Electronic Fund Transfers (Regulation E), 50243-50288 [2012-19702]
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Vol. 77
Monday,
No. 161
August 20, 2012
Part III
Bureau of Consumer Financial Protection
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12 CFR Part 1005
Electronic Fund Transfers (Regulation E); Final Rule
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Federal Register / Vol. 77, No. 161 / Monday, August 20, 2012 / Rules and Regulations
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1005
[Docket No. CFPB–2011–0009]
RIN 3170–AA15
Electronic Fund Transfers (Regulation
E)
Bureau of Consumer Financial
Protection.
ACTION: Final rule; official
interpretation.
AGENCY:
The Bureau of Consumer
Financial Protection is amending
Regulation E, which implements the
Electronic Fund Transfer Act, and the
official interpretation to the regulation,
which interprets the requirements of
Regulation E. The final rule modifies a
final rule published in February 2012
implementing section 1073 of the DoddFrank Wall Street Reform and Consumer
Protection Act regarding remittance
transfers. The final rule adopts a safe
harbor with respect to the phrase
‘‘normal course of business’’ in the
definition of ‘‘remittance transfer
provider,’’ which determines whether a
person is covered by the rule. The final
rule also revises several aspects of the
February 2012 final rule regarding
remittance transfers that are scheduled
before the date of transfer, including
preauthorized remittance transfers.
DATES: This rule is effective February 7,
2013.
FOR FURTHER INFORMATION CONTACT: Eric
Goldberg, Counsel, or Andrea Edmonds
or Dana Miller, Senior Counsels,
Division of Research, Markets, and
Regulations, Bureau of Consumer
Financial Protection, 1700 G Street NW.,
Washington, DC 20552, at (202) 435–
7700.
SUMMARY:
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SUPPLEMENTARY INFORMATION:
I. Overview
Section 1073 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (Dodd-Frank Act) 1 amended the
Electronic Fund Transfer Act (EFTA) to
create a new comprehensive consumer
protection regime for remittance
transfers sent by consumers in the
United States to individuals and
businesses in foreign countries. For
covered transactions conducted by
remittance transfer providers, the statute
generally requires: (i) The provision of
disclosures prior to and at the time of
payment by the sender for the transfer;
(ii) cancellation and refund rights; (iii)
1 Public Law 111–203, 124 Stat. 1376, section
1073 (2010).
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the investigation and remedy of errors
by remittance transfer providers; and
(iv) liability standards for remittance
transfer providers for the acts of their
agents. The Bureau of Consumer
Financial Protection (Bureau) published
a final rule on February 7, 2012, to
implement section 1073 of the DoddFrank Act. 77 FR 6194, Feb. 7, 2012
(February Final Rule). The February
Final Rule takes effect February 7, 2013.
The Bureau concurrently published a
proposed rule with request for public
comment seeking comment on whether
to provide additional safe harbors and
flexibility in applying the February
Final Rule to certain transactions and
persons. 77 FR 6310, Feb. 7, 2012
(February Proposal).2
The February Proposal addressed two
aspects of the February Final Rule. First,
the Bureau proposed to adopt a safe
harbor for determining whether a person
is providing remittance transfers in the
‘‘normal course of business,’’ and thus
is a ‘‘remittance transfer provider.’’
Second, it sought comment on possible
refinements to disclosure and
cancellation requirements for certain
remittance transfers that are scheduled
before the date of transfer, including
‘‘preauthorized remittance transfers,’’
which are authorized in advance to
recur at substantially regular intervals.
The Bureau noted that providing further
clarification on these issues might
reduce compliance burdens for
remittance transfer providers and
provide better disclosures and
cancellation rights to consumers. The
Bureau also stated that it expected to
complete any further rulemaking on
matters raised in the February Proposal
on an expedited basis before the
February 7, 2013 effective date for the
February Final Rule.
The final rule adopts a safe harbor
with respect to the phrase ‘‘normal
course of business’’ in the definition of
‘‘remittance transfer provider,’’ which
determines whether a person is covered
by subpart B of Regulation E. The final
rule states that if a person provided 100
or fewer remittance transfers in the
previous calendar year, and provides
100 or fewer remittance transfers in the
2 The Bureau issued the February Final Rule and
the February Proposal on January 20, 2012.
Consequently, when referencing the final rule, the
February Proposal used the term ‘‘January 2012
Final Rule.’’ That term is being replaced in today’s
rule with ‘‘February Final Rule’’ to reflect the date
the rule was published in the Federal Register (i.e.,
February 7, 2012). Similarly, the term ‘‘February
Proposal’’ is being used here in place of the term
‘‘January 2012 Proposed Rule,’’ which was used in
the February Final Rule. Additionally, a technical
correction to the February Final Rule was published
on July 10, 2012. 77 FR 40459. For simplicity, that
technical correction is incorporated into the term
‘‘February Final Rule.’’
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current calendar year, then the person is
deemed not to be providing remittance
transfers for a consumer in the normal
course of its business. For a person that
crosses the 100-transfer threshold, and
is then providing remittance transfers
for a consumer in the normal course of
its business, the final rule permits a
reasonable time period, not to exceed
six months, to begin complying with
subpart B of Regulation E.
The final rule also modifies several
aspects of the February Final Rule
regarding remittance transfers that are
scheduled before the date of transfer,
including preauthorized remittance
transfers. First, when a sender schedules
a one-time transfer or the first in a series
of preauthorized remittance transfers
five or more business days before the
date of transfer, the final rule permits
remittance transfer providers to estimate
certain information in the pre-payment
disclosure and the receipt provided
when payment is made. If estimates are
provided under this exception, the
provider generally must give the sender
an additional receipt with accurate
figures after the transfer is made. With
respect to subsequent preauthorized
remittance transfers, the final rule
generally eliminates the requirement
that a remittance transfer provider mail
or deliver a pre-payment disclosure for
each subsequent transfer, unless certain
specified information has changed.
However, the final rule generally
requires a remittance transfer provider
to provide accurate receipts after
subsequent transfers are made.
The final rule also modifies the
February Final Rule in several respects
with regard to the disclosure
requirements for remittance transfers
scheduled at least three business days
before the date of transfer and for
preauthorized remittance transfers. The
final rule generally requires disclosure
of the date of transfer on the initial
receipt and on any subsequent receipts
provided with respect to a particular
transfer. For subsequent preauthorized
remittance transfers, the final rule also
requires the remittance transfer provider
to disclose the future date or dates the
remittance transfer provider will
execute subsequent transfers in the
series; in most cases, the final rule offers
some flexibility in how such disclosures
can be made.
As noted in the February Final Rule,
the Bureau intends to continue working
with consumers, industry, and other
regulators in the coming months
regarding implementation issues. In the
near future, the Bureau expects to
release a small business compliance
guide and a list of countries that
providers may rely on for purposes of
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determining whether estimates may be
provided under certain circumstances.
The Bureau also expects to conduct a
public awareness campaign to educate
consumers about the new disclosures
and their other rights under the DoddFrank Act with respect to remittance
transfers.
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II. Background
A. Summary of February Final Rule
The February Final Rule imposes on
remittance transfer providers new
disclosure, error resolution, and other
substantive requirements relating to
remittance transfers. These
requirements are set forth in subpart B
of Regulation E. Consistent with the
statute, the February Final Rule
provides that the term remittance
transfer provider means any person that
provides remittance transfers for a
consumer in the normal course of its
business, regardless of whether the
consumer holds an account with such
person. 12 CFR 1005.30(f). The February
Final Rule provides guidance in the
commentary indicating that whether a
person provides remittance transfers in
the ‘‘normal course of business’’ will be
evaluated based on the facts and
circumstances, and does not set forth a
numerical threshold.
Among other requirements, the
February Final Rule imposes several
new disclosure requirements on
remittance transfer providers. First, the
rule generally requires a remittance
transfer provider to provide a written
pre-payment disclosure to a sender
containing information about the
specific transfer requested by the
sender, such as the exchange rate,
applicable fees and taxes, and the
amount to be received by the designated
recipient. Second, the provider also
must provide a written receipt when
payment is made for the transfer. The
receipt must include the information
provided on the pre-payment
disclosure, as well as additional
information such as the date of
availability of the funds, the designated
recipient’s contact information, and
information regarding the sender’s error
resolution and cancellation rights.
Consistent with the statute, which
permits remittance transfer providers to
provide estimates only in two narrow
circumstances, the February Final Rule
generally requires that disclosures state
the actual exchange rate that will apply
to a remittance transfer and the actual
amount that will be received by the
designated recipient of a remittance
transfer.
The February Final Rule also sets
forth special requirements for the timing
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and accuracy of disclosures with respect
to ‘‘preauthorized remittance transfers,’’
which are defined as remittance
transfers authorized in advance to recur
at substantially regular intervals. As
discussed in the February Final Rule, 77
FR 6194, 6267, the Bureau recognizes
that the market for preauthorized
remittance transfers is still developing.
The February Final Rule differentiates
between the first and subsequent
transfers in a series of preauthorized
remittance transfers. The first transfer in
a series is treated the same as other
standalone remittance transfers.
Accordingly, the February Final Rule
requires, for the first transaction in a
series of preauthorized remittance
transfers, that the provider provide a
pre-payment disclosure at the time the
sender requests the transfer and a
receipt at the time payment for the
transfer is made, which the commentary
explains means when payment is
authorized. In addition, the disclosures
must be accurate as of when the
payment for the transfer is made, unless
a statutory exception applies.
However, recognizing the potential
risks to providers associated with
setting exchange rates and determining
the amount to be provided to a
designated recipient weeks or months
before any subsequent transfer, and the
potentially limited utility to consumers
of information provided far in advance,
the February Final Rule does not require
that disclosures for the entire series of
preauthorized remittance transfers be
provided at the time of the sender’s
initial request and payment
authorization. Rather, the February
Final Rule requires providers to issue
pre-payment disclosures and receipts
for each subsequent transfer near the
date of the individual transfer.
Specifically, the pre-payment disclosure
for each subsequent transfer must be
provided within a reasonable time prior
to the scheduled date of the transfer.
The receipt for each subsequent transfer
generally must be provided no later than
one business day after the date on
which the transfer is made.
Finally, the February Final Rule also
provides senders specified cancellation
and refund rights. Under the rule, a
sender generally has 30 minutes after
payment is made to cancel a remittance
transfer. The February Final Rule,
however, contains special cancellation
procedures for any remittance transfer
scheduled by the sender at least three
business days before the date of the
transfer, including preauthorized
remittance transfers. In such case, the
provider would be required to cancel
the remittance transfer if it received a
request to cancel the transfer from the
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sender at least three business days
before the date of the transfer.
B. Summary of the February Proposal
Concurrent with the February Final
Rule, the Bureau issued a proposed rule
that sought comment on two aspects of
the February Final Rule. First, the
Bureau proposed to adopt in
commentary a safe harbor clarifying
when certain persons are excluded from
the statutory scheme because they do
not provide remittance transfers in the
normal course of business. Second, the
February Proposal sought comment on a
possible safe harbor and other
refinements to the disclosure and
cancellation requirements for remittance
transfers that are scheduled before the
date of the transfer, including
preauthorized remittance transfers. The
Bureau indicated that these proposed
amendments to the February Final Rule
may reduce compliance burden for
providers and allow for better disclosure
and cancellation rights for senders. The
Bureau stated its belief that these issues
would benefit from further public
comment.
Regarding the first aspect of the
February Proposal, the Bureau sought
comment on a proposed safe harbor
interpreting the phrase ‘‘normal course
of business.’’ The Bureau proposed
commentary stating that if a person
made no more than 25 remittance
transfers in the previous calendar year,
the person does not provide remittance
transfers in the normal course of
business during the current calendar
year if it provides no more than 25
remittance transfers in that year. The
Bureau also specifically solicited
comment on whether, if such a safe
harbor is appropriate, the threshold
number should be higher or lower than
25 remittance transfers, such as 10 or 50
transfers, or some other number.
Regarding the second aspect of the
February Proposal, the Bureau sought
comment on refinements to the
disclosure and cancellation
requirements for remittance transfers
that are scheduled before the date of
transfer, including preauthorized
remittance transfers. Specifically, the
February Proposal solicited comment on
whether estimates should be permitted
to be disclosed in the pre-payment
disclosure and receipt given at the time
the transfer is requested and authorized
when: (i) A consumer schedules a onetime transfer or the first in a series of
preauthorized remittance transfers more
than ten days in advance; or (ii) a
consumer enters into an agreement for
preauthorized remittance transfers
under which the amount of the transfers
can vary and the provider does not
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know the exact amount of the first
transfer at the time the disclosures for
that transfer are given. The February
Proposal further requested comment on
whether a remittance transfer provider
that uses estimates in the two situations
described above should be required to
provide a second receipt with accurate
information within a reasonable time
closer to the scheduled date of the
transfer. In addition, the February
Proposal sought comment on whether
the second receipt should be provided
to senders ten days before the date of
the transfer or whether the period
should be longer or shorter.
The February Proposal also solicited
comment on possible refinements to the
disclosure provisions applicable to
subsequent preauthorized remittance
transfers. For example, the Bureau
sought comment on two alternative
approaches to the disclosure provisions
for subsequent preauthorized remittance
transfers: (i) Whether the Bureau should
retain the requirement that a remittance
transfer provider provide a pre-payment
disclosure for each subsequent transfer
and provide a safe harbor for what
constitutes ‘‘a reasonable time’’ for
providing this disclosure; or (ii) whether
the Bureau should eliminate the
requirement to provide a pre-payment
disclosure for each subsequent transfer.
The February Proposal also sought
comment on possible changes to the
cancellation requirements for remittance
transfers that are scheduled before the
date of the transfer, including
preauthorized remittance transfers. The
February Proposal solicited comment on
whether the three-business-day period
for canceling such remittances transfers
adopted in the February Final Rule is
appropriate, or whether the rule should
require a deadline to cancel these
transfer that is more or less than three
business days. Further, the February
Proposal solicited comment on three
issues related to the disclosure of the
deadline to cancel as set forth in the
February Final Rule: first, whether the
three-business-day deadline to cancel
transfers scheduled before the date of
transfer should be disclosed to senders,
such as by requiring a remittance
transfer provider to disclose in the
receipt the specific date on which the
right to cancel will expire; second,
whether a remittance transfer provider
should be allowed to describe both the
three-business-day and 30-minute
deadline-to-cancel time frames on a
single receipt and either describe the
transfers to which each deadline is
applicable, or alternatively, use a
checkbox or other method to designate
which deadline is applicable to the
transfer to which the receipt relates;
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third, whether the disclosure of the
deadline to cancel should be disclosed
in the pre-payment disclosure, rather
than in the receipt, for each subsequent
preauthorized remittance transfer.
C. Overview of Comments and Outreach
The Bureau received more than 50
comments on the proposed rule. The
majority of comments were submitted
by industry commenters, including
depository institutions, credit unions, a
money transmitter, and industry trade
associations. In addition, letters were
submitted by individual consumers,
consumer groups, and an association of
state banking regulators.
Commenters generally supported, or
did not oppose, clarifying the meaning
of ‘‘normal course of business’’ with a
safe harbor. Consumer group
commenters supported the proposed
threshold of 25 transfers per year. The
majority of industry commenters argued
that the proposed safe harbor threshold
was insufficient and suggested higher
numerical thresholds, ranging from 50
remittance transfers annually to 25
transfers daily. Some industry
commenters suggested alternative
benchmarks for the safe harbor,
including tests based on a percentage of
an entity’s revenues or transactions
processed. A number of industry
commenters stated that they or others
would cease to offer remittance transfers
if they did not qualify for the safe
harbor. Some commenters also
suggested changes in how any safe
harbor was implemented, such as that
the Bureau should provide time for an
entity to come into compliance if the
entity becomes a remittance transfer
provider once the safe harbor threshold
is exceeded.
Commenters also generally supported
revisions to the February Final Rule
regarding remittance transfers that are
scheduled before the date of the
transfer. Commenters generally
supported providing additional
flexibility in disclosure requirements
and expanding the use of estimates in
order to reduce risks and costs that
might be passed through to senders.
Industry commenters cited various
operational and financial challenges, as
well as legal risks, associated with
disclosing an accurate exchange rate for
a future transfer. (Although the February
Proposal asked about estimates for onetime transfers or the first in a series of
preauthorized remittance transfers, most
commenters addressed the use of
estimates generally for any transfer
scheduled before the date of such
transfer.) Some industry commenters
argued that small remittance transfer
providers in particular would not have
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the scale or expertise to create the risk
management practices necessary to
comply. Other industry commenters
expressed concern about the potential
for behavior by consumers that would
increase providers’ exposure to foreign
exchange risk in light of the February
Final Rule’s three-business-day
cancellation period for transfers
scheduled before the date of the
transfer. Thus, these commenters
supported permitting estimates in prepayment disclosures and receipts
provided for remittance transfers
scheduled before the date of transfer.
Separately, some commenters thought
the Bureau should allow providers, in
lieu of (or in addition to) providing an
estimate of the exchange rate on a
disclosure for a transfer scheduled
before the date of the transfer, to
disclose the formula the provider will
use to calculate the exchange rate that
will apply to a transfer.
For similar reasons, industry
commenters further stated that the
proposed ten-day period after which
estimates would not be permitted was
too long, and should be shortened.
Industry commenters suggested shorter
time periods ranging from one to seven
business days. Several industry
commenters suggested that, even if
estimates were permitted, remittance
transfer providers might respond to the
requirement to provide accurate
disclosures for other one-time transfers
scheduled before the date of the transfer
or initial transfers in series of
preauthorized remittance transfers
scheduled in advance by only offering
same-day remittance transfers, or
remittance transfers scheduled ten or
more days before the date of the
transfer.
Consumer group commenters agreed
that the use of estimates in disclosures
may be appropriate for the first
remittance transfers in series of
preauthorized remittance transfers, but
stated that if remittance transfer
providers were allowed to use estimates
in disclosures for such transfers, senders
should be informed they would not
receive actual notice of the price of the
transfer or of the amount to be received
by the designated recipient during the
periods when the senders can cancel the
transfers. Alternatively, consumer group
commenters suggested requiring
providers to later give senders
disclosures for such transfers that
include accurate information about any
amounts previously estimated.
Industry commenters urged the
Bureau to eliminate the requirement to
provide pre-payment disclosures a
reasonable time prior to each
subsequent preauthorized remittance
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transfer. Commenters stated that such
disclosures could cause consumer
confusion in cases where senders
receive pre-payment disclosures in close
proximity to receipts for previous
preauthorized remittance transfers.
Further, industry commenters argued
that many senders scheduling
preauthorized remittance transfers are
more concerned with the convenience
allowed by the scheduling of transfers
before the date of the transfer and
having transfers made on time than with
comparison shopping with pre-payment
disclosures for each transfer. Thus,
these commenters stated that the cost of
providing pre-payment disclosures
would outweigh any potential consumer
benefit. Industry commenters also stated
that if the requirement to provide
updated pre-payment disclosures was
not eliminated, the Bureau should
permit estimates to be provided in those
disclosures. Consumer group
commenters stated that the Bureau
should maintain the requirement to
provide pre-payment disclosures before
all subsequent preauthorized remittance
transfers, but while allowing providers
to provide estimates in those
disclosures. These commenters also
supported the Bureau’s proposal that
ten days before the date of transfer
constitute a ‘‘reasonable time.’’
Most industry commenters argued
that three business days is an
appropriate time period for a sender to
cancel a remittance transfer that is
scheduled at least three business days
before the date of the transfer. Some
industry commenters conditioned their
support for the three-business-day
cancellation period on whether a
remittance transfer provider would be
required to disclose to the sender the
exchange rate that would apply to a
transfer scheduled more than three
business days before the date of such
transfer. One commenter suggested that
the Bureau adopt a five-business-day
cancellation deadline in lieu of the
three-business-day deadline adopted in
the February Final Rule.
With respect to the content and
format of disclosures related to the
cancellation period, most industry
commenters argued against requiring
that remittance transfer providers
disclose the specific cancellation
deadline in the receipt provided to a
sender for a remittance transfer
scheduled more than three business
days before the date of the transfer. One
commenter asserted that requiring
disclosure of the specific cancellation
deadline would create significant
technical challenges for service
providers. Commenters, however,
generally supported the proposal to
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permit remittance transfer providers
that provide both transfers scheduled at
least three business days before and
transfers less than three business days
before the date of the transfer to include
both the 30-minute and three-businessday cancellation periods in their
receipts along with a checkbox or other
method that allows the provider to
designate which cancellation period is
applicable to the transfer at issue.
The Bureau received few comments in
response to its inquiry regarding
disclosure of cancellation requirements
for subsequent preauthorized remittance
transfers. Among those received, there
was little consensus regarding how
cancellation rights for subsequent
transfers should be disclosed. Some
commenters asserted that the
cancellation provision should be
included on the pre-payment disclosure
and one industry commenter supported
including it on the receipt.
In addition to the comments received
on the February Proposal, Bureau staff
conducted outreach with various parties
to gather more data regarding issues
discussed in the proposal or raised in
comments. Records of these outreach
conversations are reflected in ex parte
submissions included in the rulemaking
record (accessible by searching by the
docket number associated with this final
rule at www.regulations.gov).
III. Summary of the Final Rule
A. Normal Course of Business
The final rule provides a new safe
harbor clarifying when a person
provides remittance transfers in the
normal course of business for purposes
of determining whether a person falls
under the definition of ‘‘remittance
transfer provider.’’ The proposed safe
harbor was located in the commentary;
the final safe harbor is included in
regulatory text, with further guidance in
the commentary. As adopted, the final
rule states that if a person provided 100
or fewer remittance transfers in the
previous calendar year, and provides
100 or fewer remittance transfers in the
current calendar year, then the person is
deemed not to be providing remittance
transfers for a consumer in the normal
course of its business. For a person that
crosses the 100-transfer threshold, and
is then providing remittance transfers
for a consumer in the normal course of
its business, the final rule permits a
reasonable time period, not to exceed
six months, to begin complying with
subpart B of Regulation E.
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B. Disclosure Rules for Remittance
Transfers Scheduled Before the Date of
Transfer
The final rule modifies the February
Final Rule with respect to remittance
transfers that are scheduled before the
date of transfer, including preauthorized
remittance transfers. First, when a
sender schedules a one-time transfer or
the first in a series of preauthorized
remittance transfers five or more
business days before the date of transfer,
the final rule permits remittance transfer
providers to estimate certain
information in the pre-payment
disclosure and the receipt provided
when payment is made. If a provider
gives disclosures that include estimates
under this exception, the final rule also
requires that the provider give the
sender an additional receipt with
accurate figures (unless a statutory
exception applies), which generally
must be provided no later than one
business day after the date on which the
transfer is made.
Second, with respect to subsequent
preauthorized remittance transfers, the
final rule eliminates the requirement
that a remittance transfer provider mail
or deliver a pre-payment disclosure for
each subsequent transfer. A receipt must
be sent, however, a reasonable time
prior to the transfer if certain disclosed
information is changed from what was
disclosed regarding the first
preauthorized remittance transfer. This
receipt may also contain estimates. If
estimates are provided or no update is
necessary, the final rule also requires a
remittance transfer provider to give an
accurate receipt to a sender after a
transfer is made.
C. Cancellation Period and Disclosures
The final rule modifies the February
Final Rule in several respects with
regard to the disclosure requirements for
remittance transfers scheduled at least
three business days before the date of
transfer and for preauthorized
remittance transfers. First, the final rule
requires a remittance transfer provider
to disclose the date of transfer in the
receipt provided when payment is made
with respect to remittance transfers
scheduled at least three business days
before the date of the transfer and the
initial transfer in a series of
preauthorized transfers. The transfer
date for a given transfer is also required
to be disclosed on any subsequent
receipts provided with respect to that
transfer. The transfer date will enable a
sender to identify the transfer to which
the receipt pertains, and, when received
prior to the date of the transfer,
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generally calculate the date on which
the right to cancel will expire.
Second, for subsequent preauthorized
remittance transfers, the final rule
requires the remittance transfer provider
to disclose the date or dates on which
the provider will make those subsequent
transfers in the series, with certain other
information. The final rule provides
providers some flexibility in how they
may make these disclosures to senders.
However, for subsequent preauthorized
remittance transfers for which the date
of transfer is four or fewer business days
after payment is made for the transfer,
the final rule requires disclosure of
future dates of transfer in the receipt
provided for the first transfer in the
series.
Finally, the final rule also permits
providers to describe on a receipt both
the three-business-day and 30-minute
cancellation periods and either describe
the transfers to which each deadline
applies, or alternatively, use a checkbox
or other method to designate which
cancellation period is applicable to the
transfer. The final rule does not change
the three-business-day cancellation
period for these transfers.
IV. Legal Authority
Section 1073 of the Dodd-Frank Act
creates a new section 919 of the EFTA
and requires remittance transfer
providers to provide disclosures to
senders of remittance transfers,
pursuant to rules prescribed by the
Bureau. In particular, providers must
give a sender a written pre-payment
disclosure containing specified
information applicable to the sender’s
remittance transfer. The remittance
transfer provider must also provide a
written receipt that includes the
information provided on the prepayment disclosure, as well as
additional specified information. EFTA
section 919(a).
In addition, EFTA section 919(d)
directs the Bureau to promulgate rules
regarding appropriate cancellation and
refund policies. Except as described
below, the final rule is adopted under
the authority provided to the Bureau in
EFTA section 919, and as more
specifically described in this
SUPPLEMENTARY INFORMATION.
In addition to the statutory mandates
set forth in the Dodd-Frank Act, EFTA
section 904(a) authorizes the Bureau to
prescribe regulations necessary to carry
out the purposes of the title. The
express purposes of the EFTA, as
amended by the Dodd-Frank Act, are to
establish ‘‘the rights, liabilities, and
responsibilities of participants in
electronic fund and remittance transfer
systems’’ and to provide ‘‘individual
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consumer rights.’’ EFTA section 902(b).
EFTA section 904(c) further provides
that regulations prescribed by the
Bureau may contain any classifications,
differentiations, or other provisions, and
may provide for such adjustments or
exceptions for any class of electronic
fund transfers or remittance transfers
that the Bureau deems necessary or
proper to effectuate the purposes of the
title, to prevent circumvention or
evasion, or to facilitate compliance.
As described in more detail below,
the provisions adopted in the final rule
in part or in whole pursuant to the
Bureau’s authority in EFTA sections
904(a) and 904(c) 3 include
§§ 1005.30(f)(2)(ii), 1005.32(b)(2),
1005.36(a), 1005.36(b) and 1005.36(d).4
The provisions adopted in whole or in
part pursuant to the Bureau’s authority
in EFTA section 919(a)(5)(A) include
§ 1005.31(a)(3)(iv) and (a)(5)(iv).
V. Section-by-Section Analysis
Section 1005.30
Definitions
Remittance Transfer
30(f) Definition of Remittance Transfer
Provider
Overview
Section 1005.30(f) of the February
Final Rule and the accompanying
commentary implement the definition
of the term ‘‘remittance transfer
provider’’ in EFTA section 919(g)(3).
Section 1005.30(f) states that a
‘‘remittance transfer provider’’ means
any person that provides remittance
transfers for a consumer in the normal
course of its business, regardless of
whether the consumer holds an account
with such person. A remittance transfer
provider is required to comply with
subpart B of Regulation E relating to
remittance transfers.
As adopted in the February Final
Rule, comment 30(f)–2 provides
guidance interpreting the phrase
‘‘normal course of business’’ as used in
the definition of remittance transfer
provider. Specifically, comment 30(f)–2
to the February Final Rule states that
whether a person provides remittance
3 Throughout this SUPPLEMENTARY INFORMATION,
the Bureau is citing its authority under both EFTA
section 904(a) and EFTA section 904(c) for purposes
of simplicity. The Bureau notes, however, that with
respect to some of the provisions referenced in the
text, use of only EFTA section 904(a) is needed.
4 The consultation and economic impact analysis
requirement previously contained in EFTA sections
904(a)(1)–(a)(4) were not amended to apply to the
Bureau. Nevertheless, the Bureau consulted with
the appropriate prudential regulators and other
Federal agencies and considered the potential
benefits, costs, and impacts of the rule to consumers
and covered persons as required under section 1022
of the Dodd-Frank Act, and through these processes
would have satisfied the requirements of these
EFTA provisions if they had been applicable.
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transfers in the normal course of
business depends on the facts and
circumstances, including the total
number and frequency of remittance
transfers sent by the provider. Comment
30(f)–2 also sets forth illustrative
examples.
To provide clearer guidance on
whether a person provides remittance
transfers in the normal course of
business, the Bureau proposed to add to
comment 30(f)–2 an express safe harbor
further interpreting the phrase ‘‘normal
course of business.’’ The proposed safe
harbor was based on the number of
remittance transfers that a person
provides. Proposed comment 30(f)–2
stated that if a person provided no more
than 25 remittance transfers in the
previous calendar year, the person does
not provide remittance transfers in the
normal course of business for the
current calendar year if it provides no
more than 25 remittance transfers in
that year. The proposed comment
clarified, however, that if that person
makes a 26th remittance transfer in the
current calendar year, the person would
be evaluated under the facts and
circumstances test to determine whether
the person is a remittance transfer
provider for that transfer and any other
transfers provided through the rest of
the year.
The Bureau solicited comment on the
proposal to adopt a safe harbor
interpreting the term ‘‘normal course of
business.’’ The Bureau also specifically
solicited comment on whether, if such
a safe harbor is appropriate, the
threshold number should be higher or
lower than 25 remittance transfers, such
as 10 or 50 transfers, or some other
number.
Commenters generally supported or
did not oppose clarifying the meaning of
‘‘normal course of business’’ with a safe
harbor. Consumer group commenters
supported the proposed threshold of 25
transfers per year. Some industry
commenters proposed that any safe
harbor be based on criteria other than or
in addition to the number of transfers
provided per year. Furthermore, most
industry commenters argued that if the
Bureau adopts a safe harbor based on
the number of remittance transfers
provided per year, that the Bureau
should use a threshold number that is
higher (and in some cases significantly
higher) than 25 transfers per year.
Finally, some commenters suggested
changes in how any safe harbor would
be implemented, such as that the
Bureau should provide time for an
entity to come into compliance if the
person becomes a remittance transfer
provider once the safe harbor threshold
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is exceeded. These comments are
discussed in more detail below.
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Regulatory Text
Consumer group commenters
suggested that if the Bureau adopted a
safe harbor related to the term ‘‘normal
course of business,’’ that the safe harbor
be included in the text of subpart B to
Regulation E rather than in the
commentary to the rule in order to help
consumers understand when the
protections in subpart B of Regulation E
will apply to their transactions. Upon
further consideration, the Bureau
believes that, for clarity, it is
appropriate to include the safe harbor
regarding the phrase ‘‘normal course of
business’’ in the text of subpart B of
Regulation E. Consequently, the Bureau
redesignates former § 1005.30(f) as
§ 1005.30(f)(1), and adopts
§ 1005.30(f)(2)(i), which creates the new
safe harbor described below. New
§ 1005.30(f)(2)(ii) also creates a new
transition period, described below.
Revised comment 30(f)–2 provides
interpretive guidance and illustrative
examples.
Facts and Circumstances
Comment 30(f)–2 to the February
Final Rule states that whether a person
provides remittance transfers in the
normal course of business depends on
the facts and circumstances, including
the total number and frequency of
remittance transfers sent by the
provider. The Bureau did not propose
any modification to this guidance.
However, one consumer group
commenter suggested a rewording of the
proposed safe harbor that would mean
that any person who does not qualify for
the safe harbor should be subject to the
requirements of subpart B of Regulation
E, regardless of the facts and
circumstances. Furthermore, some
commenters appeared to misunderstand
the relevance of the Bureau’s guidance
in proposed comment 30(f)–2 regarding
persons that do not qualify for the safe
harbor.
Comment 30(f)–2 to the February
Final Rule is renumbered and adopted
with several non-substantive edits for
clarity, and one minor modification, as
comment 30(f)–2.i to the final rule. The
modification is necessary because as
discussed below, the final rule adopts a
safe harbor similar to the safe harbor in
proposed comment 30(f)–2, but, among
other things, increases the threshold for
that safe harbor from 25 to 100
remittance transfers per calendar year.
For conformity, the Bureau has changed
its guidance regarding a person that
provides remittance transfers in the
normal course of business. Final
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comment 30(f)–2.i interprets the phrase
‘‘normal course of business’’ to include
a financial institution that makes
remittance transfers generally available
to customers and makes such transfers
‘‘many’’ times per month. Comment
30(f)–2 in the February Final Rule uses
the term ‘‘multiple’’ rather than
‘‘many.’’ The Bureau believes that the
term ‘‘many’’ is more consistent with
the language and approach in the safe
harbor as adopted.
A Safe Harbor Based on the Number of
Remittance Transfers Provided
Though most commenters did not
oppose a safe harbor based on the
number of remittance transfers
provided, several industry commenters
urged the Bureau to create a safe harbor
based on other criteria. Some industry
commenters suggested that a safe harbor
be based on qualitative criteria, such as
whether or not persons hold themselves
out to be remittance transfer providers.
Alternatively, some industry
commenters suggested that the safe
harbor apply to some or all financial
institutions with less than $10 billion in
assets, and other industry commenters
suggested that the Bureau look to
measures of the relative size of a
person’s remittance transfer business,
such as the percent of a person’s total
transactions that are remittance
transfers, or the percent of a person’s
revenue or net income that is earned
from such transfers. Some industry
commenters suggested the Bureau
define a safe harbor based on these
relative size measures alone, while
others suggested that the relative size
measures should apply only to certain
entities or business models, or that
entities should qualify for the safe
harbor if they satisfy either of two
alternative thresholds, such as the
number of remittance transfers provided
and a relative size measure. For
example, one industry commenter
suggested a safe harbor that would
exclude from coverage of subpart B of
Regulation E credit unions that (a) rely
on unrelated third parties to send
remittance transfers, and do not provide
remittance transfers as their primary
business, as long as (b) such transfers
account for 30 percent or less of the
credit unions’ total revenues. In general,
commenters suggesting relative size
thresholds supported such measures
because they would take into account
the size of a person’s overall business,
or because the number of remittance
transfers that a person provides may
vary from year to year.
