Last week, the Bureau of Consumer Financial Protection (Bureau) issued a request for information on its remittance rules, which are located in the Electronic Fund Transfers Act (EFTA). The request primarily seeks information and evidence related to two categories: (1) the temporary exception under the EFTA and (2) the scope of coverage of the remittance rules. Comments to this request must be received by the Bureau on or before June 28, 2019.
In sum, the remittance rules implement protections for consumers sending international money transfers (commonly referred to as “remittance transfers”). These protections include the general requirements for a remittance transfer provider to disclose the actual exchange rate and the amount to be received by the recipient, amongst others. However, EFTA currently provides a temporary exception to certain institutions that allows the institution to disclose estimates of the exchange rate, certain third-party fees, the total amount that will be transferred to the recipient inclusive of certain third-party fees, and the amount the recipient will receive after deducting third-party fees.
This exception is “temporary” in that it was originally enacted with an expiration date of July 21, 2015. The Bureau extended the temporary exception by five years to July 21, 2020; however, EFTA does not authorize the Bureau to extend the temporary exception any further.
With the expiration of the temporary exception just over a year away, the Bureau is seeking information to determine the impact of the expiration, which, based on the Bureau’s analysis, could affect hundreds of thousands of remittance transfers. The request for information also seeks evidence regarding whether the remittance rules’ current definition of “normal course of business” is appropriate. Under the current version of the remittance rules, an institution is exempt from the requirements of the rule if it provides 100 or fewer remittance transfers per year. However, the Bureau has found that more than half of the banks and around two-thirds of the credit unions covered by the rule sent fewer than 500 remittance transfers per year.
The assessment conducted by the Bureau also unveiled the following relationship: The smaller the asset size of a financial institution, the fewer total number of remittance transfers it offers on average. Ultimately, the Bureau is seeking information to determine whether the current definition of “normal course of business” should be adjusted and whether the creation of a “small financial institution” exception may be appropriate.
At the end of the day, the Bureau has no power to extend the temporary exception to the remittance rules. However, it is clear that the Bureau is interested in gathering as much information as possible to determine what effect the expiration of this exception will have on particular institutions and whether the Bureau should take any additional steps to counteract the potential negative consequences from the expiration of the exception.