CFPB Finalizes Remittance Transfer Rule; Extends Temporary Exception (Aug. 26, 2014)
The CFPB has finalized its remittance transfer rule requiring remittance transfer providers to disclose certain third-party fees and any exchange rates applicable to the transfer. The rule also provides financial institutions more time to provide exact disclosures of these fees and rates when they can’t determine exact amounts. Prepaid providers that offer international remittances are most directly affected by the rule.
The temporary exception in the CFPB’s remittance transfer rule allowing insured depository institutions to estimate fees and exchange rates was set to expire July 21, 2015; however, the final rule extends that temporary exception by 5 years, to July 21, 2020, as authorized by the Dodd-Frank Act.
“The CFPB believes an extension would give insured institutions that offer remittance services to their account holders additional time to develop reasonable ways to provide consumers with exact fees and exchange rates for all remittance disclosures,” the bureau said in an announcement. The inability to know the exact fees and exchange rates is, to a large degree, unique to insured institutions sending open-network transfers, like wire transfers, according to the CFPB. In an open network, the provider typically does not have control over, or a relationship with, all of the participants in the remittance transfer.
“The rule most directly affects international remittance providers that work with an open-transfer network, rather than those that rely on a closed-agent network, as is more typical with licensed money transmitters,” says Margo Hirsch Strahlberg, senior associate at Bryan Cave LLP.
The rule also finalizes changes related to consumer rights regarding error resolution and cancelation procedures, acceptable methods of disclosures and the application of the rule to U.S. military installations located abroad and the treatment of non-consumer accounts. The final rule will be effective 60 days after its publication in the Federal Register, and the CFPB has released a revised version of its compliance guide to reflect the changes finalized in the final rule issued last week.
