Regulation E Remittance Transfer Rule developments and resources
AML AND COMPLIANCE NEWS |
There have been several developments and new resources since our last Compliance News newsletter publication in October 2012 on the remittance transfer provisions of Regulation E. Most recently, the Consumer Financial Protection Bureau (CFPB) issued a notice of proposed rulemaking proposing revisions to the current final rule and delaying the effective date until the spring 2013. The proposal includes the following provisions:
- Foreign taxes and fees – The CFPB is proposing to provide greater flexibility in the disclosure of foreign taxes and fees. Specifically, the proposal allows remittance transfer providers to disclose the highest possible foreign tax that could be imposed with respect to any unknown variable. Similarly, the proposal would also permit the provider to estimate by disclosing the highest possible recipient institution fees that could be imposed on the remittance transfer with respect to any unknown variable, as determined based on either, fee schedules made available by the recipient institution, or information ascertained from prior transfers to the same recipient institution. If the provider cannot obtain such fee schedules or information from prior transfers, the proposal would allow a provider to rely on other reasonable sources of information.
- Regional, state, provincial and local level taxes – The CFPB is proposing to limit the remittance transfer disclosure requirements to foreign taxes imposed on the remittance transfer by a country’s central government and eliminating the requirement to disclose foreign taxes at the regional, state, provincial or local level. Additionally, the CFPB is seeking comment regarding the use of the word Estimated to describe the disclosure of foreign taxes and fees that are not exact.
- Error resolution – The CFPB is proposing revisions to the error resolution process in situations where the sender provides incorrect or insufficient information and, in particular, when a remittance transfer is not delivered to the appropriate recipient because the sender provided an incorrect account number, which results in the funds being deposited to the wrong account. In this particular scenario, the CFPB is proposing that where the provider can demonstrate that the sender provided the incorrect account number and that the sender had notice that they could lose the transfer amount, the provider would be required to attempt to recover the funds but would not be liable for the funds if those efforts were unsuccessful. The proposal also includes additional flexibility when resending funds at a new exchange rate in situations where the sender provides incorrect or insufficient information other than an incorrect account number.
- Effective date – The CFPB is proposing to delay the effective date of the final remittance transfer rule to 90 days after the proposal is finalized.
The CFPB is specifically accepting comments on the delay of the effective date for 15 days following the publication in the federal register, and accepting comments on the remaining proposed provisions for 30 days from the date of publication (as of the writing of this article on Dec. 28, the federal register had not been issued).
Additional developments in the world of Remittance Transfers include:
- A Compliance Guide for Small Entities issued by the CFPB in October 2012. The guide provides an overview of how to determine if your entity is a remittance transfer provider, for which providers have to comply with the Rule, an overview of the Rule requirements, as well as tips on developing a plan for compliance with the Rule’s provisions.
- The Financial Crimes Enforcement Network (FinCEN), in conjunction with the Federal Reserve, is proposing changes to definitions of funds transfer and transmittal of funds under the Bank Secrecy Act (BSA). The proposal seeks to streamline changes to Regulation E, as a result of the Remittance Transfer Rule with current requirements under BSA. The proposal will maintain current coverage of international wire transfers under the Travel Rule and Funds Transfer Recordkeeping requirements.
- The Federal Home Loan Bank of New York recently announced it will no longer offer international wire transfer services to its members after Dec. 31, 2012 as a result of the Remittance Transfer Rule and the uncertainty of the Rule’s provisions.