Citing Compliance Costs, CFPB Is Reexamining Remittance Rule

The CFPB is reexamining its rule governing remittances, citing, among other things, complaints about compliance costs from financial institutions, including credit unions.

The rule, as currently written, requires a variety of consumer disclosures when remittances are issued.

The rule contains a safe harbor that exempts financial institutions that handle fewer than 100 remittances a year in the normal course of business—a threshold that is much too low, according to CUNA.

NAFCU has said that credit unions should be exempt from the remittance rule, no matter how many they issue each year.

The CFPB also said it will consider whether to exempt small financial institutions from the rule.

The CFPB is requesting information about the rule, saying that some financial institutions have had to increase their prices, some credit unions have left the remittance business and some institutions have reduced services to stay within the safe harbor.

The agency said that of about 300 credit unions that provided remittances between 2014 and 2017, around 200 sent fewer than 500 remittances a year and 50 sent between 500 and 1,000.

CUNA has suggested that the safe harbor exemption should be increased from 100 remittances to 1,000 remittances.

NAFCU has cited “highly burdensome compliance costs” and said that credit unions should be exempt from the rule altogether.