The Consumer Financial Protection Bureau (CFPB) has finalized revisions to the remittance rule that it had proposed in April of this year. The revisions are intended to preserve the rule’s new consumer protections while providing federally insured institutions, such as banks and credit unions, with additional time to provide exact disclosures in certain cases.
The Dodd-Frank Wall Street Reform and Consumer Protection Act contains an exception that explicitly allows federally insured financial institutions, like banks and credit unions, to estimate third-party fees and exchange rates when providing remittance transfers to their account holders for which they cannot determine exact amounts. Insured institutions can only use this exception when they cannot determine the exact amounts for reasons beyond their control.
The exception was set to expire on July 21, 2015. The final rule extends that temporary exception by five years, until July 21, 2020, as expressly authorized by the Dodd-Frank Act. If the temporary exception expired in July 2015, current market conditions would make it impossible for insured institutions to know the exact fees and exchange rates associated with a minority of their remittance transfers. Without the exemption, these insured institutions reported that they would have been unable to send some transfers to certain parts of the world that they currently serve. The CFPB believes that this exception is limited and is not used for most remittances by insured institutions.
The CFPB cannot extend the temporary exception beyond July 21, 2020 and believes that the added extension would give insured institutions that offer remittance services to their accountholders additional time to develop reasonable ways to provide consumers with exact fees and exchange rates for all remittance disclosures. The CFPB believes that this exception is limited and is not used for most remittances by insured institutions. Now that the rule is finalized, the CFPB intends to work with these providers for a more sustainable solution to this problem before the extension’s 2020 expiration.
Click here to access the final rule. The revised compliance guide is also available on the CFPB website.