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Big Increase to Foreign Remittance Transfer Threshold

The CFPB released a Regulation E Update regarding remittance transfers and increasing the safe harbor threshold from 100 to 500 transactions per calendar year, effective July 21, 2020. Regulation E requires remittance transfer providers to provide customers with certain disclosures and establishes cancellation and error resolution procedures for these foreign transactions. Also, the update memorialized statutory temporary exceptions to certain disclosure elements which were to expire July 2020; more on that below.

Remittance transfers are electronic transfers of funds that are more than $15 requested by consumers in the United States and sent to people or companies in foreign countries. These transfers include many types of international transfers, including cash-to-cash money transfers, international wire transfers, international ACH transactions, and certain prepaid card transfers.

The safe harbor in the old rule covered companies processing fewer than 100 remittance transfers in a calendar year and raised the excepted threshold to 500. The details are:

If your bank’s calendar year total is below the 100-transaction threshold, the bank will fall under the 500-transaction cutoff level. If you’ve been providing remittance transfers exceeding the 100-transaction threshold and didn’t qualify for the safe harbor but are below 500, you will be exempt from the rule, too.

Since this is happening before mid-year, there is a twist: if you are over the 100-transaction threshold you must continue to comply with the requirements until July 20, 2020. If, on July 21, 2020, you are now exempt as your remittance transfer counts are under 500, you can stop complying at that time, not before.

For example, if your institution processed 200 transfers in 2019 and it is on track to do 210 in 2020, you are still subject to the rule until July 20, 2020. After that date, you can cease complying with this part of the regulation. That is right, just close the rule book; you are done.

What if you are close to that 500-transfer level? If, after July 21, 2020 your institution will exceed the 500-remittance transfer cutoff in a calendar year, you will have up to six months after exceeding 500 to begin to comply with the rule.

Two Temporary Exceptions Made Permanent

For those institutions that must comply, the exchange rate and third-party fee rules are now permanent based on the following provisions.

  • Insured institutions can estimate the exchange rate and other disclosures that depend on the exchange rate if all the following conditions are met:
    • The insured institution cannot determine the exact exchange rate required to be disclosed;
    • The insured institution made 1,000 or fewer remittance transfers in the prior calendar year to the country for which the designated recipients of those transfers received funds in the country’s local currency; and
    • The remittance transfer is sent from the sender’s account with the insured institution; provided however, for the purposes of this paragraph, a sender’s account does not include a prepaid account, unless the prepaid account is a payroll card account or a government benefit account.
  • A remittance transfer is tied to a designated recipient’s institution assuming all the following conditions are met:
    • The remittance transfer provider is an insured institution;
    • The insured institution cannot determine the exact covered third-party fees required to be disclosed;
    • The insured institution made 500 or fewer remittance transfers in the prior calendar year to that designated recipient’s institution, or a United States Federal statute or regulation prohibits the insured institution from being able to determine the exact covered third-party fees required to be disclosed; and,
    • The remittance transfer is sent from the sender’s account with the insured institution; provided however, for the purposes of this paragraph, a sender’s account does not include a prepaid account, unless the prepaid account is a payroll card account or a government benefit account.

There are other nuances which go along with those permanent exceptions, so be sure to check them out at 1005.32(b)(4) and (5).

The Bureau also released an Executive Summary of the regulation along with an “unofficial” redline version of the changes.

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