Alert May 14, 2013

CFPB Finalizes International Remittance Transfer Rule

The CFPB issued a final rule that amends and finalizes its international remittance transfer rule. This final rule modifies earlier final rules issued by the CFPB in February, July, and August 2012 (see August 7, 2012 Alert). This rule amends three specific areas: (1) makes optional, in certain circumstances, the requirement to disclose fees imposed by a designated recipient’s institution; (2) makes optional the requirement to disclose taxes collected by a person other than the remittance transfer provider; and (3) revises certain aspects of the error resolution provisions. In particular, the rule amends Regulation E to no longer require remittance transfer providers to disclose "non-covered third party fees," which are "fees imposed by the designated recipient’s institution for receiving a remittance transfer into an account except if the institution acts as an agent of the remittance transfer provider." Instead, the rule requires remittance transfer providers to include disclaimers in the required disclosures notifying the recipient that he or she may receive less than the disclosed total due to fees and taxes. The disclaimers must be in language substantially similar to the language in the model forms.

The error resolution procedures amendments make it so a remittance transfer provider is not liable for the cost of funds that cannot be recovered because the sender provided the wrong account number or recipient institution identifier. To be eligible for this exemption, the provider will be required to: (1) demonstrate the sender provided the wrong account number or recipient institution identifier; (2) have used reasonably available means to verify that the recipient institution identifier provided by the sender was correct; (3) disclose that the sender could lose the transfer amount if an incorrect account number or recipient institution identifier is provided; and (4) use reasonable efforts to recover the amount. In addition, the error must have resulted in the amount being deposited into an account other than the designated recipient’s. This final rule, along with the remainder of Regulation E’s remittance transfer rules, are effective on October 28, 2013.