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CFPB issues examination procedures for remittance transfers

Posted in Remittance Transfers

The Bureau has updated its examination manual with procedures to be followed when examining institutions that make remittance transfers for consumers. A remittance transfer is a wire transfer sent by a consumer in the United States to a beneficiary in another country. In response to amendments made by Dodd-Frank to the Electronic Funds Transfer Act, the CFPB assumed authority over what had been the Federal Reserve’s Regulation E (as applied to consumers) and restated that regulation along with additional provisions to implement the new consumer protections for remittance transfers. After some amendments, the remittance transfer rule (RTR) is scheduled to go into effect on October 28, 2013.  

The RTR focuses primarily on three areas of consumer protection: (1) mandatory disclosures about the originating bank’s wire transfer fees, currency exchange rates, fees charged (or estimated to be charged) by intermediary banks and the beneficiary’s bank, and the net amount to be received by the beneficiary; (2) error resolution procedures; and (3) refund and cancellation rights.    

The new examination procedures will assess not only the quality of an institution’s compliance risk management systems in this business line and the strengths or weaknesses of the business model but also various risks outside the bounds of the RTR. The latter include potential UDAAPs and GLBA privacy (Reg. P) violations. We are urging our clients to have lists of all service providers (including intermediary banks) that they routinely use in processing remittance transfers and periodically to assess the performance (including fees) of these entities. It will also be important to develop policies and procedures, perform periodic training of wire transfer department employees, create form written and electronic disclosure documents, and prepare error resolution and complaint handling scripts.