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CFPB Report January 4, 2013
CFPB Issues Changes to Remittance Rule
On Monday, December 21, 2012, the CFPB published in the Federal Register a proposed rule intended to address issues with the final Remittance Transfer Rule, originally published on February 7, 2012.
“We are dedicated to bringing new protections to consumers who want to send money internationally,” said Director Cordray. “Today’s proposal will ensure consumers have continued access to remittance transfer services while making compliance easier for remittance transfer providers.”
The proposal would refine several aspects of the Final Rule:
- Additional flexibility and guidance on how foreign taxes and recipient institution fees may be disclosed.
- Taxes: If a remittance transfer provider does not have specific knowledge regarding variables that affect the amount of foreign taxes imposed on a transfer, the provider would be permitted to rely on a sender’s representations regarding these variables. The proposal would also permit providers to estimate by disclosing the highest possible foreign tax that could be imposed with respect to any unknown variable.
- Fees: If a provider does not have specific knowledge regarding variables that affect the amount of fees imposed by a recipient’s institution for receiving a remittance transfer in an account, the proposal would permit a provider to rely on a sender’s representations regarding these variables. The proposal would also permit the provider to estimate by disclosing the highest possible recipient institution fees that could be imposed on the remittance transfer with respect to any unknown variable, as determined based on either fee schedules made available by the recipient institution or information ascertained from prior transfers to the same recipient institution. If the provider cannot obtain such fee schedules or information from prior transfers, the proposal would allow a provider to rely on other reasonable sources of information (e.g. fees at similarly situated institutions).
- Disclosure of Subnational Fees – the proposal would eliminate the requirement to disclose foreign taxes at the regional, state, provincial or local level (subnational taxes). Under the proposal, a remittance transfer provider’s disclosure obligation would be limited to foreign taxes imposed on the remittance transfer by a country’s central government.
- Strict Liability for Sender Error - the proposal would revise the error resolution provisions that apply when a sender provides incorrect or insufficient information and, in particular, when a remittance transfer is not delivered to a designated recipient because the sender provided an incorrect account number to the remittance transfer provider and that results in the funds being deposited in the wrong account. Under the proposal, where the provider can demonstrate that the sender provided the incorrect account number and that the sender had notice that the sender could lose the transfer amount, the provider would be required to attempt to recover the funds, but would not be liable for the funds if those efforts were unsuccessful.
The proposal seeks to change the effective date of the rule. The original final rule issued in early 2012 has an effective date of February 7, 2013. The CFPB proposes changing this date to 90 days after the above-referenced changes are finalized.
The comment period is 15 days from its publication date in the Federal Register – December 31, 2012 - for the implementation date change (due January 15, 2013), and 30 days from publication for the other proposed changes (due January 30, 2013). CBA will comment on the proposed changes.