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April 9, 2012 – The Consumer Financial Protection Bureau's proposed Regulation E provisions on remittance transfers are so onerous that some credit unions may decide to no longer offer the service, NAFCU President and CEO Fred Becker said Friday.

In an April 6 letter to the CFPB, Becker pointed out that the vast majority of credit unions that offer international remittances use open network systems. These institutions will have an "exceedingly difficult" time complying with the proposal, as the CFPB itself acknowledged in its final rule.

While the proposed exception for remittance transfer providers that send less than 25 remittances a year is welcome, Becker wrote, the threshold for the exception is so low that virtually no institution would fall under it.

Furthermore, Becker said the costs associated with the proposal could mean that some credit unions would decide to stop offering remittance transfers. "While many credit unions offer the service simply because there is some limited demand, it is unlikely an institution would expend the necessary resources if the demand was less than 25 transactions per year," he said.

Rather than 25 transactions a year, Becker recommended setting the threshold at 600 transactions a year; an average of just 50 per month. "This threshold would more accurately reflect the intent of the proposal: to exempt institutions that provide these services infrequently and in response to a specific customer request," he wrote.

Becker made a number of other recommendations to the agency, including:

• giving providers six months to comply after they exceed the threshold;
• allowing for a transition to take place from an exception to the rule to full compliance with all requirements;
• allowing estimates for remittance transfers scheduled less than 10 days in advance;
• eliminating the requirement for a "second receipt" in certain circumstances;
• eliminating the requirement for a prepayment disclosure for each transfer made in a series; and
• reducing the amount of time that providers must guarantee the transaction cost to two business days.

Becker added that "the infinitesimal benefits of the rule do not justify the very significant costs," with smaller institutions ultimately "disadvantaged simply because the regulatory hurdles associated with this longstanding product will be too cumbersome."