The final rule adds a safe harbor,
which is described in new
§ 1005.30(f)(2)(i). The safe harbor in the
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final rule reflects several modifications
to the proposed commentary included
in the February Proposal, as well as
several non-substantive edits for clarity.
Similar to the proposed comment, the
safe harbor in § 1005.30(f)(2)(i) is based
on a single bright line threshold, the
number of remittance transfers a person
provides. It states that a person is
deemed not to be providing remittance
transfers for a consumer in the normal
course of its business if the person
provided 100 or fewer remittance
transfers in the previous calendar year
and provides 100 or fewer remittance
transfers in the current calendar year.
Comment 30(f)–2.ii provides additional
clarification. It states that a person that
qualifies for the safe harbor in
§ 1005.30(f)(2)(i) is not a remittance
transfer provider, and is thus not subject
to the requirements of subpart B of
Regulation E. The comment also
clarifies that for the purposes of
determining whether a person qualifies
for the safe harbor, the number of
remittance transfers provided includes
any transfers that are excluded from the
definition of ‘‘remittance transfer’’ due
simply to this safe harbor. In contrast,
the number of remittance transfers
provided in a calendar year does not
include any transfers that are excluded
from the definition of ‘‘remittance
transfer’’ for reasons other than the safe
harbor, such as the small value
transactions and securities and
commodities transfers that are excluded
from the definition of ‘‘remittance
transfer’’ by § 1005.30(e)(2).
As stated in the February Proposal, 77
FR 6310, 6314–15, the Bureau believes
that a safe harbor can reduce
compliance burden by increasing legal
certainty in the market. Without a safe
harbor, some persons who currently
provide remittance transfers, or are
contemplating doing so, may face
uncertainty and litigation risk as to
whether they meet the definition of
‘‘remittance transfer provider’’ when
they provide a small number of transfers
in a given year. Increased legal certainty
may encourage some such persons to
continue providing remittance transfers,
when they might not otherwise be
inclined to offer such products, due to
concerns about legal uncertainty or the
cost of compliance with subpart B of
Regulation E.
However, the Bureau also recognizes
that a safe harbor interpreting the phrase
‘‘normal course of business’’ can limit
the protections afforded to some
consumers. The adoption of a numerical
safe harbor may result in consumers not
receiving the disclosures, error
resolution, and other protections
required by this rule in some instances
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in which they might otherwise, because
these consumers may be customers of
persons who qualify for the safe harbor
and, therefore, will have certainty that
they are not ‘‘remittance transfer
providers’’ for purposes of subpart B of
Regulation E.
Based on these considerations, the
Bureau believes that the safe harbor
should be derived from the phrase
‘‘normal course of business,’’ should
provide substantial certainty to
potential providers, and should be
limited in scope so as to preserve the
benefits of the statutory protections as
intended by Congress. The Bureau
believes that a safe harbor will provide
the most certainty if it is based on a
bright-line measure that permits persons
to identify easily whether or not they
qualify.
In addition, the Bureau continues to
believe that the provision of only a
small number of remittance transfers per
year is a reasonable basis for identifying
persons that do not provide remittance
transfers in the normal course of
business. As explained in the February
Proposal, 77 FR 6310, 6315, the Bureau
believes that the inclusion of the phrase
‘‘normal course of business’’ in the
statutory definition of ‘‘remittance
transfer provider’’ was meant to exclude
persons that provide remittance
transfers on a limited basis. As a result,
the fact that a person provides only a
small number of remittance transfers
can strongly indicate that the person is
not providing such transfers in the
normal course of its business.
Furthermore, the number of transfers
provided is an objective standard that is
easy to apply and should provide
substantial certainty to persons
regarding whether or not they qualify
for the safe harbor.5
The Bureau does not believe that it is
appropriate, based on the current
administrative record, to define a safe
harbor based on asset size or a relative
size measure such as percentage of
revenue. Commenters did not provide,
and the Bureau does not have, data
suggesting, across the remittance
transfer industry, why any of the
specific asset size or relative size
thresholds suggested by the comments
would be an appropriate basis for
defining normal course of business.
Moreover, the Bureau is concerned that
there may not be a measure of entity
size that is currently used by all
segments of the remittance transfer
industry. While some providers, such as
5 As one industry commenter suggested, given the
potential for seasonal variation in the demand for
remittance transfers, the Bureau believes that an
annual figure is the most appropriate for the safe
harbor threshold.
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banks and credit unions, tend to
measure their size in assets, in other
segments of the remittance transfer
market, revenues or some other aspect
of a business may be a more widely
used measure.
Additionally, the Bureau believes that
due to the wide variety of business
models for offering remittance transfers
and lack of currently available data, it
would be difficult to craft a single
standalone measure of relative size for
identifying persons who provide
remittance transfers on only a limited
basis. For example, a standalone
revenue threshold might exclude from
the rule’s coverage both a person who
makes few transfers, but at a high price,
and a person who offers many more
transfers for free or at a very low price,
as a value-added service to its
customers. The Bureau is concerned
that many persons who fall into the
latter category may, in fact, make
remittance transfers generally available
to customers and make many transfers
each month.
The Bureau also believes that a safe
harbor based on qualitative criteria
could require fact-intensive
determinations, and thus, unlike a
bright-line threshold, would provide
little additional clarity to the market.
For instance, a safe harbor based on
whether a person ‘‘holds itself out’’ as
a remittance transfer provider would
require context-specific evaluation
similar to the evaluation of whether a
person provides remittance transfers in
the normal course of business based on
the facts and circumstances, in
accordance with the guidance in final
comment 30(f)–2.i. Thus, such a safe
harbor would not accomplish the goals
of the February Proposal.
Size of Numerical Threshold
In proposing comment 30(f)–2, the
Bureau suggested 25 transfers as a
potential threshold, noting that the
number would be consistent with the
general threshold for coverage under the
Bureau’s Regulation Z, 12 CFR part
1026, which relates to credit
transactions. Under Regulation Z, a
creditor is defined as an entity that
regularly extends consumer credit under
specified circumstances. Generally,
under Regulation Z, a person regularly
extends consumer credit in the current
calendar year when it either extended
consumer credit more than 25 times in
the preceding calendar year or more
than 25 times in the current calendar
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year.6 See § 1026.2(a)(17) and comment
2(a)(17)(i)–4.7
The Bureau received a number of
comments regarding the appropriate
threshold on which to base any safe
harbor regarding the definition of
‘‘normal course of business.’’ Consumer
group commenters supported the
proposed threshold of 25 remittance
transfers provided per year. In contrast,
most industry commenters suggested a
range of higher thresholds. For example,
some commenters suggested thresholds
based on annual transfer volumes
ranging from 50 to 5,000 remittance
transfers, or 1,000 remittance transfers
per method of transfer. Other
commenters suggested thresholds of 75
remittance transfers per month, 25
remittance transfers per day, or other
figures. State banking regulators did not
suggest a specific threshold, but
maintained that the Bureau should base
the threshold on data received regarding
the number of remittance transfers sent
by depository institutions with under
$10 billion in assets. These regulators
also suggested that the Bureau adopt a
threshold for depository institutions
that is higher than the threshold for
other entities.
Many of the commenters that
explained why they believed a higher
threshold was appropriate focused on
the cost of compliance with subpart B
of Regulation E. Both in commenting on
the proposed ‘‘normal course of
business’’ safe harbor, and more
generally, depository institutions, credit
unions, and trade associations of
depository institutions and credit
unions described challenges associated
with complying with the February Final
Rule. These industry commenters stated
that for open network transfers in
particular,8 the requirements to estimate
6 Regulation Z in some cases provides additional
protections for credit secured by a dwelling and
certain high cost mortgages. For example, with
respect to whether a person is a creditor, a person
regularly extends consumer credit in the current
calendar year if it either extended consumer credit
for transactions secured by a dwelling more than
five times in the previous calendar year or more
than five times in the current calendar year. In
addition, a person regularly extends consumer
credit if it extends consumer credit for just one
high-cost mortgage in a 12-month period. See 12
CFR 1026.2(a)(17).
7 The Bureau notes that it has issued a separate
notice of request for information on whether it
should revise these threshold numbers in
Regulation Z. See 76 FR 75825, Dec. 5, 2011.
8 Depository institutions and credit unions have
traditionally offered consumers remittance transfers
by way of wire transfers, which are generally open
network transactions. In an open network, no single
provider has control over, or relationships with, all
of the participants that may collect funds in the
United States or disburse funds abroad. A number
of principal providers may access the system.
National laws, individual contracts, and the rules
of various messaging, settlement, or payment
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or disclose third-party fees and
exchange rates, to disclose a transfer’s
date of availability, and to refund
transfers in certain circumstances would
be impossible, challenging, risky, or
costly to implement. Based on these and
related concerns, industry commenters
who were focused on the concerns of
depository institutions and credit
unions generally argued that a threshold
higher than 25 was necessary in order
to relieve more persons from
compliance, to encourage greater
continued market participation after
subpart B of Regulation E takes effect, or
to promote the ability of smaller
depository institutions to compete with
other providers. A number of industry
commenters stated that they expected
that some (or many) individual
depository institutions and credit
unions would limit the number of
remittance transfers provided in order to
qualify for any safe harbor, or would
exit the market for remittance transfers,
in order to avoid compliance with
subpart B of Regulation E.
Alternatively, some industry
commenters urged the Bureau to
increase the size of the threshold based
on what they described as typical
practice among banks. For example, one
commenter stated that a typical bank
could reach 25 remittance transfers
within the first few weeks of a year. It
suggested a threshold of 300 remittance
transfers per year because, it contended,
that figure better represents the number
of such transfers that a small institution
provides, is still small enough that the
excepted transactions would not
generate a material source of income for
a financial institution, and amounts to,
on average, less than one transfer for
every 25 accountholders for small
banks. That commenter and other
industry commenters stated that many
or most depository institutions or credit
unions are not ‘‘in the business’’ of
providing remittance transfers, do not
advertise the service, or generally offer
remittance transfers only upon request.
Several industry commenters offered
other rationales to support thresholds
higher than 25 remittance transfers per
year. Some industry commenters stated
that a threshold of 25 would not be
useful because of the complexity of
preparing for compliance if the
threshold is crossed. One industry
commenter advocated for a threshold of
50 remittance transfers, because that
systems may constrain certain parts of transfers sent
through an open network system. However, any
participant may use the network to send transfers
to unaffiliated institutions abroad with which it has
no contractual relationship, and over which it has
limited authority or ability to monitor or control.
See 77 FR 6194, 6195–97.
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figure would constitute approximately
one remittance transfer per week.
Suggesting a threshold of 75 remittance
transfers per year, another industry
commenter argued that Regulation Z
was an inappropriate reference point for
subpart B of Regulation E because
financial institutions tend to provide far
more fund transfers per year than they
do loans. Another industry commenter
contended that a threshold of 600
remittance transfers per year was better
to exclude institutions that provide
remittance transfers infrequently and in
response to specific consumer requests.
Industry commenters also suggested
that the Bureau commit to reevaluating
the threshold on which the safe harbor
is based. One industry commenter
suggested that the Bureau revisit the
safe harbor threshold nine months after
the effective date of subpart B of
Regulation E to determine whether
further adjustment is appropriate.
Similarly, another industry commenter
suggested that the Bureau annually
adjust the safe harbor threshold.
The safe harbor described in
§ 1005.30(f)(2)(i) of the final rule
establishes a threshold of 100
remittance transfers per calendar year.
The Bureau believes that it is reasonable
to set a higher transaction threshold for
determining when remittance transfers
are provided ‘‘in the normal course of
business’’ than for determining when a
person ‘‘regularly extends’’ consumer
credit under Regulation Z. There are
several reasons why remittance transfers
are different from extensions of credit.
A single extension of credit typically
involves an ongoing relationship
between a consumer and creditor that
may extend over weeks, months, or
years. Credit is often provided as a
standalone financial product in its own
right, and can generate significant pertransaction revenues over time. A
remittance transfer, on the other hand,
is a one-time transaction, for which the
provider generally collects a one-time
set of fees. Revenues per transaction are
often relatively low; additionally,
remittance transfers are sometimes
provided as an adjunct to other financial
products (such as a long-term account
relationship). As a result, a single
extension of credit may be more
significant to a business than a single
remittance transfer would be to the
business of a person that provides such
transfers. Furthermore, a single
extension of credit may meet the
demand of a consumer with ongoing
credit needs; on the other hand,
multiple remittance transfers may be
needed to satisfy the annual demand of
a consumer with ongoing transaction
needs. Similarly, the Bureau believes
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50251
that because it is not uncommon for
consumers who send money abroad to
do so 12 or more times per year,9 a
change in the demand of just one or two
customers might result in significant
variance in the number of remittance
transfers provided by a person who
sends only a small number of transfers.
The Bureau believes the same is less
likely to be true of extensions of credit.
The Bureau believes that a figure of
100 or fewer transfers per year
appropriately accounts for the
differences between remittance transfers
and extensions of credit. It is high
enough that persons will not risk
exceeding the safe harbor based on the
needs of just two or three customers
seeking monthly transfers. At the same
time, the Bureau believes that a
threshold of 100 is low enough to serve
as a reasonable basis for identifying
persons who occasionally provide
remittance transfers, but not in the
normal course of their business. One
hundred transfers per year is equivalent
to an average of approximately two
remittance transfers per week, or the
number of remittance transfers needed
to satisfy the needs of a handful of
customers sending money abroad
monthly.
Though industry commenters
suggested a number of thresholds higher
than 100 remittance transfers per year,
the Bureau is concerned that a person
who provides more than 100 transfers in
a calendar year is more likely than other
persons to be providing remittance
transfers in the normal course of its
business, such as by making transfers
generally available to its customers, and
by providing them more frequently.
Furthermore, the Bureau does not have
industry-wide information linking
commenters’ suggested higher
thresholds either to the definition of
‘‘normal course of business,’’ or to other
factors that commenters suggested were
relevant, such as the cost of compliance
with subpart B of Regulation E.
Industry commenters provided little
data to support their contentions that
any particular threshold was the most
appropriate. Two trade associations
provided high-level summaries of
limited surveys of member banks
regarding the number of international
funds transfers sent. Otherwise, the
comments received in response to the
February Proposal generally did not
provide data on the overall distribution
and frequency of remittance transfers
9 See, e.g., Bendixen & Amandi, Survey of Latin
American Immigrants in the United States 22 (Apr.
30, 2008), available at: https://
bendixenandamandi.com/wp-content/uploads/
2010/08/
IDB_2008_National_Survey_Presentation.pdf.
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across providers to support treating any
particular number of transactions as
outside the normal course of business.
Through additional outreach, the
Bureau obtained limited data from
several sources regarding the number of
remittances transfers and similar
transactions provided by individual
depository institutions and credit
unions, money transmitters, and other
small businesses that may also send
money abroad. The Bureau hoped that
such information might enable the
Bureau to better evaluate the comments
received, and reveal patterns in the
numbers of transfers sent by different
types of providers.
The data received include results
from several limited surveys of
depository institutions and/or credit
unions regarding the number of
remittance transfers that they send;
estimates of the number of consumerinitiated outbound international wire
transfers conducted by individual banks
and/or credit unions provided through
one correspondent bank or a corporate
credit union; the number of remittances
and other transactions conducted by
state-licensed money transmitters in
California, New York, and Ohio; and
estimates of the number of outbound
international transfers provided by
individual credit unions using a
specialized service. The Bureau also
discussed with an industry expert the
characteristics of several types of small
businesses other than depository
institutions and credit unions that may
send money abroad, including start-up
enterprises and small businesses that
send money abroad that are not
registered or licensed as money
transmitters.
The Bureau does not believe that it
can extrapolate from any of the data sets
received to the remittance transfer
market as a whole or any segment of it,
due to factors including the small
sample sizes and the Bureau’s inability
to determine whether the institutions
covered in any data set are
representative of the market as a whole
or any segment of it. Also, regarding
some segments of the market, the
Bureau did not receive any data.
Furthermore, in some cases, the data
received may overestimate or
underestimate the number of remittance
transfers provided. For example, the
data sets from a correspondent bank and
a corporate credit union may
underestimate the number of
transactions provided by individual
institutions, as these data sets reflect
only wire transfers sent through either
that correspondent bank or corporate
credit union, and the institutions
covered by the data sets may use other
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such intermediary institutions, or send
remittance transfers by means other
than wire. By contrast, the three states’
transaction data both underestimate and
overestimate the number of remittance
transfers sent. On the one hand, one
state provided data regarding
transactions only from that state to
foreign countries, rather than all
international transfers that the statelicensed entities may have sent from the
United States. On the other hand, all
three states’ data mix consumerinitiated outbound international
transactions with transactions that are
not remittance transfers, as defined in
subpart B of Regulation E, including
transfers initiated by businesses,
domestic transfers, and/or sales of
certain payment devices or other stateregulated transactions, depending on
the state.
As a result of these limitations, the
Bureau does not believe it can rely on
the data received to describe the number
of remittance transfers provided by
‘‘typical’’ entities or to identify a clear
pattern in the distribution of providers
by the number of transfers provided.
Nor does the data received allow the
Bureau to distinguish meaningfully
among a number of the more modest
thresholds suggested by commenters, in
terms of the challenge of compliance for
such institutions, or other factors
suggested by commenters.
Nevertheless, the Bureau believes the
data collected provide some additional
support for a safe harbor based on a
threshold of 100 remittance transfers per
year. Though the data sets regarding
state-licensed money transmitters did
not show that any of the licensees that
recorded some transaction volume also
recorded 100 or fewer transactions per
year nationally,10 each of the data sets
regarding depository institutions and
credit unions suggested that a
meaningful portion of the institutions
covered by the data set were sending
100 or fewer remittance transfers
annually. In other words, the threshold
is not so low as to be meaningless. In
10 For transmitters licensed in California, the
Bureau does not know whether the number of
transactions reported for a company in California is
the same as or less than the number of transactions
that a company sent nationwide. Because each of
the states’ data sets combines remittance transfers
with domestic transfers, business-initiated transfers,
and/or sales of certain payment instruments
(depending on the state), the Bureau cannot be
certain as to the number of remittance transfers
provided by each listed entity. However, the
Bureau’s review of entity Web sites suggests that
many of the licensees that provide international
money transfers to consumers focus on that line of
business, and thus, that for many of the licensees
that provide any remittance transfers, most of the
reported transactions are, in fact, remittance
transfers.
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the data sets for which the Bureau
received detailed information, between
roughly 40 percent and roughly 90
percent of those responding to or
covered by the data who reported any
transactions in the most recent year also
stated that they provided 100 or fewer
such transactions in that year.
As commenters suggested, the Bureau
intends to monitor the 100-transfer
threshold over time. The Bureau is
working to develop better sources of
information on the frequency of
remittance transfers provided not only
by depository institutions, credit
unions, and state-licensed money
transmitters, but also by other types of
entities, particularly broker-dealers and
others that may send money abroad but
that are not state- or federally-licensed
or chartered. The Bureau believes based
on available information that many
nonbank companies that send money
abroad fewer than 100 times per year
may be agents for remittance transfer
providers that are required to comply
with subpart B of Regulation E.
However, data about the market for
international money transfers remains
limited, especially with regard to
providers that are not State- or
Federally-licensed or chartered. Thus,
the Bureau intends to continue seeking
better data about the business structures
and consumer protection concerns in all
segments of the market.
Application of the Safe Harbor
Commenters raised several questions
and suggestions regarding the
application of the safe harbor described
in proposed comment 30(f)–2. For
example, some industry commenters
sought clarification that a newly formed
entity or a new entrant to the market
would be considered to have provided
zero remittance transfers in the previous
calendar year.
New § 1005.30(f)(2)(i) does not
generally distinguish between entities
that provided zero remittance transfers
in the previous calendar year and those
that provided from one to 100. For
entities formed during a particular
calendar year, the Bureau recognizes
that the number of transfers provided
during the previous calendar year (i.e.,
none), sheds little light on those
entities’ current or future business
practices. However, the Bureau is
concerned that an exception to the safe
harbor for newly formed entities or new
entrants would mean that none of those
entities would be able to take advantage
of the increased legal certainty that the
safe harbor provides to other persons.
Furthermore, the Bureau expects that
any newly formed entity (or new
entrant) that plans to offer remittance
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Federal Register / Vol. 77, No. 161 / Monday, August 20, 2012 / Rules and Regulations
transfers in the normal course of its
business will develop systems to
comply with subpart B of Regulation E
from the start, rather than wait until its
101st transfer. The Bureau notes that
newly formed entities or new entrants
conducting 100 or fewer remittance
transfers in their first year in operation
likely account for a very small portion
of the total volume of remittance
transfers sent each year.
Some industry commenters suggested
that persons who exceed the safe harbor
threshold not be required to come into
compliance immediately with subpart B
of Regulation E. One industry
commenter suggested that providers be
given six months to come into
compliance with subpart B of
Regulation E after exceeding any safe
harbor threshold. Another industry
commenter suggested that compliance
be required only after a person exceeds
the threshold for two consecutive years.
In response to the comments received,
the Bureau adopts new
§ 1005.30(f)(2)(ii), which provides a
transition period for any person that
provided 100 or fewer remittance
transfers in the previous calendar year
but provides more than 100 remittance
transfers in the current calendar year.
Upon exceeding the 100-transaction
threshold, that person would be subject
to greater uncertainty as to whether it is
providing remittance transfers in the
normal course of business. Section
1005.30(f)(2)(ii) states that if such
person is then providing remittance
transfers for a consumer in the normal
course of its business, then the person
may have a reasonable period of time,
not to exceed six months, to begin
complying with subpart B of Regulation
E. Compliance with subpart B will not
be required for any remittance transfers
for which payment is made during that
reasonable period of time.
Comment 30(f)–2.iii offers further
explanation and clarification. It states
that if a person that provided 100 or
fewer remittance transfers in the
previous calendar year provides more
than 100 such transfers in the current
calendar year, the safe harbor described
in § 1005.30(f)(2)(i) applies to the first
100 remittance transfers that the person
provides in the current calendar year.
But similar to proposed comment 30(f)–
2, final comment 30(f)–2.iii clarifies that
for any additional remittance transfers
provided in the current calendar year
and for any remittance transfers
provided in the subsequent calendar
year, whether the person provides
remittance transfers for a consumer in
the normal course of business, and is
thus a remittance transfer provider for
those additional transfers, depends on
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the facts and circumstances. The
comment further explains that for such
a person, compliance with subpart B of
Regulation E will be required at the end
of the ‘‘reasonable period of time’’
permitted by § 1005.30(f)(2)(ii) unless,
based on the facts and circumstances,
such a person is not a remittance
transfer provider. Comment 30(f)–2.iv
provides an example with specific dates
to illustrate application of the safe
harbor and transition period.
The Bureau believes it necessary and
proper to use its EFTA section 904(a)
and (c) authority to adopt the transition
period described in new
§ 1005.30(f)(2)(ii) because the transition
period will effectuate the purposes of
the EFTA and facilitate compliance. The
Bureau expects that a person initiating
compliance with subpart B of
Regulation E may need some time to
adjust business processes and computer
systems and train its staff. The Bureau
is concerned that absent a transition
period, persons who intend to become
remittance transfer providers may
temporarily suspend service in order to
change their systems, and that such
temporary suspension could be
disruptive to consumers, as well as to
the providers. However, the Bureau
believes that any transition period
should be limited because it will permit
some persons to provide remittance
transfers in the normal course of
business without providing the
disclosure, error resolution, and other
protections generally required by
subpart B of Regulation E. The Bureau
believes that six months is an adequate
period of time for entities to come into
compliance, particularly because the
Bureau expects that service providers
will emerge or evolve to permit new
remittance transfer providers to
accelerate compliance. The Bureau
expects that persons who are remittance
transfer providers will use the transition
period permitted by § 1005.30(f)(2)(ii) to
take all reasonable steps toward
compliance with subpart B of
Regulation E.
One industry commenter stated that it
does not have a system in place to count
remittance transfers during the year.
The Bureau recognizes that prior to the
implementation of this rule, many
persons likely had no reason to identify
remittance transfers. In the future, the
Bureau expects that many small
providers will accurately track their
remittance transfers to know whether
they qualify for the safe harbor
described in § 1005.30(f)(2). With regard
to transfers provided prior to this rule’s
effective date, the Bureau expects that
providers who did not distinguish
remittance transfers from other
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50253
electronic transfers of funds sent to
recipients in other countries can use
reasonable means to identify what
subset of these transfers were remittance
transfers, based on available
information. For example, a bank might
conclude that every outbound
international wire transfer initiated by a
consumer is a remittance transfer for
purposes of determining whether the
safe harbor applies in the first year after
the effective date.
Other Comments
Consumer group commenters
requested that the Bureau clarify that
transfers provided by persons that
qualify for the ‘‘normal course of
business’’ safe harbor are governed by
Article 4A of the Uniform Commercial
Code (UCC). Article 4A applies to
international funds transfers, but
generally provides that it does not apply
to a funds transfer any part of which is
governed by the EFTA. In the February
Final Rule, 77 FR 6194, 6212, the
Bureau recognized that one
consequence of covering remittance
transfers under the EFTA could be legal
uncertainty under the UCC for certain
remittance transfer providers. The
Bureau stated its belief that the best
mechanisms for resolving that
uncertainty rests with the states that
have adopted the UCC, with the
purveyors of rules applicable to specific
wire systems, which can bind direct
participants in the system, and with
participants in wire transfers who can
incorporate UCC Article 4A into their
contracts. Similarly, the Bureau does
not believe that the requested
clarification is proper, as the Bureau
does not implement or administer
Article 4A. Furthermore, the Bureau
believes that subpart B of Regulation E
already makes clear what transactions it
governs.
Consumer group commenters also
suggested that the Bureau require that
either just insured institutions or all
persons that qualify for the safe harbor
described in § 1005.30(f)(2)(i) disclose to
consumers that consumer protections
applicable to remittance transfers
provided by remittance transfer
providers will not apply to transactions
provided by those persons. The Bureau
does not believe it is appropriate to
impose such a requirement without
seeking notice and comment on it.
Furthermore, such a requirement would
be in tension with EFTA Section 919,
which subpart B implements, and
which does not impose any express
obligation on persons that are not
remittance transfer providers.
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Section 1005.31
Disclosures
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Overview
In the February Proposal, the Bureau
solicited comment on issues relating to
disclosure of the cancellation
requirements in § 1005.36(c) for
remittance transfers scheduled by the
sender at least three business days
before the date of the transfer. To
address these issues, the Bureau is
amending the disclosure requirements
in §§ 1005.31(a)(3), (a)(5), and (b)(2) to
improve consumers’ ability to determine
the cancellation deadlines for particular
transfers. In addition, the Bureau is
amending § 1005.31(b)(3), regarding
combined disclosures, to allow
providers to give a confirmation that the
transfer has been scheduled in lieu of
the proof of payment required for
transfers scheduled before payment is
processed for the transfer. These
amendments are discussed in detail in
their respective sections below.
Disclosure of Deadline To Cancel
Transfers Scheduled Before the Date of
Transfer
As discussed in more detail below
regarding § 1005.36(c), the February
Final Rule adopts a cancellation policy
for remittance transfers. Under
§ 1005.34(a) of the February Final Rule,
a sender generally has 30 minutes after
payment is made to cancel a remittance
transfer. The February Final Rule,
however, contains special cancellation
procedures for any remittance transfer
that is scheduled at least three business
days before the date of the transfer,
including a series of preauthorized
remittance transfers. For these transfers,
the provider is required to cancel the
remittance transfer if it receives a
request to cancel from the sender at
least three business days before the date
of the transfer.
The February Proposal solicited
comment on possible changes to the
cancellation requirements for remittance
transfers that are scheduled at least
three business days before the date of
the transfer, including preauthorized
remittance transfers. Specifically, the
February Proposal solicited comment on
whether the three-business-day period
for cancelling such remittance transfers
adopted in the February Final Rule is
appropriate, or whether the rule should
require a deadline to cancel these
transfer that is more or less than three
business days. The February Proposal
also solicited comment on three issues
related to the disclosure of the deadline
to cancel as set forth in the February
Final Rule. The first issue was whether
the three-business-day deadline to
cancel transfers scheduled before the
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date of the transfer should be disclosed
differently to senders, such as by
requiring a remittance transfer provider
to disclose in the receipt the specific
date on which the right to cancel will
expire. The second issue was whether a
provider should be allowed to describe
both the three-business-day and 30minute cancellation provisions on a
single receipt and either describe the
transfers to which each cancellation
period is applicable, or alternatively,
use a checkbox or other method to
designate which cancellation period is
applicable to the transfer to which the
receipt relates. The third issue was
whether the cancellation requirements
should be disclosed in the pre-payment
disclosure, rather than in the receipt, for
each subsequent preauthorized
remittance transfer.
The approaches taken in the final rule
for the three-business-day cancellation
period and the disclosures required to
be provided in connection with
subsequent remittance transfers within a
series of preauthorized remittance
transfers are described in greater detail
below in the discussion regarding
§ 1005.36(c) and (d). Consistent with
these provisions, the Bureau is also
revising § 1005.31 to add new
paragraphs (a)(3)(iv), (a)(5)(iv), and
(b)(2)(vii), and associated commentary,
regarding the content and format of the
disclosures that must be provided to
senders of transfers scheduled at least
three business days before the date of
the transfer and of certain preauthorized
remittance transfers.
Taken together, the final rule requires
remittance transfer providers to disclose
the date of transfer, and in certain
instances, the future date or dates of
transfer and related information in
receipts that may be provided at the
time payment is made or after the date
of transfer. For any remittance transfer
scheduled at least three business days
before the date of the transfer, the
receipt provided when payment is made
must disclose the date of transfer for
that transfer. Where a consumer
schedules a series of preauthorized
remittance transfers, the receipt
provided for the first transfer must also
provide the date of transfer for that first
transfer. In each case, if a second receipt
is required after the date of transfer, that
receipt must also disclose the date the
transfer was made. The final rule also
addresses, among other things, a
requirement to disclose future dates of
transfer for subsequent preauthorized
transfers. In addition to the information
described above, the receipt provided
for the initial transfer in a series of
preauthorized remittance transfers must
also disclose the future date or dates of
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transfer for any subsequent
preauthorized remittance transfer in that
series for which the date of transfer is
scheduled four or fewer business days
after the date on which payment for the
initial transfer is made. For other
subsequent preauthorized transfers, the
rule provides flexibility as to whether
the information regarding transfer dates
and cancellation requirements for
subsequent transfers is included in one
or more receipts or standalone
disclosures, so long as it is provided
sufficiently in advance to allow the
consumer to exercise his or her
cancellation rights.
Finally, as is the case with one-time
transfers scheduled at least three
business days before the date of the
transfer, the final rule also requires that
receipts for subsequent preauthorized
remittance transfers include the date of
transfer for the transfer that is the
subject of the receipt and, if the
provider chooses, the future dates of
transfer for the next scheduled
subsequent transfer or transfers.
31(a) General Form of Disclosures
31(a)(3)(iv)
As discussed below, the Bureau adds
new § 1005.31(b)(2)(vii) to require that
in certain circumstances, a receipt for a
remittance transfer include the date of
the transfer for that specific transfer in
order to provide consumers with a
clearer explanation of their cancellation
rights. Further, the Bureau adds new
§ 1005.36(d) to require that in certain
instances, such receipts disclose the
dates of upcoming transfers and related
information. The Bureau is making
corresponding changes to the disclosure
requirements for transfers conducted
entirely by telephone to require oral
disclosure of transfer date information
in certain circumstances. As stated in
the February Final Rule, the Bureau
believes that for oral telephone
transactions, senders should be
informed of their cancellation rights
before the cancellation period has
passed. 77 FR 6194, 6217. Because a
receipt would generally be mailed to a
sender for telephone transactions as
permitted by § 1005.31(e)(2), the sender
may not receive the cancellation
disclosure included in that receipt until
after the standard 30-minute
cancellation period had passed unless
the Bureau required the disclosure to be
made orally before the 30-minute
cancellation period expires.
Consequently, § 1005.31(a)(3)(iii), as
adopted in the February Final Rule,
requires oral disclosure of cancellation
rights when the sender requests the
remittance transfer and prior to payment
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for the transfer, if the provider takes
advantage of the option to provide prepayment disclosures orally for
transactions conducted entirely by
telephone.
For similar reasons, among others, the
Bureau believes that for a remittance
transfer scheduled at least three
business days before the date of the
transfer, and for any preauthorized
remittance transfer scheduled to occur
four or fewer business days after the
date payment is made for the transfer,
an oral pre-payment disclosure
regarding cancellation rights should be
accompanied by an oral disclosure
regarding the date of that transfer.
Although the time period for
cancellation of transfers scheduled in
advance may be calculated in days
rather than minutes, the period may still
expire before the consumer receives any
written material, particularly if the
consumer is scheduling the transfer
three or four days in advance. For
preauthorized remittance transfers,
several transfers in the series may be
sent before a written receipt is received.
Accordingly, pursuant to its authority
under EFTA section 919(a)(5)(A), the
Bureau is amending § 1005.31(a)(3) to
add § 1005.31(a)(3)(iv) as a further
condition for the provision of oral
disclosures for remittance transfers
conducted entirely by telephone. This
provision permits oral disclosures if
(among other requirements) the provider
discloses orally, to the extent
applicable, (A) the information required
by § 1005.31(b)(2)(vii) and (B) the
information required by
§ 1005.36(d)(1)(i)(A) with respect to
transfers subject to § 1005.36(d)(2)(ii),
pursuant to the timing requirements in
§ 1005.31(e)(1).
