WASHINGTON (3/29/12)--The Credit Union National Association (CUNA) has released a final rule analysis of new Consumer Financial Protection Bureau (CFPB) protections for consumers who transfer money internationally.
The rule broadly defines these "remittance transfers" to include virtually all cross-border electronic funds transfers initiated by consumers in the U.S. including automated clearinghouse (ACH) and wire transfers, and products such as the World Council of Credit Unions' IRnet.
Under the CFPB remittance rule, remittance transfer providers must disclose the exchange rate and all fees associated with a transfer so consumers know exactly how much money will be received on the other end.
These disclosures must be provided in writing before the transfer is initiated, and must include the exchange rate, fees and taxes, and the amount of currency to be received by the recipient.
A receipt must also be provided after the remittance is transmitted. This receipt must also include information about error resolution, provider and regulator contact information, and the availability of the funds upon receipt. The remittance rule also requires remittance transfer providers to investigate disputes and fix mistakes.
Error resolution rights, standards for resolving errors and recordkeeping rules, and cancellation and refund policies for all remittance transfers, including those with an estimated exchange rate, such as those falling within the partial exemption for federally insured credit unions, are also addressed by the rule.
The rule also allows consumers that are sending the remittances to cancel the transfer, and receive a full refund of the transfer amount and any fees, if the remittance is cancelled within 30 minutes.
There are two exceptions for the actual amount of currency to be received that allow an estimated exchange rate. Federally-insured credit unions and other institutions, in some situations, will be granted temporary exemptions if they cannot determine certain disclosed amounts for reasons beyond their control.
This exemption is scheduled to expire on July 21, 2015.
Also, remittance providers that cannot determine the amounts to be disclosed because of the laws of, or the method by which transactions are made in a recipient country, will also be granted permanent exceptions. The method by which transactions are made exception is for international ACH transfers that are under the Federal Reserve's FedGlobal ACH program.
Credit unions and financial institutions that provide remittance services to consumers, as well as money transfer organizations such as Western Union or MoneyGram, will be subject to the rule. CUNA recommended that credit unions that work with these groups contact them to determine applicable changes to their contractual or compliance requirements. The final rule does not apply to most transfers involving credit, debit, and prepaid cards.
The CFPB is considering certain changes to the final rule, including setting a threshold that would minimize the impact of the rule on community banks, credit unions, and other companies that do not normally process these transactions.
The CFPB expects to complete any further rulemaking on these issues before the final rule becomes effective on Feb. 7, 2013.
For the full CUNA Final Rule Analysis, use the resource link.