CFPB Revises The Remittance Rule
By Eliott C. Ponte, Law Clerk
The Dodd-Frank Act added new requirements for remittance transfers under the Electronic Fund Transfer Act by directing the CFPB to issue regulations amending Regulation E. Under this mandate, the CFPB released a series of regulations (the Remittance Rules) corresponding with Congressâ intent. These regulations became effective on October 28, 2013. NAFCU issued a summary of the final regulation on July 21, 2012, which can be found by clicking this link (you must be a NAFCU Member to access this summary).
Of the many Remittance Rules promulgated by the CFPB, the Dodd-Frank Act required that consumers be provided with exact pricing disclosures before paying for a remittance transfer. Foreseeing problems with such requirements, Congress included a provision that allowed insured financial institutions to provide estimated disclosures where exact information could not be determined for reasons beyond a financial institutionâÂÂs control. Congress sought this exemption to be temporary, and thus included a sunset provision that retired this exemption on July 21, 2015. Hedging against their own expectations, Congress also empowered the CFPB to extend the exemption for an additional five years if the CFPB determined that the expiration of the exemption would negatively affect the ability of insured financial institutions to send remittances to locations in foreign countries.Â
In April of this year, the CFPB announced that it sought to amend the Remittance Rules by, among other things, extending the exemption for an additional five years (ten years in total, which is the maximum length as allowed by the Dodd-Frank Act). Last week, the CFPB announced that it finalized its proposed regulations, thereby extending the exemption period until July 21, 2020. In prepared remarks, CFPB Director Richard Cordray said, âÂÂtodayâÂÂs final rule will help ensure these changes are implemented smoothly and that consumers will be well-protected during that process.âÂÂ
In addition to extending the exemption, the CFPB also adopted several clarifications and technical corrections to the Remittance Rule. First, the CFPB clarified that U.S. military installations abroad are considered to be located in a âÂÂStateâ for purposes of the Remittance Rule. Prior to this clarification, the Remittance Rule was unclear as whether a United States military base in a foreign nation was considered a âÂÂStateâ for the purposes of the regulation. Under the final rule, transfers that will be received at a location on a United States military base that is physically located abroad are considered to be received in a âÂÂState.â Similarly, transfers that are sent to a recipientâÂÂs account that is also located on a United States military base abroad is considered to be located in a âÂÂState.âÂÂÂ
Second, the CFPB clarified that whether a remittance transfer from an account is for personal, family, or household purposes (and thus, whether the transfer could be a remittance transfer) may be determined by ascertaining the primary purpose of the account. Next, the CFPB clarified that faxes are considered writings for purposes of satisfying certain provisions of the Remittance Rule that require remittance transfer providers to provide written disclosures.Â
Fourth, the clarified regulation permits providers to include the CFPBâÂÂs new remittance-specific consumer website (the Spanish speaking version of the website can be found here, although it is not currently functioning) as the website that providers must disclose on remittance transfer receipts. Finally, the CFPB released a revised version of its compliance guide to reflect the changes finalized in the updated regulation. The Final Regulation is available here.