31(a)(5)(iv)
As discussed in the section-by-section
analysis to the February Final Rule,
since remittance transfers sent via
mobile application or text message on a
telephone are conducted entirely by
telephone, EFTA section 919(a)(5)(A)
permits the Bureau to allow oral prepayment disclosures in connection with
transfers sent via mobile application or
text message if the transfer is conducted
entirely by telephone. 77 FR 6194, 6217.
Because oral disclosures are not
retainable, the Bureau further observed
that for such transactions, senders
would not be less protected, and might
be better informed, by receiving prepayment disclosures via mobile
application or a text message even
though these disclosures may also not
be retainable. Id. Accordingly, to
effectuate the purposes of the EFTA and
facilitate compliance, the Bureau used
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its authority under EFTA sections 904(a)
and (c) to include in the February Final
Rule § 1005.31(a)(5), which states that
the pre-payment disclosure may be
provided orally or via mobile
application or text message if: (i) The
transaction is conducted entirely by
telephone via mobile application or text
message; (ii) the remittance transfer
provider complies with the foreign
language requirements of
§ 1005.31(g)(2); and (iii) the provider
discloses orally or via mobile
application or text message a statement
about the rights of the sender regarding
cancellation required by
§ 1005.31(b)(2)(iv) pursuant to the
timing requirements in § 1005.31(e)(1).
Pursuant to the same authority, and
for the same reasons as those discussed
above regarding with § 1005.31(a)(3)(iv),
the Bureau adopts new
§ 1005.31(a)(5)(iv), which adds as an
additional condition for the provision of
the pre-payment disclosures orally or
via mobile application or text message
a requirement that the provider disclose,
to the extent applicable, (A) the
information required by
§ 1005.31(b)(2)(vii) and (B) the
information required by
§ 1005.36(d)(1)(i)(A) with respect to
transfers subject to § 1005.36(d)(2)(ii),
pursuant to the timing requirements in
§ 1005.31(e)(1).
31(b)(2) Receipt
31(b)(2)(vii) Date of Transfer
The February Final Rule requires the
receipt provided to a sender to include
an abbreviated statement about the
sender’s cancellation rights.
§ 1005.31(b)(2)(iv). In the February
Proposal, the Bureau noted that senders
may have difficulty determining the
specific date on which the right to
cancel expires for a particular transfer.
77 FR 6310, 6321. Accordingly, the
Bureau sought comment on whether, as
applicable, the three-business-day
deadline to cancel transfers should be
disclosed differently to consumers, such
as by requiring a remittance transfer
provider to disclose in the receipt the
specific date on which the right to
cancel will expire or to state its business
days in receipts provided to senders.
The Bureau also solicited comment on
alternative means of disclosing the
deadline for cancelling transfers
scheduled at least three business days
before the date of the transfer.
The Bureau received a number of
comments on the cancellation
disclosure from various industry
members and one consumer group. Most
comments focused on whether
providers should be required to include
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the specific cancellation deadline in the
receipts provided to senders.
Commenters did not address any of the
other questions raised on this issue in
the February Proposal nor did they
suggest alternatives.11
With respect to disclosure of the
specific cancellation date, the majority
of industry commenters opposed such a
requirement. Some industry
commenters asserted that requiring
disclosure of the specific cancellation
deadline for a particular transaction
would make it more difficult and
expensive to produce receipts by adding
a new element specific to each transfer.
One industry commenter stated that
requiring a remittance transfer provider
to specify the exact date for cancellation
would create significant technical
challenges because at that point, the
disclosure becomes dynamic, rather
than static. This commenter stated that
producing such a dynamic disclosure
may require updating based on the time
of day of the transfer request and the
provider’s processing deadline, whereas
a static disclosure without such a
requirement can be reliably produced at
any time of day. Further, the commenter
stated that a sender uncertain of the
cancellation deadline will contact a
remittance transfer provider directly for
clarification and then cancel the
transaction in the course of the same
contact.
In contrast, the consumer group
commenter argued that the period for
cancellation rights should be disclosed
as a specific date. One industry
commenter did not oppose requiring
remittance transfer providers to disclose
the specific cancellation date for each
transaction, but argued that providers
should be allowed to disclose a cut-off
time for exercising the cancellation right
because the lack of clarity regarding the
time of day the cancellation period
expires could result in a transfer being
delayed until the next business day.
Pursuant to the Bureau’s authority
under EFTA section 919(d)(3), the
February Final Rule is revised to add a
new § 1005.31(b)(2)(vii), which requires
that a receipt for any remittance transfer
scheduled by the sender at least three
business days before the date of the
transfer, or the first transfer in a series
of preauthorized remittance transfers,
disclose the date the remittance transfer
provider will make or made the
11 Regarding the Bureau’s inquiry about
disclosure of the provider’s business days, the
Bureau did not receive comment on this issue
specifically, although one industry commenter
stated that providers should not be required to
disclose the specific deadline to cancel or other
additional items that are not required to be
disclosed by the February Final Rule.
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remittance transfer, using the term
‘‘Transfer Date,’’ or a substantially
similar term.
The Bureau is also adopting
commentary to provide further guidance
on the application of
§ 1005.31(b)(2)(vii). As explained in
more detail below in the discussion of
§ 1005.36, for certain transactions, a
receipt meeting the requirements of
§ 1005.31(b)(2), including the transfer
date required under § 1005.31(b)(2)(vii),
may need to be provided at different
times. For example, for the first in a
series of preauthorized remittance
transfers, an initial receipt will need to
be provided at the time payment is
made for the transfer; and then in some
cases, a receipt will need to be provided
shortly after that particular transfer has
been made. Thus, comment 31(b)(2)–4
clarifies that, where applicable,
§ 1005.31(b)(2)(vii) requires disclosure
of the date of transfer for the remittance
transfer that is the subject of a receipt
required by § 1005.31(b)(2), including a
receipt that is provided in accordance
with the timing requirements in
§ 1005.36(a).
Comment 31(b)(2)–4 further clarifies
that, for any subsequent preauthorized
remittance transfer subject to
§ 1005.36(d)(2)(ii), the future date of
transfer and related information must be
provided on any receipt provided for
the initial transfer in that series of
preauthorized remittance transfers, or
where permitted, or disclosed as
permitted by § 1005.31(a)(3) and (a)(5),
in accordance with § 1005.36(a)(1)(i).
Comment 31(b)(2)–5 provides an
example of how disclosure of the dates
of transfer required by
§ 1005.31(b)(2)(vii) and § 1005.36(d)(1)
should be provided in receipts required
by § 1005.31(b)(2) pursuant to the
timing requirements in § 1005.36(a)(1)(i)
or (a)(1)(ii). Comment 31(b)(2)–5 also
explains that if the provider discloses
on either receipt the cancellation period
applicable to and dates of subsequent
preauthorized remittance transfers in
accordance with 1005.36(d)(2)(i), the
disclosure must be phrased and
formatted in such a way that it is clear
to the sender which cancellation period
is applicable each date of transfer on the
receipt.
Upon further review and analysis, the
Bureau concludes that because the
cancellation requirements in
§ 1005.36(c) are based on and calculated
from the date of transfer, the actual
transfer date is the most logical piece of
information to require since the
remittance transfer provider is already
required to obtain this information in
order to comply with § 1005.36(c),
although it is not required to be
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disclosed to the sender under the
February Final Rule.
Further, the Bureau also believes that
requiring a remittance transfer provider
to disclose the date of a remittance
transfer, along with a disclosure that the
sender’s cancellation rights will expire
three business days before the date of
the transfer, provides a reasonable
balance between consumer and industry
interests. This approach significantly
improves the information provided to
senders because, under the February
Final Rule, a provider is generally only
required to disclose the cancellation
policy, with a statement such as ‘‘you
can cancel for a full refund no later than
three business days prior to the
scheduled date of the transfer.’’ 77 FR
6310, 6321. This required disclosure,
however, does not elaborate on what
constitutes the date of transfer or how
the sender may determine the
cancellation deadline from the date of
transfer. Without a clear starting point
from which to count the three-businessday deadline, the Bureau believes
senders may be confused about the
dates by which they are required to
cancel transfers, which may make
cancellation disclosures less effective.
In situations such as when transferred
funds will be drawn from an account at
a later date rather than paid up front,
the transfer date may also help the
sender understand when the funds for
the transfer must be available for the
provider to conduct the transfer. The
transfer date may also help senders
differentiate and keep track of
completed transfers, especially where
the sender receives a number of receipts
in the mail or on an account statement
in close proximity to one another.
The Bureau also believes that
requiring disclosure of the date of
transfer is the most technically feasible
solution relative to the alternatives
raised in the February Proposal. The
dates of transfer should be readily
available to remittance transfer
providers since they are likely primarily
responsible for executing remittance
transfer requests, and as part of their
business processes should already know
when they must execute transfers to
satisfy the terms of their contracts with
senders (if the contracts are based on the
date of the transfer) or to meet any
delivery deadlines (if those deadlines
are the bases of the contracts). The
Bureau also believes that disclosure of
the date of transfer is an added benefit
for senders who may choose to schedule
a transaction based on when the funds
must be available. Finally, the Bureau
notes that the requirement to disclose
the date of transfer is consistent with
the existing requirement for certain
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preauthorized electronic fund transfers.
In particular, § 1005.10(d)(1) (in subpart
A of Regulation E) requires an electronic
fund transfer provider to send the
consumer the date of transfer (and other
information) at least ten days before the
scheduled date of the transfer when a
preauthorized electronic fund transfer
from the consumer’s account will vary
in amount from the previous transfer
under the same authorization.
Consequently, certain remittance
transfer providers that also provide
preauthorized electronic fund transfers
may already have the capability to
produce disclosures with the date of
transfer.
Moreover, the Bureau believes that
keeping disclosure forms short, simple,
and succinct is helpful to senders. As
noted in the February Final Rule,
participants in consumer testing
understood and responded positively to
concise, abbreviated disclosures. 77 FR
6194, 6228. Of the options considered,
the Bureau believes that disclosure of
only the date of transfer best
accomplishes this goal because that date
may be provided independently of other
information. While disclosure of the
specific dates of cancellation deadlines
would inform senders of the actual
dates on which their rights to cancel
expire, the Bureau believes that
consumers would still benefit from
disclosure of the date of transfer. The
Bureau is concerned that requiring
providers to include multiple dates on
receipts may be more confusing to
senders and possibly dilute the
usefulness of the disclosures regarding
cancellation rights.
Likewise, the Bureau is concerned
that requiring providers to state their
business days on receipts may result in
a longer, more unwieldy form. The
Bureau believes that providers will
generally make available to the public
upon request the days that constitute
‘‘business days’’ under subpart B of
Regulation E, and that, therefore,
senders can obtain this information as
necessary. Absent further data regarding
the usefulness of this information, the
Bureau does not believe that it is
appropriate at this time to make the
forms significantly longer and more
complicated to include information that
is likely to be used by only a small
subset of consumers who may contact
their remittance transfer providers in
any event to effectuate the cancellation.
Accordingly, the Bureau believes that
requiring the date of transfer and
cancellation rights in receipts strikes the
appropriate balance between providing
senders with information about their
transfers and minimizing the burden to
providers. However, the Bureau will
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continue to gather data on consumers’
exercise of cancellation rights, the
effectiveness of related disclosures, and
programming burdens on providers over
time and, if warranted, will reexamine
this issue at a later date to determine if
a better solution exists.
The Bureau has further determined
that it is appropriate to require
disclosure of the date of transfer at the
time payment is made, but also in
subsequent receipts required to be
provided with respect to a given transfer
in accordance with § 1005.36(a)(1)(ii) or
§ 1005.36(a)(2)(ii). The Bureau believes
that a single consistent rule will be
simpler as a matter of programming for
providers and will frequently provide
additional benefits to consumers in light
of the fact that the final rule eliminates
the requirement to provide the prepayment disclosure and receipt in
advance of the transfer for subsequent
preauthorized transfers in a series. (See
discussion below regarding
§ 1005.36(a).)
In particular, although stating the date
of transfer in a post-transfer receipt will
not facilitate senders’ understanding of
cancellation deadlines that have already
passed, the Bureau believes the
information will frequently be useful to
senders in other ways. For example, as
noted above, if a sender schedules a
number of standalone transfers before
the date of transfer, or a series of
closely-spaced preauthorized remittance
transfers, senders may receive a number
of receipts in close proximity to each
other and may use the date of transfer
to identify and track which transfer has
occurred. Having the date of transfer on
receipts with respect to each transfer
would likewise be helpful in situations
where the receipt is provided with a
periodic statement on which there are
several transactions.
In addition, because senders may not
receive additional disclosures prior to
the subsequent preauthorized transfer in
a series, the receipt provided after the
transfer is completed in accordance
with § 1005.36(a)(2)(ii) will contain
information regarding cancellation
rights (as well as the exchange rate, fees
and taxes) that could help inform the
sender about the upcoming subsequent
remittance transfer. Furthermore, as
most preauthorized remittance transfers
are likely to be scheduled some time in
advance, senders will generally receive
receipts after the transfer is completed.
This receipt would provide
confirmation that the transfer occurred
as scheduled. Finally, where remittance
transfer providers choose to satisfy their
obligations under § 1005.36(d)(1) by
disclosing the future transfer dates for
preauthorized transfers on a receipt
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relating to a prior transaction, providing
the date of transfer for the prior
transaction will help differentiate to
which transfer the disclosures in the
receipt apply.
Disclosure of Both the Three-BusinessDay Deadline and the 30-Minute
Deadline in Same Receipt
Under § 1005.31(b)(2)(iv) of the
February Final Rule, notice of the
period to cancel a remittance transfer
must be disclosed in the receipt
provided pursuant to § 1005.31(b)(2).
For any transfer scheduled at least three
business days before the date of the
transfer, the receipt provided by the
remittance transfer provider to the
sender may describe only the
cancellation rights and three-businessday deadline set forth in § 1005.36(c).
For all other remittance transfers, the
provider is required to describe the
cancellation rights and 30-minute
cancellation period set forth in
§ 1005.34(a). In the February Proposal,
the Bureau solicited comment on
whether remittance transfer providers
that offer both types of transfers should
be given flexibility to include the two
different cancellation periods permitted
by this rule on the same receipt with
some statement or method such as a
checkbox to designate which
cancellation period applies to a given
transaction.
The Bureau received only a few
comments on this issue. Of those
received, two industry commenters
urged the Bureau to permit providers
flexibility in disclosing the cancellation
requirement. One industry commenter
argued that allowing providers to
include both cancellation period
options on the same receipt would
enable providers to rely on one standard
receipt form, which, compared to the
alternative, may result in lower costs for
providers (and, presumably, lower
prices for senders). The other industry
commenter stated that it supported any
disclosure modification that would
allow smaller providers to generate and
deliver one disclosure and that the
proposed option would eliminate the
need to produce multiple disclosures to
reflect the different cancellation
periods. A consumer group commenter,
however, stated that, to ensure that
senders receive accurate and precise
information to avoid potential
confusion, only the cancellation
provision that corresponds to the type of
remittance transfer requested should be
disclosed.
After consideration of these
comments, the Bureau is adding new
comment 31(b)(2)–6 to clarify that
providers that offer remittance transfers
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50257
scheduled at least three business days
before the date of the transfer, as well
as remittance transfers scheduled fewer
than three business days before the date
of the transfer, may meet the
cancellation disclosure requirements in
§ 1005.31(b)(2)(iv) by describing the
three-business-day and 30-minute
cancellation periods on the same
disclosure and using a checkbox or
other method to clearly designate the
applicable cancellation period. In other
words, remittance transfer providers
that provide both transfers scheduled at
least three business days before the date
of the transfer and transfers scheduled
closer to the date of the transfer may
disclose the cancellation period
applicable to a particular transfer in one
of two ways: (i) describe in the receipt
either the 30-minute cancellation period
or the three-business-day cancellation
period, as applicable to the particular
transaction; or (ii) provide a description
of both the 30-minute and threebusiness-day cancellation periods along
with a clear indication of which
cancellation period applies to the
sender’s transaction. With respect to the
latter option, the comment does not
mandate a particular method for
identifying the applicable time period
for cancellation. The comment,
however, clarifies that the provider may
use a number of ways to indicate which
cancellation period applies to the
transaction including, but not limited
to, a statement to that effect, use of a
checkbox, highlighting, circling, and the
like. Finally, comment 31(b)(2)–6 states
that for transfers scheduled three or
more business days before the date of
transfer, the cancellation disclosures
provided pursuant to § 1005.31(b)(2)(iv)
should be phrased and formatted in
such a way that it is clear to the sender
which cancellation period is applicable
to the date of transfer disclosed on the
receipt.
The Bureau believes senders are
unlikely to be confused by having a
description of both cancellation
deadlines in the same disclosure. To the
contrary, including a description of both
the 30-minute and three-business-day
cancellation period with a checkbox or
other method that clearly designates the
cancellation time period applicable to
the sender’s transaction may improve
senders’ understanding of the
cancellation provisions generally.
Moreover, the ability for remittance
transfer providers to use pre-printed
receipt forms that describe both
cancellation options with some method
to identify the applicable cancellation
time period may reduce the need to
create multiple standard receipts,
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potentially reducing costs for some
providers. The Bureau also notes that
nothing in the final rule prohibits a
provider from including only the
applicable cancellation policy on a
receipt.
31(b)(3) Combined Disclosure
The Bureau is revising the
requirements in the February Final Rule
for combined disclosures that
remittance transfer providers may
choose to give to senders. Under
§ 1005.31(b)(3) in the February Final
Rule, a remittance transfer provider may
combine the pre-payment disclosure
required by § 1005.31(b)(1) and the
receipt required by § 1005.31(b)(2) into
a single, combined disclosure, if such a
disclosure is provided pursuant to the
timing requirements applicable to prepayment disclosures. See
§ 1005.31(e)(1). Section 1005.31(b)(3)
provides that if the provider chooses to
provide a combined disclosure, the
provider must also provide the sender a
proof of payment for the transfer when
payment is made for the remittance
transfer. As described in the February
Final Rule, the Bureau issued
§ 1005.31(b)(3) pursuant to its authority
under EFTA sections 919(a)(5)(C), and
904(a) and (c).
Pursuant to the same authority, the
Bureau is revising § 1005.31(b)(3) to
allow a remittance transfer provider to
provide a confirmation of scheduling in
lieu of the proof of payment with
combined disclosures for transfers
scheduled before the date of transfer in
order to facilitate compliance and
enhance consumer protection. The
Bureau is redesignating § 1005.31(b)(3)
from the February Final Rule as
§ 1005.31(b)(3)(i) and is adopting a new
§ 1005.31(b)(3)(ii). Section
1005.31(b)(3)(ii) states that if the
disclosure described in
§ 1005.31(b)(3)(i) is provided in
accordance with § 1005.36(a)(1)(i)
(which concerns one-time transfers
scheduled five or more business days
before the date of transfer or the first in
a series of preauthorized remittance
transfers) and payment is not processed
by the remittance transfer provider at
the time the remittance transfer is
scheduled, a remittance transfer
provider may provide confirmation that
the transaction has been scheduled in
lieu of the proof of payment otherwise
required by § 1005.31(b)(3)(i). The
confirmation of scheduling must be
clear and conspicuous, provided in
writing or electronically, and provided
in a retainable form.
Although the February Proposal did
not propose changes to § 1005.31(b)(3),
it sought comment generally on the form
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of disclosures for transfers scheduled
before the date of transfer. 77 FR 6310,
6317. The Bureau believes that
adjustments are necessary to
§ 1005.31(b)(3) because while comment
31(e)–2 in the final rule states that
payment is made for purposes of
subpart B of Regulation E when
payment is authorized, this does not
necessarily mean that providing ‘‘proof
of payment’’ at the time of authorization
will make sense for either the provider
or the sender for a one-time remittance
transfer that is scheduled before the date
of transfer or the first in a series of
preauthorized remittance transfers when
payment may not be processed until
closer to the date of such transfer.
For many remittance transfers,
senders tender payment for immediate
processing once they authorize the
remittance transfer provider to complete
the transfer (e.g., by paying cash or by
providing a payment device). In those
situations, the Bureau does not believe
there would be any downside for the
sender or the remittance transfer
provider if the provider provided proof
of payment at the time that payment is
made, i.e., authorized. These situations
are distinct from the case in which a
sender arranges with the provider to
have funds deducted from the sender’s
account with the provider or to process
a payment with a payment device at
some later time, closer to the date of a
transfer. In such an instance, the Bureau
is concerned that providing a sender
with ‘‘proof of payment’’ could confuse
the sender. Furthermore, the Bureau is
concerned that providers may not wish
to provide ‘‘proof of payment’’ in such
instances.
New comment 31(b)(3)–2 provides
additional guidance regarding the
confirmation of scheduling. This
comment explains that, as discussed in
comment 31(e)–2, payment is
considered to be made when payment is
authorized for purposes of various
timing requirements in subpart B,
including with regard to the timing
requirement for provision of the proof of
payment described in § 1005.31(b)(3)(i).
However, where a transfer (whether a
one-time remittance transfer or the first
in a series of preauthorized remittance
transfers) is scheduled before the date of
transfer and the provider does not
intend to process payment until at or
near the date of transfer, the provider
may provide a confirmation of
scheduling in lieu of the proof of
payment required by § 1005.31(b)(3)(i).
No further proof of payment is required
when payment is later processed.
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Section 1005.32
Estimates
32(b)(1) Permanent Exception for
Transfers to Certain Countries
In the February Proposal, the Bureau
proposed renumbering § 1005.32(b) to
§ 1005.32(b)(1) to allow for the proposed
exception for the disclosure of estimates
for transfers scheduled before the date
of transfer (i.e., proposed
§ 1005.32(b)(2)). The February Proposal
also proposed conforming changes to
provisions that reference this exception.
No comments were received on this
renumbering. As discussed below, the
Bureau is adopting a new exception for
estimates and thus is adopting as
proposed conforming revisions to
§ 1005.32(b)(1) and is renumbering the
official interpretations thereto. See
comments 32(b)(1)–1 through –7.
32(b)(2) Permanent Exception for
Transfers Scheduled Before the Date of
Transfer
In the February Proposal, the Bureau
proposed to use its EFTA section 904(a)
and (c) authority to add a new
exception, in proposed § 1005.32(b)(2),
that would provide additional flexibility
for remittance transfer providers to
disclose estimates in pre-payment
disclosures and receipts for one-time
transfers or the first in a series of
preauthorized remittance transfers
scheduled to occur more than ten days
after the transfer is authorized.
In the February Proposal, the Bureau
noted that the market for remittance
transfers scheduled in advance of the
date of transfer, including preauthorized
remittance transfers, is still in its
nascent stages. The Bureau also noted
its concern that requiring a remittance
transfer provider to set exchange rates
before the date of transfer might cause
a provider that is already permitting
consumers to schedule remittance
transfers in advance of the date of
transfer to stop offering a potentially
useful product to consumers rather than
bear or manage the increased exchange
rate risk that might be associated with
such a product. While remittance
transfer providers (or their business
partners) may be able to develop tools
to manage such risk, the Bureau stated
that it was concerned that providers
might not do so, or that they would pass
on any new risk management costs to
consumers. Based on these concerns,
the Bureau sought comment on whether
providers should be permitted to
disclose estimates of exchange rates,
and related figures, in two
circumstances: (i) A sender schedules a
one-time transfer or the first in a series
of preauthorized remittance transfers to
occur more than ten days after the
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transfer is authorized; or (ii) a sender
enters into an agreement for
preauthorized remittance transfers
where the amount of the transfers can
vary and the provider does not know the
exact amount of the first transfer at the
time the disclosures for that transfer are
given. The Bureau received comments
about the use of estimates generally and
conducted additional outreach to better
understand some of the issues raised by
commenters.
The Bureau is adopting new
§ 1005.32(b)(2), which permits
disclosures to contain estimates in
certain cases for remittance transfers
scheduled before the date of transfer.
The new provision allows for certain
estimates for all remittance transfers
scheduled five or more business days
before the date of transfer, rather than
only for one-time transfers or the first in
a series of preauthorized remittance
transfers scheduled more than ten
business days before the date of the
transfer (as was proposed). The
allowance for estimates in disclosures
for subsequent preauthorized remittance
transfers will have limited application,
insofar as the Bureau is eliminating the
requirement that pre-payment
disclosures be sent prior to subsequent
preauthorized remittance transfers and
is only requiring pre-transfer receipts for
such transfers when certain previously
disclosed figures change. However, to
the extent that a remittance transfer
provider must send a pre-transfer
receipt, the final rule permits the
provider to disclose estimates in
accordance with § 1005.32(b)(2). See
§ 1005.36(a)(2)(i) (discussing pretransfer disclosure requirements for
subsequent preauthorized remittance
transfers). In addition, the new
exception permitting estimates is
expanded from the February Proposal to
allow estimates in certain cases when
the provider agrees to a sender’s request
to fix the amount to be transferred in the
currency in which the remittance
transfer will be received and not the
currency in which it is funded. The new
provisions and comments received are
discussed in more detail below.
Provision of Estimates for Transfers
Scheduled Before the Date of Transfer
Industry commenters generally
supported the first option for estimates
suggested by the February Proposal: an
exception from the general rule
requiring accurate disclosures
(§ 1005.31(f)) that would permit
remittance transfer providers to disclose
estimates of the amount of currency to
be received, as well as other information
such as exchange rates, for certain
remittance transfers scheduled before
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the date of transfer. Although the
February Proposal only sought comment
regarding disclosure of estimates in onetime transfers and the first in a series of
preauthorized remittance transfers
scheduled more than ten business days
before the date of transfer, most
commenters addressed the use of
estimates for all transfers scheduled
before the date of transfer (i.e., one-time
transfers scheduled before the date of
transfer, the first in a series of
preauthorized remittance transfers, and
subsequent preauthorized remittance
transfers).
Industry commenters stated that
absent an exception allowing for the
disclosure of estimates, remittance
transfer providers would face
difficulties adjusting their risk
management systems to provide
accurate exchange rates before the date
of transfer, particularly when providers
are required to allow senders to cancel
remittance transfers up to three business
days before the scheduled date of
transfer. See § 1005.36(c). Commenters
also favored the disclosure of estimates
due to the potential legal consequences
associated with creating risk
management strategies required in order
to provide accurate (rather than
estimated) disclosures far before a
scheduled remittance transfer.
First, multiple industry commenters
argued that if remittance transfer
providers were required to give accurate
disclosures of the exchange rates that
would apply to remittance transfers
scheduled before the date of transfer,
any providers offering such transfers
would likely need to change their
current methods of managing foreign
exchange risk. One commenter stated
that remittance transfer providers often
assume the risk from fluctuations in the
wholesale rates at which they buy
foreign currency during the course of a
day, by setting one retail exchange rate
to apply to remittance transfers (or other
transactions) conducted throughout that
day. However, industry commenters
stated that setting retail exchange rates
farther before the date of transfer would
cause a remittance transfer provider to
incur more exchange rate risk due to the
extended time period during which
wholesale foreign currency markets
might fluctuate. Commenters contended
that in order to disclose the exchange
rate that would apply to a remittance
transfer far before the date of such
transfer, a provider would either have to
(1) bear the risk of the wholesale
exchange rate changing before the date
of transfer or (2) use some method to
purchase currency before the date of
transfer and bear the risk of the sender
cancelling the transfer, leaving the
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provider (or its business partner) with
unneeded currency.
During outreach conversations, the
Bureau spoke to industry participants to
learn more about how remittance
transfer providers can or do manage
foreign exchange risk. In these
conversations, foreign currency
providers and other market participants
stated that if they were required to
disclose accurate exchange rates several
days in advance of the date of transfer,
remittance transfer providers (or their
business partners) might have to
develop new procedures to manage
fluctuations in the wholesale foreign
exchange rates, i.e., the rates at which
remittance transfer providers (or their
business partners) generally buy foreign
currency.
Second, several industry commenters
stated that remittance transfer providers
would face difficulties implementing
any of the methods that would allow
them to manage the risk associated with
disclosing exchange rates before the
date of a transfer, and that these
methods could result in increased prices
for senders. Industry commenters
indicated, and participants in outreach
conducted by the Bureau further
explained, that the primary method for
remittance transfer providers (or their
business partners) to manage any
additional risk created due to the
disclosure of actual exchange rates for
remittance transfers scheduled before
the date of transfer would likely be
through employing foreign exchange
futures or forward contracts, through
which a buyer commits to buying a
specified amount of foreign currency, at
a specified foreign exchange rate, at a
later date.12 Industry commenters stated
that a remittance transfer provider could
itself, or through a third party, purchase
a futures or a forward contract for the
amount of the remittance transfer, and/
or sell such a contract to the sender.
One industry commenter explained,
however, that such methods can be
risky if foreign currency markets
fluctuate and if a sender cancels a
remittance transfer after the provider
secures the currency needed for the
transfer. In such a case, a remittance
transfer provider (or its business
partner) may experience a loss due to
changes in the foreign exchange
markets.
Third, industry commenters stated
that setting exchange rates before the
12 A futures contract for foreign currency is a
contract between two parties to purchase a
specified amount of foreign currency at a date in the
future for a price agreed upon at the time of
contracting. Such contracts would allow a provider
to ‘‘lock-in’’ a rate in order for it to give customers
an accurate rate when scheduling the transfer.
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date of transfer could implicate other
laws and regulations. For example, one
trade association commenter expressed
concern that for some types of entities,
simply setting an exchange rate before
the date of transfer might be considered
a forward contract, and that therefore
these entities might become subject to
U.S. Commodity Futures Trading
Commission regulations that contain
registration, capital, reporting, and
recordkeeping requirements. Separately,
in an outreach conversation, one bank
expressed concern that restrictions on
depository institutions’ investments
created by the Dodd-Frank Act may
similarly limit depository institutions’
ability to purchase the necessary
contracts needed to manage the risk
associated with setting far in advance
the exchange rates that will apply to
remittance transfers. Finally, one credit
union commenter expressed concern
that Federal credit union regulations
might restrict credit unions’ ability to
manage foreign currency risk.
Fourth, apart from regulatory
concerns, some industry commenters
and participants in outreach suggested
that requiring accurate disclosures of
exchange rates far before the date of
transfer would significantly increase
costs. Several commenters stated that
any additional efforts to provide exact
exchange rates in advance would result
in increased prices charged to senders
(though none estimated by how much).
These commenters indicated that costs
could be so high that senders would not
choose these products.
Fifth, an industry commenter
expressed concern that any requirement
to disclose an accurate exchange rate
before the date of a remittance transfer
would pose a significant risk to
remittance transfer providers if senders
decide to take advantage of the threebusiness-day cancellation period to seek
better exchange rates. The requirements
in the February Final Rule in
§§ 1005.31(b)(1)(iv), 1005.33(a)(1)(iii),
and 1005.36(b) that remittance transfer
providers disclose the exchange rate
that applies to a remittance transfer in
pre-payment disclosures and receipts
and that the provider must make
available to the designated recipient the
amount of currency stated in the
disclosure means, in effect, that a
remittance transfer provider must
commit to a specific exchange rate at the
time the sender authorizes the transfer,
even if disclosed days or weeks before
the date of the transfer. As a result, the
commenter stated some senders might
use the three-day cancellation period
applicable to transfers scheduled before
the date of transfer strategically in order
to seek better exchange rates. Thus, if
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prior to expiration of the cancellation
period, the remittance transfer provider
offered an exchange rate that was more
favorable to the sender than the
exchange rate set for the transfer, the
commenter felt that a sender might
decide to cancel the remittance transfer
and immediately rebook it at the more
favorable exchange rate available that
day. Conversely, if the provider offered
an exchange rate that was less favorable
than the earlier rate, the sender would
benefit from having locked in a better
rate that the remittance transfer provider
was contractually bound to apply to the
transfer. The commenter stated that this
phenomenon would increase providers’
exchange rate risk and the cost of
managing such risk. Some industry
commenters indicated that, at least in
some instances, providers would refuse
to offer consumers the ability to
schedule remittance transfers before the
date of transfer if the Bureau required
providers to disclose, before the
cancellation deadline passes, the
exchange rate that will apply to any
such remittance transfer.
Consumer group commenters agreed
that the use of estimates in disclosures
may be appropriate for initial transfers
in series of preauthorized remittance
transfers, but stated that, if remittance
transfer providers were allowed to use
estimates in disclosures for such
transfers, senders should be informed
they would not receive actual notice of
the price of the transfer or of the amount
to be received by the designated
recipient during the periods when the
senders can cancel the transfers. Some
of these commenters also stated that if
remittance transfer providers were
permitted to use estimates for transfers
scheduled before the date of transfer,
then providers should also be required
to ensure that senders eventually
receive disclosures that state the actual
exchange rates that will apply to the
remittance transfers prior to the
expiration of the cancellation periods
for those transfers, or the providers
should be required to commit to the
method they will use to set the
exchange rate on the date of transfer.
Finally, an individual commenter and
several industry commenters stated that
disallowing estimates would
disproportionately harm smaller
remittance transfer providers. The
individual commenter suggested that
small providers would not have the
scale or expertise to manage exchange
rate risk in a manner necessary to
comply with any requirement that
providers disclose accurate exchange
rates before the date of transfer.
Relatedly, industry commenters stated
that not allowing estimates for
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disclosures provided prior to the date of
a remittance transfer would
disproportionately affect small
providers relative to large providers.
