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CFPB Revises Rule Protecting Consumers Sending Money Internationally

Revisions Will Help Facilitate Compliance with New Consumer Protections

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today revised its rule that creates certain protections for consumers who transfer money internationally. The revisions are intended to preserve the new consumer protections provided under the rule while facilitating industry’s compliance with the rule. The rule will take effect on October 28, 2013.

“We are dedicated to protecting consumers who send money abroad and to preserving their access to these services,” said CFPB Director Richard Cordray. “Today’s final rule achieves these goals by maintaining the rule’s crucial new consumer protections while facilitating compliance for providers of remittance transfers.”

The remittance rule creates a comprehensive consumer protection regime for remittance transfers sent by consumers in the United States to individuals and businesses in foreign countries. Under the remittance rule, remittance transfer providers will be required to disclose certain fees and taxes, as well as the exchange rate that will apply to the transfer. The rule also provides consumers with error resolution and cancellation rights. Today’s rule finalizes changes first proposed on December 31, 2012. Today’s rule builds on a final rule on international money transfers that was published by the CFPB on February 7, 2012 and supplemented on August 20, 2012.

The CFPB is making the following changes in the final rule issued today:

  • Disclosure of institution fees and foreign taxes: Remittance transfer providers must disclose certain fees, such as a provider’s own fees and those charged by an agent of the provider or intermediary institution. The requirement that providers disclose foreign taxes or, if that institution is not the provider’s agent, fees imposed by a recipient institution for receiving transfers into an account has been made optional. Providers must include, where applicable, a disclaimer that these fees and taxes may apply.
  • Errors from incorrect account information: Under the final rule, when funds are deposited into the wrong account because the sender provided an incorrect account number or routing number and certain other conditions are satisfied, the provider would be required to attempt to recover the funds but would not bear the cost of funds that cannot be recovered.

The CFPB’s revisions are designed to preserve market competition and consumers’ access to remittance transfer services and to facilitate implementation of and compliance with the rule’s requirements, while maintaining the rule’s valuable new consumer protections and ensuring that those protections can be effectively delivered to consumers.

The complete money transfer rule will take effect on October 28, 2013. The CFPB believes that this added time will allow entities that provide remittance transfers sufficient time to adapt to today’s changes.

Consumers transfer tens of billions of dollars from the United States to foreign countries each year. Prior to the passage of the Dodd-Frank Act, these international money transfers were generally not covered by existing federal consumer protection regulations.

To remedy this, the Dodd-Frank Act expanded the scope of the Electronic Fund Transfer Act to provide protections for remittance transfer senders, and directed that rules implementing certain provisions of the new protections be issued by January 21, 2012. Authority to implement the new requirements transferred from the Federal Reserve Board to the CFPB in July 2011.

The final rule is available here: http://files.consumerfinance.gov/f/201304_cfpb_final-rule_remittance-transfers.pdf

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