Morrison & Foerster Client Alert: Consumer Financial Protection Bureau Finalizes Regulatory Scheme for Remittance Transfers

Morrison & Foerster Client Alert: Consumer Financial Protection Bureau Finalizes Regulatory Scheme for Remittance Transfers

by Ezra C. Levine, Andrew M. Smith, and M. Sean Ruff

Earlier this week, the Consumer Financial Protection Bureau ("Bureau") published, in the Federal Register, a final rule setting forth an entirely new regulatory scheme for companies that provide remittance transfers, including banks.1 Remittance transfers are electronic transfers of money from U.S. consumers to recipients in foreign countries. Among other things, the Bureau's final rule: (1) requires that specific disclosures be given to each "sender" of a remittance transfer showing how much money will be received by the recipient of the transfer in local currency; (2) enables senders to dispute errors for up to 180 days following a remittance transfer; and (3) allows senders to cancel remittance transfer transactions within 30 minutes.

BACKGROUND

Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act added a new section 919 to the Electronic Fund Transfer Act ("EFTA") to require certain disclosures and error resolution procedures with respect to remittance transfers.2 The new rule implements these EFTA provisions.

REQUIRED DISCLOSURES

The final rule requires a remittance transfer provider to provide to each "sender" of a remittance transfer a prepayment disclosure describing: (i) the amount that will be transferred to the designated recipient, in the currency in which the remittance transfer is funded, using the term "Transfer Amount" or a substantially similar term; (ii) any fees and taxes imposed on the remittance transfer by the provider, in the currency in which the remittance transfer is funded, using the terms "Transfer Fees" for fees and "Transfer Taxes" for taxes, or substantially similar terms; (iii) the total amount of the transaction in the currency in which the remittance transfer is funded, using the term "Total" or a substantially similar term; (iv) the exchange rate used by the provider for the remittance transfer using the term "Exchange Rate" or a substantially similar term; (v) the amount that will be received by the designated recipient in the currency in which the funds will be received, but only if, fees and taxes are imposed by a person other than the remittance transfer provider; (vi) any fees and taxes imposed on the remittance transfer by a person other than the provider, in the currency in which the funds will be received by the designated recipient, using the terms "Other Fees" for fees and "Other Taxes" for taxes, or substantially similar terms; and (vii) the amount that will be received by the designated recipient, in the currency in which the funds will be received, using the terms "Total to Recipient" or a substantially similar term.

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