No error arises under the remittance rule (contained in Regulation E) when funds aren’t delivered on time because of certain government-mandated closures of commercial activity – that is the gist of a set of three frequently asked questions published Tuesday by the Consumer Financial Protection Bureau (CFPB), but that conclusion involves several factors present at the time of the transfer.
A remittance provider’s failure to deliver funds by the disclosed availability date would not be a remittance rule error “if the provider could not have reasonably anticipated the closure,” the first of the three FAQs explains. “In general, the Remittance Rule requires a remittance transfer provider to disclose the date on which funds will be available in the foreign country to the designated recipient, and provides that the provider’s failure to deliver or transmit a remittance transfer by the disclosed date of availability is an error,” the bureau wrote. “However, the Rule also states that such a failure is not an error if it resulted from extraordinary circumstances outside the remittance transfer provider’s control that the provider could not have reasonably anticipated.”
The FAQs provide examples of government-mandated closures that could and that could not be reasonably anticipated by a remittance transfer provider. These examples boil down to timing; when the transfer was initiated, when a closure was announced, if the closure treated remittance transfer providers as “nonessential” businesses, and the disclosed funds availability date are all factors.
The bureau said it is aware that some foreign governments have mandated closures of commercial activity due to the pandemic and that these closures may prevent remittance providers from delivering or transmitting by the disclosed date of availability.