Alert January 10, 2013

CFPB Revises Transfer Remittance Rule and Extends Implementation Date

The CFPB announced proposed revisions  to its final rule on remittance transfers, issued on February 7, 2012, and supplemented on August 20, 2012 (see August 7, 2012 Alert). The proposed revisions amend the disclosure requirements imposed on remittance transfer providers with respect to foreign taxes and the fees imposed by the designated recipient’s financial institution. For example, under the proposed revisions, a remittance transfer provider will only be required to disclose foreign taxes imposed by a central government; however, if local foreign taxes are not included in the disclosure, an indication that the disclosed amount is an estimate will be required.  In addition, if a remittance transfer provider does not have specific knowledge regarding the variables that impact the amount of foreign taxes, the remittance transfer provider “may disclose the highest possible tax that could be imposed on a remittance transfer with respect to any unknown variable.”

The proposed revisions also amend the error resolution procedures. Under the proposed revisions, if certain conditions are met, a remittance transfer provider is relieved from bearing the cost of funds that cannot be recovered when funds are not received by a designated recipient due to incorrect or insufficient information. The CFPB extended the rule’s effective date from February 7, 2013, to 90 days after the proposal is finalized. Comments on the delay of the effective date are due January 15, 2013 and comments on the proposed changes to the disclosure and error resolution requirements are due January 30, 2013.