CFPB Issues Proposals to Remittance Transfer Rule

The Consumer Financial Protection Bureau (CFPB) has issued a proposed rule to address some issues with the final Remittance Transfer Rule, published on Feb. 7, 2012. The proposed changes to the final rule are beneficial to financial institutions that will continue to offer remittance transfer services.

The CFPB is seeking comment on four proposed changes:

The final rule requires remittance transfer providers to provider disclosures to consumers that include tax and fee information for the country and institutions where the transfer beneficiary will receive the funds. The CFPB has realized that this is not always feasible and is proposing the following changes:

  • The provider can rely on a sender’s representations regarding the variables of taxes and fees imposed on the foreign transfer.
  • The other option would be for the provider to estimate and disclose the highest possible foreign tax that could be imposed, with respect to any unknown variable.
    • The provider may rely on a fee schedule provided by the recipient institution
    • The provider may rely on information obtained from prior transfers to the same recipient institution.

The CFPB also recognized that while it may already be difficult to obtain certain fees and taxes imposed by the financial institution and the foreign country’s government, that it would be very challenging for an American financial institution to be expected to obtain and disclose foreign taxes at the regional, stated, provincial, or local level. The CFPB has decided to eliminate the requirement of the taxes that are not imposed by the foreign country’s central government.

The third proposed change to the final rule that the CFPB is suggesting would limit the liability of the remittance transfer provider in certain instances. As it is currently written, providers have unlimited liability in all cases of remittance transfers that do not make it to their intended destination. The CFPB received and acted on dozens of comments expressing concern over this portion of the rule.  The CFPB listened and took into consideration the fact that the sender, not the provider, may relay incorrect information (account number) to the provider, causing a transfer to not reach the intended recipient. In this instance, a provider is required to attempt to recover the funds but is not liable for the funds if the receiving institution will not return them.

The final portion of the proposal seeks to change the effective date of the rule. The final rule issued in early 2012 has an effective date of Feb. 7, 2013. The CFPB wants to change this date to 90 days after the proposed changes are finalized.

The CFPB is requesting comments on the proposed changes. The comment period is 15 days from publication in the Federal Register for the implementation date change, and 30 days from publication for the other proposed changes.

Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Advocacy News, Around the NW, Compliance News.