Some financial institutions could estimate certain remittance fee and exchange rate information – instead of disclosing exact amounts in certain circumstances – under a proposal issued by the federal consumer financial protection agency Tuesday.
The proposal would also increase the “safe harbor” threshold to 500 or fewer annual transfers (from 100 transfers or less) for determining whether a financial institution is subject to the rule.
The notice of proposed rulemaking issued by the Consumer Financial Protection Bureau (CFPB) would require companies that provide remittance transfers in the normal course of business to disclose to consumers certain fees and the exchange rates that apply to transfers.
However, it also includes the exception that allows some banks and credit unions to estimate certain fee and exchange rate information instead of disclosing exact amounts in certain circumstances. The estimates would be allowed when conditions make it economically infeasible for those insitutions to provide exact disclosures, the agency said. “This could preserve consumers’ ability to send remittances from their bank accounts to certain destinations and reduce the compliance burden for banks and credit unions,” CFPB said.
However, CFPB points out the exception expires by statute in July 2020.
In addition, CFPB said it is proposing to increase the safe harbor threshold that determines whether a company makes remittance transfers in the normal course of its business and is subject to the rule. “Under the proposal, companies making 500 or fewer transfers annually in the current and prior calendar years would not be subject to the rule,” the agency said. “This would reduce the burden on over 400 banks and almost 250 credit unions that send a relatively small number of remittances – less than .06% of all remittances,” the bureau said.
The proposal, which was released with a 45-day comment period, also seeks comments related to a safe harbor countries list. Under the existing rule, if a remittance transfer provider sends a remittance transfer to one of five countries that appear on the safe harbor countries list, the provider may estimate the exchange rate and certain amounts in the required disclosures unless the remittance provider has information that it is possible to determine the exact amount or rate to be disclosed. CFBP wants comments on the exception and the process for adding countries to the safe harbor list.
Consumer Financial Protection Bureau Issues Notice of Proposed Rulemaking on Remittance Rule