Cash Crunch: The final word on the Regulation E foreign remittance transfer rule

In February 2012, the Consumer Financial Protection Bureau first published amendments to Regulation E to provide new protections—including disclosures and  error resolution and cancellation rights—to consumers who send remittance transfers to other consumers or businesses in a foreign country. The amendments implement statutory requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Now, the CFPB has finalized the rules after making a series of changes and adjustments based in part on recommendations from ICBA to make the rules more workable for community banks. (See this month’s Payments Exchange column on page XX for specifics.)

In its final form, Regulation E has specific rules that govern what your community bank must do to comply with the required disclosures for providing remittance transfers. The CFPB rules take effect Oct. 28, 2013, when full compliance is required. Your community bank should look at what is covered under the rules and what will be needed to adjust systems, operations, procedures and policies for effective, timely compliance.

Key definitions

Here are some important definitions the CFPB is using under the amendments to Regulation E for remittance transfers.

Remittance-transfer disclosures

Starting in October, a remittance-transfer provider will be required to make certain transaction disclosures to consumer senders, including a notice of the consumer’s right to cancel the remittance transfer under certain circumstances. The disclosures may be provided in writing or electronically, or they may be provided orally in the case of transactions conducted entirely by telephone.

A remittance-transfer provider will have to disclose to a consumer-sender the following information before sending a payment, as applicable:

Under the rules, the remittance-transfer provider must provide the consumer-sender with a disclosure receipt when a payment is made that includes:

Under certain circumstances, a remittance-transfer provider may provide the disclosures in a combined format.

Error-resolution requirements

For purposes of error-resolution requirements, the term “error” includes any of the following under the rules:

provider relating to a remittance transfer; and

Under the rule, the term error does not include these circumstances:

The remittance-transfer provider must investigate and respond to alleged errors within prescribed time frames. When funds are deposited into the wrong account because the sender provided an incorrect account number or routing number (as long as other conditions are properly met by the provider), the provider will be able to attempt to recover the funds, but it will not have to bear the cost of funds that cannot be recovered.

Remittance-transfer cancellation

Under the rules, a remittance-transfer provider will have to comply with any oral or written request from the consumer-sender to cancel a remittance transfer that has been funded. The cancelation must occur within 30 minutes after the consumer-sender makes a payment to fund the transaction if:

In canceling a remittance transfer, the provider must refund, at no additional cost to the sender, the total amount of funds provided by the sender for the remittance transfer. These refunds must include any fees and, to the extent not prohibited by law, taxes imposed to conduct the remittance transfer. These refunds must be provided within three business days of receiving a sender’s request to cancel the remittance transfer.

Mary Thorson is vice president of Chartwell Compliance, an ICBA Compliance & Risk Management service provider.

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