Recently the Consumer Financial Protection Bureau (CFPB) published a proposed revision to Regulation E regarding remittance transfers. The proposal addresses three narrow issues.
Additional flexibility regarding the disclosure of foreign taxes and fees
If a remittance transfer provider does not have specific knowledge regarding variables that affect the amount of foreign taxes imposed on the transfer the proposal would:
- Continue to permit a provider to rely on a sender’s representations regarding these variables.
- Separately permit providers to estimate by disclosing the highest possible foreign tax that could be imposed with respect to any unknown variable.
If a provider does not have specific knowledge regarding variables that affect the amount of fees imposed by a recipient’s institution for receiving a remittance transfer in an account, the proposal would permit:
- A provider to rely on a sender’s representations regarding these variables.
- The provider to estimate by disclosing the highest possible recipient institution fees that could be imposed on the remittance transfer with respect to any unknown variable, as determined based on either fee schedules made available by the recipient institution or information ascertained from prior transfers to the same recipient institution. If the provider cannot obtain such fee schedules or information from prior transfers, the proposal would allow a provider to rely on other reasonable sources of information.
Limit disclosure of foreign taxes to those imposed by a country’s central government
The CFPB proposes to exercise its exception authority under section 904(c) of the Electronic Funds Transfer Act (EFTA) to eliminate the requirement to disclose foreign taxes at the regional, state, provincial or local level. Thus, under the proposal, a remittance transfer provider’s disclosure obligation would be limited to foreign taxes imposed on the remittance transfer by a country’s central government. Because the proposed changes regarding recipient institution fees and taxes, taken together, could mean that a provider could be making disclosures that are not exact, the proposal also solicits comment on whether the existing requirement in the Final Rule to state that a disclosure is “Estimated” when estimates are provided under § 1005.32 should be extended to scenarios where disclosures are not exact, to the extent permitted by the proposed revisions.
Revise the error resolution provisions
The proposal also revises 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. Where the provider can demonstrate that the sender provided the incorrect account number and that the sender had notice that the sender could lose the transfer amount, the provider would be required to attempt to recover the funds but would not be liable for the funds if those efforts were unsuccessful.
The CFPB also proposes to revise the existing remedy procedures in situations where a sender provides incorrect or insufficient information other than an incorrect account number to allow providers additional flexibility when resending funds at a new exchange rate. Under the proposed rule, providers would be able to provide oral, streamlined disclosures and need not treat the resend as an entirely new remittance transfer. The CFPB also proposes to make conforming revisions in light of the proposed revisions regarding recipient institution fees and foreign taxes.
Temporarily delay and extend the effective date
The CFPB proposes to temporarily delay the February 7, 2013 effective date of the Final Rule. The CFPB further proposes to extend the Final Rule’s effective date until 90 days after this proposal is finalized.