CFPB Notice of Proposed Rulemaking to Amend the Remittance Transfer Rule

The CFPB announced its Notice of Proposed Rulemaking (NPRM) regarding remittance transfers requirements under Regulation E.  The CFPB is proposing changes to two areas of the remittance transfer requirements and also asking for comments related to the safe harbor countries list.  The proposed changes include:

• Increasing the normal course of business safe harbor threshold from 100 to 500 annual remittance transfers, and
• Creating two new exceptions allowing insured institutions to use estimates in the required disclosures.

Normal Course of Business safe Harbor Threshold:

Currently, if a person provided 100 or fewer remittance transfers in the previous calendar year and provides 100 or fewer remittance transfers in the current calendar year, that person is not considered to be providing remittance transfers in the normal course of business and is not subject to the rule’s requirements. The NPRM proposes to increase the safe harbor threshold to 500 remittance transfers. A person would not be considered a remittance transfer provider under the Rule if the person provided 500 or fewer remittance transfers in the previous calendar year and provides 500 or fewer remittance transfers in the current calendar year.

Two New Estimation Exceptions:

Currently, §1005.32(a) provides a temporary exception that permits financial institutions to use estimates, if it cannot determine the exact amounts for reasons beyond its control.  This exception expires July 21, 2020.  (We blogged about this here.)

The first proposed exception would allow financial institutions, in certain circumstances, to disclose estimated covered third-party fees (and estimate other information that depend on those fees) if (1) the financial institution made 500 or fewer transfers to the designated recipient’s institution in the prior calendar year; and (2) the financial institution cannot determine the exact amount of the covered third-party fees that will be imposed at the time the disclosures must be provided.

The second proposed exception would permit financial institutions, in certain circumstances, to use an estimate of the exchange rate (and estimate of the other information that depends on the exchange rate) if the recipient will receive funds the country’s local currency and (1) the financial institution made 1,000 or fewer transfers in the prior calendar year to the country for which the designated recipients of those transfers received funds in the country’s local currency; and (2) the financial institution cannot determine the exact exchange rate for the specific transfer.

Safe Harbor Countries:

• 1005.32(b) allows estimates to be used when the provider cannot determine the exact amounts for disclosures because either the laws of the recipient country do not permit such a determination, or the method by which transactions are made in the recipient country does not permit such determination.

Currently, the safe harbor list consists of five countries:  Aruba, Brazil, China, Ethiopia, and Libya.

Commenting:

Comments are accepted for 45 days from the publication of the NPRM in the Federal Register.

Links:

Summary of the proposed amendments

Table of contents for the proposed amendments

Unofficial redline of the proposed amendments

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