CFPB finalizes Remittance Transfer rule
AML AND COMPLIANCE NEWS |
On May 22, 2013 the Consumer Financial Protection Bureau (CFPB) published the final remittance transfer rule under Regulation E. The rule has undergone multiple reiterations with the effective date now set for Oct. 28, 2013. Amendments to the final rule, originally published Aug. 20, 2012, include streamlining of the error resolution process and easing of the requirements regarding disclosure of third-party taxes and fees. The final rule makes optional, in certain circumstances, the requirement to disclose fees imposed by a designated recipient's institution and also makes optional the requirement to disclose taxes collected by a person other than the remittance transfer provider. In place of these two former requirements, disclaimers must be added to the already required disclosures indicating that the recipient may receive less than the disclosed total due to the fees and taxes for which disclosure is now optional. To qualify for the exemption to the requirement for disclosing third-party fees, the transfer must be processed over an open network. Fees imposed for transfers sent through closed networks, whereby the recipient picks up the transfer from an agent, would still be required to be disclosed under the final rule. Unlike the provision for third-party fees, there are no special exemption requirements to disclaim foreign taxes.
In addition to the changes outlined above, the final rule also streamlines the error resolution process. The existing rule outlines timeliness requirements for investigating and resolving errors with appropriate notice from the consumer. The final rule provides additional guidance on errors resulting from incorrect information from the sender and updates the procedures to reflect the changes regarding disclosure of third-party taxes and fees. Under the final rule, the CFPB has expanded the definition of error to include situations where a sender has provided an incorrect recipient institution identifier in addition to situations where a sender provides an incorrect account number, as long as the error results in a mis-deposit of the funds. The Final Rule also includes, as a condition for protection, the provider use reasonably available means to verify the recipient institution identifier provided by the sender before sending the transfer.
The Final Rule and associated documentation from the CFPB can be viewed at: http://www.consumerfinance.gov/remittances-transfer-rule-amendment-to-regulation-e/