remittance transfer rule cancellation

The term covered third-party fees is defined in 1005.30(h)(1) to mean any fees (other than non-covered third-party fees described in 1005.30(h)(2)) that a person other than the remittance transfer provider imposes on the transfer. The insured institution made 1,000 or fewer remittance transfers in the prior calendar year to the particular country for which the designated recipients of those transfers received funds in the country's local currency. [103], At the proposed rule stage, the Bureau determined that an IRFA was not required because the proposal, if adopted, would not have a significant economic impact on a substantial number of small entities. In addition, commenters noted that consumers would not be able to compare prices or easily identify which providers were required to comply with the Rule and offer its protections. The number of remittance transfers does not include remittance transfers to a country in the prior calendar year when the designated recipients of those transfers did not receive the funds in the country's local currency. Bureau of Consumer Fin. For example, a financial institution that closes at 5:00 p.m. could stop accepting payment for remittance transfers after 4:30 p.m. 4. Customer has rights under EFTA 919 (disclosure/cancellation/refund) What happens under UCC 4A, Regulation J, and/or CHIPS rules? 5512(d). [15] None of these insured institutions will be covered by the Rule under the increase in the normal course of business safe harbor threshold from 100 transfers annually to 500 transfers annually. This final rule adopts 1005.32(b)(5)(i)(A) as proposed to provide that the remittance transfer provider must be an insured institution as defined in 1005.32(a)(3). Under the PRA, the Bureau may not conduct or sponsor, and, notwithstanding any other provision of law, a person is not required to respond to, an information collection unless the information collection displays a valid control number assigned by OMB. In that case, an insured institution could not have used proposed 1005.32(b)(4) to estimate those disclosures. Also, the Bureau determines that, when the temporary exception expires, if the Rule did not allow estimates of the exchange rate in certain circumstances, some insured institutions that continue to offer remittance transfer services may see costs increase when sending transfers to certain countries because these institutions may have to change how they provide remittance transfers to disclose exact exchange rates. Regulations and official interpretations Browse the Remittance Rule (Subpart B of Regulation E, 12 CFR 1005) on: Interactive Bureau Regulations | eCFR [70] Lastly, the Bureau notes that some of the comments the Bureau received raised issues that are beyond the scope of the 2019 Proposal. For these reasons, the Bureau declines at this time to raise the normal course of business safe harbor threshold to a number other than 500 transfers annually. The insured institution would have a reasonable amount of time after December 1, 2021 to begin providing exact exchange rates in disclosures (assuming it cannot rely on another exception in 1005.32 to estimate the exchange rate). (ii) The disclosure in 1005.31(b)(1)(vii) may be estimated under paragraph (b)(5)(i) of this section only if covered third-party fees are permitted to be estimated under paragraph (b)(5)(i) of this section and the estimated covered third-party fees affect the amount of such disclosure. to send remittance transfers on behalf of consumers. To the extent that a comment was within the scope of the 2019 Proposal, the Bureau has considered it in adopting this final rule. 3. For a more detailed description of these reporting requirements, see Assessment Report at 24. The Consumer Financial Protection Bureau's (" CFPB ") Remittance Transfer Rule, also known as Regulation E, became effective on October 28, 2013. Principally, these conditions are that the designated recipient of the remittance transfer will receive funds in the country's local currency and (a) the insured institution made 1,000 or fewer transfers in the prior calendar year to that country where the designated recipients received funds in the country's local currency, and (b) the insured institution cannot determine the exact exchange rate for that particular transfer at the time it must provide the applicable disclosures. The Bureau instead considered the effects of these permanent exceptions relative to the first baseline, under which the temporary exception expires and the Bureau maintains the existing normal course of business safe harbor threshold at 100 transfers annually. 5 U.S.C. Cancellation process What to do in case of any errors Where to submit complaints Full Disclosures of Privacy Policies & Deductions: Remittance transfer providers must disclose all the information about the exchange rates, fees & taxes payable for the transfer amount to be transferred. Subpart B is also issued under 12 U.S.C. This table of contents is a navigational tool, processed from the Section 1005.32(a)(3) provides that insured depository institutions, insured credit unions, and uninsured U.S. branches and agencies of foreign depository institutions are considered insured institutions for purposes of the temporary exception. Federal agencies are generally required to seek approval from the Office of Management and Budget (OMB) for information collection requirements prior to implementation. In such cases, they may rely on the temporary exception with respect to the disclosure of the exchange rate.