Similarly, several industry commenters
urged the Bureau to allow estimates
because without estimates they would
not be able to manage risk and thus
would have no reliable way of providing
accurate disclosures before the date of
transfer of the exchange rate and related
figures. If the February Final Rule
remained unchanged, these providers
stated they would not permit consumers
to schedule transfers before the date of
transfer.
Based on comments received and the
Bureau’s outreach and further analysis,
and in order to effectuate the purposes
of the EFTA and facilitate compliance,
the Bureau believes it necessary and
proper to use its EFTA section 904(a)
and (c) authority to adopt proposed
§ 1005.32(b)(2) with the changes
discussed in more detail below
concerning (i) when estimates will be
allowed under this provision and (ii)
situations where the amount to be
transferred may vary.
The Bureau continues to believe that
the market for remittance transfers
scheduled significantly before of the
date of transfer, including preauthorized
remittance transfers, is currently
limited. Nevertheless, the Bureau
believes that if it did not adopt this
provision to allow estimates, the subset
of remittance transfers providers that
currently offer senders the ability to
schedule remittance transfers before the
date of transfer—or are considering
doing so—may limit such offerings
because the providers (or their business
partners) would not want to absorb or
manage the risk associated with fixing
the exchange rates that would apply to
transfers far in advance of the date of
transfer. As described above, many
retail exchange rates are set through
reference to wholesale currency markets
in which rates can fluctuate frequently.
As a result, whenever there are time lags
between when the retail rate applied to
a transfer is set, when the relevant
foreign currency is purchased, and
when funds are delivered, a remittance
transfer provider (and/or its business
partner) may face losses due to
unexpected changes in the value of the
relevant foreign currency. Generally,
this risk may increase the more time
that elapses between these events.
The Bureau is concerned that in many
cases, remittance transfer providers (or
their business partners) will find it more
difficult or costly to manage the risks
related to disclosing accurate exchange
rates before the date of transfer and that
such risks may be exacerbated because
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the final rule allows senders to cancel
transfers up to three business days
before the date of transfer. The Bureau
is also concerned that, because
remittance transfers scheduled before
the date of transfer are a relatively small
portion of the remittance transfer
market, providers may decide not to
develop necessary risk management
tools and may not offer transfers
scheduled before the date of transfer.
The Bureau further believes that for
such transactions, allowing estimates
may be beneficial to senders in many
instances even though senders may
receive less information before the date
of transfer than they would under the
February Final Rule. If senders received
exchange rates set long before the dates
of remittance transfers, in some cases,
senders would receive a more favorable
exchange rate than they would
otherwise, while other senders would
receive less favorable rates, depending
on the fluctuation of the exchange rate
between the date of disclosure and the
date of transfer. However, allowing
estimates may result in lower costs for
remittance transfer providers (and thus
lower prices for all senders of transfers
scheduled before the date of transfer), as
well as wider access for senders to the
convenience of one-time transfers
scheduled before the date of transfer
and preauthorized remittance transfers.
Furthermore, while under
§ 1005.32(b)(2) senders will not always
receive disclosures of a fixed exchange
rate and amount of currency to be
received, the Bureau believes that even
estimates of these amounts will still
permit consumers to learn some
information that could assist in
comparing remittance transfer
providers’ price models. As is discussed
below (see § 1005.32(d)) estimates
provided pursuant to § 1005.32(b)(2)
must be based on the exchange rate or,
where applicable, the estimated
exchange rate based on an estimation
methodology permitted under
§ 1005.32(c) that the provider would
have used or did use that day in
providing disclosures to a sender
requesting such a remittance transfer to
be made on the same day.
Time Period for Estimates for Transfers
Scheduled Before the Date of Transfer
Proposed § 1005.32(b)(2)(i) stated that
estimates could be provided for certain
items required in the pre-payment
disclosure, receipt, or combined
disclosure if a remittance transfer was
requested or authorized by the sender
more than ten days before the date of
transfer. The Bureau sought comment
on whether ten days is an appropriate
period after which estimates should no
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longer be permitted or whether the
period should be longer or shorter.
The Bureau received a number of
comments on the appropriate period for
use of estimates in disclosures provided
for all remittance transfers scheduled
before the date of transfer (rather than
just one-time transfers scheduled before
the date of transfer and first in a series
of preauthorized remittance transfers as
covered by the February Proposal).
Industry commenters supported
estimates in disclosures for all
remittance transfers scheduled more
than ten days before the date of transfer,
but many also urged the Bureau to allow
estimates for remittance transfers
scheduled ten or less days before for
many of the reasons discussed above—
namely the risk management and other
challenges that they believed that
remittance transfer providers would face
if they were required to disclose
exchange rates far in advance of
remittance transfers. These commenters
urged a shorter period within which
they would not be permitted to provide
estimated disclosures. Commenters also
expressed concern that providers would
refuse to offer consumers the ability to
schedule transfers ten or fewer days
before the date of transfer because
providers would not want to disclose
exact exchange rates between one and
ten days before the date of transfer.
Industry commenters suggested a
range of alternatives less than ten days.
One industry commenter proposed
allowing estimates for all transfers
scheduled more than one day before the
date of transfer because it was unable to
manage the risks associated with
providing accurate exchange rates more
than one day in advance. Other industry
commenters provided similar rationales
for proposed periods of less than two
days, two or three days, five days, and
seven days. One trade group commenter
urged the Bureau to allow estimates for
all remittance transfers scheduled two
or more days before the date of transfer
and to require only a two-day
cancellation period because a shorter
cancellation period would still allow
senders to cancel transfers and would
exacerbate providers’ foreign currency
risks.
Consumer group commenters favored
the ten-day rule expressed in the
February Proposal. One of these
commenters explained that although it
understood the difficulty of disclosing
the actual exchange rate before the date
of transfer, its research showed that
consumers are better informed when
they receive accurate and precise
disclosures, and thus this commenter
preferred to expand the period during
which estimates would not permitted.
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The Bureau is adopting a revised
§ 1005.32(b)(2)(i), which permits
remittance transfer providers to estimate
exchange rates and, in some instances
fees and taxes, for all remittance
transfers scheduled five or more
business days before the date of transfer,
rather than for one-time transfers or the
first in a series of preauthorized
remittance transfers scheduled more
than ten days before the date of transfer
as proposed. As is explained above
regarding the use of estimates generally,
compared to the proposal permitting
estimates in some cases more than ten
days before the date of transfer, the
Bureau believes this provision will
allow providers increased flexibility to
continue to offer transfers scheduled
five or more business days before the
date of transfer while still requiring
accurate disclosures for transfers
scheduled less than five days before the
date of transfer (except when estimates
are permitted by § 1005.32(a) or (b)(1)).
The Bureau recognizes that for
transfers scheduled three or four
business days before the date of transfer,
providers will have to disclose an
accurate exchange rate (rather than an
estimate) while maintaining the sender’s
right to cancel the transfer. See
§ 1005.36(c). The Bureau believes,
however, that as compared to transfers
scheduled five or more business days
before the date of transfer, risk
management needs are reduced for
transfers scheduled less than five
business days before the date of transfer.
The Bureau believes that providers
should not be permitted to use provide
estimates, other than as permitted under
§ 1005.32(a) and (b)(1), for transfers
scheduled less than five business days
before the date of transfer. Because risk
is generally more manageable closer to
the date of transfer, the Bureau believes
consumers should receive accurate
disclosures during that period. To the
extent that any remittance transfer
providers that currently offer, or plan to
offer, remittance transfers scheduled in
advance may be inclined to limit
senders’ ability to schedule transfers
three or four business days before the
date of transfer (because they are
unwilling or unable to provide an
accurate exchange rate while
cancellation remains possible), the
Bureau believes there is a limited loss
of convenience to consumers as
compared to a scenario where estimates
are disallowed for a longer period. The
Bureau presumes that any consumer has
the option of a same-day transfer with
a remittance transfer provider who does
not offer two, three, or four days
advance scheduling.
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Thus, in the final rule,
§ 1005.32(b)(2)(i) provides that estimates
may be provided in certain cases for the
amounts to be disclosed under
§ 1005.31(b)(1)(iv) through (vii) if a
remittance transfer is scheduled by a
sender five or more business days before
the date of transfer.
The Bureau proposed revisions to
comment 32–1 to explained when the
proposed § 1005.32(b)(2) exception
would apply. The Bureau is revising
proposed comment 32–1 to clarify that
§ 1005.32(b)(2) permits estimates to be
used for certain information if the
remittance transfer is scheduled by a
sender five or more business days before
the date of the transfer, for disclosures
described in § 1005.36(a)(1)(i) and
(a)(2)(i). Section 1005.36(a)(1)(i) and
(a)(2)(i) concern pre-payment
disclosures and receipts for one-time
transfers scheduled five or more
business days before the date of transfer
and preauthorized remittance transfers
and are discussed in detail below.
Estimates of the Amount To Be
Transferred
The Bureau also sought comment on
whether remittance transfer providers
should be allowed flexibility to estimate
certain information in disclosures for
the first scheduled transfer in a series of
preauthorized remittance transfers
where the exact amount of the transfer
can vary. The few commenters on this
issue suggested that the need to estimate
the amount to be transferred could
occur in two scenarios. For example, an
industry commenter suggested that
senders may want to transfer a variable
amount (such as a paycheck or
government benefits payment in an
amount that varies), or may want to
prearrange the delivery of a fixed
amount of one currency from an account
denominated in another currency, e.g.,
U.S. dollars (which would result in the
transfer amount depending on the
exchange rate). The Bureau believes it
unnecessary to adjust the rule expressly
to address the first potential scenario.
No industry commenter stated that it
currently allows customers to schedule
transfers of a variable amount, and the
Bureau is not aware of business models
permitting such remittance transfers.
Under the final rule, § 1005.36(a)(2)(i)
requires a receipt to be provided a
reasonable time prior to a subsequent
preauthorized transfer if the amount to
be transferred changes from the first
transfer in series a of preauthorized
remittance transfers.
As to the latter scenario, outreach
confirmed that the marketplace
currently permits some consumers to
schedule series of recurring remittance
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transfers in which the transfer amount
is fixed in a currency other than that in
which the transfer is funded. To address
this latter scenario, the Bureau believes
it necessary and proper to effectuate the
purposes of the EFTA and to facilitate
compliance to exercise its EFTA section
904(a) and (c) authority to adopt an
additional revision to § 1005.32(b)(2).
Specifically, the final rule states in
§ 1005.32(b)(2)(i) that if, at the time the
sender schedules a transfer, the
remittance transfer provider agrees to a
sender’s request to fix the amount to be
transferred in the currency in which the
remittance transfer will be received and
not the currency in which it is funded,
estimates may also be provided for the
amounts to be disclosed under
§ 1005.31(b)(1)(i) through (iii), except as
provided in § 1005.32(b)(2)(iii) (i.e., in
certain cases the provider can disclose
estimates of the fees and taxes imposed
on the transaction and the total amount
of the transaction, as well as the amount
that will be transferred in the currency
in which the remittance transfer is
funded).
New comment 32(b)(2)–1 provides an
example regarding the exception for
remittance transfers scheduled before
the date of transfer in which the amount
to be transferred is fixed in a currency
other than that in which the transfer is
funded.
New comment 32(b)(2)–2 clarifies the
interaction between the final rule and
§ 1005.10(d) of subpart A of Regulation
E.13 It states that to the extent
§ 1005.10(d) requires, for an electronic
fund transfer that is also a remittance
transfer, notice when a preauthorized
electronic fund transfer from the
consumer’s account will vary in amount
from the previous transfer under the
same authorization or from the
preauthorized amount, that provision
applies even if subpart B would not
otherwise require notice before the date
of transfer. However, insofar as
§ 1005.10(d) does not specify the form of
such notice, a notice sent pursuant to
§ 1005.36(a)(2)(i) will satisfy
§ 1005.10(d) as long as the timing
requirements of § 1005.10(d) are
satisfied.
Relatedly, the Bureau solicited
comment as to whether a remittance
transfer provider should be permitted to
estimate the date in the foreign country
13 Section 1005.10(d)(1) states: ‘‘Notice. When a
preauthorized electronic fund transfer from the
consumer’s account will vary in amount from the
previous transfer under the same authorization or
from the preauthorized amount, the designated
payee or the financial institution shall send the
consumer written notice of the amount and date of
the transfer at least 10 days before the scheduled
date of the transfer.’’
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on which the funds will be available, if
the amount of the transfers under the
preauthorized remittance transfer
arrangement varies from one transfer to
the next, and the remittance transfer
provider does not know the exact date
on which the remittance transfer must
be sent at the time that disclosures are
given for the first transfer. 77 FR 6310,
6318 (suggesting that this situation
could arise, for example, if remittance
transfers are being used to pay bills with
due dates that are not known in
advance). No comments were received
on this issue. The Bureau is not
adopting any changes to the February
Final Rule regarding estimates of the
date on which funds will be available.
32(b)(2)(ii) and (b)(2)(iii)
To accommodate the allowance for
estimates of exchange rates in certain
disclosures for remittance transfers
scheduled five or more business days
before the date of transfer, several
additional provisions are included in
§ 1005.32(b)(2) regarding other
information disclosed in pre-payment
disclosures and receipts.
Proposed § 1005.32(b)(2)(ii) permitted
a remittance transfer provider to
estimate taxes imposed on the
remittance transfer by a person other
than the provider for transfers
scheduled more than ten days before the
date of transfer only if those taxes were
a percentage of the amount transferred
to the designated recipient and are to be
disclosed in the currency in which the
funds will be received. Proposed
§ 1005.32(b)(2)(iii)(A) similarly
permitted a remittance transfer provider
to estimate fees imposed on the
remittance transfer by a person other
than the provider for transfers
scheduled more than ten days before the
date of transfer only if those fees were
a percentage of the amount transferred
to the designated recipient and are to be
disclosed in the currency in which the
funds will be received. Unlike proposed
§ 1005.32(b)(2)(ii), proposed
§ 1005.32(b)(2)(iii) contained an
additional provision—
§ 1005.32(b)(2)(iii)(B)—that, in effect,
reasserted the temporary exception (in
§ 1005.32(a)) for ‘‘insured institutions’’
to estimate fees. Because § 1005.32(a)
remains unchanged in the final rule and
continues to apply regardless of the
application of § 1005.32(b)(2), the
Bureau believes it unnecessary to
include a provision incorporating that
exception.14
14 For the same reasons, the Bureau is not
adopting the proposed change to comment 32(c)(1)–
1, concerning potential transmittal routes or
proposed comment 32(b)(2)–1 concerned fees
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As a result, there is no longer a need
for separate provisions for estimation of
the fees and taxes in the disclosure
required under § 1005.31(b)(1)(vi). In
place of proposed § 1005.32(b)(2)(ii) and
(b)(2)(iii)(A), as well as proposed
comment 32(b)(2)–7, the Bureau adopts
§ 1005.32(b)(2)(ii), which provides that
fees and taxes described in
§ 1005.31(b)(1)(vi) may be estimated
under § 1005.32(b)(2)(i) only if the
exchange rate is also estimated under
§ 1005.32(b)(2)(i) and the estimated
exchange rate affects the amount of fees
and taxes under § 1005.31(b)(1)(vi). The
revised provision expands the ability to
estimate fees and taxes to cover not just
situations in which the tax or fee is a
percentage of the amount of the funds
transferred, but also to cover situations
in which a tax or fee may otherwise vary
depending on the exchange rate (i.e. a
tax is only charged on transfers that
exceed a certain threshold denominated
in the currency in which the funds will
be received, and that amount depends
on the exchange rate).
The final rule also includes
§ 1005.32(b)(2)(iii). This provision
allows remittance transfer providers to
estimate fees and taxes in certain
disclosures provided for remittance
transfers scheduled five or more
business days before the date of transfer,
when a remittance transfer provider
agrees to a sender’s request to fix the
amount to be transferred in the currency
in which the remittance transfer will be
received and not the currency in which
it is funded. But § 1005.32(b)(2)(iii)
explains that fees and taxes described in
§ 1005.31(b)(1)(ii) may be estimated
under § 1005.32(b)(2)(i) only if the
amount that will be transferred in the
currency in which it is funded is also
estimated under § 1005.32(b)(2)(i), and
the estimated amount affects the amount
of such fees and taxes.
Disclosure of Formulas Used To
Calculate the Exchange Rate
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In the February Proposal, the Bureau
sought comment on whether, in lieu of
providing an estimate of the exchange
rate for a remittance transfer scheduled
before the date of transfer, the Bureau
imposed on the remittance transfer provider by a
person other than the remittance transfer provider.
The Bureau received no comments regarding
comment 32(b)(2)–1. Nevertheless, the Bureau is
not adopting the proposed comment because it is
duplicative. See § 1005.32(a) and (b)(2)(ii). The final
rule continues, in effect, to allow estimates for the
fees described in § 1005.31(b)(1)(vi) in two
circumstances: (i) Where the fees are calculated as
a percentage of the amount transferred to the
designated recipient pursuant to § 1005.32(b)(2)(ii);
or (ii) where an ‘‘insured institution’’ as defined in
§ 1005.32(a)(3) is permitted to estimate fees under
the temporary exception in § 1005.32(a).
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should allow providers to disclose a
formula that will be used to calculate
the exchange rate that will apply to such
a transfer, and that is based on
information that is publicly available
prior to the time of transfer. The sender
could then use that formula to calculate
the exchange rate that will apply to the
transfer.
Several industry and consumer group
commenters supported the use of such
a formula although they disagreed on
whether its use should be optional. One
industry commenter stated that the
disclosure of a formula could eliminate
the need for remittance transfer
providers to manage exchange rate risk
and would reduce the burden on
providers as compared to a rule that
required providers to disclose actual
exchange rates for transfers scheduled
before the date of transfer. Another
industry commenter favored disclosure
of formulas rather than estimates for
remittance transfers scheduled before
the date of transfer because the volatility
of currency markets makes disclosure of
estimates of limited utility to senders
trying to gauge the pricing of a
particular provider’s services. Other
industry commenters stated that either a
formula or use of estimates could reduce
compliance burden on providers. One
consumer group favored the use of
formulas whenever the Bureau would
also permit estimates on disclosures
provided more than ten days before the
date of transfer because formulas may
make comparison shopping easier for
consumers.
In contrast, one industry commenter
preferred disclosure of estimates to
formulas because, the commenter stated,
for remittance transfers scheduled
before the date of transfer, it would be
easier to provide an estimate of an
exchange rate to senders and such an
estimate would be easier for a sender to
understand.
The Bureau believes that, in some
cases, compared to either an estimated
or an actual exchange rate, a welldesigned formula could better serve
consumers and potentially reduce
burden on remittance transfer providers.
The Bureau believes that, given the
nature of foreign currency markets, in
many cases, any estimate of the
exchange rate for a remittance transfer
scheduled days or weeks in the future
may not provide a highly precise
indication to the sender of the exchange
rate that would actually be applied to
the sender’s transfer. By contrast, a
formula that will be used to calculate
the exchange rate applicable to a
transfer could provide more certainty to
a sender as to relative prices or the
pricing mechanism used and allow the
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50263
sender to calculate the actual exchange
rate that will apply to a transfer, before
the date of the transfer. In addition,
disclosing a formula would reduce the
need for a remittance transfer provider
to manage the currency risk associated
with providing an accurate exchange
rate for a transfer scheduled before the
date of transfer.
Nevertheless, the Bureau does not
believe it is appropriate to allow for the
use of formulas in disclosures at this
time. First, the Bureau is concerned that
the disclosure of formulas themselves
could be confusing to senders if not
designed in a way that consumers can
understand. Second, if a formula was
not required to be disclosed by all
remittance transfer providers, the
Bureau is concerned that consumer
confusion could be a problem if some
providers disclose formulas while
others disclose estimates. However, the
Bureau expects to continue evaluating
how disclosures can most effectively
inform senders without imposing undue
burden on remittance transfer providers.
32(c) and (d) Bases for Estimates
The February Proposal sought
comment on the appropriate method to
calculate estimates of exchange rates,
and related figures, under the proposed
exception for remittance transfers
scheduled before the date of transfer.
However, the Bureau did not propose
specific changes to § 1005.32(c), which
concerns the allowable bases for
estimates of required disclosures.15 The
Bureau received a few comments on this
issue but none that suggested revisions
to § 1005.32(c). However, in order to
allow remittance transfer providers to
give estimates for transfers scheduled
five or more business days before the
date of transfer and to make those
estimates more useful for consumers,
the Bureau believes revisions to the
allowable bases for such estimates are
necessary for disclosures that contain
estimates pursuant to § 1005.32(b)(2).
These changes are adopted in a new
§ 1005.32(d).
The February Final Rule contains, in
§ 1005.32(c)(1), three specific
approaches by which a remittance
transfer provider may estimate an
exchange rate when using the
exceptions for estimates in § 1005.32(a)
and (b) (now renumbered as (b)(1)).
Section 1005.32(c) further allows a
15 In the February Proposal, the Bureau did
propose conforming changes to comment 32(c)(3)–
1 that referenced the renumbered provisions
relating to the permanent exception for transfers to
certain countries (what is § 1005.32(b)(1) in the
final rule). The Bureau received no comments on
the proposed changes to this comment, and the
Bureau is adopting it as proposed.
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provider to use an estimation approach
not listed in § 1005.32(c)(1) so long as
the designated recipient receives the
same, or greater, amount of funds than
the remittance transfer provider
disclosed, as required by
§ 1005.31(b)(1)(vii). Under, the February
Proposal, the bases for determining
estimates under proposed
§ 1005.32(b)(2) would have been the
same as the bases for determining
estimates under the existing provisions
permitting estimates in the February
Final Rule (i.e., § 1005.32(c)).
In commenting on proposed
§ 1005.32(b)(2), industry commenters
noted that if allowed, the most likely
way that they would ‘‘estimate’’ the
future exchange rate would be by
providing the actual rate available on
the day of scheduling to customers
sending same-day transfers. One
commenter explained that while they
could always disclose the actual rate
available on the date the transfer is
scheduled, the commenter cautioned
that many variables could alter
exchange rates over time. Furthermore,
industry commenters stated that they
believed that senders typically do little
comparison shopping when scheduling
transfers before the date of transfer and
instead are more interested in reliable
and timely transfers from a remittance
transfer provider that the senders trust.
To clarify the proper bases for
disclosing estimates, the Bureau adds
§ 1005.32(d), which states that estimates
provided pursuant to § 1005.32(b)(2)
must be based on the exchange rate or,
where applicable, the estimated
exchange rate based on an estimation
methodology permitted under
§ 1005.32(c) that the provider would
have used or did use that day in
providing disclosures to a sender
requesting such a remittance transfer to
be made on the same day. If, in
accordance with § 1005.32(d), a
remittance transfer provider uses a basis
described in § 1005.32(c) but not listed
in § 1005.32(c)(1), the provider is
deemed to be in compliance with
§ 1005.32(d) regardless of the amount
received by the designated recipient, so
long as the estimation methodology is
the same as that the provider would
have used or did use in providing
disclosures to a sender requesting such
a remittance transfer to be made on the
same day.16
The Bureau is making two changes to
the bases for estimates applicable to the
16 Section 1005.32(c)(1) contains three
methodologies for providing estimates. If a provider
chooses to use a non-listed method, § 1005.32(c)
explains that the amount received by the designated
recipient must be the same, or greater then, the
estimated amount disclosed to the sender.
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exception for estimates for remittance
transfers scheduled five or more
business days before the date of transfer.
The first requires providers to base
estimates on the exchange rate (or
estimated exchange rate) that the
provider would have used or did use
that day in providing disclosures to a
sender requesting such a remittance
transfer to be made on the same day. In
order to allow for easier comparison
shopping and for estimates to be of use
to senders, the Bureau believes that
remittance transfer providers should
base their estimates on similar
methodologies. The Bureau believes that
if providers uniformly disclose the
actual rate available that day as the
estimated rate for transfers scheduled
before the date of transfer, senders will
more easily be able to compare the
offerings of various remittance transfer
providers by comparing rates and fees.
Moreover, commenters did not suggest
any other reliable method to estimate
future exchange rates.
The second change concerns
estimates pursuant to § 1005.32(b)(2) by
remittance transfer providers that can
otherwise use the two statutory
exceptions in § 1005.32(a) or (b)(1). As
explained above, providers of transfers
scheduled before the date of transfer
who cannot use one of the enumerated
methods for estimating in
§ 1005.32(c)(1) will have difficulties
guaranteeing that the designated
recipient receives the same, or greater,
amount of funds than the remittance
transfer provider disclosed. The Bureau
is concerned about remittance transfer
providers that use estimates pursuant to
§ 1005.32(a) or (b)(1), and that, as
permitted by § 1005.32(c), have chosen
to use an estimation methodology other
than those specified in § 1005.32(c)(1).
With regard to such methodologies,
§ 1005.32(c) requires that if a provider
bases an estimate on an approach that
is not listed in that paragraph, the
provider is deemed to be in compliance
with the paragraph so long as the
designated recipient receive the same,
or greater, amount of funds than the
provider disclosed under
§ 1005.31(b)(1)(vii). The Bureau is
concerned that due to the fluctuations
in wholesale foreign exchange markets
discussed above, in many cases,
remittance transfer providers that have
developed estimation methodologies
that reliably satisfy the requirements of
§ 1005.32(c) for same-day transfers, may
not be able to do the same for estimates
of exchange rates provided for transfers
scheduled five or more business days
before the date of a remittance transfer.
The Bureau also recognizes that the
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elimination of this guarantee will
reduce burden on providers.
The Bureau expects that most
remittance transfer providers, if
allowed, will set the retail exchange rate
that applies to a remittance transfer
scheduled before the date of transfer on
the date of that transfer, in rough
reference to one of several measures of
the wholesale or market exchange rates.
Insofar as there are a large number of
factors that may alter exchange rates, the
Bureau believes that in most scenarios,
there is no method to predict with
precision what those market or
wholesale rates will be far before the
date on which a remittance transfer
provider sets a retail exchange rate.
Thus, the requirement in § 1005.32(c)
that providers who cannot use a listed
methodology guarantee that the amount
received by the designated recipient
must be the same, or greater than, the
estimated amounts disclosed to the
sender, is not feasible for disclosures
provided five or more business days
before the date of transfer. Nevertheless,
because providers must use the same
method for transfers scheduled before
the date of transfers as they use for
same-day transfers, the Bureau believes
there will still be consistency in the
estimation methodology.
New comment 32(d)–1 explains that
when providing an estimate pursuant to
§ 1005.32(b)(2), § 1005.32(d) requires
that a remittance transfer provider’s
estimated exchange rate must be the
exchange rate (or estimated exchange
rate) that the remittance transfer
provider would have used or did use
that day in providing disclosures to a
sender requesting such a remittance
transfer to be made on the same day. If,
for the same-day remittance transfer, the
provider could utilize either of the other
two exceptions permitting the provision
of estimates in § 1005.32(a) or (b)(1), the
provider may provide estimates based
on a methodology permitted under
§ 1005.32(c). For example, if, on
February 1, the sender schedules a
remittance transfer to occur on February
10, the provider should disclose the
exchange rate as if the sender was
requesting the transfer be sent on
February 1. However, if at the time
payment is made for the requested
transfer, the remittance transfer provider
could not send any remittance transfer
until the next day (for reasons such as
the provider’s deadline for the batching
of transfers), the remittance transfer
provider can use the rate (or estimated
exchange rate) that the remittance
transfer provider would have used or
did use in providing disclosures that
day with respect to a remittance transfer
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requested that day that could not be sent
until the following day.
Section 1005.33 Procedures for
Resolving Errors
As noted above, consumers may be
permitted to schedule a series of
preauthorized remittance transfers in
which the transfer amount is fixed in a
currency other than that in which the
transfer is funded. Thus,
§ 1005.32(b)(2)(i) permits estimates to be
provided for, among other things, the
total amount of the transfer. In light of
this new provision, a revision to
§ 1005.33(a)(1)(i) is necessary to clarify
that disclosing an estimate of the total
amount of the transfer in this case
would not result in an error.
Under the February Final Rule,
§ 1005.33(a)(1)(i) states than ‘‘error’’
means an incorrect amount paid by a
sender in connection with a remittance
transfer. Comment 33(a)–1 explains that
§ 1005.33(a)(1)(i) covers circumstances
in which a sender pays an amount that
differs from the total amount of the
transaction, including fees imposed in
connection with the transfer, stated in
the receipt or combined disclosure
provided under § 1005.31(b)(2) or (3).
The Bureau is revising this provision
to exempt from the definition of error
estimates of the total amount of the
transfer provided in accordance with
the new exception in § 1005.32(b)(2).
This exception allows for, among other
things, an estimate of the amount to be
transferred if, at the time the sender
schedules the transfer, the remittance
transfer provider agrees to a sender’s
request to fix the amount to be
transferred in the currency in which the
remittance transfer will be received and
not the currency in which it is funded.
When the amount to be transferred is
estimated under this section, the
provider is also permitted to estimate
the total amount of the transaction (i.e.,
the amount to be paid by the sender).
Thus, as revised, § 1005.33(a)(1)(i)
states that the term error means an
incorrect amount paid by a sender in
connection with a remittance transfer,
unless the disclosure stated an estimate
of the amount paid by a sender in
accordance with § 1005.32(b)(2) and the
difference results from application of
the actual exchange rate, fees, and taxes,
rather than any estimated amount. As
discussed in detail below, when a
remittance transfer provider estimates of
the total amount of the transfer in a
receipt provided at least five or more
business days before the date of transfer
(see § 1005.36(a)(1)(i) and (a)(2)(i)), the
provider must also send a receipt
without the estimate after the transfer
(see § 1005.36(a)(1)(ii) and (a)(2)(ii)).
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Thus, the sender will still receive a
receipt with the actual amount the
sender paid for the transfer and can still
assert an error based on the disclosure
of the amount paid in that receipt.
Section 1005.36 Transfers Scheduled
Before the Date of Transfer
Overview
The February Final Rule sets forth
several procedures for the timing,
content, and accuracy of pre-payment
disclosures and receipts for
preauthorized remittance transfers. At
the same time, the February Proposal
sought comment on whether further
adjustments were necessary to address
one-time transfers scheduled before the
date of transfer and preauthorized
remittance transfers.
Specifically, the February Final Rule
treats the first in a series of
preauthorized remittance transfers the
same as most other remittance transfers
by requiring that accurate (not
estimated) figures be disclosed in the
pre-payment disclosure and receipt. But
in recognition of the potential risks
associated with setting exchange rates
and the potential difficulty of
determining the amount to be provided
to a designated recipient weeks or
months before subsequent transfers, the
February Final Rule does not require
that disclosures for an entire series of
preauthorized remittance transfers be
provided when the sender initially
requests the transfer and authorizes
payment. Instead, the February Final
Rule requires remittance transfer
providers to issue pre-payment
disclosures and receipts for each
subsequent transfer closer to the dates of
the individual transfers. In particular,
under the February Final Rule, the prepayment disclosure for each subsequent
transfer must be provided within a
reasonable time prior to the scheduled
date of the transfer, and the receipt for
each subsequent transfer generally must
be provided no later than one business
day after the date on which the transfer
is made. The pre-payment disclosure
and receipt for each subsequent transfer
must be accurate when the respective
transfer is made, unless a statutory
exception applies. See § 1005.36(b).
Senders must also be permitted to
cancel these transfers up to three
business days before the date of transfer.
See § 1005.36(c).
Because the Bureau was concerned
that even with the modifications
permitted by the February Final Rule,
the disclosure requirements could pose
difficulty for certain remittance transfers
scheduled significantly before the date
of transfer, the February Proposal asked
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a number of questions regarding
whether to make further adjustments to
the disclosure and cancellation regime
for these transfers. The Bureau sought
input on how to manage the importance
to senders of accurate and timely
disclosures, permit growth of this
portion of the remittance transfer
market, and limit industry compliance
burdens in light of the potential risks
associated with providing accurate
exchange rates and the difficulty of
determining the amount to be received
by designated recipients for a particular
transfer.
Specifically, the February Proposal
sought comments on a number of
potential changes to the February Final
Rule concerning the type, timing, and
accuracy of pre-payment disclosures
and receipts a sender should receive in
connection with one-time transfers and
the first in a series of preauthorized
remittance transfers scheduled to occur
more than ten days before the date of
transfer. The February Proposal also
sought comment on whether senders
should receive disclosures for
subsequent preauthorized remittance
transfers and, if so, what form those
disclosures should take. Finally, the
February Proposal sought comment on
what cancellation rules should apply to
these transactions and how and when
those rules should be disclosed to
senders.
Based on comments received, the
Bureau is amending the February Final
Rule to allow providers increased
flexibility, while maintaining
requirements that senders receive
sufficient and timely information to
help inform their selection of remittance
transfer providers and help them
understand the terms of their remittance
transfers. With respect to timing, the
final rule requires pre-payment
disclosures and receipts for one-time
transfers scheduled five or more
business days before the date of transfer
and the first in a series of preauthorized
remittance transfers to be provided in
the same manner as they are provided
for all other transfers (i.e., at request and
at payment authorization). The final
rule also requires providers to give
senders additional, accurate receipts
after the transfer is sent if prior
disclosures contained estimates
pursuant to § 1005.32(b)(2). The Bureau
is also maintaining the three-businessday cancellation period in § 1005.36(c).
Finally, although the Bureau is
generally eliminating the requirement to
provide pre-payment disclosures for
subsequent remittance transfers in a
preauthorized series, the Bureau is
adopting a new § 1005.36(d) to require
disclosure of upcoming dates of transfer
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36(a) Timing
Section 1005.36(a) of the February
Final Rule addresses the timing of
disclosures for the first in a series of
preauthorized remittance transfers. In
the February Proposal, the Bureau
sought comment on a number of
questions relating to the timing of
disclosures for all remittance transfers
that are scheduled more than ten days
before the date of transfer, including
preauthorized remittance transfers, as
described below.
