The CFPB recently issued a final rule amending the Remittance Rule, which implements the requirements for remittance transfers under the Electronic Fund Transfer Act (EFTA). The final rule follows the CFPB’s December 2019 notice of proposed rulemaking (NPRM), which WBK previously covered here. The changes made by the final rule will go into effect on July 21, 2020.
Notably, as initially proposed in the NPRM, the final rule provides a safe harbor which states that a person is not deemed to be providing remittance transfers for a consumer in the normal course of its business (i.e., the person is not considered to be a “remittance transfer provider” that is subject to the Remittance Rule) if the person provided 500 or fewer remittance transfers in the previous calendar year and provides 500 or fewer transfers in the current calendar year. Previously, the safe harbor was applicable to a person who provided 100 or fewer transfers in the previous calendar year and 100 or fewer transfers in the current calendar year.
The Remittance Rule requires remittance transfer providers to give certain disclosures to consumers before they pay for remittance transfers. Among other things, the disclosures must contain the price of a remittance transfer, the exchange rate, the amount to be delivered to a recipient, and the date of availability. The Remittance Rule contains a temporary exception, which is set to expire on July 21, 2020, that allows certain insured institutions to provide estimates of the exchange rate and covered third-party fees instead of exact amounts.
As proposed in the NPRM, the final rule provides a permanent exception that would permit insured institutions to estimate the exchange rate for a remittance transfer to a particular country if, among other things, the recipient will receive funds in the country’s local currency and the insured institution made 1,000 or fewer remittance transfers in the prior calendar year to that country when the recipients received funds in the country’s local currency. Further, the final rule provides a permanent exception that would permit insured institutions to estimate covered third-party fees for a remittance transfer to a particular recipient’s institution if, among other things, either the insured institution made 500 or fewer remittance transfers to that recipient’s institution in the prior calendar year, or a U.S. federal law prohibits the insured institution from being able to determine the exact covered third-party fees required to be disclosed for that remittance transfer.