CFPB updates examination procedures for funds transfers

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On February 14, the Consumer Financial Protection Bureau (CFPB) updated its Supervision and Reviews Handbook to reflect changes it made to the Funds Transfer Rule (Rule) in a final published rule. on June 5, 2020. Amendments to Subpart B of Regulation E, effective July 21, 2020, (1) increased the safe harbor of the rule for compliance from 100 fund transfers to 500 fund transfers per year and (2) created two new permanent exceptions that allow insured institutions to disclose estimates of particular fees and exchange rates if certain conditions are met.

The Dodd-Frank Act amended the Electronic Funds Transfer (EFTA) Act and created a new system of consumer protections for money transfers sent by consumers in the United States to individuals and businesses in foreign countries. strangers. On February 7, 2012, the CFPB issued Subpart B (Requirements for Funds Transfers) of Regulation E to implement the new funds transfer protections set forth in the Dodd-Frank Act (77 Fed. Reg. 6194). Under Rule E, a financial institution subject to funds transfer requirements must provide the sender with both pre-payment disclosure (when the consumer first requests a transfer and before the sender is required to pay for the funds transfer) and a receipt (after the sender makes payment for the funds transfer). This information includes the exchange rate, fees charged by a third party in connection with the transfer, etc.

Safe Harbor states that only entities that have provided 500 or fewer remittances in the current calendar year and the previous calendar year will not be subject to the remittance requirements.

The first permanent exception allows insured institutions to estimate the exchange rate and other information that depends on the exchange rate, provided that several conditions are met: (1) The sender requests to send the funds transfer from his account at the insured institution; (2) the exact exchange rate of the funds transfer cannot be determined by the insured institution at the time the statements are to be made; and (3) in the previous calendar year, the Insured Institution sent 1,000 or fewer remittances to the particular country to which the remittance in question is sent.

The second permanent exception allows insured institutions to estimate covered third-party charges and other disclosures that depend on covered third-party charges in connection with a funds transfer only if (1) the sender requests to send the funds from his account at the insured establishment; (2) the insured institution cannot determine the exact third party fees that must be disclosed at the time of the transfer of funds; and (3) in the previous calendar year, the Insured Institution sent 500 or fewer remittances to the particular country to which the remittance in question is sent.

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