CFPB Delays Remittance Transfer Rule Based on Feedback, but Some Damage Already Done

The Consumer Financial Protection Bureau (CFPB) showed last week that it is listening to feedback from the financial institutions it regulates, but not before at least one financial institution had announced that it will no long process international wire transfers as a result of the original rule.

On Nov. 27, the CFPB agreed to delay implementation of the international remittance transfer rule scheduled to go into effect on Feb. 7, 2013, giving the agency a chance to refine three elements of the rule that have caused concern among credit unions and others in the financial industry.

The CFPB is expected to issue a notice of proposed rulemaking clarifying requirements related to the disclosure of third-party fees, foreign taxes, and regional and local taxes assessed abroad. The proposed rule will also provide revisions to the error resolutions contained in the rule.

On Nov. 20, 2012, the Federal Home Loan Bank of New York (FHLBNY), a congressionally chartered wholesale bank that some financial institutions use as a third-party provider to clear remittance transfers, indicated that it will stop processing international wire transfers at the end of the year.

According to FHLBNY spokesman Brian Finnegan, the bank is not planning to reconsider its decision based on the CFPB bulletin delaying implementation of the final remittance rule. The FHLB of Seattle has not indicated that it plans to follow suit. However, the situation is worth monitoring for financial institutions that clear remittance transfers through their regional FHLB.

“When a rule mandated by Congress causes a congressionally chartered bank to no longer provide a service, specifically because of the regulatory hurdles being placed on the service, you know you have a problem,” said Jack Fallis, president and CEO of Global Credit Union and chair of the Association’s Regulatory Advisory Committee.

The FHLBNY has been processing international wires for its members since the mid-1990s, and member requests to process international wires have continued to increase over the past 20 years. The FHLBNY will continue to process international wire transfers through its 1Linksm system through the end of the year.

The CFPB’s decision to delay implementation came less than a month after Northwest credit union executives met with CFPB Director Richard Cordray. Cordray sent a letter thanking Northwest Credit Union Association (NWCUA) President and CEO Troy Stang for arranging the meeting, which provided invaluable insight into the issues facing credit unions in Oregon and Washington.

“This is a great example of hard work and perseverance of the members of CUNA, and the NWCUA ultimately resulting in a better rule,” Stang said. “This is the type of deliverable we promised our members, and although the new rule is improved from the original proposal, there is more work to do, and we intend to build on this going forward.”

Based on current expectations, the remittance transfer rule will likely go into effect in the spring of 2013.


The NWCUA Regulatory Advocacy team works with state and federal regulators to help reduce the regulatory burden on credit unions and protect the credit union movement. The Association encourages members to participate in the regulatory process. If you have any questions on these or any regulatory issues, please contact Director of Regulatory Advocacy John Trull at, or at 503.350.2209.

Posted in Around the NW.