[55]. transfer providers under the Remittance Transfer Rule and thus are not subject to it. Given the inconvenience of consumers changing from one institution to another institution, such as closing their account at one bank and opening an account at another bank, and the analysis of the impact of the 100-transfer normal course of business safe harbor threshold on the market for remittance transfers discussed in the Assessment Report,[83] The Bureau is not excluding closed loop transfers from being included in the number of transfers that count toward the threshold under 1005.32(b)(4)(i)(C). One bank trade association recommended that the Bureau clarify that the current transition period provision in existing 1005.30(f)(2)(ii) continue to apply to the Rule, as amended, so that when an entity exceeds the normal course of business safe harbor threshold, it will have six months to come into compliance (as set forth in the current Rule). 3. 59. Which answer correctly identifies one of those situations? the official SGML-based PDF version on govinfo.gov, those relying on it for 1. Using the bank Call Reports, however, the Bureau finds that only one small bank will need to begin providing exact disclosures. 1005.9 Receipts at electronic terminals; periodic statements. The Bureau is not adopting these suggestions. In addition, while some insured institutions provide remittance transfers to many countries on their customers' behalf, some countries are the destination of far more remittance transfers than others. The Bureau received approximately 60 comment letters from individual consumers; nearly all of whom were credit union members. statement about the rights of the sender regarding cancellation required by paragraph (b)(2)(iv) of this section pursuant to the timing requirements in paragraph (e)(1) of this . 76. [85] The Bureau understands that relatively few insured institutions provide most of the remittance transfers that insured institutions provide. These commenters noted that the Bureau dismissed suggestions to raise the normal course of business safe harbor threshold to a number higher than 100 in 2012 when it finalized the current threshold, and that the Bureau has not adequately explained or justified its change in position. The proposed threshold was based on limited information, and as such, in the 2019 Proposal, the Bureau requested data or other evidence that would have assisted it in determining what number would be most appropriate for the normal course of business safe harbor threshold. For example, if a sender requests that a remittance transfer be deposited into an account in U.S. dollars, the provider need not disclose an exchange rate, even if the account is denominated in Mexican pesos and the funds are converted prior to deposit into the account. 32. If non-covered third-party fees or taxes collected by a person other than the provider apply to a particular remittance transfer or if a provider does not know if such fees or taxes may apply to a particular remittance transfer, 1005.31(b)(1)(viii) requires the provider to include the disclaimer with respect to such fees and taxes. The Bureau also proposed conforming changes to the following provisions to reference the proposed exception in 1005.32(b)(4) if the temporary exception in 1005.32(a) currently is referenced and pertains to the estimation of the exchange rate: (1) 1005.32(c); (2) 1005.33(a)(1)(iii)(A); (3) 1005.36(b)(3); (4) comment 32-1; (5) comment 32(b)(1)-4.ii; (6) comment 32(d)-1; and (7) comment 36(b)-3. Examples include: (1) The continued growth and expanding functionality of the Society for Worldwide Interbank Financial Telecommunication (SWIFT)'s global payment innovation (gpi) tracking product, which can increase the amount of up-front information available to sending institutions, and the expansion of the major payment card networks' capacity to support cross-border payments;[57] EFTA section 904(c) further provides that regulations prescribed by the Bureau may contain any classifications, differentiations, or other provisions, and may provide for such adjustments or exceptions for any class of electronic fund transfers or remittance transfers that the Bureau deems necessary or proper to effectuate the purposes of the title, to prevent circumvention or evasion, or to facilitate compliance. Two trade associations indicated that the Bureau should establish a six-month transition period after an insured institution exceeds the threshold amounts in proposed 1005.32(b)(4) and (5) during which the institution could still avail itself of the new proposed exceptions. The Bureau is not aware of any small governmental units or not-for-profit organizations to which this final rule would apply. The Bureau also received approximately 60 comments from individual consumers, nearly all of whom were credit union members. Compliance with this subpart will not be required for any remittance transfers for which payment