Unless the CFPB extends or removes the expiration of allowing estimates for remittance transfers, financial institutions will need to make sure their disclosures reflect the actual terms of any remittance transfer.
The requirements for remittance transfer disclosures, under Regulation E, include the ability to estimate certain information included on the pre-payment, receipt, or combined disclosures required for remittance transfers. The information that can currently be estimated includes: (1) the exchange rate used by the provider for the remittance transfer; (2) the amount of funds that will be transferred to the designated recipient, in the currency in which the funds will be received; (3) any covered third-party fees, in the currency in which the funds will be received; and, (4) the “Total to Recipient” in the currency in which the funds will be received. This estimation allowance is set to expire on July 21, 2020. Unless amendments are made to the Rule, insured depository institutions will need to include exact amounts for these exchange rates and third-party fees. In many cases, it is hard, if not impossible, to know the exact amounts.
Not my Job
In a Request for Information, issued in April of this year, the CFPB asked for comments that would “mitigate the effects of the expiration,” but not eliminate the requirement. Included in the Request is “EFTA expressly limits the length of the temporary exception to July 21, 2020 and does not authorize the Bureau to extend this term. Therefore, the exception will expire on July 21, 2020 unless Congress changes the law.” [highlight added]
A September 31, 2019 Letter from members of Congress, seems to point the finger back at the CFPB, “We believe the Bureau has authority to mitigate these consequences and request that the Bureau take every available step to preserve consumers’ access to remittance services.” The letter directs the CFPB to permanently “…allow insured depository institutions to continue providing estimates of third party fees and exchange rates in cases where exact disclosures are not possible.”
What should I do?
If you are already disclosing accurate figures for these, you are good to go. If not, you will want to keep an eye on updates to the remittance transfer rules, and have plans to provide accurate figures before July 21, 2020, if the rules do not get changed.
Law-Related Services Disclaimer. Please be advised, CSG provides financial services compliance audit and consulting services to our clients. The services that we provide include certain tasks that may be characterized as “law-related services” under Rule 5.7 of the Rules of Professional Conduct governing lawyers. Since some of our employees are lawyers with an active bar license but are NOT engaged in the private practice of law, that Rule requires us to make disclosures clarifying that the services we perform may be law-related services, but they are not legal services. Because they are not legal services, those services and our relationship will not be governed by the Rules of Professional Conduct that guide the client-lawyer relationship, such as rules applicable to privileged communications and prohibitions of conflicts of interest. Notwithstanding this disclaimer, we will continue to govern our relationship with you using reasonable ethical and professional standards that are expected to meet your expectations.