A final rule that permanently provides “tailored” exceptions to remittance rule requirements for banks’ and credit unions’ disclosures of exchange rates and covered third-party fees, and raises the safe harbor under the rule from 100 transfers annually to 500 annually, was issued Monday by the Consumer Financial Protection Bureau (CFPB).
The final rule takes effect July 21, when the statutory exception on the above-noted cost disclosures expires.
The remittance rule implements provisions of the Electronic Fund Transfer Act (EFTA) and is included in the bureau’s EFTA implementing rule, Regulation E. The CFPB’s previous rule applied only to those who provide more than 100 remittances each in the previous and current calendar years. Under the final rule, only those providing more than 500 remittances annually in each of those years are covered.
For affected institutions, the final rule provides permanent exceptions from the requirement to provide exact amounts of exchange rates and third-party fees based in part on the number of remittances handled annually, and it provides a transition period for compliance once those thresholds are exceeded:
- Exchange rates: Insured institutions may estimate the exchange rate for a remittance transfer to a particular country if, among other things, the designated recipient will receive funds in the country’s local currency and the insured institution made 1,000 or fewer remittance transfers in the prior calendar year to that country when the designated recipients received funds in the country’s local currency.
- Third-party fees: Insured institutions may estimate covered third-party fees for a remittance transfer to a designated recipient’s institution if, among other things, the insured institution made 500 or fewer remittance transfers to that designated recipient’s institution in the prior calendar year.
- Transition period: Institutions that exceed either of the above two thresholds may continue to provide estimates “for a reasonable period of time” – the later of six months in the calendar year in which that event occurs, or Jan. 1 of the following year – while they work to comply with the rule’s requirement for providing exact amounts.
The bureau also reiterates in its final rule the special consideration in effect due to the COVID-19 pandemic: For remittance transfers that occur on or after July 21, 2020, and before Jan. 1, 2021, the CFPB does not intend to cite in an examination or initiate an enforcement action in connection with the disclosure of exact third-party fees and exchange rates against “any insured institution that will be newly required to disclose exact third-party fees and exchange rates after the temporary exception expires.”