is made during that reasonable period of time. One bank commenter opposed using anything other than the number of remittance transfers, stating that using another metric, such as the percentage of an entity's customers that send remittance transfers, would be unduly burdensome to monitor. Several banks and a trade association urged the Bureau not to sunset proposed 1005.32(b)(4). Example of safe harbor and transition period for 100-transfer safe harbor threshold effective prior to July 21, 2020. Section 919(c) of EFTA) allows the Bureau to write regulations specific to transfers to certain countries if it has determined that the recipient country does not legally allow, or the methods by which transactions are made in the recipient country do not allow, a remittance transfer provider to know the amount of currency the designated recipient will receive. As referenced above, in October 2018, the Bureau published the results of the Assessment in the Assessment Report, providing insights into the effectiveness of the Rule and its provisions. The bank initiates the U.S. leg of that transfer by debiting the customer's account and sending a payment order via Fedwire or CHIPS What law applies to that payment order? If the laws of a recipient country change such that a remittance transfer provider can determine exact amounts, the remittance transfer provider must begin providing exact amounts for the required disclosures as soon as reasonably practicable if the provider has information that the country legally permits the provider to determine exact disclosure amounts. Based on outreach, the Bureau recognizes that correspondent relationships or RMAs with designated recipient's institutions are formed for a particular country and the same relationship does not cover all countries in which that designated recipient's institution operates. Guidance on when the disclosure of an exchange rate is required. Estimated Change in Total Annual Burden Hours on Bureau Respondents under the Rule: 22,870. In addition, the Bureau concludes that this final rule will have no material change in burden on remittance transfer providers that are non-depository financial institutions. The Bureau concludes that these transfers are relevant to whether it is cost effective to develop relationships necessary to determine exact covered third-party fees regardless of whether the transfers are delivered in U.S. dollars or in a currency other than the country's local currency. Further, the Bureau believes the permanent exception for estimating the exchange rate will be used for only a small portion of all remittance transfers sent by insured institutions. See also Assessment Report at 149. Thus, this final rule more than quadruples the number of bank transfers and more than doubles the number of credit union transfers that are not subject to the Rule relative to the alternative. The Bureau will continue to monitor the remittance market, including monitoring the impact of the new exceptions in 1005.32(b)(4) and (5), and will revisit the thresholds if it concludes that it may be appropriate to change them. In turn, these cost savings may be passed on to consumers, and help to maintain consumer access to the extent that the extra flexibility the transition period will provide make it less likely that insured institutions would stop providing remittance transfers to stay below the 1,000-transfer threshold. The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required. The Bureau solicited comment on this aspect of the proposal, and as noted above, one industry commenter responded to this issue and stated that the Bureau should continue using the phrase as it is easily understood and consistent with the current regulation. For example, if a remittance transfer will be received by the designated recipient in Start Printed Page 34882the same currency as the one in which the transfer is funded, the insured institution would not disclose an exchange rate for the transfer, and the total amount that will be transferred to the recipient inclusive of covered third-party fees, the amount of covered third-party fees, and the amount that will be received by the designated recipient (after deducting covered third-party fees) will not be affected by an exchange rate. Furthermore, the person would not have qualified for the safe harbor described in 1005.30(f)(2)(i) in 2015 because the person did not provide 100 or fewer remittance transfers in 2014. Recent market developments and potential solutions. [102] legal research should verify their results against an official edition of Makes it infeasible for the insured institution to form a relationship with the designated recipient's institution and that relationship is necessary for the insured institution to be able to determine, at the time it must provide the applicable disclosures, exact covered third-party fees. In response, several industry commenters, including trade associations, banks, and a credit union, made various requests, primarily suggesting that particular countries or regions be added to the list. Under Section 1005.31Disclosures, revise 31(b)(1)(viii) Statement When Additional Fees and Taxes May Apply. An insured institution can still use 1005.32(b)(5) to provide estimates of covered third-party fees for a remittance transfer sent to a particular designated recipient's institution even if the insured institution sent more than 500 transfers to the designated recipient's institution in the prior calendar year if a United States Federal statute or regulation prohibits the insured institution from being able to determine the exact covered third-party fees required to be disclosed under 1005.31(b)(1)(vi) for the remittance transfer and the insured institution meets the other conditions set forth in 1005.32(b)(5). 