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Remittance Exam Procedures Released by CFPB
WASHINGTON (10/23/13)--The policies and procedures Consumer Financial Protection Bureau examiners will use when examining remittance programs were previewed in a Tuesday agency release.

The bureau also released e-Regulations, a new online tool that will make CFPB regulations "easier to find, read, and understand." Regulation E is the first regulation highlighted by the new tool.

Under the final CFPB rule, remittance transfer providers are required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors. The rule has an Oct. 28 effective date.

The rule will not apply to credit unions and other entities that consistently provide 100 or fewer remittance transfers each year. Transactions of less than $15 will also not be covered under the rule.

The CFPB said it is working closely with its fellow regulators to ensure they all have a shared understanding of new rules. The remittance examination procedures were developed, in part, through the Federal Financial Institutions Examination Council. "This interagency effort will promote consistent supervision of remittance providers," the CFPB said.

According to the CFPB, examiners will focus on:
  • Assessing the quality of the regulated entity's compliance risk management systems in its remittance transfer business;
  • Identifying acts or practices that materially increase the risk of violations of federal consumer financial law and associated harm to consumers in connection with remittance transfers;
  • Gathering facts that help to determine whether a supervised entity engages in acts or practices that are likely to violate federal consumer financial law in connection with remittance transfers; and
  • Determining, in accordance with CFPB internal consultation requirements, whether a violation of a federal consumer financial law has occurred and whether further supervisory or enforcement actions are appropriate.
The examiners will also check for weaknesses or other risks in the organization's remittance business model, and whether the institution's audits address all applicable provisions of Regulation E and all key business processes and functions.

Organizational charts, process flowcharts, policies and procedures, account and transaction documentation, checklists and computer program documentation will be considered as examiners determine whether an entity's internal controls are adequate to ensure compliance with various sections of Regulation E, the CFPB added.

The Credit Union National Association has provided a host of resources to help credit unions prepare for remittance rule compliance. (See Oct. 17 News Now story: CUNA Preps CUs For Oct. 28 Remittance Rule Reckoning.)

CUNA said that it will continue to urge the CFPB to minimize the regulatory burden of its rulemakings, but added this initiative will make it easier to find revisions and read the final regulations in context with the commentary.  CUNA has asked the agency to follow suit with it its mortgage rules and commentaries as quickly as possible.

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