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CFPB Publishes Procedures to Ensure Consumers Making Remittance Transfers are Protected
Wednesday, October 23, 2013 7:55 AM

The Consumer Financial Protection Bureau (CFPB) yesterday published the procedures it will use in examining institutions that make remittance transfers for consumers. The CFPB is also releasing eRegulations, an online tool designed to make regulations easier to understand.

The rule, which goes into effect on Oct. 28, 2013, has been subsequently revised to address concerns related to some specific implementation challenges. The rule applies to many companies that offer international transfers to consumers, including banks, credit unions, and money transmitters. It does not, however, apply to companies that consistently provide 100 or fewer remittance transfers each year, nor does it apply to transactions under $15.

The remittance transfer rule was designed to bring new levels of transparency to international money transfers. CFPB examiners will use today’s procedures as a guide to ensure that remittance transfer providers are complying with requirements of federal consumer financial law, including:

  • Providing required disclosures: The CFPB remittance rule requires that providers disclose information about certain fees, the exchange rate, and the amount to be received by the recipient. Disclosures must generally be provided when the consumer first requests a transfer. After payment is made, consumers are entitled to additional information or, in some cases, a proof of payment.
  • Following proper error resolution procedures: Remittance providers must to investigate and resolve errors. These procedures must include notifying the consumer of the outcome of the investigation.
  • Offering refund and cancellation rights to consumers: Consumers may cancel most remittance transfers up to thirty minutes after payment. Examiners will be looking to make sure that the provider refunds the consumer’s money, at no additional cost to the consumer, within three business days if the consumer makes an appropriate request in time.

Examiners will also review the activities of international money transfer providers for other consumer risks, including potentially unfair, deceptive, or abusive acts or practices. When necessary, examiners will coordinate and work closely with the CFPB’s enforcement staff to take appropriate enforcement actions to address harm to consumers.

The CFPB is coordinating with other regulators to ensure they all have a shared understanding of the CFPB’s new rules. Today’s procedures are based on procedures that the CFPB and other examining agencies developed through the Federal Financial Institutions Examination Council. This interagency effort will promote consistent supervision of remittance providers.

In addition to the examination procedures, the CFPB has developed a small entity compliance guide to assist the industry in its implementation of the rule’s requirements. To raise awareness of the rule and its requirements, the CFPB has been holding webinars and information sessions at a number of industry conferences in addition to addressing questions from stakeholders.

Resources on the CFPB’s remittance transfer rule are available online, as are the remittance transfer examination procedures.