December 04, 2019

CFPB proposes increase to remittance safe harbor

moneyThe CFPB Tuesday issued a proposal related to its remittance rule that includes a NAFCU-sought increase to the safe harbor threshold under the rule, though it is not as high as NAFCU recommended. NAFCU has expressed concerns about its highly burdensome compliance costs that have caused many credit unions to stop offering these services and urged the bureau to exempt credit unions from the rule.

"Consumers deserve to receive remittance transfer services from institutions that they trust and that are not just out for profits, and we are pleased the CFPB has increased the safe harbor transaction threshold to 500," said NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt, whose statement was also featured in Reuters. "Under the current remittance rule, a number of credit unions have effectively been prevented from offering remittance transfer services because of the high compliance costs and associated burdens.

"While the proposal's increase to the transaction threshold for compliance purposes fell short of NAFCU's recommendations, it will provide relief to credit unions. NAFCU will continue to push for credit unions, as community-based lenders, to be exempt from the rule altogether," Hunt added.

The remittance rule proposal was on the bureau's fall rulemaking agenda; it will be open for a 45-day comment period once published in the Federal Register.

Last year, NAFCU witness and United Nations Federal Credit Union's Senior Vice President of Corporate Affairs and General Counsel John Lewis testified at a House Financial Services subcommittee hearing, sharing the challenges his credit union faced due to changes in remittance requirements, including increased costs for the credit union and their members. Lynette Smith, President and CEO of TruEnergy Federal Credit Union, also testified on the remittance rule's impact in 2012.

The CFPB's statutorily-required assessment of the remittance rule was also published last year.