29, 2019) (Remittance RFI 2019). In developing this final rule, the Bureau has consulted with appropriate Federal agencies regarding the consistency of this final rule with prudential, market, or systemic objectives administered by such agencies as required by section 1022(b)(2)(B) of the Dodd-Frank Act.[75]. As discussed in the Assessment Report, at least some bank and credit union providers reported to the Bureau that in response to the Rule, they increased the price they charged consumers to provide remittance transfers. The Bureau does not have the information necessary to quantify these costs. the Bureau expects that the net change in remittance transfers and market participation will likely be small for insured institutions that are no longer covered by the Rule because of the increase in the normal course of business safe harbor threshold to 500 transfers. These commenters added that the issue of the normal course of business safe harbor threshold is whether entities offer remittance transfers normally, not whether they are trying to attract new customers or provide services to current ones. Some MSBs compete with insured institutions for high-value transfers in some corridors. The laws of the recipient country do not permit a remittance transfer provider to determine exact amounts required to be disclosed when a law or regulation of the recipient country requires the person making funds directly available to the designated recipient to apply an exchange rate that is: i. Some of these insured institutions currently provide exact disclosures (based on Call Report data) and all of them would have to provide exact disclosures under the first baseline (i.e., the no-action baseline). Another possibility is that some consumers who send remittance transfers may have limited English proficiency, and therefore, be less likely to know that they can submit complaints to the Bureau or may be less likely to seek help from a government agency than other consumers. That exception expires on July 21, 2020. These changes to the normal course of business safe harbor threshold appear in the definition of remittance transfer provider in 1005.30(f) and related commentary. The correspondent banking network is a decentralized network of bilateral banking relationships between the world's tens of thousands of banks and credit unions. [42] First, it examines the information available to the Bureau to determine the likely impact of the expiration of the existing temporary exception. See id. Proposed comment 32(b)(4)-2.i set forth that for purposes of determining whether an insured institution made 1,000 or fewer remittance transfers in the prior calendar year to a particular country pursuant to proposed 1005.32(b)(4)(i)(C), the number of remittance transfers provided includes transfers in the prior calendar year to that country if the designated recipients of those transfers received funds in the country's local currency regardless of whether the exchange rate was estimated for those transfers. Consumer groups. b. 2. In the 2019 Proposal, the Bureau proposed to raise the normal course of business safe harbor threshold from 100 remittance transfers to 500 remittance transfers, in response to feedback it has received over the years from banks, credit unions, and their trade associations in which these entities asserted that the 100-transfer threshold is too low. 1005.13 Administrative enforcement; record retention. When estimates are permitted, however, they must be disclosed in accordance with 1005.31(d). B. Remittance Rulemaking Under Section 1073 of the Dodd-Frank Act, Section 1005.30Remittance Transfer Definitions, 32(a)Temporary Exception for Insured Institutions, Challenges of Insured Institutions in Disclosing Exact Amounts, 32(b)(4)Permanent Exception for Estimation of the Exchange Rate by an Insured Institution, 32(b)(5)Permanent Exception for Estimation of Covered Third-Party Fees by an Insured Institution, The Permanent Exception in 1005.32(b)(1) and the Bureau's Safe Harbor Countries List, VI. 1005.33 Procedures for resolving errors. From discussions with some large banks and a trade association representing a number of the largest banks, the Bureau understands that the temporary exception generally is not used by very large banks to estimate exchange rates because providing the exact exchange rate is not difficult for such banks. ii. and services, go to An insured institution has a correspondent relationship with the designated recipient's institution; ii. [52] Thus, the Bureau expects only a modest impact on MSBs from this final rule relative to either baseline.[78]. 