CFPB Seeking Comments On Possible Remittance Rule Revisions
By Daniel S. Cohen and Jeremy M. McLaughlin
On April 25th, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issued a request for information (“RFI”) asking for input about the scope of its Remittance Rule (the “Rule”), whether the Bureau should exempt certain small financial institutions from the Rule, and how the expiration of the Rule’s “temporary exemption” for insured depository institutions and credit unions would adversely affect consumers. Comments are due 60 days after publication in the Federal Register.
The Rule generally applies to consumer cross-border money transfers. Only entities engaged in remittance transfers in “the normal course of business” (meaning entities that execute more than 100 remittance transfers per year) are subject to the Rule. Last October, the CFPB published its five year assessment of the Rule (the “Assessment”), as required by the Dodd-Frank Act. According to the Assessment, from 2014 to 2017, of the 700 banks subject to the Rule, approximately 400 sent fewer than 500 remittance transfers per year while 100 sent between 500 and 1,000 remittance transfers per year. Collectively, these institutions accounted for less than 0.2% of all remittance transfers in 2017. According to these institutions, the cost of executing such transfers has risen significantly since the Rule went into effect.
Given the small role these institutions play in the remittance market and their rising cost of business, the CFPB is seeking comment on whether it should increase the threshold number of remittance transfers an entity must make to be subject to the Rule, and/or consider additional factors in determining whether an entity provides remittance transfers in the normal course of business. For similar reasons, the Bureau also is seeking comments on whether it should establish an exception for small financial institutions. The RFI also seeks related data.
Finally, the CFPB is seeking comments on the existing exemption that permits insured depository institutions and insured credit unions to send remittances from an account the consumer has with them, without complying with the Rule, if they are unable to know, for reasons beyond their control, the amount of currency that will be made available to the designated recipient. That exemption is set to expire on July 21, 2020, and the Bureau has asked whether its expiration will cause any negative impacts. At most, approximately 0.5% of all remittance transfers in 2017 were executed in reliance on this exemption, so the CFPB is also seeking information on which institutions rely on this exemption and for which transactions.