WASHINGTON (8/8/12)--The Consumer Financial Protection Bureau (CFPB) Tuesday released its long-anticipated rule that will provide a safe harbor exemption for certain institutions from the requirements of the remittances rule issued previously by the CFPB that implements provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding new consumer disclosures for remittance transfers.
The Credit Union National Association (CUNA) had warned the bureau that its remittance transfer rule, as proposed, would impose unsustainably high compliance costs and legal liabilities that could force credit unions with relatively small volume international payments programs to eliminate such programs.
CUNA had urged the bureau to increase its proposed safe harbor exemption for small remittance issuers from 25 remittances per year to no fewer than 1,000 remittances a year.
Although the CFPB did increase the safe harbor exemption in the final rule, it extended it only to providers that transact 100 or fewer remittances per year. The CFPB indicated at least 80% of credit unions that offer remittance services would be exempt.
In response to the CFPB announcement Tuesday, CUNA president/CEO Bill Cheney said CUNA remains very concerned about the safe harbor provisions.
"Together with state credit union leagues and associations, credit unions and other trade groups, we have advocated for meaningful relief from this requirement during the enactment of the Dodd-Frank Act and throughout the rulemaking process over the past two years.
"We are reviewing our options including appealing the rule with the Financial Stability Oversight Council (FSOC), which can overturn CFPB rules," the CUNA leader said.
The CFPB, in a release, said it concluded that those institutions that consistently conduct 100 or fewer remittance transfers per year do not provide transfers in the "normal course of business" and therefore are not subject to the new requirements.
Also, the CFPB said, if a company that provided 100 or fewer remittance transfers in the previous year provides more than 100 remittance transfers in the current year, the rule provides a reasonable transition period to come into compliance
The bureau's new remittance disclosure rule will take effect Feb. 7, 2013. This final rule is only on the safe harbor and preauthorized transfers. It affects international wires and international ACH transfers.
Disclosures must generally be provided when the consumer first requests a transfer and again when payment is made. The rule also provides consumers with error resolution and cancellation rights.
CUNA's Cheney is scheduled to discuss credit union issues with CFPB Director Richard Cordray on Aug. 14, and Cordray also will be the speaker on a CUNA webinar Aug. 30, with Cheney, to discuss credit union concerns and issues on a range of topics, including remittances.
Also, CUNA Deputy General Counsel Mary Dunn is one of three financial institution representatives who is addressing CFPB staff today at an agency conference. She will be pointing out credit unions' many concerns with the CFPB, including those involving remittances rules. She will also address concerns that the CFPB is creating undue regulatory burdens for credit unions.
Use the resource links below to read the CFPB rule, and also to access CUNA's Comment Letters on the bureau's proposal.