1. The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires each agency to consider the potential impact of its regulations on small entities, including small businesses, small governmental units, and small not-for-profit organizations. One credit union trade association and one credit union suggested exempting credit unions entirely from the Rule, stating that the disclosure and error resolution requirements have caused credit unions to discontinue remittance transfer services due to the significant compliance costs, and that such an exemption would cultivate a competitive remittance market, given that only the largest and most technologically sophisticated institutions can afford to comply with the Rule. Specifically, based on the Bureau's analysis of the 2018 Call Start Printed Page 34878Report data,[43] has no substantive legal effect. The costs to customers of banks and credit unions providing between 101 and 500 remittance transfers annually are the potential loss of the Rule's pre-payment disclosures, which may facilitate comparison shopping, and other Rule protections, including cancellation and error resolution rights. 12 CFR 1005.30(e). Fees and taxes disclosed under 1005.31(b)(1)(viii) must be disclosed in the currency in which the funds will be received. Except as provided in 1005.36(c), a remittance transfer provider shall comply with the requirements of this section with respect to any oral or written request to cancel a remittance transfer from the sender that is received by the provider no later than 30 minutes after the sender makes payment in connection with the remittance transfer if: 1. The insured institution would have a reasonable amount of time after December 1, 2021 to begin providing exact covered third-party fees in disclosures (assuming that a United States Federal statute or regulation does not prohibit the insured institution from being able to determine the exact covered third-party fees, or the insured institution cannot rely on another exception in 1005.32 to estimate covered third-party fees). As explained above, under the second baseline, the other half of the remittance transfers for which estimated disclosures are currently provided would no longer be provided by the insured institutions that currently send them but would be sent by different insured institutions. Again, the other impacts as described above for a normal course of business safe harbor threshold of 500 transfers would follow for a 200-transfer threshold. The Bureau concludes that if these institutions discontinue providing such transfers, consumer access to remittance transfer services for certain designated recipient's institutions may be reduced or eliminated. This final rule has potential benefits and costs to the customers of banks and credit unions providing between 101 and 500 remittance transfers annually. 84 FR 67132, 67148 (Dec. 6, 2019). The Bureau did not receive specific comments on 1005.32(b)(5)(i)(B) and comments 32(b)(5)(i)-1 and -2. Estimates of any non-covered third-party fees and any taxes collected on the remittance transfer by a person other than the provider must be disclosed in accordance with 1005.32(b)(3). The permanent exceptions permitting estimation of exchange rate and covered third-party fees do not have any additional effect on the insured institutions (and their customers) that the Rule no longer covers. They asserted that sunset provisions create unnecessary uncertainty for consumers and institutions. These technical corrections do not change or alter the meaning of the existing regulatory text and commentary. If a person provided 500 or fewer transfers in 2019 and provides 500 or fewer remittance transfers in 2020, that person qualifies for the safe harbor threshold in 2020. CFPB's Remittance Transfer Rule | Foley & Lardner LLP Examples where an insured institution can determine the exact exchange rate. CFPB Amendments to the Remittance Transfer Rule | NCUA Comment 32(b)(1)-2.i explains that, for example, under the first category, the laws do not permit exact disclosures when the exchange rate is determined after the provider sends the transfer or at the time of receipt. Second, the analysis then considers the likely benefits, costs, and impacts of the permanent exceptions. Second, the analysis then considers the likely benefits, costs, and impacts of this change. A group of trade association commenters also suggested that the Bureau loosen and revise its requirements for the inclusion of additional countries on the countries list as a way to mitigate the expiration of the temporary exception. In the 2019 Proposal, the Bureau did not propose to make any changes to 1005.32(b)(1) or to the Bureau's safe harbor countries list, but again sought comment on the permanent exception in 1005.32(b)(1) and on the countries list. [13] Section 1005.31 requires a remittance transfer provider to include an abbreviated notice of the sender's right to cancel a remittance transfer on the receipt or combined disclosure given under 1005.31(b)(2) or (3). Insured institutions may face a number of hurdles with respect to converting funds to certain currencies up-front. The other impacts as described above for a normal course of business safe harbor threshold of 500 transfers would follow for a threshold of 200 transfers.
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