Frank Wall Street Reform Act of 2010, which went into effect October 2011. The CFPB said fee disclosures must generally be provided when consumers first request transfers and again when transfers are made. The rule also offers consumers error resolution and money transfer cancellation rights.
"Consumers transfer tens of billions of dollars from the United States to foreign countries each year," the CFPB said. "Prior to the passage of the Dodd-Frank Act, these international money transfers were generally excluded from existing federal consumer protection regulations. To remedy this, the Dodd-Frank Act expanded the scope of the Electronic Fund Transfer Act to provide protections for senders of remittance transfers."
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