As summer comes to a close, you can count on a few things—cooler weather, changing leaves, and this year, a looming October 28 mandatory compliance deadline for remittance transfers. With just two months to prepare to institute new disclosure requirements for international electronic transfers, let's walk through the top five action items to tackle.
5. Start Counting
Beginning in October, all remittance transfer providers will be required to comply with new Regulation E requirements governing electronic fund transfers. Your credit union is considered a remittance transfer provider if you send remittance transfers "in the normal course of business," which the CFPB defines as more than 100 remittance transfers per year. If you conduct 100 or fewer transfers per year, you have a safe harbor. To determine if you are a remittance transfer provider, you must count all of the remittance transfers you originated in 2012.
Why 2012? It's the look-back period. If you exceed 100 remittance transfers in the previous calendar year, you will be considered a remittance transfer provider in the current calendar year regardless of the actual number of remittance transfers you send. See the chart for help on safe harbor application.
When counting, consider all remittance transfers you sent/originated in 2012, including international wires, ACHs, electronic bill payments, or any pre-paid cards sent internationally.
4. Start Tracking
The NCUA recently issued a Regulatory Alert (13-RA-06) that states: "You are expected to track the number of remittance transfers conducted annually to confirm eligibility for the safe harbor exemption." For those credit unions who continue these services but fall under the safe harbor, it's imperative to implement a tracking system. For those who exceed the threshold, a tracking system will still be useful to demonstrate compliance with the new rules come exam time. It was also help assess member remittance transfer needs.
3. Make Business Decisions
Put simply: is it worth providing members this service? Consider the following questions. Does my membership rely on us for remittance transfers (e.g. do you serve military members or are you located near a U.S. border?). How many remittance transfers do we provide per year? Do we have the systems/staff capability to handle the procedural changes? Your answers will determine if you stay in the market, get out of the market, or stay in the market but within the safe harbor. Make an informed decision, and do so quickly.
2. Update your Policies and Procedures
After making necessary business decisions, you must ensure your policies and procedures reflect those decisions. If you continue providing these services, you should also note that the new regulations require your policies and procedures to incorporate certain error resolution requirements. Learn more about this requirement via the resources below.
1. Learn How to Comply
If you continue providing these services and are required to comply with the rules, then it would be prudent to dedicate a resource to understand them and facilitate implementation. The new disclosures that must be provided to a consumer are simplistic; however, ascertaining the amounts to populate those disclosures is complex. Additionally, providing the disclosures in accordance with mandated timing requirements is confusing.
That said, there are plenty of resources to help you, including your vendors! Many credit unions have service providers or documents providers who can help facilitate this transition.
As we near the October 28 mandatory compliance date, sharpen your focus on remittance transfers, make decisions, document those decisions, and work towards compliance. Your members and your regulators are paying attention, so be sure you are, too.
Lauren Capitini is a regulatory compliance manager for CUNA Mutual Group.
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