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Joint Comment Letter re Potential Regulatory Changes to the Remittance Rule
To Whom It May Concern:
The Clearing House Payments Company LLC (“TCH”), the American Bankers Association, the Consumer Bankers Association, and the Bankers Association for Finance and Trade (collectively, the “Associations”)1 respectfully submit this comment in response to the Consumer Financial Protection Bureau’s (“CFPB” or “Bureau”) Request for Information Regarding Potential Regulatory Changes to the Remittance Rule (“Remittance RFI”).2 In the Remittance RFI, the Bureau seeks comment on two aspects on its Remittance Transfer Rule, subpart B of Regulation E (the “Remittance Rule”): (1) the pending July 2020 expiration of a temporary exception that, if certain conditions are met, allows insured depository institutions to estimate the exchange rate and certain fees on remittance transfers, 12 CFR 1005.32(a) (“Temporary Exception”); and (2) the Remittance Rule’s 100-transfer safe harbor that provides an exemption from the Remittance Rule for institutions that send 100 or fewer annual remittance transfers, 12 CFR 1005.30(f)(2). This comment letter focuses on the Temporary Exception.
The Associations appreciate the Bureau’s willingness to work with industry participants to find a solution to this impending problem. As more fully discussed below, bank-provided remittance transfers are an important service for bank customers. Without action by the Bureau, the expiration of the Temporary Exception will have the perverse effect of reducing consumer choice, forcing bank customers to use less convenient or more expensive services, and, for some consumers, leaving them without an alternative means of sending the transfers that they send today through their banks. Accordingly, the Associations request that the Bureau:
- Recognize the distinct segment of the remittance transfer market that is served by banks; and
- Utilize its existing authority to permit banks to provide estimated disclosures so that they can continue providing remittance transfer services to their customers with the same worldwide reach that their customers are accustomed to today.
The Remittance Rule, which implements section 1073 of the Dodd-Frank Act (codified at section 919 of the Electronic Fund Transfer Act (“EFTA”)), established a comprehensive system for consumer protection for consumers who send remittance transfers in the United States to individuals and businesses in foreign countries. A requirement of the Remittance Rule is to provide consumers with disclosures that include the price of a remittance transfer (including most fees and the exchange rate), the amount of currency to be delivered to the recipient, and the date the funds will be available to the recipient.
Although disclosures are generally required to be exact, in section 1073 of the Dodd-Frank Act, Congress included a time-limited exception allowing insured depository institutions that satisfy specified conditions to estimate certain fees and the exchange rate.4 The Remittance Rule incorporated this exception. Congress initially set the exception to last for five years, until July 2015, and authorized the Bureau to extend the exception further, to July 2020, if the expiration “would negatively affect the ability of [insured institutions] . . . to send remittances.”5 In 2014, the Bureau made such a determination and extended the exception to July 21, 2020.6 In doing so, the Bureau explained insured institutions were, for some transfers, unable to disclose exact exchange rates or fees and that the Bureau did not expect solutions to this problem to emerge before July 2020.