As is discussed further below, to
further the purposes of the EFTA and
facilitate compliance, the Bureau finds
it necessary and proper to use its EFTA
section 904(a) and (c) authority to adopt
§ 1005.36(a)(1)(i), (a)(1)(ii), and (a)(2)(i)
through (iii) and to eliminate the
requirement to provide pre-payment
disclosures for subsequent
preauthorized remittance transfers.
Sections 1005.36(a)(1)(i), (a)(1)(ii),
(a)(2)(i), and (a)(2)(ii) are revised from
the February Final Rule. Section
1005.36(a)(2)(iii) is a new provision in
the final rule.
36(a)(1) Timing of Disclosures for OneTime Transfers Scheduled Before the
Date of Transfer and the First in a Series
of Preauthorized Remittance Transfers
Section 1005.36(a) of the February
Final Rule addresses the timing of
required disclosures for preauthorized
remittance transfers. Section
1005.36(a)(1) of the February Final Rule
requires that, for the first in a series of
preauthorized remittance transfers, the
pre-payment disclosure and receipt be
provided in the same manner as
required for all other transfers. In the
February Proposal, the Bureau sought
comment on whether to make further
adjustments in the disclosure rules for
preauthorized remittance transfers and
certain other transfers scheduled before
the date of transfer.
With respect to the timing of prepayment disclosures and receipts given
to senders upon request of and payment
for a transfer, the Bureau received few
comments, apart from those raising the
concerns discussed earlier regarding the
disclosure of exact exchange rates far
before the date of a remittance transfer.
Largely, industry commenters did not
raise other concerns about the
requirement that remittance transfer
providers give pre-payment disclosures
(or combined disclosures) when
transfers are requested and prior to
payment and receipts (if no combined
disclosures were provided) when
payment is authorized for either one-
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time transfers scheduled before the date
of transfer or the first in a series of
preauthorized remittance transfers. In
the final rule, the Bureau maintains the
requirement from the February Final
Rule that for any one-time remittance
transfer scheduled five or more business
days before the date of transfer, and for
the first transfer in a series of
preauthorized remittance transfers, a
remittance transfer provider must
provide a pre-payment disclosure and a
receipt to the sender subject to the same
timing rules that apply to any one-time
transfer.
For clarity and consistency, the
Bureau is revising § 1005.36(a)(1) from
the February Final Rule as a new
§ 1005.36(a)(1)(i) by adjusting the
provision to apply both to a one-time
advance transfer scheduled five or more
business days before the date of transfer
and the first in a series of preauthorized
remittance transfers, rather than just the
latter. The Bureau is also clarifying that
remittance transfer providers may use
combined disclosures, pursuant to
§ 1005.31(b)(3), for transfers covered by
this provision.
The Bureau also requested comment
on what follow-up disclosures, if any,
should be provided to senders after
authorization of a remittance transfer
scheduled before the date of transfer.
Specifically the Bureau asked whether a
second receipt with accurate
information should be provided to a
sender within a reasonable time period
prior to such a transfer, if the remittance
transfer provider previously disclosed
estimates pursuant to proposed
§ 1005.32(b)(2).
Most industry commenters argued
against requiring a second receipt with
accurate figures to be given prior to a
remittance transfer when the original
pre-payment disclosure and receipt
contained estimates. These commenters
argued that to the extent such a
provision required disclosure of
accurate figures ten days before the date
of transfer, it would render the
exception allowing providers to disclose
estimates meaningless.
To the extent the Bureau would
instead allow a second receipt to
contain estimates, industry commenters
argued that giving senders three
documents (a pre-payment disclosure
when requesting the remittance transfer,
a receipt when payment is authorized
for the transfer, and a second receipt a
reasonable time before the transfer)
would be confusing and unhelpful to
senders. One industry commenter
suggested there would be limited value
added by a second receipt that could
contain information that, other than
updated estimated exchange rates and
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associated figures, would be identical to
the information included in the initial
receipt. Another commenter expressed
concern that a sender could be confused
into thinking that a remittance transfer
provider has made a single transfer
multiple times or that an error had
occurred, necessitating the additional
disclosure. Industry commenters also
stated that they thought senders would
benefit little from additional disclosures
before a transfer, particularly when any
such benefit is balanced against the
increased upfront and ongoing costs to
the remittance transfer providers of
giving senders the additional receipt.
These commenters argued that
providers would pass these costs on to
senders. Finally, as an alternative to a
second pre-transfer receipt, one industry
commenter suggested that providers
give senders receipts reflecting actual
figures (and not estimates) after the
providers send the transfers to the
designated recipient. Consumer group
commenters argued that receipts with
actual figures (and not estimates) be
provided to senders a reasonable time
prior to the date of each transfer.
In light of the Bureau’s decision to
allow the use of estimates in certain
disclosures for remittance transfers
scheduled five or more business days
before the date of a remittance transfer
rather than ten days as originally
proposed, the Bureau believes that a
follow-up receipt provided closer to the
date of the transfer is not likely to
provide significant benefit to senders in
many cases. For example, if a remittance
transfer provider schedules a remittance
transfer one month before the date of
transfer, and discloses an estimated
exchange rate at that time, and then
provides a sender a receipt with an
accurate exchange rate only four
business days before the date of transfer
(because unless a statutory exception
applies, § 1005.32(b)(2) of the final rule
permits estimates only for disclosures
five or more business days before the
date of transfer) the receipt might not
reach the sender before the expiration of
the three-business-day cancellation
period in § 1005.36(c). Conversely, if
this follow-up receipt were sent five or
more business days before the date of
transfer, estimates of certain amounts
would be permitted under
§ 1005.32(b)(2). The Bureau believes
that such a disclosure generally would
be of little additional value as compared
to the initial estimate provided in the
pre-payment disclosure and receipt
required by § 1005.36(a)(1)(i) if the
wholesale rate, and thus the retail rate,
had not moved significantly since the
initial estimate was provided.
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Although the Bureau is not requiring
a second receipt closer to the time of
transfer, the Bureau believes that for
every remittance transfer, where a
sender receives a disclosure that
contains estimates pursuant to
§ 1005.32, the sender should also
receive an accurate post-transfer
disclosure that informs the sender of the
actual exchange rate (as well as fees,
taxes, and other figures) applied to the
transfer. Thus, to further consumer
protections, the Bureau is adopting a
revised § 1005.36(a)(1)(ii), which
requires that if the disclosures provided
pursuant to § 1005.36(a)(1)(i) contain
estimates as permitted by
§ 1005.32(b)(2) (for transfers scheduled
five or more business days before the
date of transfer), the provider must mail
or deliver to the sender an additional
receipt meeting the requirements
described in § 1005.31(b)(2) no later
than one business day after the date of
transfer.17 If the transfer involves the
transfer of funds from the sender’s
account held by the provider, the
receipt required by § 1005.36(a)(1)(ii)
may be provided on or with the next
periodic statement for that account, or
within 30 days after the date of the
transfer if a periodic statement is not
provided. As required by
§ 1005.36(b)(3), which is discussed
below, this receipt must contain
accurate figures unless estimates are
allowed by § 1005.32(a) or (b)(1).
As many remittance transfers
scheduled before the date of transfer are
conducted by senders who have
accounts with remittance transfer
providers, the Bureau believes the final
rule may relieve many providers of
having to provide receipts immediately
after each preauthorized remittance
transfer or after one-time transfer
scheduled five or more business days
before the date of the transfer. In
addition, the Bureau believes that an
accurate receipt will ensure that senders
receive accurate accountings of their
transfers. Furthermore, to the extent that
senders of preauthorized remittance
transfers want to comparison shop
based on price for future transfers, these
receipts may be a mechanism that
allows senders to better understand
providers’ pricing mechanisms (by
allowing a sender to know the exchange
rate applied to each transfer) and the
amount received by the designated
recipient.
17 The timing requirement in § 1005.36(a)(1)(ii)
does not prevent a remittance transfer provider
from providing this receipt before the date of the
transfer. The same is true for disclosures required
by § 1005.36(a)(2)(ii), which are discussed below.
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36(a)(2) Timing of Disclosures for
Subsequent Preauthorized Remittance
Transfers
The February Final Rule contains
disclosure provisions specific to
subsequent preauthorized remittance
transfers (i.e., all preauthorized
remittance transfers after the first in the
series of transfers). Section
1005.36(a)(2)(i) of the February Final
Rule requires that a remittance transfer
provider also mail or deliver a prepayment disclosure to the sender for
each subsequent transfer and requires
the disclosure to be mailed or delivered
within a reasonable time prior to the
scheduled date of each subsequent
transfer. This provision is in lieu of the
general timing rule, which would have
required that a pre-payment disclosure
for each transfer in a series of
preauthorized remittance transfers be
given at the time of the initial request
(and thus a sender would receive a
disclosure for every preauthorized
transfer when requesting the entire
series). See § 1005.31(e)(1). Section
1005.36(a)(2)(ii) in the February Final
Rule requires a receipt to be mailed or
delivered no later than one business day
after the transfer or, for account-based
transactions, on or with the next
regularly scheduled periodic statement
or within 30 days after payment is made
for the remittance transfer if a periodic
statement is not provided.
In the February Proposal, the Bureau
sought comment on an alternative to the
requirement in the February Final Rule
that a pre-payment disclosure for each
subsequent transfer in a series of
preauthorized remittance transfer be
provided within a reasonable time prior
to the scheduled date of transfer:
Whether the pre-payment disclosure
requirement for subsequent
preauthorized remittance transfers
should be eliminated.
Industry commenters generally
favored eliminating the requirement for
providing pre-payment disclosures for
subsequent preauthorized remittance
transfers for many of the same reasons
these commenters disfavored a rule
requiring accurate pre-payment
disclosures for other transfers scheduled
before the date of transfer. These
commenters argued that a pre-payment
disclosure for each subsequent transfer
would be unnecessary, potentially
confusing to senders, and burdensome
to providers. For example, one
commenter argued that senders
schedule preauthorized remittance
transfers for purposes of convenience
and that senders typically do not
comparison shop to complete each
recurring transfer. The same commenter
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expressed concern that the requirement
of an additional pre-payment disclosure
might cause some providers to no longer
allow consumers to schedule transfers
before the date of transfer.
In contrast, one consumer group
commenter supported requiring prepayment disclosures to be provided to
senders ten days before each subsequent
transfer in a series of preauthorized
remittance transfers (and stated that if
estimates were permitted for disclosures
related to such transfers, that those
disclosures contain current estimates).
This commenter urged that the Bureau
maintain the requirement in the
February Final Rule for pre-payment
disclosures so that senders have
additional information regarding the
details of each preauthorized remittance
transfer prior to such transfer.
Upon consideration of these
comments and to facilitate compliance,
the Bureau is eliminating the
requirement to provide a pre-payment
disclosure within a reasonable time
prior to the scheduled date of each
subsequent preauthorized remittance
transfer. Thus, the Bureau is eliminating
what was § 1005.36(a)(2)(i) in the
February Final Rule. The Bureau is
doing so for several reasons. The Bureau
is concerned that the requirement in the
February Final Rule—a pre-payment
disclosure sent a reasonable time prior
to each subsequent remittance transfer—
might provide senders only a limited
amount of information because prepayment disclosures for subsequent
preauthorized remittance transfers sent
five or more business days before the
date of transfer could contain estimates,
pursuant to § 1005.32(b)(2). In addition,
in some scenarios, this could create a
potential for confusing and overlapping
disclosures and receipts.
Conversely, the Bureau believes that if
it mandated that pre-payment
disclosures be sent less than five
business days before a subsequent
transfer such that the disclosures could
not contain estimates under
§ 1005.32(b)(2), the disclosure would be
of little use to the sender for the
upcoming transfer as it could be
received too close to (or after) the
cancellation deadline. Separately,
confusion for senders could exist in
some circumstances where
preauthorized remittance transfers are
scheduled relatively close together or
receipts are provided with periodic
statements. In these cases, a sender
might receive a post-transfer receipt
from a prior preauthorized remittance
transfer close in time to a pre-payment
disclosure for the next transfer. These
documents, with potentially differing
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exchange rates and other figures, might
confuse senders unnecessarily.
The Bureau also believes that
eliminating the requirement for prepayment disclosures for subsequent
preauthorized remittance transfers is
appropriate in part because senders will
receive some relevant information in
receipts for prior preauthorized
remittance transfers. The final rule
requires that for any preauthorized
remittance transfer, the remittance
transfer provider must provide a sender
a receipt with accurate information
(except to the extent estimates are
permitted by § 1005.32(a) or (b)(1)). A
receipt from the prior transfer with
accurate amounts may provide the
sender with information that could
educate the sender not only about the
prior transfer but also about the
provider’s practices generally, which
may help the sender judge whether to
continue with the provider for future
preauthorized remittance transfers. The
Bureau believes a sender can learn
about a remittance transfer provider’s
exchange rate practices from what the
designated recipient actually received
from the prior transfers in the series. In
addition, the receipt provided for the
initial transfer in a series provides
information about the fees and taxes
that will apply to all subsequent
preauthorized remittance transfers,
unless a change necessitates a new
disclosure, as discussed below.
Although the Bureau is eliminating
the requirement that a remittance
transfer provider provide a pre-payment
disclosure for each subsequent transfer
in a series of preauthorized remittance
transfers, the Bureau remains concerned
that previously disclosed figures (other
than the estimates themselves) could
change, rendering the figures disclosed
in the pre-payment disclosure provided
for the initial transfer inaccurate as
applied to the subsequent transfers.18
Comment 31(f)–1 to the February Final
Rule explains that under the general
timing and accuracy rules in subpart B
of Regulation E, providers must give
senders new pre-payment disclosures
before accepting payment if previously
provided pre-payment disclosures are
inaccurate. However, since a receipt
provided pursuant to § 1005.36(a)(1)(i)
or, as discussed below, .36(a)(2)(i), may
serve as a disclosure with respect to
multiple subsequent preauthorized
transfers, the temporal elements
disclosed on those receipts would only
18 Although changes in terms trigger notice
requirements in some instances under Regulation E
(see 12 CFR 1005.10), that provision does not apply
to remittance transfers that are not electronic fund
transfers.
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be accurate with respect to the transfer
to occur after the receipt is provided.
Thus, the Bureau is adopting a new
§ 1005.36(a)(2)(i) to specifically address
certain changes in terms related to
subsequent preauthorized remittance
transfers. Section 1005.36(a)(2)(i) states
that if any of the information on the
most recent receipt provided pursuant
to § 1005.36(a)(1)(i) or § 1005.36(a)(2)(i),
other than the temporal disclosures
required by § 1005.31(b)(2)(ii) (Date
Available) and (b)(2)(vii) (Transfer
Date), is no longer accurate with respect
to a subsequent preauthorized
remittance transfer for reasons other
than as permitted by § 1005.32, then the
remittance transfer provider must
provide an updated receipt meeting the
requirements described in
§ 1005.31(b)(2) to the sender. The
provider must mail or deliver this
receipt to the sender within a reasonable
time prior to the scheduled date of the
next subsequent preauthorized
remittance transfer. Such receipt must
clearly and conspicuously indicate that
it contains updated disclosures.
New comment 36(a)(2)–1 clarifies
when the disclosure required by
§ 1005.36(a)(2)(i) must be provided.
Specifically, it states that when a sender
schedules a series of preauthorized
remittance transfers, the provider is
generally not required to provide a prepayment disclosure prior to the date of
each subsequent transfer. However,
§ 1005.36(a)(1)(i) requires the provider
to provide a pre-payment disclosure and
receipt for the first in the series of
preauthorized remittance transfers in
accordance with the timing
requirements set forth in § 1005.31(e).
See § 1005.36(a)(1)(i). While certain
information in those disclosures is
expressly permitted to be estimated (see
§ 1005.32(b)(2)(i) through (iii)), other
information is not permitted to be
estimated, or is limited in how it may
be estimated. When any of the
information on the most recent receipt
provided pursuant to § 1005.36(a)(1)(i)
or (a)(2)(i), other than the temporal
disclosures required by
§ 1005.31(b)(2)(ii) (the Date Available)
and (b)(2)(vii) (the Transfer Date), is no
longer accurate with respect to a
subsequent preauthorized remittance
transfer for reasons other than as
permitted by § 1005.32, the provider
must provide, within a reasonable time
prior to the scheduled date of the next
preauthorized remittance transfer, a
receipt that complies with
§ 1005.31(b)(2) and which discloses,
among the other disclosures required by
§ 1005.31(b)(2), the changed terms.
For example, if the provider discloses
in the pre-payment disclosure for the
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first in the series of preauthorized
remittance transfers that its fee for each
remittance transfer is $20 and, after six
preauthorized remittance transfers, the
provider increases its fee to $30 (to the
extent permitted by contract law), the
provider must provide the sender a
receipt that complies with
§§ 1005.31(b)(2) and 1005.36(b)(2)
within a reasonable time prior to the
seventh transfer. Barring a further
change, this receipt will apply to
transfers after the seventh transfer. Or,
if, after the sixth transfer, a tax increases
from 1.5% of the amount that will be
transferred to the designated recipient to
2.0% of the amount that will be
transferred to the designated recipient,
the provider must provide the sender a
receipt that complies with
§§ 1005.31(b)(2) and 1005.36(b)(2)
within a reasonable time prior to the
seventh transfer. In contrast,
§ 1005.36(a)(2)(i) does not require an
updated receipt where an exchange rate,
estimated as permitted in § 1005.32,
changes.
New comment 36(a)(2)–2 explains
that in order to clearly and
conspicuously indicate that the
provider’s fee has changed as required
by § 1005.36(a)(2)(i), the provider could,
for example, state on the receipt:
‘‘Transfer Fees (UPDATED) * * * $30.’’
To the extent that other figures on the
receipt must be revised because of the
new fee, the receipt should similarly
indicate that those figures are updated.
In the February Proposal, the Bureau
also solicited comment on whether it
should provide a safe harbor
interpreting the ‘‘within a reasonable
time’’ standard for providing a prepayment disclosure for subsequent
preauthorized remittance transfers.
Although such a disclosure is no longer
required, the same ‘‘within a reasonable
time’’ requirement now applies to
receipts required by § 1005.36(a)(2)(i).
The bulk of the comments received on
how to interpret ‘‘within a reasonable
time’’ concerned industry commenters’
concerns regarding the requirement in
the February Final Rule that any
required pre-payment disclosures reflect
the actual exchange rates that will apply
to preauthorized remittance transfers.
Industry commenters stated that it
would be difficult to disclose accurate
exchange rates ten days before the date
of a remittance transfer. Insofar as
§ 1005.32(b)(2) allows estimates in
disclosures provided for remittance
transfers scheduled five or more
business days before the date of transfer,
this concern should be alleviated.
Industry commenters generally stated
that if estimates were permitted, ten
days was a reasonable period of time.
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New comment 36(a)(2)–3 explains if a
receipt required by § 1005.36(a)(2)(i) (or,
as discussed below, required by
§ 1005.36(d)(1)) is mailed, the receipt
would be considered to be received by
the sender five business days after it is
posted in the mail. If hand delivered or
provided electronically, the receipt
would be considered to be received by
the sender at the time of delivery. Thus,
if the provider mails the receipt not later
than ten business days before the
scheduled date of the transfer, or hand
or electronically delivers the receipt not
later than five business days before the
scheduled date of the transfer, the
provider would be deemed to have
mailed or delivered the receipt within a
reasonable time prior to the scheduled
date of the subsequent preauthorized
remittance transfer.
In addition, the Bureau is modifying
§ 1005.36(a)(2)(ii) from the February
Final Rule, which requires receipts for
all subsequent preauthorized remittance
transfers. As adopted, § 1005.36(a)(2)(ii)
explains when receipts must be sent. It
states that unless a receipt was provided
in accordance with § 1005.36(a)(2)(i)
that contained no estimates pursuant to
§ 1005.32, the remittance transfer
provider must mail or deliver to the
sender a receipt described in
§ 1005.31(b)(2) no later than one
business day after the date of the
transfer. If the remittance transfer
involves the transfer of funds from the
sender’s account held by the provider,
the receipt required by this paragraph
may be provided on or with the next
periodic statement for that account, or
within 30 days after the date of the
transfer if a periodic statement is not
provided.
Finally, the Bureau is adopting an
additional disclosure requirement for
subsequent preauthorized remittance
transfers as § 1005.36(a)(2)(iii), which
requires providers to provide the
disclosures required by § 1005.36(d) in
accordance with the timing
requirements of that section. Section
1005.36(d) is discussed in more detail
below.
36(b) Accuracy
The February Final Rule contains, in
§ 1005.36(b), requirements for the
accuracy of disclosures for
preauthorized remittance transfers.
Under that provision in the February
Final Rule, the pre-payment disclosures
and receipt for the first scheduled
transfers in a series of preauthorized
remittance transfers are required to be
accurate at the time of payment (i.e.,
they must comply with § 1005.31(f),
which states that disclosures must be
accurate when a sender makes payment
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for the remittance transfer, except to the
extent estimates are permitted by
§ 1005.32). For subsequent
preauthorized remittance transfers, as
discussed above, the February Final
Rule requires providers to give accurate
pre-payment disclosures as of when the
transfer is made within a reasonable
time prior to each transfer and then to
provide an accurate receipt after each
transfer.
To further compliance and to enhance
consumer protections, the Bureau finds
it necessary and proper to use its EFTA
section 904(a) and (c) authority to adopt
a revised § 1005.36(b). The Bureau is
revising § 1005.36(b) to address the
accuracy of receipts provided for
remittance transfers that are scheduled
five or more business days before the
date of transfer, as well as preauthorized
remittance transfers. The Bureau is
adopting § 1005.36(b)(1), which states
that for a one-time transfer scheduled
five or more business days before the
date of transfer or the first in a series of
preauthorized remittance transfers,
disclosures provided in accordance with
§ 1005.36(a)(1)(i) must comply with
§ 1005.31(f) by being accurate when the
sender makes payment, except to the
extent estimates are permitted by
§ 1005.32.
For subsequent preauthorized
remittance transfers, the Bureau is
adopting § 1005.36(b)(2), which states
that for each subsequent preauthorized
remittance transfer, the most recent
receipt provided pursuant to
§ 1005.36(a)(1)(i) or (a)(2)(i) must be
accurate as of when such transfer is
made, except: (i) The temporal elements
required by § 1005.31(b)(2)(ii) (Date
Available) and (b)(2)(vii) (Transfer Date)
must be accurate only if the transfer is
the first transfer to occur after the
disclosure was provided, and (ii) to the
extent estimates are permitted by
§ 1005.32. As noted above, since a
receipt provided pursuant to
§ 1005.36(a)(1)(i) or (a)(2)(i) may serve
as a disclosure with respect to multiple
subsequent preauthorized transfers, the
temporal elements disclosed on those
receipts need only be accurate with
respect to the transfer to occur after the
receipt is provided.
To address situations in which
receipts may be provided after the date
of a remittance transfer, the Bureau is
adopting a new § 1005.36(b)(3). That
provision states that such receipts
(provided pursuant to either
§ 1005.36(a)(1)(ii) or (a)(2)(ii)) must be
accurate as of when the remittance
transfer to which it pertains is made,
except to the extent estimates are
permitted by § 1005.32(a) or (b)(1).
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50269
Proposed comment 36(b)–1 addressed
estimates and, in particular, stated that
providers may use any of the exceptions
set forth in § 1005.32, to the extent
applicable. This comment is adopted
largely as proposed, with changes to
reflect the newly adopted
§ 1005.32(b)(2), which allows for
estimates in certain disclosures for
transfers scheduled five or more
business days before the date of transfer,
and the revised § 1005.36(a)(1)(i) and
(a)(2)(i), which permit use of estimates
under § 1005.32(b)(2). The comment
also notes that when estimates are
permitted, they must be disclosed in
accordance with § 1005.31(d).
New comment 36(b)–2 explains that,
for a subsequent transfer in a series of
preauthorized remittance transfers, the
receipt provided pursuant to
§ 1005.36(a)(1)(i), except for the
temporal disclosures in that receipt
required by § 1005.31(b)(2)(ii) (Date
Available) and (b)(2)(vii) (Transfer
Date), applies to each subsequent
preauthorized remittance transfer unless
and until it is superseded by a receipt
provided pursuant to § 1005.36(a)(2)(i).
For each subsequent preauthorized
remittance transfer, only the most recent
receipt provided pursuant to
§ 1005.36(a)(1)(i) or (a)(2)(i) must be
accurate as of the date each subsequent
transfer is made. As a receipt may apply
to multiple transfers in a series of
preauthorized remittance transfers, the
disclosure required by § 1005.31(b)(2)(ii)
(i.e. disclosure of the date in the foreign
country on which funds will be
available to the designated recipient)
need not be accurate for subsequent
preauthorized remittance transfers that
occur after the first transfer to which the
receipt pertains.
Finally, new comment 36(b)–3
clarifies that a receipt required by
§ 1005.36(a)(1)(ii) must accurately
reflect the details of the transfer to
which it pertains and may not contain
estimates pursuant to § 1005.32(b)(2).
However, the remittance transfer
provider may continue to disclose
estimates to the extent permitted by
§ 1005.32(a) or (b)(1). In providing
receipts pursuant to § 1005.36(a)(1)(ii)
or (a)(2)(ii), § 1005.36(b)(2) and (b)(3) do
not allow a remittance transfer provider
to change figures previously disclosed
on a receipt provided pursuant to
§ 1005.36(a)(1)(i) or (a)(2)(i), unless a
figure was an estimate or based on an
estimate disclosed pursuant to
§ 1005.32. Thus, for example, if a
provider disclosed its fee as $10 in a
receipt provided pursuant to
§ 1005.36(a)(1)(i) and that receipt
contained an estimate of the exchange
rate pursuant to § 1005.32(b)(2), the
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second receipt provided pursuant to
§ 1005.36(a)(1)(ii) must also disclose the
fee as $10. The Bureau is adopting this
comment to clarify that the purpose of
receipts required by § 1005.36(a)(1)(ii)
and (a)(2)(ii) is to provide a sender with
the actual exchange rate applied to the
transfer (unless the statutory exceptions
for estimates apply) rather than the
estimate previously disclosed for the
transfer pursuant to § 1005.32(b)(2).
Thus, the final rule does not permit a
provider to change other items, such as
non-estimated fees and taxes, from a
prior disclosure applicable to that
transfer on the post-transfer receipt.
36(c) Cancellation
The February Final Rule contains
cancellation requirements for remittance
transfers. For most remittance transfers,
§ 1005.34(a) requires the remittance
transfer provider to comply with a
cancellation request received no later
than 30 minutes after the sender makes
payment for the remittance transfer if:
(i) The sender’s request allows the
provider to identify the sender’s name
and address or telephone number and
the specific transaction to be cancelled;
and (ii) the transferred funds have not
been picked up by the designated
recipient or deposited into the
recipient’s account. For remittance
transfers scheduled at least three
business days before the date of the
transfer, including preauthorized
remittance transfers, § 1005.36(c) of the
February Final Rule requires the
remittance transfer provider to comply
with a sender’s request for cancellation
if the request: (i) Enables the provider to
identify the sender’s name and address
or telephone number and the particular
transfer to be cancelled; and (ii) is
received at least three business days
before the scheduled date of the
remittance transfer. Section
1005.31(b)(2)(iv) requires the provider
to include a statement about the
sender’s cancellation rights, using the
language set forth in Model Form A–37
of Appendix A to subpart B or
substantially similar language.
The Bureau is amending Regulation E
in this final rule to, among other things,
clarify the obligations of the remittance
transfer provider for remittance transfers
scheduled before the date of transfer
and to provide senders with information
to calculate the cancellation deadline
for remittance transfers scheduled at
least three business days before the date
of the transfer. As discussed above, the
Bureau is making certain adjustments to
the disclosure and timing requirements
in other sections of the final rule in
order to enhance senders’ ability to
properly determine the cancellation
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deadline for remittance transfers, to
enable senders to more easily identify
and track preauthorized remittance
transfers that occur in close proximity to
one another, and to facilitate industry
compliance with the cancellation
disclosure requirements.
As discussed above, the final rule
adds § 1005.31(b)(2)(vii), which requires
remittance transfer providers to disclose
the date of transfer in certain receipts
provided to senders pursuant to
§ 1005.31(b)(2). These requirements
apply only to remittance transfers
scheduled by the sender at least three
business days before the date of the
transfer, as well as the initial transfer in
a series of preauthorized remittance
transfers. As discussed below,
§ 1005.36(d)(2)(ii) also requires future
transfer dates to be disclosed for
subsequent transfers in a series of
preauthorized remittance transfers, for
which payment is made by the sender
four or fewer business days before the
date of the transfer.
However, as discussed below, the
Bureau is retaining in § 1005.36(c) the
requirement that a remittance transfer
provider must comply with any oral or
written request to cancel a remittance
transfer if the request to cancel is
received at least three business days
before the scheduled date of the
remittance transfer. The Bureau is also
adopting a new § 1005.36(d) to require
providers to disclose the future dates of
transfer, cancellation requirements, and
provider’s contact information for
subsequent preauthorized remittance
transfers no more than 12 months and
no less than five business days before
the date of the transfer. This timing
requirement for these disclosures does
not apply to subsequent transfers in a
series of preauthorized remittance
transfers for which payment is made by
the sender four or fewer business days
before the date of the transfer. For this
subset of transfers, the information
required by § 1005.36(d)(1), including
future dates of transfer, must instead be
included in the receipt for the first
transfer in the series of preauthorized
remittance transfers provided in
accordance with § 1005.36(a)(1)(i). For
subsequent preauthorized remittance
transfers and transfers scheduled at least
three business days before the date of
transfer, any receipt provided after the
transfer is made in accordance with
§ 1005.36(a)(1)(ii) or (a)(2)(ii) must
include the date of transfer (and
cancellation requirements) for the
transfer that is the subject of the receipt.
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The Three-Business-Day Deadline To
Cancel
As noted above, section 919(d)(3) of
the EFTA provides the Bureau broad
discretion to fashion cancellation
requirements for remittance transfers. In
the February Final Rule, the Bureau
adopted in § 1005.36(c) specific
cancellation requirements for remittance
transfers scheduled at least three
business days before the date of the
transfer. In adopting the three-businessday cancellation rule for such transfers,
the Bureau explained that the general
30-minute cancellation period would
not be appropriate for remittance
transfers scheduled far in advance
because it would permit only a short
time for cancellation even though the
remittance transfer might not occur for
many days or even months. 77 FR 6194,
6268. Thus, the Bureau concluded that
a three-business-day time period is more
beneficial because it provides senders
with more time to decide whether to go
through with the transaction while
giving remittance transfer providers
sufficient time to process a cancellation
request before the transaction is
executed. Id.
In the February Proposal, the Bureau
explained that further consideration of
the three-business-day cancellation rule
and its application to remittance
transfers scheduled before the date of
transfer was necessary to ensure that the
rule provided appropriate protection to
senders without imposing an undue
burden on providers. 77 FR 6310, 6321.
Accordingly, the Bureau solicited
comment on whether the threebusiness-day deadline to cancel advance
transfers accomplishes these goals, or
whether the deadline to cancel should
be more or less than the three days
adopted in the February Final Rule. The
Bureau also solicited comment on
whether it is important to maintain
consistency between the cancellation
deadline adopted for preauthorized
remittances transfers in § 1005.36(c) and
the cancellation deadline for
preauthorized electronic fund transfers
in § 1005.10(c)(1). 77 FR 6310, 6321.
Finally, the Bureau solicited comment
on whether the deadline to cancel
would be easier to calculate if the
cancellation period was based on
calendar days instead of business days.
Several commenters addressed the
cancellation deadline for remittance
transfers scheduled three or more
business days in advance. Both industry
and consumer group commenters
generally agreed that the three-businessday time period for cancellation in the
February Final Rule appropriately
balances the interests of both parties to
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the transfer. One industry commenter
opposed the three-business-day time
period for cancellation; this commenter
proposed as an alternative a five-day
cancellation period, arguing that the
Bureau should take into consideration
providers’ existing compliance
obligations under other laws as well.
Another industry commenter posited
that, if the Bureau does not amend the
definition of ‘‘remittance transfer
provider’’ to exclude depository
institutions executing certain types of
international wire transfers, cancellation
should be allowed only until a transfer
has been executed by a depository
institution. One industry commenter
agreed that the Bureau should continue
to require the deadline to cancel to be
expressed in business days as opposed
to calendar days.
Although most commenters expressed
support for the three-business-day
cancellation period, a few industry
commenters conditioned their support
on whether and to what extent
remittance transfer providers may be
required to disclose to senders the
exchange rates that apply to transfers
scheduled before the date of transfer.
One industry commenter stated that the
three-business-day cancellation period
would be appropriate only if a
remittance transfer provider were not
required to disclose the actual exchange
rates that would apply to preauthorized
remittance transfers ten days before the
dates of such transfers. The industry
commenter, however, also agreed that
senders should be able to cancel
preauthorized remittance transfers or
other remittance transfers scheduled to
take place in the future, but that the
cancellation requirements should be
balanced with a shorter time period for
exchange rate disclosure. Another
industry commenter argued that the
three-business-day cancellation
requirement would present a substantial
risk of loss to a remittance transfer
provider if the provider were required to
disclose the exchange rate that would
apply to a remittance transfer more than
one day before the scheduled date of
transfer. This commenter suggested that
the Bureau establish a bifurcated
cancellation structure for transfers
scheduled before the date of transfer
under which: (i) the 30-minute
cancellation period in § 1005.34(a)
would apply for any transfer for which
the provider discloses the actual
exchange rate; and (ii) the threebusiness-day cancellation period
established in § 1005.36(c) would apply
for any transfer in which the provider
discloses an estimated exchange rate.
