Remittance Transfer Rule (Amendment to Regulation E)

The CFPB has issued a rule in three parts to amend Regulation E, which implements the Electronic Fund Transfer Act. The new rule regulates “Remittance Transfers.” It amends subpart A of Regulation E and creates a new subpart B of Regulation E, as well as related, official interpretations. (Read below for a summary of the rule.)

Note: On December 31, 2012, the Federal Register published a Notice of Proposed Rulemaking regarding changes to the Remittance Transfer Rule.

On January 22, 2013, the Bureau issued a rule temporarily delaying the effective date of the remittance transfer rule. The Bureau will announce a new effective date when the December 31, 2012 proposal is finalized.

Rule, Official Interpretation, and Related Materials

Unofficial complete Remittance Transfer Rule and Interpretations in PDF format

Part 1: Final remittance rule published February 7, 2012 on FederalRegister.gov | Final rule in PDF format

Part 2: Technical correction to the final rule published July 10, 2012 on FederalRegister.gov | Technical correction in PDF format

Part 3: Final remittance rule published August 20, 2012 on FederalRegister.gov | Final rule in PDF format

Notice of Proposed Rule and Request for Comment published February 7, 2012 | Comments on the Notice

Safe Harbor Countries List published September 26, 2012
Countries and other areas that the Bureau has determined qualify for a permanent exception from certain disclosure requirements.

Model forms

A-30 – Model Form for Pre-Payment Disclosures for Remittance Transfers Exchanged into Local Currency (§ 1005.31(b)(1))
A-31 – Model Form for Receipts for Remittance Transfers Exchanged into Local Currency (§ 1005.31(b)(2))
A-32 – Model Form for Combined Disclosures for Remittance Transfers Exchanged into Local Currency (§ 1005.31(b)(3))
A-33 – Model Form for Pre-Payment Disclosures for Dollar-to-Dollar Remittance Transfers (§ 1005.31(b)(1))
A-34 – Model Form for Receipts for Dollar-to-Dollar Remittance Transfers (§ 1005.31(b)(2))
A-35 – Model Form for Combined Disclosures for Dollar-to-Dollar Remittance Transfers (§ 1005.31(b)(3))
A-36 – Model Form for Error Resolution and Cancellation Disclosures (Long) (§ 1005.31(b)(4))
A-37 – Model Form for Error Resolution and Cancellation Disclosures (Short) (§§ 1005.31(b)(2)(iv) and (b)(2)(vi))
A-38 – Model Form for Pre-Payment Disclosures for Remittance Transfers Exchanged into Local Currency – Spanish (§ 1005.31(b)(1))
A-39 – Model Form for Receipts for Remittance Transfers Exchanged into Local Currency – Spanish (§ 1005.31(b)(2))
A-40 – Model Form for Combined Disclosures for Remittance Transfers Exchanged into Local Currency – Spanish (§ 1005.31(b)(3))
A-41 – Model Form for Error Resolution and Cancellation Disclosures (Long) – Spanish (§ 1005.31(b)(4))

Additional Information

CFPB Bulletin Announcing Proposed Changes to Rule and Extension of Effective Date
Remittance rule webinar
International Fund Transfers Small Entity Compliance Guide

Summary of Remittance Transfer Rule

The Consumer Financial Protection Bureau has issued rules to protect consumers who send money electronically to foreign countries. These transactions are called “remittance transfers.”

Background

The term “remittance transfer” includes consumer-to-consumer transfers of low monetary value, often made via non-depository companies known as “money transmitters.” In addition to using money transmitters, consumers can transfer funds through banks or credit unions, for instance through wire transfers or automated clearing house (ACH) transactions. Furthermore, consumers in the United States may transfer funds to businesses as well as to individuals in foreign countries.

Consumers in the United States send billions of dollars in remittance transfers each year. Up to now, Federal consumer protection rules have not applied to most of these transfers. The Dodd-Frank Wall Street Reform and Consumer Protection Act changes that by requiring the Bureau to issue rules on remittance transfers.

Disclosures

The rules require companies to give a disclosure to a consumer before the consumer pays for a remittance transfer. The disclosure must list:

  • The exchange rate,
  • Fees, and taxes,
  • The amount of money to be delivered abroad.

Companies must also provide a receipt or proof of payment that repeats the information in the first disclosure. The receipt must also tell consumers the date when the money will arrive.

Companies must provide the disclosures in English. Sometimes companies must also provide the disclosures in other languages.

Other protections

The rules also require that:

  • Consumers get 30 minutes (and sometimes more) to cancel a transfer. Consumers can get their money back if they cancel.
  • Companies must investigate if a consumer reports a problem with a transfer. For certain errors, consumers can get a refund or have the transfer re-sent without charge if the money did not arrive as promised.
  • Companies that provide remittance transfers are responsible for mistakes made by certain people who work for them.
  • The rules also contains specific provisions applicable to transfers that consumers schedule in advance and for transfers that are scheduled to recur on a regular basis.

Coverage

The rules apply to most remittance transfers if they are:

  • More than $15
  • Made by a consumer in the United States
  • Sent to a person or company in a foreign country

This includes many types of transfers, including wire transfers.

The rules apply to many companies that offer remittance transfers, including:

  • Banks
  • Thrifts
  • Credit unions
  • Money transmitters
  • Broker-dealers

However, the rules do not apply to companies that consistently provide 100 or fewer remittance transfers each year.