A regulatory alert that gives credit unions an overview of final remittance rule changes adopted in May, and set to take effect July 21, was issued Wednesday by the institutions’ federal regulator.
The final rule, issued by the Consumer Financial Protection Bureau (CFPB) as amendments to Regulation E and published June 5 in the Federal Register, permanently provides “tailored” exceptions to remittance rule requirements for banks’ and credit unions’ disclosures of exchange rates and covered third-party fees. It also raises the safe harbor under the rule from 100 transfers annually to 500 annually.
The National Credit Union Administration (NCUA), in Regulatory Alert 20-RA-05, provides an overview. Among the key details, and under the final rule:
- If a credit union provided 500 or fewer remittance transfers in the previous calendar year and provides 500 or fewer remittance transfers in the current calendar year, that credit union is not considered to be providing remittance transfers in the normal course of business. Therefore, the credit union is not a “remittance transfer provider” and not subject to the remittance rule.
- Credit unions may disclose certain estimated third-party fees for a particular remittance transfer to a designated recipient’s institution if:
- the credit union made 500 or fewer transfers to the designated recipient’s institution in the prior calendar year;
- at the time the disclosures must be given, the credit union cannot determine the exact amount of the covered third-party fees that will be imposed on that particular transfer; and
- the remittance transfer is sent from the sender’s credit union account, provided the sender’s account does not include a prepaid account, unless the prepaid account is a payroll card account or a government benefit account.
- Credit unions may disclose an estimate of the exchange rate for a transfer to a country if:
- the remittance payment is made in the local currency of the designated recipient’s country;
- the credit union processing the transaction made 1,000 or fewer remittance payments to that country in the prior calendar year; and
- the credit union cannot determine the exact exchange rate for that particular remittance transfer.
- Credit unions may estimate third-party fees when another federal statute or regulation prohibits it from determining the exact amount of covered third-party fees, and the credit union meets the other conditions in the final rule.
The NCUA notes that the rule provides credit unions that exceed the thresholds in these new permanent exceptions a reasonable amount of time to come into compliance, not to exceed the later of six months after the applicable threshold is crossed or Jan. 1 of the following year.