The Bureau recognizes the concern
expressed by a few industry
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commenters that remittance transfer
providers may incur additional risk if
the time period to cancel a transfer
extends beyond the date upon which a
remittance transfer provider must
disclose the actual exchange rate that
will apply to a remittance transfer. As
the Bureau noted in the discussion
regarding § 1005.32(b)(2)(i), whenever
there are time lags between when the
retail exchange rate that applies to a
remittance transfer is set, when the
relevant foreign currency is purchased,
and when funds are delivered, a
remittance transfer provider (and/or its
business partner) may face losses due to
unexpected changes in the value of the
relevant foreign currency. The Bureau’s
decision in § 1005.32(b)(2) of the final
rule to allow remittance transfer
providers to provide an estimated
exchange rate in certain disclosures for
remittance transfers scheduled five or
more business days before the date of
transfer should help alleviate these
concerns. (See discussion above
regarding § 1005.32(b)(2) for additional
analysis of foreign exchange risks.) As a
result, under the final rule, a remittance
transfer provider will not be required to
disclose, prior to the date of the transfer,
an actual, as opposed to an estimated,
exchange rate if the transfer is
scheduled five or more business days
before the date of transfer. This fivebusiness-day period is shorter than the
more than ten day period proposed in
the February Proposal and reduces the
period during which a remittance
transfer provider that permits transfers
to be scheduled before the date of
transfer may face additional foreign
exchange risks due to the gap between
the time the provider sets an exchange
rate and the date of the transfer. And,
while there is a short period outside the
cancellation window in which the
remittance transfer provider is required
to disclose actual rather than estimated
exchange rates, the Bureau believes that
providers may be able to manage the
foreign currency risks or may choose not
to offer consumers the ability to
schedule remittance transfers in this
period. The Bureau does not believe the
latter option presents a substantial risk
of harm to senders, because it believes
that any provider that generally permits
consumers to schedule remittance
transfers in advance will at least retain
the option for consumers to schedule
their transfers the day of or five or more
business days before the date of the
transfer.
Accordingly, the Bureau concludes
that the three-day-business cancellation
period for remittance transfers
scheduled at least three business days
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before the date of the transfer as adopted
in the February Final Rule is
appropriate. The Bureau believes that
cancellation rights are important
because they allow senders time to
review the disclosure for accuracy and
cancel the transaction when warranted
by a change in circumstances. In
addition, the Bureau believes the threebusiness-day cancellation period strikes
an appropriate balance between sender
and remittance transfer provider
interests. This time period is close
enough to the transfer date so that
senders will know if there are
circumstances warranting a
cancellation, while it gives providers an
adequate amount of time to process a
cancellation request. Finally, as the
Bureau noted in the February Final
Rule, the three-business-day
cancellation period is consistent with
the cancellation requirement for
electronic fund transfers. 77 FR 6194,
6268. Since many remittance transfer
providers also provide electronic fund
transfers, maintaining similar regulatory
regimes should minimize burden and
facilitate compliance.
Disclosure of Cancellation Period in PrePayment Disclosures for Subsequent
Preauthorized Remittance Transfers
In the February Proposal, the Bureau
solicited comment on whether a
remittance transfer provider should be
required to disclose the cancellation
period in the pre-payment disclosure for
each subsequent remittance transfer in a
series of preauthorized remittance
transfers, rather than in the receipt for
each subsequent transfer. As the Bureau
recognized in the February Proposal,
this issue would be relevant only if the
pre-payment disclosure requirement in
§ 1005.36(a)(2)(i) of the February Final
Rule is retained in this rulemaking. 77
FR 6310, 6323.
As discussed above, the Bureau is
revising the disclosure requirements for
preauthorized remittance transfers to
eliminate the requirement that
remittance transfer providers provide a
pre-payment disclosure for each
subsequent transfer in series of
preauthorized remittance transfers.
Instead, the final rule requires that, in
most circumstances, a receipt for each
subsequent transfer be provided to the
sender. Consequently, the Bureau’s
inquiry of whether the cancellation
disclosure should be provided in the
pre-payment disclosure or the receipt
for each subsequent transfer is now
generally moot. Since there generally is
no longer a requirement to provide a
pre-payment disclosure for subsequent
transfers, the sender’s cancellation
rights must be disclosed on any receipt
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provided in accordance with
§ 1005.36(a)(2) and (d)(2) (see
discussion below), as applicable.
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36(d) Additional Requirements for
Subsequent Preauthorized Remittance
Transfers
Under the February Final Rule,
remittance transfer providers are
required to provide senders with both a
pre-payment disclosure and a receipt for
each subsequent preauthorized
remittance transfer in a series.
Specifically, the pre-payment disclosure
for each subsequent transfer must be
provided within a reasonable time prior
to the scheduled date of the transfer,
and the receipt for each subsequent
transfer generally must be provided no
later than one business day after the
date on which the transfer is made. As
discussed above, however, the Bureau is
concerned with balancing the interest of
consumers in receiving timely
disclosures for subsequent transfers
with the interests of industry in
reducing risks and developing this
market segment. Thus, in the February
Proposal, the Bureau sought comment
on a number of issues related to
subsequent preauthorized remittance
transfers, including whether senders
should receive disclosures for
subsequent preauthorized remittance
transfers and, if so, what form those
disclosures should take. 77 FR 6310,
6223. The February Proposal also sought
comment on what cancellation rules
should apply to these transfers and
when those rules should be disclosed to
senders.
The Bureau received few comments in
response to its inquiry regarding
disclosure of cancellation requirements
for subsequent preauthorized remittance
transfers. Among those received, there
was little consensus regarding how
cancellation rights for subsequent
preauthorized transfers should be
disclosed. One industry commenter
advocated for flexibility on the
disclosure requirements to minimize
costs. Another industry commenter
asserted that the cancellation rights
should be included only in the first prepayment disclosure for each subsequent
transfer, while a consumer group
commenter posited that a subsequent
pre-payment disclosure disclosing
cancellation rights should be sent before
each subsequent transfer. Only one
industry commenter supported
including the statement regarding
cancellation rights for the next
scheduled transfer on the current
receipt, arguing that it would give
senders more time to cancel the transfer
than if the cancellation rights were
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included in a pre-payment disclosure
provided before the subsequent transfer.
Having eliminated the pre-payment
disclosure requirement for subsequent
transfers and altered the requirements
for when a receipt would have to be
provided for a subsequent transfer in the
final rule, the Bureau is concerned that
senders may not receive adequate and
timely information regarding the dates
of upcoming transfers and, thus, may
not know when their right to cancel
those transfers expires. Further, as
discussed above regarding
§ 1005.31(b)(2)(vii), even when senders
receive disclosures regarding their
cancellation rights, they may not have
the type of information needed to
determine the date on which the right
to cancel a subsequent transfer expires.
The Bureau is also concerned that,
where senders receive a number of
receipts in close proximity to one
another as part of a series of
preauthorized remittance transfers,
senders may not have information that
would be helpful in distinguishing to
which transfer a particular receipt
applies.
Accordingly, to further the purposes
of the EFTA, the Bureau believes it is
necessary and proper to use its authority
under EFTA sections 904(a) and (c) to
adopt a new § 1005.36(d), which
amends the disclosure requirements for
subsequent preauthorized remittance
transfers. Section 1005.36(d)(1)(i) states
that, for any subsequent transfer in a
series of preauthorized remittance
transfers, the remittance transfer
provider must disclose to the sender:
(A) the date the provider will make the
subsequent transfer, using the term
‘‘Future Transfer Date,’’ or a
substantially similar term; (B) a
statement about the rights of the sender
regarding cancellation as described in
§ 1005.31(b)(2)(iv); and (C) the name,
telephone number(s), and Web site of
the remittance transfer provider. Section
1005.36(d)(1)(ii) states that if the future
date or dates of transfer required to be
disclosed by this paragraph are
described as occurring in regular
periodic intervals, e.g., the 15th of every
month, rather than as a specific calendar
date or dates, the remittance transfer
provider must disclose any future date
or dates of transfer that do not conform
to the described interval.
Section 1005.36(d)(2)(i) establishes
the general timing requirements for
disclosures required by § 1005.36(d)(1),
stating that, except as described in
§ 1005.36(d)(2)(ii), the disclosures
required by § 1005.36(d)(1) must be
received by the sender no more than 12
months, and no less than five business
days prior to the date of any subsequent
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preauthorized remittance transfer to
which it pertains. Section
1005.36(d)(2)(i) also states that the
disclosures required by § 1005.36(d)(1)
may be provided in a separate
disclosure or on one or more disclosures
required by subpart B related to the
same series of preauthorized remittance
transfers, so long as the consumer
receives the required information for
each subsequent preauthorized
remittance transfer in accordance with
the timing requirements of
§ 1005.36(d)(2)(i).
The Bureau believes that information
regarding cancellation rights is as
important to subsequent preauthorized
remittance transfers as it is to other
transfers. Accordingly, as noted in the
discussion regarding
§ 1005.31(b)(2)(vii), senders need the
date of transfer to determine, among
other things, when the cancellation
period for a certain preauthorized
transfer expires. At the same time, the
Bureau recognizes that when
authorizing a preauthorized remittance
transfer, the sender establishes a
recurring schedule. The Bureau believes
the repetitive and cyclical nature of
preauthorized remittance transfers
reduces the need for senders to receive
notice of the cancellation period in
individual notices sent immediately
before each subsequent transfer, and
warrants additional flexibility to
remittance transfer providers to
determine the timing and type of
disclosure to be used to advise senders
of their cancellation rights for
subsequent preauthorized remittance
transfers. The Bureau notes, however,
that such notices must be provided
within a timeframe that would be useful
to senders and is concerned that a
notice provided more than 12 months
before the date of such transfers would
likely be unhelpful to senders. Likewise,
a notice received fewer than five
business days before the date of transfer
may not provide the sender with enough
time to determine whether cancellation
is warranted and, thus, would also not
be helpful to senders.
The Bureau also recognizes that for
subsequent preauthorized remittance
transfers scheduled four or fewer
business days before the date of the
transfer, remittance transfer providers
will be unable to provide the
disclosures regarding the future date of
transfer and cancellation rights five or
more business days before the date of
transfer. Accordingly, § 1005.36(d)(2)(ii)
states that for any preauthorized
remittance transfer for which the date of
transfer is four or fewer business days
after the date payment is made for that
transfer, the information required by
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§ 1005.36(d)(1) must be provided on or
with the receipt described in
§ 1005.31(b)(2), or disclosed as
permitted by § 1005.31(a)(3) and (a)(5),
for the initial transfer in that series in
accordance with § 1005.36(a)(1)(i). For
example, if, on Monday, a sender
authorizes a series of preauthorized
remittance transfers in which the initial
transfer occurs that day and the first
subsequent transfer is scheduled to
occur on Wednesday, the 30-minute
cancellation period under § 1005.34(a)
would apply to both transfers. If,
however, in the same series of
preauthorized remittance transfers the
second subsequent remittance transfer is
scheduled to occur on Friday, the threebusiness-day cancellation period would
apply to that transfer. For either
subsequent transfer, the provider would
be unable to provide the required
information at least five business days
before the date of the transfer. In that
instance, the provider would be
required to disclose the cancellation
period and future date of transfer for the
subsequent remittance transfer on or
with the receipt provided for the initial
preauthorized remittance transfer.
As a result, preauthorized remittance
transfers scheduled fewer than three
business days from the date of the
transfer are now subject to different
disclosure requirements than standalone
remittance transfers scheduled fewer
than three business days from the date
of the transfer. With respect to the latter,
there is no requirement to disclose the
date of transfer or future date of transfer
on receipts. The Bureau, however,
believes these two sets of transfers
present different concerns warranting
different treatment. Preauthorized
remittance transfers by definition are
authorized to recur at substantially
regular intervals. As a result, as
discussed above, preauthorized
remittance transfer present a higher risk
of confusion since, depending on the
frequency of the subsequent transfers in
the series, senders may receive multiple
receipts at or around the same time and,
absent identifying information such as
the date of transfer, may be unable to
identify the transfer to which a
particular receipt applies. One-time
transfers scheduled in advance do not
generally present the same risks because
in most instances the sender would
schedule a single transfer at any given
time as opposed to a series of transfers
and should not have difficulty
identifying the transfer to which the
receipt applies. Further, if disclosures
were only required for subsequent
preauthorized transfers occurring at
least three business days in the future,
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consumers may mistakenly believe that
no transfers were scheduled on any days
prior to that time.
Thus, while the Bureau believes the
date of transfer would be helpful to
senders of preauthorized remittance
transfers, it does not believe such
information is necessary for standalone
transfers scheduled fewer than three
business days from the date of the
transfer. As stated above, the Bureau
believes that it will be simpler for
remittance transfer providers to program
their receipts to include the transfer
date information consistently for
preauthorized transfers than to create
separate receipt forms for one-time and
preauthorized remittance transfers.
New § 1005.36(d)(3) and (d)(4)
address formatting and accuracy
requirements for disclosures required
under § 1005.36(d)(3). Section
1005.36(d)(3) states that the information
required by § 1005.36(d)(1)(i)(A)
generally must be disclosed in close
proximity to the other information
required by § 1005.36(d)(1)(i)(B).
Section 1005.36(d)(4) states that any
disclosure required by § 1005.36(d)(1)
must be accurate as of the date the
subsequent preauthorized remittance
transfer to which it pertains is made.
The Bureau is also adopting
commentary to provide further guidance
on the application of § 1005.36(d).
Comment 36(d)–1 clarifies that
§ 1005.36(d)(2) permits remittance
transfer providers some flexibility in
determining how and when the
disclosures required by § 1005.36(d)(1)
may be provided to senders. Comment
36(d)–1 states that the disclosure may be
provided as a separate disclosure, or on
or with any other disclosures required
by subpart B of Regulation E related to
the same series of preauthorized
remittance transfers, provided that the
disclosure and timing requirements in
§ 1005.36(d)(2) and other applicable
provisions in subpart B are satisfied. For
example, the required disclosures may
be made on or with a receipt provided
pursuant to § 1005.36(a)(1)(i); a receipt
provided pursuant to § 1005.36(a)(2)(ii);
or in a separate disclosure created by
the provider. The comment also
provides a fact pattern describing how
a remittance transfer provider would
comply with § 1005.36(d)(1).
Comment 36(d)–2 clarifies that
§ 1005.36(d)(2)(i) requires that the
sender receive disclosure of the date of
transfer, applicable cancellation
requirements, and the provider’s contact
information no more than 12 months
and no less than 5 business days prior
to the date of the subsequent
preauthorized remittance transfer.
Comment 36(d)–2 also cross-references
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50273
comment 36(a)(2)–3 for purposes of
determining when a disclosure required
by § 1005.36(d)(1) is received by the
sender.
Comment 36(d)–3 provides guidance
on how the remittance transfer provider
should disclose the date of transfer.
Specifically, comment 36(d)–3 clarifies
that the date of transfer of a subsequent
preauthorized remittance transfer may
be disclosed either as a specific date
(e.g., July 19, 2013), or by using a
method that clearly permits
identification of the date of transfer,
such as periodic intervals (e.g., the third
Monday of every month, or the 15th of
every month). Comment 36(d)–3 further
clarifies that if the future dates of
transfer are disclosed as occurring
periodically and there is a break in the
sequence, or the date of transfer does
not conform to the described period,
e.g., if a weekend or holiday causes the
provider to deviate from the normal
schedule, the provider should disclose
the specific date of transfer for the
affected transfer. Finally, comment
36(d)–4 clarifies the accuracy
requirements for disclosures required by
§ 1005.36(d)(1). Comment 36(d)–4
explains that if any of the information
required by § 1005.36(d)(1) changes, the
provider must provide an updated
disclosure with the revised information
that is accurate as of when the transfer
is made, pursuant to § 1005.36(d)(2).
VI. Section 1022(b)(2) Analysis
In developing the proposed rule, the
Bureau has considered potential
benefits, costs, and impacts, and has
consulted or offered to consult with the
prudential regulators and the Federal
Trade Commission, including regarding
consistency with any prudential,
market, or systemic objectives
administered by such agencies.19
In this rulemaking, the Bureau is
amending subpart B of Regulation E,
which implements EFTA section 919,
and the accompanying commentary.
This rule modifies the February Final
Rule and the accompanying
commentary. The final rule provides a
new safe harbor clarifying when a
person does not provide remittance
transfers in the normal course of
business for purposes of determining
whether a person is a ‘‘remittance
transfer provider.’’ In the final rule, the
19 Specifically, section 1022(b)(2)(A) of the DoddFrank Act calls for the Bureau to consider the
potential benefits and costs of a regulation to
consumers and covered persons, including the
potential reduction of access by consumers to
consumer financial products or services; the impact
on depository institutions and credit unions with
$10 billion or less in total assets as described in
section 1026 of the Dodd-Frank Act; and the impact
on consumers in rural areas.
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Bureau is also refining the disclosure
requirements for certain remittance
transfers scheduled before the date of
the transfer, including preauthorized
remittance transfers, and the
accompanying interpretations of those
requirements. The analysis below
considers the benefits, costs, and
impacts of this rule relative to the
baseline provided by the February Final
Rule.
In the February Proposal, the Bureau
sought information regarding various
aspects of the market for remittance
transfers. Among other things, the
Bureau sought information describing
the number of consumers who send
remittance transfers through persons
who would qualify for the proposed safe
harbor or who schedule remittance
transfers before the date of the transfer.
Similarly, the Bureau sought data
describing the number and
characteristics of persons who would
qualify for the proposed safe harbor.
Additionally, the Bureau requested that
interested parties provide data
describing the number of firms that
schedule remittance transfers before the
date of the transfer, the number of
remittance transfers provided, and the
revenues earned from those transfers.
The Bureau received limited
information in response to these
requests. In their comments in response
to the February Proposal, two trade
associations provided high-level
summaries of limited surveys of
member depository institutions.
Through additional outreach, the
Bureau obtained more detailed data
from these associations, as well as data
from several other sources regarding the
number of remittance transfers or
similar transactions provided by
individual depository institutions,
credit unions, and state-licensed money
transmitters. However, as discussed
above, the data received through this
process were neither comprehensive nor
necessarily representative of the entire
population of remittance transfer
providers or of the populations covered
by the data. Furthermore, the Bureau
did not receive any data pertaining to
certain types of persons who may be
remittance transfer providers, such as
non-depository institutions that are not
state-licensed money transmitters.
The Bureau also did not receive any
industry-wide data regarding the
number of remittance transfer providers
that send preauthorized remittance
transfers or standalone remittance
transfers scheduled before the date of
the transfer, or the number of consumers
using these services. Nor did the Bureau
receive specific figures regarding the
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costs of the options discussed in the
February Proposal.
Due to the limited quantitative
information received, this analysis
generally provides a qualitative
discussion of the benefits, costs, and
impacts of the final rule. Considered
with the limited data that are available,
general economic principles provide
insight into these benefits, costs, and
impacts but do not support a
quantitative analysis.
A. Benefits and Costs to Consumers and
Covered Persons
Normal Course of Business
Section 1005.30(f) of the February
Final Rule defines the term ‘‘remittance
transfer provider’’ to mean any person
that provides remittance transfers for a
consumer in the normal course of its
business. Such persons are required to
comply with subpart B of Regulation E
relating to remittance transfers.
Comment 30(f)–2 to the February Final
Rule states that whether a person
provides remittance transfers in the
normal course of business depends on
the facts and circumstances, including
the total number and frequency of
remittance transfers sent by the
provider. Though it includes two
examples, comment 30(f)–2 to the
February Final Rule does not state a
specific numerical threshold for
determining when a person is not
providing remittance transfers in the
normal course of its business.
The final rule provides, in
§ 1005.30(f)(2)(i), a safe harbor clarifying
when a person does not provide
remittance transfers in the normal
course of business for purposes of
determining whether a person is a
‘‘remittance transfer provider.’’ The
final rule states that if a person provided
100 or fewer remittance transfers in the
previous calendar year, and provides
100 or fewer remittance transfers in the
current calendar year, then the person is
deemed not to be providing remittance
transfers for a consumer in the normal
course of its business.
For a person that crosses the 100transfer threshold, and is then providing
remittance transfers in the normal
course of its business, the final rule also
permits a reasonable period of time, not
to exceed six months, to begin
complying with subpart B of Regulation
E. For such a person, compliance with
subpart B of Regulation E will be
required at the end of the ‘‘reasonable
period of time’’ unless, based on the
facts and circumstances, such a person
is not a remittance transfer provider.
The safe harbor will benefit persons
who qualify by reducing the legal
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uncertainty they likely would have had
under the February Final Rule regarding
whether they provided remittance
transfers in the normal course of
business and their compliance costs to
the extent they decide not to comply
voluntarily with subpart B of Regulation
E. Furthermore, the safe harbor does not
impose any burden on the persons who
qualify. The safe harbor is based on a
bright-line numerical threshold that
persons may use to determine easily
whether they do not meet the definition
of remittance transfer provider. The
bright-line threshold should reduce
uncertainty and legal risk for persons
who provide a small number of
remittance transfers each year as to
whether they do not provide remittance
transfers in the normal course of
business and thus are not required to
comply with subpart B of Regulation E.
For those persons who do not qualify for
the safe harbor, whether or not they are
providing remittance transfers in the
normal course of business will continue
to depend on the facts and
circumstances.
As a result, the Bureau expects that
the safe harbor could enable persons
who qualify to continue providing
remittance transfers to consumers, as
opposed to exiting the market or
increasing prices in response to the
February Final Rule. The Bureau
expects that some persons who qualify
for the safe harbor would have exited
the market for remittance transfers,
absent the safe harbor, rather than
incurred the cost associated with
implementing the requirements of
subpart B of Regulation E under the
February Final Rule or risking noncompliance (due to legal risk
surrounding the interpretation of the
term ‘‘normal course of business’’).
Alternatively, some persons may have
chosen to implement subpart B of
Regulation E if it resulted in higher
expected net benefits than either risking
non-compliance or ceasing to offer
remittance transfers (and foregoing any
revenues earned from them). Such
persons may have increased their prices
to recover some, or all, of the cost of
complying with subpart B of Regulation
E.
Under the final rule, by contrast, the
Bureau expects that most persons who
qualify for the safe harbor will not
voluntarily choose to implement the
requirements of subpart B of Regulation
E given the expense associated with
implementing the requirements. The
Bureau expects that, for these persons,
the cost associated with counting
remittance transfers (to ensure the
conditions of the safe harbor are met) is
lower than the cost of unnecessarily
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implementing the requirements of
subpart B of Regulation E. Furthermore,
the Bureau expects that the clarity
provided by the safe harbor will
encourage more persons to continue to
offer remittance transfers rather than
exiting the market—thus retaining a
revenue stream they may otherwise
have foregone.
For certain persons who are newly
entering the market or who plan to
expand their business such that they
may no longer qualify for the safe
harbor, the Bureau expects that the
transition period in the final rule may
also reduce the cost of compliance, by
permitting such providers a reasonable
period of time during which to come
into compliance with subpart B of
Regulation E. Under the February Final
Rule, those persons considered to be
remittance transfer providers would
have been required to implement the
requirements of subpart B of Regulation
E for each remittance transfer.
Consumers may experience both
benefits and costs from the additional
clarity offered by both the safe harbor
and the transition period permitted by
the final rule. Some consumers may
benefit from additional access to
remittance transfers and increased
competition among providers, including
potentially lower prices, if, absent the
safe harbor, some persons who qualify
for the safe harbor would have exited
the market. However, some consumers
may incur costs associated with not
receiving disclosures, error resolution
rights, and other protections generally
required by subpart B of Regulation E.
Some consumers might incur such costs
due to the transition period. Other
consumers may incur such costs
because some of the persons who
qualify for the safe harbor might have
complied with subpart B of Regulation
E absent the safe harbor. If persons who
would have provided more than 100
remittance transfers absent the safe
harbor choose to limit the number of
remittance transfers provided so that
they may qualify for the safe harbor,
some consumers could also experience
decreased access. However, the Bureau
expects any cost arising from not
receiving disclosures, error resolution
rights, and other protections will be
incurred by a small number of
consumers, as the Bureau estimates that
depository institutions, credit unions,
and others that will qualify for the safe
harbor are responsible for only a very
small fraction of all remittance transfers
provided each year.
The Bureau cannot quantify the
number of persons who will qualify for
the safe harbor or the transition period
implemented in the final rule. As
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discussed above, the Bureau received
limited survey results and data from
several sources regarding the number of
remittance transfers or similar
transactions provided by individual
depository institutions, credit unions,
and state-licensed money transmitters.
The Bureau does not believe that it can
extrapolate from any of these data
sources to determine precisely the
number of persons who will qualify for
the safe harbor, or the fraction of those
persons who might cross the 100transfer threshold in any year, and thus
be eligible for the transition period.
However, as discussed above, the data
suggest that a meaningful number of
insured institutions and credit unions
will likely qualify for the safe harbor
while few state-licensed money
transmitters will qualify. Data sources of
varying quality and comprehensiveness
show that between roughly 40 and
roughly 90 percent of depository
institutions or credit unions that
responded to a survey or were otherwise
covered by the data, and that reported
any transactions, sent 100 or fewer
covered transactions in the prior year.20
As noted above, the Bureau estimates
that the depository institutions, credit
unions, and others that qualify for the
safe harbor are responsible for only a
very small fraction of the remittance
transfers provided each year.
In addition, the Bureau cannot
determine the number of persons who
will no longer implement subpart B of
Regulation E as a result of the final rule.
It is likely that some persons who
qualify for the safe harbor would not
have implemented subpart B of
Regulation E, in any event, either
because they would have relied on the
facts and circumstances to conclude that
they were not providing remittance
transfers in the normal course of
business under the February Final Rule,
or because they would have exited the
market absent the safe harbor. It is also
possible that some of the persons who
qualify for the safe harbor or are eligible
for the transition period will choose to
implement some portions of the
requirements in subpart B of Regulation
E due to market demands. Therefore,
whether there is a change, and the
extent of such a change, in the number
of institutions that will implement
subpart B of Regulation E relative to the
February Final Rule is not known.
However, all persons who qualify for
the safe harbor now have an additional
option available to them for determining
whether they are required to comply
with subpart B of Regulation E and
20 Caveats associated with these data sources are
described above.
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50275
therefore may potentially benefit from
this provision of the final rule.
Furthermore, all persons who qualify for
the safe harbor but then cross the 100transfer threshold will be eligible for the
transition period.
Estimates and Disclosure Requirements
The February Final Rule requires, for
the first transfer in a series of
preauthorized remittance transfers, that
the provider provide a pre-payment
disclosure at the time the sender
requests the transfer and a receipt at the
time payment for the transfer is made,
which the commentary explains means
when payment is authorized. The
February Final Rule also generally
requires that both the pre-payment
disclosure and the receipt be accurate
when payment is made. In the case of
subsequent preauthorized remittance
transfers, the February Final Rule
requires that a pre-payment disclosure
be provided a reasonable time prior to
each subsequent preauthorized
remittance transfer and that a receipt be
provided following the transfer. These
pre-payment disclosures and receipts
are required to include accurate figures,
unless a statutory exception permitting
the use of estimates applies.
In the final rule, a new exception,
§ 1005.32(b)(2), permits disclosures
required to be provided prior to or when
payment is made to contain estimates of
exchange rates and certain related
figures in certain cases for remittance
transfers scheduled five or more
business days before the date of the
transfer, including preauthorized
remittance transfers. If a remittance
transfer provider discloses estimates
under this provision, the final rule
requires that the provider later give
senders receipts with accurate figures
unless a statutory exception permitting
the use of estimates applies.
As discussed above, industry
commenters stated that disclosing an
exchange rate that would apply to a
remittance transfer long before the date
of that transfer poses particular
difficulties. Commenters stated that
such a disclosure would potentially
subject the remittance transfer provider
(or its business partners) to additional
exchange rate risk since a wholesale
exchange rate may vary between the
date that a remittance transfer is
scheduled (and disclosures are
provided) and the date of the transfer.
Although some of this risk may be
reduced through the use of financial
instruments, risk mitigation strategies
may increase costs to providers, and
some providers may not want to absorb
or manage the associated risks. In
addition, an industry commenter
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indicated that, at least in some
instances, providers would refuse to
offer remittance transfers scheduled
three or more business days before the
date of the transfer if the Bureau
required providers to disclose an
accurate exchange rate prior to the
expiration of the consumer’s
cancellation right.
Under the final rule, remittance
transfer providers choosing to provide
estimates in certain circumstances will
avoid the cost associated with providing
accurate figures before the date of
transfer but will incur the cost
associated with providing accurate
receipts after the date of transfer. Since
remittance transfer providers retain the
option of giving accurate pre-payment
disclosures and receipts as required
under the February Final Rule, net costs
incurred by remittance transfer
providers choosing to use the new
exception for estimates should not
increase relative to the February Final
Rule. Permitting estimates of certain
amounts on the pre-payment disclosure
and receipt given in connection with
remittance transfers scheduled five or
more business days before the date of
the transfer reduces the cost of
compliance. Specifically, the exception
eliminates the need for remittance
transfer providers (or their business
partners) to manage any exchange rate
or other risk associated with committing
to an exchange rate on disclosures
provided five or more business days
before the date of the transfer.
If a remittance transfer provider
chooses to estimate certain information
under this new exception, it is also
required to provide an additional
receipt with figures that are accurate as
of the date the transfer is made (unless
estimates are permitted under either of
the two statutory exceptions). For onetime remittance transfers or the first in
a series of preauthorized remittance
transfers scheduled five or more
business days before the date of the
transfer, this requirement could require
three disclosure forms, rather than the
two disclosures required by the
February Final Rule. To provide this
additional disclosure in these cases,
remittance transfer providers may incur
additional costs, e.g. for programming,
printing or distribution, if it is not
already the providers’ standard business
practice to provide this disclosure.
Consumers scheduling remittance
transfers five or more business days
before the date of the transfer may
receive benefits or incur costs as a result
of the changes made by the final rule to
provisions concerning these transfers.
Industry commenters indicated that, at
least in some instances, remittance
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transfer providers would cease offering
transfers scheduled before the date of
the transfer if they were required to
disclose accurate exchange rates at the
time of scheduling. In addition, to
address any risk associated with setting
exchange rates before the date of the
transfer, providers might have disclosed
less favorable exchange rates to
consumers, thus effectively increasing
the prices of their services. Permitting
the use of estimates may result in more
providers offering remittance transfers
scheduled before the date of the
transfer, and doing so at a lower cost.
Therefore, consumers may benefit from
expanded access to remittance transfers
scheduled five or more business days
before the date of the transfer, increased
competition, and potentially lower
prices. If providers who otherwise
would have provided accurate figures
choose to disclose estimates under the
final rule, some consumers may incur
costs if they receive less reliable
information regarding the exchange rate,
the amount transferred, and the amount
received before the date of the transfer.
The magnitude of these costs would
depend on the size of any discrepancy
between estimated and accurate
disclosures and the extent to which the
consumer relies on the disclosure to
choose among providers or to make
spending, budgeting, or other financial
decisions. However, consumers valuing
accurate information retain the option of
not pre-scheduling remittance transfers.
Furthermore, this change will have no
impact on consumers who send
remittance transfers that require no
foreign exchange because they are
funded and received in the same
currency and thus no exchange rate
needs to be disclosed.
Disclosure Rules for Subsequent
Preauthorized Remittance Transfers
The final rule eliminates the
requirement that remittance transfer
providers mail or deliver a pre-payment
disclosure a reasonable time prior to
each subsequent preauthorized
remittance transfer. Instead, the final
rule requires that a provider send a
receipt a reasonable time prior to the
scheduled date of the next
preauthorized remittance transfer if
certain disclosed information is changed
from what was disclosed regarding the
first preauthorized remittance transfer
(or what was disclosed in a prior
updated receipt, if such a receipt was
provided previously). This receipt must
disclose the changed terms, in addition
to the other disclosures required by
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§ 1005.31(b)(2).21 If no updated receipt
is necessary (or if the updated receipt
contains estimates), providers generally
must give an accurate receipt to
consumers for each subsequent
preauthorized remittance transfer
shortly after the date of transfer.
The Bureau does not know the
number of remittance transfer providers
offering preauthorized remittance
transfers, but comments and
information received through outreach
suggest that they comprise a small
percentage of all remittance transfers.22
Furthermore, based on the Bureau’s
understanding of the remittance transfer
market, the Bureau believes that,
although some depository institutions
and credit unions that are remittance
transfer providers offer preauthorized
remittance transfers, a very small
number of state-licensed money
transmitters do so.
For the remittance transfer providers
that offer preauthorized remittance
transfers, the elimination of the prepayment disclosure for subsequent
preauthorized remittance transfers
reduces the costs associated with
providing preauthorized remittance
transfers. These costs may include
distribution cost as well as compliance
risk arising from uncertainty
surrounding the interpretation of
‘‘reasonable time.’’
For consumers, the changes in the
requirements regarding subsequent
preauthorized remittance transfers
could result in some benefits and some
costs. Since the risk and burden
associated with providing accurate prepayment disclosures for subsequent
preauthorized remittance transfers
might have discouraged some providers
from offering preauthorized remittance
transfers or caused them to increase
prices, consumers potentially will have
increased access to this product and the
convenience associated with it.
Furthermore, in some cases, the
elimination of the pre-payment
disclosure requirement may provide
some benefit to consumers who might
otherwise have been confused when
receiving, in close proximity, both
receipts from completed preauthorized
remittance transfers as well as pre21 It may contain estimates as permitted by
§ 1005.32(b)(2).
22 One trade association reported that it believes
that less than three percent of remittance transfers
at credit unions are preauthorized remittance
transfers. Another trade association noted that
‘‘preauthorized international transfers’’ make up
only a small percentage of the ‘‘total international
transfers initiated by consumers.’’ One money
transmitter stated that, although the product is
relatively new and growing, scheduled payments
currently represent only a small percentage of its
overall business.
