January 7, 2013 –
CFPB issues anticipated proposal amending remittance transfer rule for financial institutions

On December 31, 2012, the Bureau of Consumer Financial Protection (“CFPB”) issued a proposed notice of rulemaking (the “Notice”) proposing to amend the final rule issued by the CFPB earlier in 2012 that implements Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding remittance transfers (the “Remittance Transfer Rule”).

Among other things, the Notice sets forth the CFPB’s proposal to temporarily delay the effective date of the Remittance Transfer Rule (currently, February 7, 2013) until 90 days after the proposal under the Notice is finalized. It is expected that the new effective date of the Remittance Transfer Rule will be sometime in the late spring or early summer of 2013.

Additionally, the Notice sets forth the CFPB’s proposal to refine three elements of the Remittance Transfer Rule.
First, the CFPB’s proposal would provide additional flexibility and guidance on how foreign taxes and recipient institution fees may be disclosed.

Second, the CFPB proposes to exercise its exception authority under section 904(c) of the Electronic Fund Transfer Act to eliminate the requirement to disclose foreign taxes at the regional, state, provincial or local level.

Third, the CFPB’s proposal would also revise the error resolution provisions that apply when a sender provides incorrect or insufficient information and, in particular, when a remittance transfer is not delivered to a designated recipient because the sender provided an incorrect account number to the remittance transfer provider and the incorrect account number results in the funds being deposited in the wrong account.

As a result of the foregoing, financial institutions will need to update their model disclosures relating to remittance transfers and possibly their general terms and conditions relating to such products/services.

If you have any questions regarding the Notice and/or the Remittance Transfer Rule, please contact Clemente Vazquez-Bello or Gabriel Caballero.

Read a copy of the notice from the Federal Register (12/31/12)