Regulation E Foreign Remittance Rules go into effect February 7, 2013 as promulgated by the CFPB (Consumer Financial Protection Bureau). These rules can be found in Subpart B of Regulation E (12CFR Chapter X part 1005). There are a lot of related tools located on the CFPB’s website that can also give you more information. You can click this link. The CFPB has also posted a free webinar video that you can watch that will give you all of the rules and help you determine if you will be subject to these rules.
In short, financial institutions that process over 100 foreign remittances are going to be subject to these rules. In order to determine if you process over 100 foreign remittances, you need to keep track, perhaps on a log or system generated report, of the volume of transfers that you are processing. Once you hit the 100 mark, you will be subject to the rules and will have 6 months in order to implement them. Please also keep in mind that these relate to “consumer” initiated transfers, not business initiated transfers.
To determine what to count towards the 100 mark, you will need to count any outgoing wire transfers to foreign countries, any outgoing international ACH transactions, any bill payments that are sent to foreign countries, and any prepaid cards (that you are aware of) that the customer is going to send to someone overseas.
If you fall under the rules, you will need to adhere to the following:
Prior to the transaction, you will need to provide the customer a “pre-payment disclosure” which should include the amount to be transferred, any front end fees and taxes, the current exchange rate, any back end fees and taxes, and the total amount to be received by the designated recipient.
After payment has been made, you will need to provide the customer with a “receipt” which should include all information required in pre-payment disclosure as well as the date of availability, the name of designated recipient, error resolution/cancellation rights, remittance transfer provider contact information, state regulator (only if you are regulated under the state) and CFPB contact information, and the transfer date.
There are model disclosures located in Appendix A of 12CFR1005.
The sender of the foreign remittance has the right to cancel within 30 minutes of payment. Therefore, financial institutions may wish to wait 30 minutes before actually sending out the remittance in case the sender exercises this right.
Error Resolution Obligations:
Sender has the right to report errors within 180 days of the disclosed date of availability. The provider must then investigate and make a determination within 90 days of the date the error was reported. The provider must report their results to the sender within 3 days after completing their investigation. If an error was incurred, the provider must correct the error within 1 business day, or as soon as reasonably practicable, of receiving the sender’s instructions.
In conclusion, check out the CFPB’s website as they have a lot of useful information. In addition, start tracking now. It’s the beginning of the year, it would be great to start out on the right foot and track your remittances.
Senior Quality Control and Review Specialist
Sharon Geiger has 27 years banking experience, 21 of which have been involved in internal audit. She has extensive knowledge of all aspects of the banking industry, with a particular emphasis on regulatory compliance and identifying risks and controls. As QCR Specialist, she performs Quality Control Reviews to ensure all workpapers and reports are completed in compliance with the firm's standards.