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payment disclosures for future
preauthorized remittance transfers.
With the elimination of the
requirement for pre-payment
disclosures for subsequent
preauthorized remittance transfers,
consumers could also be harmed by
generally not receiving additional
reminders of upcoming remittance
transfers and their cost close to the date
of the transfer. However, the Bureau
expects that any such effect will be
small. As discussed below, the final rule
generally requires that providers
disclose the date of the transfer,
cancellation requirements, and the
provider’s contact information to
senders of subsequent preauthorized
remittance transfers no fewer than five
business days and no more than 12
months before the date of the transfer.
This should serve as a reminder to
consumers of future preauthorized
remittance transfers and the method of
cancellation. With respect to cost, the
accurate figures provided in receipts
may serve as a basis for the consumer
to project the likely cost associated with
future preauthorized remittance
transfers.
Cancellation Period and Other
Disclosures
The final rule modifies the February
Final Rule in several respects with
regard to the cancellation disclosure
requirements for transfers scheduled at
least three business days before the date
of the transfer, as well as preauthorized
remittance transfers. First, the final rule
requires a remittance transfer provider
to disclose the specific date of the
transfer in receipts given in association
with certain transfers, so that a sender
may calculate the date on which the
sender’s right to cancel will expire. This
requirement applies to one-time
remittance transfers scheduled at least
three business days before the date of
the transfer, as well as the first transfer
in a series of preauthorized remittance
transfers. Also, the final rule requires, in
conjunction with certain disclosures
related to initial transfers in series of
preauthorized transfers, disclosures of
the date of transfer regarding any
subsequent preauthorized transfer in
that series for which the date of the
transfer is four or fewer business days
after the date payment is made for that
transfer. Second, for other preauthorized
remittance transfers (i.e., those
scheduled five or more business days
before the date of the transfer), the final
rule requires the remittance transfer
provider to disclose the date or dates on
which the remittance transfer provider
will execute such subsequent transfers
in the series of preauthorized remittance
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transfers, the applicable cancellation
requirements, and contact information
for the provider. The final rule permits
providers some flexibility in
determining how these disclosures may
be provided, although there are specific
timing requirements. In addition,
disclosures regarding the dates of
transfer for all preauthorized remittance
transfers must be accurate as of the date
the preauthorized remittance transfer to
which the disclosure pertains is made.
Finally, the final rule also permits
providers to describe on the same
receipt both the three-business-day and
30-minute cancellation periods (the
latter applying to remittance transfers
scheduled fewer than three business
days before the date of the transfer) and
either describe the transfers to which
each period applies or, alternatively, use
a checkbox or other method to designate
which cancellation period is applicable
to the transfer.
Remittance transfer providers could
incur costs from the requirement in the
final rule that they disclose certain dates
of transfer on receipts given in
connection with one-time remittance
transfers scheduled at least three
business days before the date of the
transfer and certain preauthorized
remittance transfers. To comply with
this new requirement, remittance
transfer providers will need to revise
receipts for these transfers to include
the date or dates of the transfers.23 The
additional disclosures on certain
receipts may constitute an additional
cost to remittance transfer providers if
they do not already include this
information on their receipts. The
Bureau lacks specific information
regarding the additional burden
imposed on remittance transfer
providers by this change but believes
that it involves a slight modification of
a disclosure required by the February
Final Rule to include information
maintained by providers. For those
providers producing receipts
electronically, this customization will
likely involve a one-time change to
information technology systems.
For transfers scheduled at least three
business days before the date of the
transfer, the date of the transfer gives
consumers a basis from which to
determine when their cancellation
rights expire, thus providing consumers
with additional clarity regarding their
cancellation rights that could benefit
those consumers who may want to
cancel. This requirement also provides
23 In some limited circumstances described in
§ 1005.36(d)(2)(ii), disclosure regarding future dates
of transfer may also be accompanied by additional
information regarding cancellation periods.
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50277
consumers with additional information
about when the transfer will take place
and, thus, the date by which a
consumer’s funds must be available in
order for the remittance transfer
provider to make the transfer.
As discussed above, the final rule also
requires that the provider disclose to the
sender the upcoming date of the
transfer, cancellation requirements, and
the provider’s contact information for
any subsequent preauthorized
remittance transfer scheduled five or
more business days before the date of
the transfer.24 This additional
requirement in the final rule represents
an additional cost to providers who are
not already required to, or do not
otherwise voluntarily, provide this
information to consumers. The Bureau
does not have information regarding the
cost associated with disclosing the dates
of transfer, cancellation requirements,
and the provider’s contact information
for subsequent preauthorized remittance
transfers. For remittance transfer
providers who choose to include this
information on an electronicallygenerated periodic statement or receipt,
this likely represents a modest, one-time
programming cost. The final rule does
not require that this information be
provided on an additional, separate
disclosure, but rather permits providers
to modify existing statements, receipts,
or disclosures to include this
information, which is already
maintained by the remittance transfer
provider. If the provider elects to do so,
however, it may disclose this
information in a separate disclosure that
may be provided annually.
As described above, the date of the
transfer gives consumers a basis from
which to determine when their
cancellation rights expire. This
requirement provides consumers with
additional clarity regarding their
cancellation rights that could benefit
those consumers that may want to
cancel. It also provides consumers with
additional information about when the
transfer will take place and, thus, the
date by which the consumer’s funds
must be available in order for the
remittance transfer provider to make the
transfer.
The final rule also states that
remittance transfer providers that offer
both remittance transfers scheduled at
least three business days before the date
of the transfer and remittance transfers
scheduled fewer than three business
days before the date of the transfer may
describe both the three-business-day
and 30-minute cancellation periods
24 Timing requirements for this additional
requirement are addressed in § 1005.36(d)(2)(i).
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applicable to such transfers on one
receipt, provided they either describe
the applicable deadline, or alternatively,
use a checkbox or some other method to
designate which cancellation period is
applicable. This allows providers to use
one standardized form, though each
receipt needs to be modified for that
particular remittance transfer. Providers
who offer remittance transfers
scheduled three or more business days
before the date of the transfer, in
addition to remittance transfers
scheduled closer to or on the date of the
transfer, may be relieved of costs since
they are otherwise required by the
February Final Rule to produce two
distinct types of receipts. This
additional flexibility benefits providers
without imposing any additional costs
because providers retain the option of
complying with the requirements of the
February Final Rule.
Disclosing both cancellation
provisions on the same receipt could
result in a receipt that is potentially
more confusing to consumers.25
However, the Bureau believes that
consumers are unlikely to be confused
by having a description of both
cancellation deadlines in the same
disclosure. To the contrary, including a
description of both the 30-minute and
three-business-day cancellation periods
with a checkbox or other method that
clearly designates the cancellation time
period applicable to a consumer’s
transaction may improve consumers’
understanding of the cancellation
provisions generally.
B. Potential Specific Impacts of the
Final Rule
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Depository Institutions and Credit
Unions With $10 Billion or Less in Total
Assets, as Described in Section 1026
The Bureau does not believe that the
costs and benefits arising from the final
rule for depository institutions and
credit unions with $10 billion or less in
total assets are substantively different
from those discussed in the general
analysis. However, the Bureau does
believe that those depository
institutions and credit unions with $10
billion or less in total assets are more
likely to benefit from the additional
25 These potential confusion costs, which the
Bureau is unable to monetize, are likely only
incurred by consumers using remittance transfer
providers that offer remittance transfers scheduled
more than three business days before, as well as
remittance transfers scheduled closer to, the date of
the transfer. It is possible, however, that a consumer
using a provider that does not offer remittance
transfers scheduled three or more business days
before the date of the transfer could be exposed to
both cancellation periods if, for example, the
provider utilizes a third-party software solution that
prints both periods on the same receipt.
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clarity and burden reduction provided
by the safe harbor than larger
institutions or non-depository
institutions. Although the Bureau lacks
comprehensive data describing the
number of remittance transfers provided
by each entity, information that the
Bureau obtained through comments and
outreach suggests that, among
depository institutions and credit
unions that provide any remittance
transfers, an institution’s asset size and
the number of remittance transfers sent
by the institution is positively, though
imperfectly, related. As a result, the
Bureau expects that a greater share of
depository institutions and credit
unions with $10 billion or less in total
assets that provide any remittance
transfers will qualify for the safe harbor
compared with those with more than
$10 billion in total assets. The Bureau
does not have any data with which to
predict the percentage of those
institutions that may, at some point,
stop qualifying for the safe harbor, and
thus be eligible for the transition period
included in the final rule.
With respect to the elements of the
final rule addressing remittance
transfers scheduled before the date of
the transfer, the Bureau does not believe
that the costs and benefits arising from
the final rule for depository institutions
and credit unions with $10 billion or
less in total assets are substantively
different from those discussed in the
general analysis.
the transfer or to send preauthorized
remittance transfers.
As discussed above, the final rule
generally lowers costs for persons
providing remittance transfers relative
to the February Final Rule.27 If
consumers in rural areas are more likely
to send remittance transfers through
persons who qualify for the safe harbor
and, absent the safe harbor, would have
exited the market, they likely will
experience greater benefits from the
final rule—in terms of increased access
or more competitive pricing—than
consumers generally. If persons
providing remittance transfers to rural
consumers are more likely to qualify for
the safe harbor and, absent the safe
harbor, would have chosen to
implement subpart B of Regulation E,
rural consumers may be more likely to
lose potential benefits arising from the
disclosure, cancellation, and error
resolution rights.
It is likely that depository institutions
and credit unions serving rural
consumers are smaller in terms of asset
size, on average, suggesting that they
might be more likely to benefit from the
safe harbor. This benefit may be muted,
however, if rural consumers are more
likely than other consumers to use
remittance transfer providers that are
not depository institutions or credit
unions.
Consumers in Rural Areas
Consumers in rural areas may
experience different impacts from the
final rule than consumers in general. In
the February Proposal, the Bureau
solicited additional information
regarding the characteristics of rural
consumers who send remittance
transfers, the types of businesses
through which they send remittance
transfers, and the quantitative and
qualitative characteristics of the services
provided to them. The Bureau did not
receive information regarding the types
of institutions that rural consumers use
to send remittance transfers and
whether those institutions are more or
less likely to benefit from the additional
clarity provided by the safe harbor
provision.26 Furthermore, the Bureau
did not receive information regarding
whether rural consumers are more or
less likely than other consumers either
to schedule remittance transfers three or
more business days before the date of
The Regulatory Flexibility Act (RFA)
generally requires an agency to conduct
an initial regulatory flexibility analysis
(IRFA) and a final regulatory flexibility
analysis (FRFA) of any rule subject to
notice-and-comment rulemaking
requirements, unless the agency certifies
that the rule will not have a significant
economic impact on a substantial
number of small entities.28 The Bureau
also is subject to certain additional
procedures under the RFA involving the
convening of a panel to consult with
small business representatives prior to
26 A few commenters suggested that rural banks
would benefit from the safe harbor. The Bureau did
not receive comment regarding whether rural
consumers were more or less likely to use nondepository institutions than other consumers.
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VII. Regulatory Flexibility Act
27 Exceptions include additional requirements in
certain cases to disclose the date of the transfer and
other cancellation information as described above.
28 For purposes of assessing the impacts of the
proposed rule on small entities, ‘‘small entities’’ is
defined in the RFA to include small businesses,
small not-for-profit organizations, and small
government jurisdictions. 5 U.S.C. 601(6). A ‘‘small
business’’ is determined by application of Small
Business Administration regulations and reference
to the North American Industry Classification
System (NAICS) classifications and size standards.
5 U.S.C. 601(3). A ‘‘small organization’’ is any ‘‘notfor-profit enterprise which is independently owned
and operated and is not dominant in its field.’’ 5
U.S.C. 601(4). A ‘‘small governmental jurisdiction’’
is the government of a city, county, town, township,
village, school district, or special district with a
population of less than 50,000. 5 U.S.C. 601(5).
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proposing a rule for which an IRFA is
required.29
The Bureau is certifying the final rule.
Therefore, a FRFA is not required for
this rule because it will not have a
significant economic impact on a
substantial number of small entities.
In this rulemaking, the Bureau is
amending subpart B of Regulation E,
which implements the EFTA, and the
official interpretation to the Regulation.
This rule modifies the February Final
Rule as well as the accompanying
commentary. The final rule provides a
new safe harbor clarifying when a
person does not provide remittance
transfers in the normal course of
business for purposes of determining
whether a person is a ‘‘remittance
transfer provider.’’ In the final rule, the
Bureau is also refining the disclosure
requirements for certain remittance
transfers scheduled before the date of
the transfer, including preauthorized
remittance transfers, and the
accompanying interpretations of those
requirements.
This rule facilitates compliance with
the February Final Rule and eases
possible compliance burden while
generally preserving potential benefits
to consumers arising from the
disclosure, cancellation, and error
resolution requirements of the February
Final Rule. The Bureau concluded that
the February Proposal would not have a
significant economic impact on a
substantial number of small entities,
and to the extent that it has such
impacts, they would largely be positive.
The Bureau received a number of
comments in response to the February
Proposal addressing the burden
imposed by the February Proposal and
potential alternatives as well as the
burden imposed by the February Final
Rule. These comments are summarized
above. The Bureau also invited
comment from members of the public
regarding whether the rule, as proposed,
would have a significant impact on a
substantial number of small entities.
One commenter urged the Bureau to
employ the Small Business Regulatory
Enforcement Fairness Act (SBREFA)
panel process. This commenter also
suggested that the Bureau engage in
outreach to credit unions and
community banks prior to finalizing the
rule.30
29 5
U.S.C. 609.
commenter appeared to be confusing the
February Proposal with the February Final Rule.
The letter states: ‘‘As noted in the final rule, the
agency concluded that the proposed rule could
have a significant economic impact on small
entities regarding international wire transfers.’’ This
is not true of the February Proposal in which the
Bureau certified that the February Proposal, if
30 This
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As discussed below, the Bureau
considered these comments, data, and
other information obtained through
further outreach in concluding that a
factual basis exists for certifying the
final rule. The analysis examines the
regulatory impact of the final rule
against the baseline of the February
Final Rule.
A. Affected Small Entities
Potentially affected small entities
include depository institutions and
credit unions that have $175 million or
less in assets that offer remittance
transfers as well as non-depository
institutions that have average annual
receipts that do not exceed $7 million.31
These affected small entities may
include state-licensed money
transmitters, among others.32 Of the
7,319 insured depository institutions,
3,845 are small entities.33 As explained
in the February Final Rule, these
institutions generally offer remittance
transfers through wire transfers, though
they may also offer remittance transfers
through other means.
Regulatory filings by insured
depository institutions do not contain
information about the number of
institutions that offer consumer
international wire transfers (or other
types of remittance transfers). Two trade
association surveys of a small number of
depository institutions found that seven
percent of respondents (in one survey)
and ten percent (in the other survey)
stated that they do not offer
international funds transfers on behalf
of consumers.34 The Bureau does not
promulgated, would not have a significant
economic impact on a substantial number of small
entities.
31 Small Business Administration, Table of Small
Business Size Standards Matched to North
American Industry Classification System Codes,
https://www.sba.gov/sites/default/files/files/
Size_Standards_Table.pdf. Effective March 26,
2012.
32 For the purpose of this analysis, the Bureau
assumes that providers, and not their agents, will
assume any costs associated with implementing the
final rule. A remittance transfer provider is liable
for any violation of subpart B by an agent when the
agent acts for the provider (See § 1005.35). There
may be other entities that serve as remittance
transfer providers that are not depository
institutions, credit unions, or money transmitters,
as traditionally defined. These entities could
include broker-dealers that send remittance
transfers. The Bureau does not have information
regarding the number of broker-dealers that send
remittance transfers.
33 Federal Deposit Insurance Corporation, https://
www2.fdic.gov/idasp/main.asp, downloaded July
12, 2012. Count includes active institutions as of
March 31, 2012.
34 One survey of 146 banks reported that 10.3
percent of respondent banks did not ‘‘initiate
electronic funds transfers (wires or IAT) for
consumers in the U.S. to persons or entities outside
the U.S.’’ Another survey of 277 banks found that
6.9 percent of bank respondents did not send
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believe it can extrapolate from either
survey to the entire population of
depository institutions. However, for the
purposes of this analysis, the Bureau
assumes that all but seven percent of
small depository institutions, i.e., 3,576,
send remittance transfers. The Bureau
believes that this figure likely
overestimates the number of small
entity depository institutions offering
remittance transfers. Data from the
National Credit Union Administration
suggest that, as of March 2012, 3,382 of
the 7,019 federally insured credit
unions offer international wire transfers.
Of the insured credit unions that offer
international wire transfers, 2,548 are
small entities. Though the Bureau does
not have exact data on the number of
credit unions that offer remittance
transfers, the Bureau assumes that the
figure is similar.
Apart from insured depository
institutions and credit unions, the
Bureau believes that most of the other
small entities affected by this rule are
state-licensed money transmitters. In
comment to the February Final Rule,
one trade association estimated that
there are about 500 state-licensed
money transmitters. In an analysis
performed in connection with the
February Final Rule, the Bureau
estimated that 350 of these 500 statelicensed money transmitters had $7
million or less in total revenues and
therefore would be considered small
entities under the Small Business
Administration’s small business size
standards.35
As discussed below, the Bureau
expects that many small entities will
likely benefit from the additional clarity
provided by the safe harbor. The small
entities directly affected by other
aspects of the final rule are those
entities that are required to comply with
subpart B of Regulation E and either (i)
Provide remittance transfers scheduled
at least five business days before the
date of the transfer; (ii) provide
preauthorized remittance transfers; or
(iii) provide remittance transfers
scheduled three or more business days
international fund transfers on behalf of consumers.
In its comment letter, the same trade association
stated that 68 percent of community banks offer
international funds transfers to consumers and cited
to a survey with 713 respondents (implying that 32
percent of banks do not offer international funds
transfers).
35 Regulatory data received from New York shows
that 55 percent of money transmitters licensed in
that state had $7 million or less in revenue in 2011.
Applying that percentage to the figure of 500 statelicensed money transmitters would result in an
estimate of 275 small entity money transmitters.
However, absent further information, the Bureau
does not believe that it can extrapolate from the
New York data to the entire money transmitter
market.
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before the date of the transfer as well as
remittance transfers scheduled fewer
than three business days before the date
of the transfer.
B. Normal Course of Business
Comment 30(f)–2 to the February
Final Rule states that whether a person
provides remittance transfers in the
normal course of business depends on
the facts and circumstances, including
the total number and frequency of
remittance transfers sent by the
provider. The final rule provides a new
safe harbor clarifying when a person
does not provide remittance transfers in
the normal course of business for
purposes of determining whether a
person is a ‘‘remittance transfer
provider.’’ The final rule states that if a
person provided 100 or fewer
remittance transfers in the previous
calendar year, and provides 100 or
fewer remittance transfers in the current
calendar year, then the person is
deemed not to be providing remittance
transfers for a consumer in the normal
course of its business. For a person that
crosses the 100-transaction threshold,
and is providing remittance transfers for
consumers in the normal course of its
business, the final rule permits a
reasonable period of time, not to exceed
six months, to begin complying with
subpart B of Regulation E. For such a
person, compliance with subpart B of
Regulation E will be required at the end
of the ‘‘reasonable period of time’’
unless, based on the facts and
circumstances, such a person is not a
remittance transfer provider.
The Bureau expects that persons who
believe they qualify for the safe harbor
will endeavor to track the number of
remittance transfers that they send each
year. Though there may be a cost
associated with tracking the number of
remittance transfers provided, persons
elect to incur it at their option. Persons
qualifying for the safe harbor will be
relieved of uncertainty and legal risk
regarding whether they provide
remittance transfers in the normal
course of business. Furthermore,
persons who formerly qualified for the
safe harbor, but then provide more than
100 remittance transfers in a year, will
benefit from the final rule’s transition
period. Therefore, the final rule may
only decrease compliance costs relative
to the baseline established by the
February Final Rule.
As discussed above, the Bureau is
unable to state definitively the number
of small entities that would benefit from
the additional certainty provided by the
safe harbor and the benefits of the
transition period. The Bureau received
limited survey results and data from
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several sources describing the number
of remittance transfers or similar
transactions (which may include
remittance transfers) provided by
individual depository institutions,
credit unions, and state-licensed money
transmitters. This information suggests
that a meaningful number of depository
institutions and credit unions will likely
qualify for the safe harbor. Furthermore,
for depository institutions and credit
unions that provide remittance
transfers, these sources also suggest a
generally positive relationship between
asset size and remittance transfer
counts, suggesting that small entity
institutions are more likely to qualify for
the safe harbor than larger institutions.
In addition to data regarding
depository institutions and credit
unions, the Bureau obtained some
information from state regulators in
California, New York, and Ohio
regarding entities licensed as money
transmitters in those states. These data
generally tracked transactions that are
money transmissions under each state’s
law, which generally include remittance
transfers, as defined in subpart B of
Regulation E, but may not include all
such remittance transfers, and may
include a number of other types of
transactions that are not remittance
transfers under subpart B of Regulation
E. Nevertheless, these data, combined
with the Bureau’s research regarding the
business models of covered companies,
suggest that few state-licensed money
transmitters would qualify for the safe
harbor. Therefore, the additional clarity
provided by the safe harbor would
likely represent little, if any, change
relative to the February Final Rule for
small entity state-licensed money
transmitters.36
C. Estimates and Disclosure
Requirements
In the final rule, § 1005.32(b)(2)
permits providers to estimate certain
information in pre-payment disclosures
and certain receipts provided for
remittance transfers scheduled by a
sender five or more business days before
the date of the transfer, including
preauthorized remittance transfers. If a
remittance transfer provider chooses to
give estimated disclosures pursuant to
§ 1005.32(b)(2), the final rule also
requires that it provide a receipt with
accurate figures (unless a statutory
exception permitting the use of
estimates applies).
36 Although the Bureau does not have access to
data regarding other types of entities that
potentially provide remittance transfers, those
entities could only benefit from the clarity provided
by the safe harbor and the reduction in compliance
costs associated with the transition period.
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This provision for estimates only
affects remittance transfer providers that
offer consumers the option to schedule
remittance transfers five or more
business days before the date of the
transfer. As discussed above in the
Section 1022 Analysis, these providers
are relieved of the potential burden
associated with disclosing accurate
exchange rates five or more business
days before the date of the transfer.
Remittance transfer providers
choosing to employ this exception for
estimates will potentially incur
additional costs associated with
providing an additional receipt with
accurate figures to consumers in
connection with one-time transfers and
the first in a series of preauthorized
remittance transfers. However,
remittance transfer providers retain the
option of complying with the February
Final Rule and providing accurate prepayment disclosures and receipts (and
thus not providing a second receipt) for
every transfer. Therefore, remittance
transfer providers, including small
entity providers, should only benefit
and not incur any additional costs from
this change.
D. Disclosure Rules for Subsequent
Preauthorized Remittance Transfers
The final rule eliminates the
requirement that remittance transfer
providers mail or deliver pre-payment
disclosures within a reasonable time
prior to the date of each subsequent
preauthorized remittance transfer.
Instead, the final rule requires a receipt
be provided to the consumer within a
reasonable time prior to the date of the
next preauthorized remittance transfer
only if certain figures (generally those
that are not estimates or based on
estimates) on the receipt provided with
respect to the first in that series of
preauthorized remittance transfers
change (or the figures disclosed from a
prior updated receipt change, if one was
previously provided). This receipt must
disclose the changed terms, among the
other disclosures required by
§ 1005.31(b)(2).37 This additional
flexibility will benefit providers,
including small entity providers. With
respect to these pre-payment
disclosures, providers will no longer
incur the costs associated with
providing these disclosures or
compliance risk arising from
uncertainty surrounding the
interpretation of ‘‘reasonable time.’’
When certain figures change, providers
will still incur some cost associated
with providing a receipt displaying
37 It may contain estimates as permitted by
§ 1005.32(b)(2).
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these figures a reasonable time prior to
the subsequent transfer. However, it is
expected that an obligation to provide
updated receipts will occur less
frequently than the requirement in the
February Final Rule to provide prepayment disclosures before every
subsequent preauthorized transfer.
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E. Cancellation Period and Disclosures
The final rule requires that remittance
transfer providers disclose the date of
the transfer on receipts given in
association with any transfer scheduled
at least three business days before the
date of the transfer, as well as the first
transfer in a series of preauthorized
remittance transfers. Also, the final rule
requires, in conjunction with certain
disclosures related to initial transfers in
series of preauthorized transfers,
disclosures of the date of transfer
regarding any subsequent preauthorized
transfer in that series for which the date
of the transfer is four or fewer business
days after the date payment is made for
that transfer. To comply with this new
requirement, remittance transfer
providers must program systems to
disclose the date of the transfer on
receipts for certain transfers. This may
constitute an additional cost to
remittance transfer providers if they do
not already include this information on
their receipts. The Bureau lacks specific
information regarding the additional
burden imposed on remittance transfer
providers by this provision, but believes
it to be modest given that it involves a
slight modification of a disclosure
already required by the February Final
Rule to include information already
maintained by the provider. For those
remittance transfer providers producing
receipts electronically, this will likely
involve a one-time programming change
to information technology systems.
The additional requirement in the
final rule that providers disclose the
date of the transfer, as well as
cancellation requirements and the
provider’s contact information, within a
certain period before each subsequent
preauthorized remittance transfer
scheduled five or more business days
before the date of the transfer represents
an additional cost to remittance transfer
providers that do not already disclose
this information. Among other options,
providers may include this information
in an existing statement or disclosure, or
in a single notice covering multiple
transfers that is provided up to a year
before the date of the transfer.38 The
38 This flexibility does not extend to subsequent
preauthorized remittance transfers scheduled four
or fewer business days after the date payment is
made for that transfer.
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Bureau believes that modifying existing
statements or disclosures to include
information already maintained by the
remittance transfer provider likely
represents a modest, one-time
programming cost for those remittance
transfer providers generating statements
or disclosures electronically.
Furthermore, the rule permits providers
flexibility to disclose the required
information in any number of ways.
Thus, providers may be able to choose
the least expensive among several
disclosure options.
The final rule also states that
remittance transfer providers may
describe both the three-business-day
and 30-minute cancellation periods on
one receipt, provided they either
describe the remittance transfers to
which each period applies, or
alternatively, use a checkbox or some
other method to designate which
cancellation period is applicable to the
transfer.39 This permits the use of one
standardized form, though each receipt
would need to be modified for the
particular remittance transfer. This may
result in reduced costs for those
providers that offer both remittance
transfers scheduled either three or more
business days before the date of the
transfer and closer to or on the date of
the transfer, since providers otherwise
are required by the February Final Rule
to produce two types of receipts. This
additional flexibility may benefit
providers while not imposing any
additional costs on them since they
retain the option of complying with the
requirements of the February Final Rule.
The Bureau did not receive specific
information regarding the number of
small entities that would be affected by
these changes. As discussed above, the
Bureau believes that a meaningful
number of small insured depository
institutions and credit unions will
qualify for the safe harbor in the final
rule, and thus are not remittance
transfer providers and are not required
to comply with subpart B of Regulation
E. The Bureau additionally believes
that, though few state-licensed money
transmitters are likely to qualify for the
safe harbor in the final rule, very few
small state-licensed money transmitters
offer consumers preauthorized
remittance transfers or the ability to
schedule remittance transfers to be sent
at some later date. Therefore, the Bureau
believes that provisions relating to
preauthorized or prescheduled transfers
39 Consumers scheduling remittance transfers at
least three business days before the date of the
transfer may cancel the remittance transfer up to
three business days prior to the date of the transfer.
Otherwise, consumers have 30 minutes from when
they make payment to cancel.
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are not likely to have a significant
economic impact on a substantial
number of small entities.
F. Cost of Credit for Small Entities
The final rule does not apply to credit
transactions or to commercial
remittances. Therefore, the Bureau does
not expect the final rule to increase the
cost of credit for small businesses. With
a few exceptions, the final rule generally
does not change or lowers the cost of
compliance for depositories and credit
unions, many of which offer small
business credit. Any effect of this rule
on small business credit, however,
would be highly attenuated. The final
rule also generally does not change or
lowers the cost of compliance for money
transmitters. Money transmitters
typically do not extend credit to any
entity, including small businesses.
G. Certification
Accordingly, the undersigned certifies
that this rule will not have a significant
economic impact on a substantial
number of small entities.
VIII. Paperwork Reduction Act
The Bureau’s information collection
requirements contained in this final rule
have been submitted to and approved by
the Office of Management and Budget
(OMB) in accordance with the
requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C.
3507(d)). This collection of information
was submitted to OMB as an
amendment to the previously approved
collection for the Electronic Fund
Transfer Act (Regulation E) 12 CFR part
1005 under OMB control number 3170–
0014. Under the Paperwork Reduction
Act (PRA), an agency may not conduct
or sponsor, and a person is not required
to respond to, an information collection
unless the information collection
displays a valid OMB control number.
The information collection
requirements in this final rule are in 12
CFR part 1005. This information
collection is required to provide benefits
for consumers and is mandatory. See 15
U.S.C. 1693, et seq. The likely
respondents are remittance transfer
providers, including small businesses.
This information collection is required
to provide disclosures and receipts to
consumers in the United States who,
primarily for personal, family, or
household purposes, request remittance
transfer providers to send remittance
transfers to designated recipients, to be
received in a foreign country. The
disclosures provide pricing information
and information regarding cancellation
and error resolution rights. This
information may be used by consumers
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for budgeting and shopping purposes
and by consumers and Federal agencies
to determine when violations of the
underlying rules and statute have
occurred.
The Bureau estimates that the
frequency of response to the collection
of information in the final rule will be
on-occasion. The Bureau estimates that
the total one-time burden for all 10,689
respondents potentially affected by the
final rule to comply with Regulation E
decreases by 914,311 hours as a result
of the final rule, and the total ongoing
annual burden decreases by 532,784
hours.40 This decrease in total burden is
largely, but not exclusively, attributable
to respondents who will decide not to
comply with subpart B of Regulation E
due to the safe harbor provided for in
the final rule.41 Although the Bureau
does not have precise information
regarding the number of entities
qualifying for the safe harbor, the
information obtained in this rulemaking
suggests that a meaningful number of
insured depositories and credit unions
may qualify. For purposes of this PRA
analysis, the Bureau has assumed that
all respondents availing themselves of
the safe harbor are non-Bureau
respondents, since the Bureau estimates
that larger depository institutions and
credit unions (in terms of asset size) are
less likely to qualify for the safe harbor.
Other Federal agencies, including the
Federal Trade Commission, are
responsible for estimating and reporting
to OMB the paperwork burden for the
institutions for which they have
administrative enforcement authority.
They may, but are not required to, use
the Bureau’s burden estimation
methodology.
Despite this overall reduction, the
Bureau estimates that one-time burden
for Bureau respondents increases
slightly.42 For the 154 large depository
institutions and credit unions
(including their depository affiliates)
considered to be Bureau respondents for
the purposes of this PRA analysis, the
Bureau estimates that the final rule
increases one-time burden by 809 hours
and has no impact on ongoing burden.
For the 500 non-depository money
transmitters for which the Bureau has
administrative enforcement authority
for the purposes of the PRA, the rule
increases one-time burden by 1,313
hours and has no impact on ongoing
burden.43
In conjunction with the February
Proposal, the Bureau received
comments on the merits of various
aspects of the final rule, including the
burden of compliance generally, the
relative burden of providing actual
exchange rates and estimates, whether
or how information regarding
cancellation periods should be
disclosed, estimates of the number of
institutions affected by the safe harbor,
and whether particular disclosure forms
should be required. These comments
relate to core issues in the February
Proposal and the Bureau’s consideration
of these comments is discussed above.
The Bureau received no comments
specifically addressing the Bureau’s
proposed PRA burden estimates or
numbers of Bureau respondents.
40 The decrease in respondents relative to the
PRA analysis for the February Final Rule reflects a
revision by the Bureau of the estimate of the
number of non-Bureau depository institutions and
credit unions offering remittance transfers relative
to the number reported in the February Final Rule.
The Bureau previously estimated that
approximately 11,000 insured depositories and
credit unions not supervised by the Bureau provide
remittance transfers. The Bureau now believes that
that number may be closer to 10,000. The decrease
in burden relative to what was previously reported
from this revision is not included in the change in
burden reported here. However, the revised entity
counts are used for the purpose of calculating other
changes in burden arising from the final rule. This
number also assumes that 500 money transmitters,
and not their agents, are respondents.
41 The Bureau previously made the conservative
assumption in the PRA analysis for the February
Final Rule that no respondent would choose not to
comply with subpart B of Regulation E. By
increasing certainty as to whether a remittance
transfer provider does not provide remittance
transfers in the normal course of business, the
Bureau anticipates that the final rule’s safe harbor
will increase the number of respondents that take
advantage of the normal course of business
exclusion and therefore decide to not comply with
subpart B.
Banking, Banks, Consumer protection,
Credit unions, Electronic fund transfers,
National banks, Remittance transfers,
Reporting and recordkeeping
requirements, Savings associations.
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List of Subjects in 12 CFR Part 1005
42 The Bureau’s estimates of burden and
respondents have changed from the February
Proposal due to modifications to the Bureau’s
estimation methodology. Specifically, this PRA
analysis reduces certain burdens in instances where
disclosures are no longer required. The Bureau also
assumes that no ongoing burden is associated with
the modification of an existing disclosure.
Additionally, burden attributed to reading the final
rule is included. With respect to Bureau
respondents, the Bureau further assumes that
money transmitters, and not their agents, incur the
burden associated with the provisions in this
rulemaking, which generally involve the
modification of existing disclosures.
43 The Bureau and the Federal Trade Commission
generally both have enforcement authority over
non-depository institutions subject to Regulation E.
