The Consumer Financial Protection Bureau on Tuesday released the final part of its new remittance rule, increasing the maximum number of annual transactions that qualify for safe harbor exemption to 100.
Generally speaking, that increase from the originally proposed 25 annual transactions does help ease regulatory burden, said Carrie Hunt, NAFCU general counsel and vice president of regulatory affairs.
However, it won't provide relief for most credit unions, she said, because most credit unions exceed 100 transactions per year, and those unable to comply with the new rule will be faced with either denying the 101st transaction, or eliminating remittance services altogether.
CFPB Director Richard Cordray said, “We recognize that in regulations, one size does not necessarily fit all. The final remittance rule will protect the overwhelming majority of consumers while making the process easier for community banks, credit unions and other small providers that do not send many remittance transfers.”
The rule will take effect Feb. 7, 2013. It implements new protections under the Dodd-Frank Act that require remittance transfer providers to disclose fees upfront, as well as the exchange rate and the amount to be received by the recipient.
Disclosures must generally be provided when the consumer first requests a transfer and again when payment is made. The rule also provides consumers with error resolution and cancellation rights.
The CFPB said in a release that it concluded institutions which consistently conduct 100 or fewer remittance transfers per year do not provide transfers in the “normal course of business” and therefore are not subject to the new requirements.
However, if a company that provided 100 or fewer remittance transfers in the previous year provides more than 100 remittance transfers in the current year, the rule provides a reasonable transition period to come into compliance.
The final rule also adjusts certain rules regarding remittance transfers that consumers schedule several days in advance of the transfer. The changes are designed to address concerns that remittance transfer providers might stop offering transfers scheduled in advance due to concerns about compliance costs under the new requirements.
The new final rule is available on the CFPB's website.
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.