RSSCommunity banks and other financial service providers that offer remittance transfers will be subject to new rules under Regulation E, the Electronic Funds Transfer Act, which go into effect in January 2013.
The Consumer Financial Protection Bureau has published its final rules, which apply to banks, thrifts, credit unions and money remitters. Generally, the rules apply to all transfers of $15 or more, made by a person in the United States to a person or company in a foreign country. The new rules require that:
- Companies provide a disclosure to a consumer before the consumer pays for a remittance transfer. The disclosure must include the exchange rate, fees and the amount of money to be delivered. These disclosures must be in English. (Model forms are available within the full text of the final rule.)
- Companies must provide a receipt or proof of payment that repeats the information in the first disclosure, as well as the date the money will arrive.
- Consumers must get 30 minutes (sometimes longer) to cancel a transfer and can get their money back if they cancel.
- Companies must investigate if a consumer reports a problem with a transfer. In some circumstances, the customer may be eligible for a refund or no-cost transfer.
- Companies take responsibility for mistakes made by employees.
The Bureau is seeking comment on other changes to the rules, which would create an exemption for companies that don’t provide remittance transfers in the normal course of their business; and how to apply the rules when a consumer schedules a remittance transfer many days in advance.
The Independent Community Bankers of America “opposes the onerous and unworkable disclosure regime, which will cause many banks to exit the consumer international funds transfer business or partner with closed-loop networks, such as Western Union,” according to an ICBA newsletter.
“The compliance burden associated will result in a majority of community banks abandoning these services, leaving their customers at the mercy of larger banks’ services, or more likely, forcing them to use non-bank remittance providers that traditionally have high service fees and poor exchange rates,” ICBA wrote in a comment letter submitted early in the rulemaking process.
The association also asked for an exemption for community banks that conduct fewer than 1,200 remittance transfers a year. Bankers may comment on the final rules through Feb. 27, 2012, at www.regulations.gov/#!documentDetail;D=CFPB-2011-0021-0001.