Accordingly, the Bureau has allocated to itself half
of the total estimated 2,626 burden hours incurred
by non-depository money transmitters subject to the
final rule.
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Authority and Issuance
For the reasons stated in the
preamble, the Bureau of Consumer
Financial Protection amends 12 CFR
part 1005 as set forth below:
PART 1005—ELECTRONIC FUND
TRANSFERS (REGULATION E)
1. The authority citation for part 1005
is revised to read as follows:
■
Authority: 12 U.S.C. 5512, 5581; 15 U.S.C.
1693b.
Subpart B is also issued under 12 U.S.C.
5601.
Subpart B—Requirements for
Remittance Transfers
2. Amend § 1005.30 to revise
paragraph (f) to read as follows:
■
§ 1005.30
Remittance transfer definitions.
*
*
*
*
*
(f) Remittance transfer provider—(1)
General definition. ‘‘Remittance transfer
provider’’ or ‘‘provider’’ means any
person that provides remittance
transfers for a consumer in the normal
course of its business, regardless of
whether the consumer holds an account
with such person.
(2) Normal course of business—(i)
Safe harbor. For purposes of paragraph
(f)(1) of this section, a person is deemed
not to be providing remittance transfers
for a consumer in the normal course of
its business if the person:
(A) Provided 100 or fewer remittance
transfers in the previous calendar year;
and
(B) Provides 100 or fewer remittance
transfers in the current calendar year.
(ii) Transition period. If a person that
provided 100 or fewer remittance
transfers in the previous calendar year
provides more than 100 remittance
transfers in the current calendar year,
and if that person is then providing
remittance transfers for a consumer in
the normal course of its business
pursuant to paragraph (f)(1) of this
section, the person has a reasonable
period of time, not to exceed six
months, to begin complying with this
subpart. Compliance with this subpart
will not be required for any remittance
transfers for which payment is made
during that reasonable period of time.
*
*
*
*
*
■ 3. Amend § 1005.31 to revise
paragraphs (a)(3)(ii), (a)(3)(iii), (a)(5)(ii),
(a)(5)(iii), (b)(2)(v), (b)(2)(vi), and (b)(3);
and add paragraphs (a)(3)(iv), (a)(5)(iv),
and (b)(2)(vii) to read as follows:
§ 1005.31
Disclosures.
(a) * * *
(3) * * *
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(ii) The remittance transfer provider
complies with the requirements of
paragraph (g)(2) of this section;
(iii) The provider discloses orally a
statement about the rights of the sender
regarding cancellation required by
paragraph (b)(2)(iv) of this section
pursuant to the timing requirements in
paragraph (e)(1) of this section; and
(iv) The provider discloses orally, as
each is applicable, the information
required by paragraph (b)(2)(vii) of this
section and the information required by
§ 1005.36(d)(1)(i)(A), with respect to
transfers subject to § 1005.36(d)(2)(ii),
pursuant to the timing requirements in
paragraph (e)(1) of this section.
*
*
*
*
*
(5) * * *
(ii) The remittance transfer provider
complies with the requirements of
paragraph (g)(2) of this section;
(iii) The provider discloses orally or
via mobile application or text message
a statement about the rights of the
sender regarding cancellation required
by paragraph (b)(2)(iv) of this section
pursuant to the timing requirements in
paragraph (e)(1) of this section; and
(iv) The provider discloses orally or
via mobile application or text message,
as each is applicable, the information
required by paragraph (b)(2)(vii) of this
section and the information required by
§ 1005.36(d)(1)(i)(A), with respect to
transfers subject to § 1005.36(d)(2)(ii),
pursuant to the timing requirements in
paragraph (e)(1) of this section.
*
*
*
*
*
(b) * * *
(2) * * *
(v) The name, telephone number(s),
and Web site of the remittance transfer
provider;
(vi) A statement that the sender can
contact the State agency that licenses or
charters the remittance transfer provider
with respect to the remittance transfer
and the Consumer Financial Protection
Bureau for questions or complaints
about the remittance transfer provider,
using language set forth in Model Form
A–37 of Appendix A to this part or
substantially similar language. The
disclosure must provide the name,
telephone number(s), and Web site of
the State agency that licenses or charters
the remittance transfer provider with
respect to the remittance transfer and
the name, toll-free telephone number(s),
and Web site of the Consumer Financial
Protection Bureau; and
(vii) For any remittance transfer
scheduled by the sender at least three
business days before the date of the
transfer, or the first transfer in a series
of preauthorized remittance transfers,
the date the remittance transfer provider
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will make or made the remittance
transfer, using the term ‘‘Transfer Date,’’
or a substantially similar term.
(3) Combined disclosure—(i) In
general. As an alternative to providing
the disclosures described in paragraph
(b)(1) and (2) of this section, a
remittance transfer provider may
provide the disclosures described in
paragraph (b)(2) of this section, as
applicable, in a single disclosure
pursuant to the timing requirements in
paragraph (e)(1) of this section. Except
as provided in paragraph (b)(3)(ii) of
this section, if the remittance transfer
provider provides the combined
disclosure and the sender completes the
transfer, the remittance transfer provider
must provide the sender with proof of
payment when payment is made for the
remittance transfer. The proof of
payment must be clear and
conspicuous, provided in writing or
electronically, and provided in a
retainable form.
(ii) Transfers scheduled before the
date of transfer. If the disclosure
described in paragraph (b)(3)(i) of this
section is provided in accordance with
§ 1005.36(a)(1)(i) and payment is not
processed by the remittance transfer
provider at the time the remittance
transfer is scheduled, a remittance
transfer provider may provide
confirmation that the transaction has
been scheduled in lieu of the proof of
payment otherwise required by
paragraph (b)(3)(i) of this section. The
confirmation of scheduling must be
clear and conspicuous, provided in
writing or electronically, and provided
in a retainable form.
*
*
*
*
*
■ 4. Amend § 1005.32 to revise
paragraph (b) and the introductory text
of paragraph (c), and to add paragraph
(d) to read as follows:
§ 1005.32
Estimates.
*
*
*
*
*
(b) Permanent exceptions—(1)
Permanent exception for transfers to
certain countries.
(i) General. For disclosures described
in §§ 1005.31(b)(1) through (b)(3) and
1005.36(a)(1) and (a)(2), estimates may
be provided for transfers to certain
countries in accordance with paragraph
(c) of this section for the amounts
required to be disclosed under
§ 1005.31(b)(1)(iv) through (b)(1)(vii), if
a remittance transfer provider cannot
determine the exact amounts when the
disclosure is required because:
(A) The laws of the recipient country
do not permit such a determination, or
(B) The method by which transactions
are made in the recipient country does
not permit such determination.
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(ii) Safe harbor. A remittance transfer
provider may rely on the list of
countries published by the Bureau to
determine whether estimates may be
provided under paragraph (b)(1) of this
section, unless the provider has
information that a country’s laws or the
method by which transactions are
conducted in that country permits a
determination of the exact disclosure
amount.
(2) Permanent exception for transfers
scheduled before the date of transfer. (i)
Except as provided in paragraph
(b)(2)(ii) of this section, for disclosures
described in §§ 1005.36(a)(1)(i) and
(a)(2)(i), estimates may be provided in
accordance with paragraph (d) of this
section for the amounts to be disclosed
under §§ 1005.31(b)(1)(iv) through (vii)
if the remittance transfer is scheduled
by a sender five or more business days
before the date of the transfer. In
addition, if, at the time the sender
schedules such a transfer, the provider
agrees to a sender’s request to fix the
amount to be transferred in the currency
in which the remittance transfer will be
received and not the currency in which
it is funded, estimates may also be
provided for the amounts to be
disclosed under §§ 1005.31(b)(1)(i)
through (iii), except as provided in
paragraph (b)(2)(iii) of this section.
(ii) Fees and taxes described in
§ 1005.31(b)(1)(vi) may be estimated
under paragraph (b)(2)(i) of this section
only if the exchange rate is also
estimated under paragraph (b)(2)(i) and
the estimated exchange rate affects the
amount of such fees and taxes.
(iii) Fees and taxes described in
§ 1005.31(b)(1)(ii) may be estimated
under paragraph (b)(2)(i) of this section
only if the amount that will be
transferred in the currency in which it
is funded is also estimated under
paragraph (b)(2)(i) of this section, and
the estimated amount affects the amount
of such fees and taxes.
(c) Bases for estimates generally.
Estimates provided pursuant to the
exceptions in paragraph (a) or (b)(1) of
this section must be based on the belowlisted approach or approaches, except as
otherwise permitted by this paragraph.
If a remittance transfer provider bases
an estimate on an approach that is not
listed in this paragraph, the provider is
deemed to be in compliance with this
paragraph so long as the designated
recipient receives the same, or greater,
amount of funds than the remittance
transfer provider disclosed under
§ 1005.31(b)(1)(vii).
*
*
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*
*
(d) Bases for estimates for transfers
scheduled before the date of transfer.
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Estimates provided pursuant to
paragraph (b)(2) of this section must be
based on the exchange rate or, where
applicable, the estimated exchange rate
based on an estimation methodology
permitted under paragraph (c) of this
section that the provider would have
used or did use that day in providing
disclosures to a sender requesting such
a remittance transfer to be made on the
same day. If, in accordance with this
paragraph, a remittance transfer
provider uses a basis described in
paragraph (c) of this section but not
listed in paragraph (c)(1) of this section,
the provider is deemed to be in
compliance with this paragraph
regardless of the amount received by the
designated recipient, so long as the
estimation methodology is the same that
the provider would have used or did use
in providing disclosures to a sender
requesting such a remittance transfer to
be made on the same day.
■ 5. Amend § 1005.33 to revise
paragraph (a)(1)(i) to read as follows:
§ 1005.33
Procedures for resolving errors.
(a) * * *
(1) * * *
(i) An incorrect amount paid by a
sender in connection with a remittance
transfer unless the disclosure stated an
estimate of the amount paid by a sender
in accordance with § 1005.32(b)(2) and
the difference results from application
of the actual exchange rate, fees, and
taxes, rather than any estimated amount;
*
*
*
*
*
■ 6. Amend § 1005.36 to revise the
section heading and paragraphs (a) and
(b), and to add paragraph (d) to read as
follows:
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§ 1005.36 Transfers scheduled before the
date of transfer.
(a) Timing. (1) For a one-time transfer
scheduled five or more business days
before the date of transfer or for the first
in a series of preauthorized remittance
transfers, the remittance transfer
provider must:
(i) Provide either the pre-payment
disclosure described in § 1005.31(b)(1)
and the receipt described in
§ 1005.31(b)(2) or the combined
disclosure described in § 1005.31(b)(3),
in accordance with the timing
requirements set forth in § 1005.31(e);
and
(ii) If any of the disclosures provided
pursuant to paragraph (a)(1)(i) of this
section contain estimates as permitted
by § 1005.32(b)(2), mail or deliver to the
sender an additional receipt meeting the
requirements described in
§ 1005.31(b)(2) no later than one
business day after the date of the
transfer. If the transfer involves the
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transfer of funds from the sender’s
account held by the provider, the
receipt required by this paragraph may
be provided on or with the next periodic
statement for that account, or within 30
days after the date of the transfer if a
periodic statement is not provided.
(2) For each subsequent preauthorized
remittance transfer:
(i) If any of the information on the
most recent receipt provided pursuant
to paragraph (a)(1)(i) of this section, or
by this paragraph (a)(2)(i), other than the
temporal disclosures required by
§ 1005.31(b)(2)(ii) and (b)(2)(vii), is no
longer accurate with respect to a
subsequent preauthorized remittance
transfer for reasons other than as
permitted by § 1005.32, then the
remittance transfer provider must
provide an updated receipt meeting the
requirements described in
§ 1005.31(b)(2) to the sender. The
provider must mail or deliver this
receipt to the sender within a reasonable
time prior to the scheduled date of the
next subsequent preauthorized
remittance transfer. Such receipt must
clearly and conspicuously indicate that
it contains updated disclosures.
(ii) Unless a receipt was provided in
accordance with paragraph (a)(2)(i) of
this section that contained no estimates
pursuant to § 1005.32, the remittance
transfer provider must mail or deliver to
the sender a receipt meeting the
requirements described in
§ 1005.31(b)(2) no later than one
business day after the date of the
transfer. If the remittance transfer
involves the transfer of funds from the
sender’s account held by the provider,
the receipt required by this paragraph
may be provided on or with the next
periodic statement for that account, or
within 30 days after the date of the
transfer if a periodic statement is not
provided.
(iii) A remittance transfer provider
must provide the disclosures required
by paragraph (d) of this section in
accordance with the timing
requirements of that section.
(b) Accuracy. (1) For a one-time
transfer scheduled five or more business
days in advance or for the first in a
series of preauthorized remittance
transfers, disclosures provided pursuant
to paragraph (a)(1)(i) of this section
must comply with § 1005.31(f) by being
accurate when a sender makes payment
except to the extent estimates are
permitted by § 1005.32.
(2) For each subsequent preauthorized
remittance transfer, the most recent
receipt provided pursuant to paragraph
(a)(1)(i) or (a)(2)(i) of this section must
be accurate as of when such transfer is
made, except:
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(i) The temporal elements required by
§ 1005.31(b)(2)(ii) and (b)(2)(vii) must be
accurate only if the transfer is the first
transfer to occur after the disclosure was
provided; and
(ii) To the extent estimates are
permitted by § 1005.32.
(3) Disclosures provided pursuant to
paragraph (a)(1)(ii) or (a)(2)(ii) of this
section must be accurate as of when the
remittance transfer to which it pertains
is made, except to the extent estimates
are permitted by § 1005.32(a) or (b)(1).
*
*
*
*
*
(d) Additional requirements for
subsequent preauthorized remittance
transfers—(1) Disclosure requirement.
(i) For any subsequent transfer in a
series of preauthorized remittance
transfers, the remittance transfer
provider must disclose to the sender:
(A) The date the provider will make
the subsequent transfer, using the term
‘‘Future Transfer Date,’’ or a
substantially similar term;
(B) A statement about the rights of the
sender regarding cancellation as
described in § 1005.31(b)(2)(iv); and
(C) The name, telephone number(s),
and Web site of the remittance transfer
provider.
(ii) If the future date or dates of
transfer are described as occurring in
regular periodic intervals, e.g., the 15th
of every month, rather than as a specific
calendar date or dates, the remittance
transfer provider must disclose any
future date or dates of transfer that do
not conform to the described interval.
(2) Notice requirements. (i) Except as
described in paragraph (d)(2)(ii) of this
section, the disclosures required by
paragraph (d)(1) of this section must be
received by the sender no more than 12
months, and no less than five business
days prior to the date of any subsequent
transfer to which it pertains. The
disclosures required by paragraph (d)(1)
of this section may be provided in a
separate disclosure or may be provided
on one or more disclosures required by
this subpart related to the same series of
preauthorized transfers, so long as the
consumer receives the required
information for each subsequent
preauthorized remittance transfer in
accordance with the timing
requirements of this paragraph (d)(2)(i).
(ii) For any subsequent preauthorized
remittance transfer for which the date of
transfer is four or fewer business days
after the date payment is made for that
transfer, the information required by
paragraph (d)(1) of this section must be
provided on or with the receipt
described in § 1005.31(b)(2), or
disclosed as permitted by
§ 1005.31(a)(3) or (a)(5), for the initial
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transfer in that series in accordance
with paragraph (a)(1)(i) of this section.
(3) Specific format requirement. The
information required by paragraph
(d)(1)(i)(A) of this section generally
must be disclosed in close proximity to
the other information required by
paragraph (d)(1)(i)(B) of this section.
(4) Accuracy. Any disclosure required
by paragraph (d)(1) of this section must
be accurate as of the date the
preauthorized remittance transfer to
which it pertains is made.
■ 7. In Supplement I to part 1005:
■ a. Under Section 1005.30, amend
comment 30(f) by revising paragraph 2;
■ b. Under Section 1005.31, comment
31(b), amend paragraph 31(b)(2) by
adding paragraphs 4 through 6;
■ c. Under Section 1005.31, comment
31(b), amend paragraph 31(b)(3) by
adding paragraph 2;
■ d. Under Section 1005.32, revise
paragraph 1;
■ e. Under Section 1005.32, revise
comment 32(b);
■ f. Under Section 1005.32, comment
32(c), amend paragraph (c)(1) by
revising paragraph 1;
■ g. Under Section 1005.32, add new
comment 32(d); and
■ h. Under Section 1005.36, add
comments 36(a), 36(b) and 36(d).
The additions and revisions read as
follows:
Supplement I to Part 1005—Official
Interpretations
*
*
*
*
*
Section 1005.30—Remittance Transfer
Definitions
*
*
*
*
*
30(f) Remittance Transfer Provider
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*
*
*
*
*
2. Normal course of business. i. General.
Whether a person provides remittance
transfers in the normal course of business
depends on the facts and circumstances,
including the total number and frequency of
remittance transfers sent by the provider. For
example, if a financial institution generally
does not make remittance transfers available
to customers, but sends a couple of such
transfers in a given year as an
accommodation for a customer, the
institution does not provide remittance
transfers in the normal course of business. In
contrast, if a financial institution makes
remittance transfers generally available to
customers (whether described in the
institution’s deposit account agreement, or in
practice) and makes transfers many times per
month, the institution provides remittance
transfers in the normal course of business.
ii. Safe harbor. Under § 1005.30(f)(2)(i), a
person that provided 100 or fewer remittance
transfers in the previous calendar year and
provides 100 or fewer remittance transfers in
the current calendar year is deemed not to be
providing remittance transfers in the normal
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course of its business. Accordingly, a person
that qualifies for the safe harbor in
§ 1005.30(f)(2)(i) is not a ‘‘remittance transfer
provider’’ and is not subject to the
requirements of subpart B. For purposes of
determining whether a person qualifies for
the safe harbor under § 1005.30(f)(2)(i), the
number of remittance transfers provided
includes any transfers excluded from the
definition of ‘‘remittance transfer’’ due
simply to the safe harbor. In contrast, the
number of remittance transfers provided does
not include any transfers that are excluded
from the definition of ‘‘remittance transfer’’
for reasons other than the safe harbor, such
as small value transactions or securities and
commodities transfers that are excluded from
the definition of ‘‘remittance transfer’’ by
§ 1005.30(e)(2).
iii. Transition period. A person may cease
to satisfy the requirements of the safe harbor
described in § 1005.30(f)(2)(i) if the person
provides in excess of 100 remittance transfers
in a calendar year. For example, if a person
that provided 100 or fewer remittance
transfers in the previous calendar year
provides more than 100 remittance transfers
in the current calendar year, the safe harbor
applies to the first 100 remittance transfers
that the person provides in the current
calendar year. For any additional remittance
transfers provided in the current calendar
year and for any remittance transfers
provided in the subsequent calendar year,
whether the person provides remittance
transfers for a consumer in the normal course
of its business, as defined in § 1005.30(f)(1),
and is thus a remittance transfer provider for
those additional transfers, depends on the
facts and circumstances. Section
1005.30(f)(2)(ii) provides a reasonable period
of time, not to exceed six months, for such
a person to begin complying with subpart B,
if that person is then providing remittance
transfers in the normal course of its business.
At the end of that reasonable period of time,
such person would be required to comply
with subpart B unless, based on the facts and
circumstances, the person is not a remittance
transfer provider.
iv. Example of safe harbor and transition
period. Assume that a person provided 90
remittance transfers in 2012 and 90 such
transfers in 2013. The safe harbor will apply
to the person’s transfers in 2013, as well as
the person’s first 100 remittance transfers in
2014. However, if the person provides a 101st
transfer on September 5, the facts and
circumstances determine whether the person
provides remittance transfers in the normal
course of business and is thus a remittance
transfer provider for the 101st and any
subsequent remittance transfers that it
provides in 2014. Furthermore, the person
would not qualify for the safe harbor
described in § 1005.30(f)(2)(i) in 2015
because the person did not provide 100 or
fewer remittance transfers in 2014. However,
for the 101st remittance transfer provided in
2014, as well as additional remittance
transfers provided thereafter in 2014 and
2015, if that person is then providing
remittance transfers for a consumer in the
normal course of business, the person will
have a reasonable period of time, not to
exceed six months, to come into compliance
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with subpart B. Assume that in this case, a
reasonable period of time is six months.
Thus, compliance with subpart B is not
required for remittance transfers made on or
before March 5, 2015 (i.e., six months after
September 5, 2014). After March 5, 2015, the
person is required to comply with subpart B
if, based on the facts and circumstances, the
person provides remittance transfers in the
normal course of business and is thus a
remittance transfer provider.
*
*
*
*
*
Section 1005.31—Disclosures
*
*
*
*
*
31(b) Disclosure Requirements.
*
*
*
*
*
*
*
31(b)(2) Receipt
*
*
*
4. Date of transfer on receipt. Where
applicable, § 1005.31(b)(2)(vii) requires
disclosure of the date of transfer for the
remittance transfer that is the subject of a
receipt required by § 1005.31(b)(2), including
a receipt that is provided in accordance with
the timing requirements in § 1005.36(a). For
any subsequent preauthorized remittance
transfer subject to § 1005.36(d)(2)(ii), the
future date of transfer must be provided on
any receipt provided for the initial transfer in
that series of preauthorized remittance
transfers, or where permitted, or disclosed as
permitted by § 1005.31(a)(3) and (a)(5), in
accordance with § 1005.36(a)(1)(i).
5. Transfer date disclosures. The following
example demonstrates how the information
required by § 1005.31(b)(2)(vii) and
§ 1005.36(d)(1) should be disclosed on
receipts: On July 1, a sender instructs the
provider to send a preauthorized remittance
transfer of US$100 each week to a designated
recipient. The sender requests that first
transfer in the series be sent on July 15. On
the receipt, the remittance transfer provider
discloses an estimated exchange rate to the
sender pursuant to § 1005.32(b)(2). In
accordance with § 1005.31(b)(2)(vii), the
provider should disclose the date of transfer
for that particular transaction (i.e., July 15)
on the receipt provided when payment is
made for the transfer pursuant to the timing
requirements in § 1005.36(a)(1)(i). The
second receipt, which § 1005.36(a)(1)(ii)
requires to be provided within one business
day after the date of the transfer or, for
transfers from the sender’s account held by
the provider, on the next regularly scheduled
periodic statement or within 30 days after
payment is made if a periodic statement is
not provided, is also required to include the
date of transfer. If the provider discloses on
either receipt the cancellation period
applicable to and dates of subsequent
preauthorized remittance transfers in
accordance with § 1005.36(d)(2), the
disclosure must be phrased and formatted in
such a way that it is clear to the sender
which cancellation period is applicable to
any date of transfer on the receipt.
6. Cancellation disclosure. Remittance
transfer providers that offer remittance
transfers scheduled three or more business
days before the date of the transfer, as well
as remittance transfers scheduled fewer than
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three business days before the date of the
transfer, may meet the cancellation
disclosure requirements in § 1005.31(b)(2)(iv)
by describing the three-business-day and 30minute cancellation periods on the same
disclosure and using a checkbox or other
method to clearly designate the applicable
cancellation period. The provider may use a
number of methods to indicate which
cancellation period applies to the transaction
including, but not limited to, a statement to
that effect, use of a checkbox, highlighting,
circling, and the like. For transfers scheduled
three business days before the date of the
transfer, the cancellation disclosures
provided pursuant to § 1005.31(b)(2)(iv)
should be phrased and formatted in such a
way that it is clear to the sender which
cancellation period is applicable to the date
of transfer disclosed on the receipt.
*
*
*
*
*
31(b)(3) Combined Disclosures
*
*
*
*
*
2. Confirmation of scheduling. As
discussed in comment 31(e)–2, payment is
considered to be made when payment is
authorized for purposes of various timing
requirements in subpart B, including with
regard to the timing requirement for
provision of the proof of payment described
in § 1005.31(b)(3)(i). However, where a
transfer (whether a one-time remittance
transfer or the first in a series of
preauthorized remittance transfers) is
scheduled before the date of transfer and the
provider does not intend to process payment
until at or near the date of transfer, the
provider may provide a confirmation of
scheduling in lieu of the proof of payment
required by § 1005.31(b)(3)(i). No further
proof of payment is required when payment
is later processed.
*
*
*
*
*
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Section 1005.32—Estimates
1. Disclosures where estimates can be used.
Sections 1005.32(a) and (b)(1) permit
estimates to be used in certain circumstances
for disclosures described in §§ 1005.31(b)(1)
through (3) and 1005.36(a)(1) and(2). To the
extent permitted in § 1005.32(a) and (b)(1),
estimates may be used in the pre-payment
disclosure described in § 1005.31(b)(1), the
receipt disclosure described in
§ 1005.31(b)(2), the combined disclosure
described in § 1005.31(b)(3), and the prepayment disclosures and receipt disclosures
for both first and subsequent preauthorized
remittance transfers described in
§ 1005.36(a)(1) and (a)(2). Section
1005.32(b)(2) permits estimates to be used for
certain information if the remittance transfer
is scheduled by a sender five or more
business days before the date of the transfer,
for disclosures described in § 1005.36(a)(1)(i)
and (a)(2)(i).
*
*
*
*
*
32(b) Permanent Exceptions
32(b)(1) Permanent Exceptions for Transfers
to Certain Countries
1. Laws of the recipient country. The laws
of the recipient country do not permit a
remittance transfer provider to determine
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exact amounts required to be disclosed when
a law or regulation of the recipient country
requires the person making funds directly
available to the designated recipient to apply
an exchange rate that is:
i. Set by the government of the recipient
country after the remittance transfer provider
sends the remittance transfer or
ii. Set when the designated recipient
receives the funds.
2. Example illustrating when exact
amounts can and cannot be determined
because of the laws of the recipient country.
i. The laws of the recipient country do not
permit a remittance transfer provider to
determine the exact exchange rate required to
be disclosed under § 1005.31(b)(1)(iv) when,
for example, the government of the recipient
country, on a daily basis, sets the exchange
rate that must, by law, apply to funds
received and the funds are made available to
the designated recipient in the local currency
the day after the remittance transfer provider
sends the remittance transfer.
ii. In contrast, the laws of the recipient
country permit a remittance transfer provider
to determine the exact exchange rate required
to be disclosed under § 1005.31(b)(1)(iv)
when, for example, the government of the
recipient country ties the value of its
currency to the U.S. dollar.
3. Method by which transactions are made
in the recipient country. The method by
which transactions are made in the recipient
country does not permit a remittance transfer
provider to determine exact amounts
required to be disclosed when transactions
are sent via international ACH on terms
negotiated between the United States
government and the recipient country’s
government, under which the exchange rate
is a rate set by the recipient country’s central
bank or other governmental authority after
the provider sends the remittance transfer.
4. Example illustrating when exact
amounts can and cannot be determined
because of the method by which transactions
are made in the recipient country.
i. The method by which transactions are
made in the recipient country does not
permit a remittance transfer provider to
determine the exact exchange rate required to
be disclosed under § 1005.31(b)(1)(iv) when
the provider sends a remittance transfer via
international ACH on terms negotiated
between the United States government and
the recipient country’s government, under
which the exchange rate is a rate set by the
recipient country’s central bank on the
business day after the provider has sent the
remittance transfer.
ii. In contrast, a remittance transfer
provider would not qualify for the
§ 1005.32(b)(1)(i)(B) methods exception if it
sends a remittance transfer via international
ACH on terms negotiated between the United
States government and a private-sector entity
or entities in the recipient country, under
which the exchange rate is set by the
institution acting as the entry point to the
recipient country’s payments system on the
next business day. However, a remittance
transfer provider sending a remittance
transfer using such a method may qualify for
the § 1005.32(a) temporary exception.
iii. A remittance transfer provider would
not qualify for the § 1005.32(b)(1)(i)(B)
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methods exception if, for example, it sends
a remittance transfer via international ACH
on terms negotiated between the United
States government and the recipient
country’s government, under which the
exchange rate is set by the recipient country’s
central bank or other governmental authority
before the sender requests a transfer.
5. Safe harbor list. If a country is included
on a safe harbor list published by the Bureau
under § 1005.32(b)(1)(ii), a remittance
transfer provider may provide estimates of
the amounts to be disclosed under
§ 1005.31(b)(1)(iv) through (b)(1)(vii). If a
country does not appear on the Bureau’s list,
a remittance transfer provider may provide
estimates under § 1005.32(b)(1)(i) if the
provider determines that the recipient
country does not legally permit or method by
which transactions are conducted in that
country does not permit the provider to
determine exact disclosure amounts.
6. Reliance on Bureau list of countries. A
remittance transfer provider may rely on the
list of countries published by the Bureau to
determine whether the laws of a recipient
country do not permit the remittance transfer
provider to determine exact amounts
required to be disclosed under
§ 1005.31(b)(1)(iv) through (vii). Thus, if a
country is on the Bureau’s list, the provider
may give estimates under this section, unless
a remittance transfer provider has
information that a country on the Bureau’s
list legally permits the provider to determine
exact disclosure amounts.
7. Change in laws of recipient country. i.
If the laws of a recipient country change such
that a remittance transfer provider can
determine exact amounts, the remittance
transfer provider must begin providing exact
amounts for the required disclosures as soon
as reasonably practicable if the provider has
information that the country legally permits
the provider to determine exact disclosure
amounts.
ii. If the laws of a recipient country change
such that a remittance transfer provider
cannot determine exact disclosure amounts,
the remittance transfer provider may provide
estimates under § 1005.32(b)(1)(i), even if
that country does not appear on the list
published by the Bureau.
32(b)(2) Permanent Exceptions for Transfers
Scheduled Before the Date of Transfer
1. Fixed amount of foreign currency. The
following is an example of when and how a
remittance transfer provider may disclose
estimates for remittance transfers scheduled
five or more business days before the date of
transfer where the provider agrees to the
sender’s request to fix the amount to be
transferred in a currency in which the
transfer will be received and not the currency
in which it was funded. If on February 1, a
sender schedules a 1000 Euro wire transfer
to be sent from the sender’s bank account
denominated in U.S. dollars to a designated
recipient on February 15, § 1005.32(b)(2)
allows the provider to estimate the amount
that will be transferred to the designated
recipient (i.e., the amount described in
§ 1005.31(b)(1)(i)), any fees and taxes
imposed on the remittance transfer by the
provider (if based on the amount transferred)
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(i.e., the amount described in
§ 1005.31(b)(1)(ii)), and the total amount of
the transaction (i.e., the amount described in
§ 1005.31(b)(1)(iii)). The provider may also
estimate any fees and taxes imposed on the
remittance transfer by a person other than the
provider if the exchange rate is also
estimated and the estimated exchange rate
affects the amount of fees and taxes (as
allowed by § 1005.32(b)(2)(ii)).
2. Relationship to § 1005.10(d). To the
extent § 1005.10(d) requires, for an electronic
fund transfer that is also a remittance
transfer, notice when a preauthorized
electronic fund transfer from the consumer’s
account will vary in amount from the
previous transfer under the same
authorization or from the preauthorized
amount, that provision applies even if
subpart B would not otherwise require notice
before the date of transfer. However, insofar
as § 1005.10(d) does not specify the form of
such notice, a notice sent pursuant to
§ 1005.36(a)(2)(i) will satisfy § 1005.10(d) as
long as the timing requirements of
§ 1005.10(d) are satisfied.
32(c) Bases for Estimates
32(c)(1) Exchange Rate
1. Most recent exchange rate for qualifying
international ACH transfers. If the exchange
rate for a remittance transfer sent via
international ACH that qualifies for the
§ 1005.32(b)(1)(i)(B) exception is set the
following business day, the most recent
exchange rate available for a transfer is the
exchange rate set for the day that the
disclosure is provided, i.e., the current
business day’s exchange rate.
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*
*
*
*
*
32(d) Bases for Estimates for Transfers
Scheduled Before the Date of Transfer
1. In general. When providing an estimate
pursuant to § 1005.32(b)(2), § 1005.32(d)
requires that a remittance transfer provider’s
estimated exchange rate must be the
exchange rate (or estimated exchange rate)
that the remittance transfer provider would
have used or did use that day in providing
disclosures to a sender requesting such a
remittance transfer to be made on the same
day. If, for the same-day remittance transfer,
the provider could utilize either of the other
two exceptions permitting the provision of
estimates in § 1005.32(a) or (b)(1), the
provider may provide estimates based on a
methodology permitted under § 1005.32(c).
For example, if, on February 1, the sender
schedules a remittance transfer to occur on
February 10, the provider should disclose the
exchange rate as if the sender was requesting
the transfer be sent on February 1. However,
if at the time payment is made for the
requested transfer, the remittance transfer
provider could not send any remittance
transfer until the next day (for reasons such
as the provider’s deadline for the batching of
transfers), the remittance transfer provider
can use the rate (or estimated exchange rate)
that the remittance transfer provider would
have used or did use in providing disclosures
that day with respect to a remittance transfer
requested that day that could not be sent
until the following day.
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Section 1005.36—Transfers Scheduled
Before the Date of Transfer
36(a) Timing
36(a)(2) Subsequent Preauthorized
Remittance Transfers
1. Changes in disclosures. When a sender
schedules a series of preauthorized
remittance transfers, the provider is generally
not required to provide a pre-payment
disclosure prior to the date of each
subsequent transfer. However,
§ 1005.36(a)(1)(i) requires the provider to
provide a pre-payment disclosure and receipt
for the first in the series of preauthorized
remittance transfers in accordance with the
timing requirements set forth in § 1005.31(e).
While certain information in those
disclosures is expressly permitted to be
estimated (see § 1005.32(b)(2)), other
information is not permitted to be estimated,
or is limited in how it may be estimated.
When any of the information on the most
recent receipt provided pursuant to
§ 1005.36(a)(1)(i) or (a)(2)(i), other than the
temporal disclosures required by
§ 1005.31(b)(2)(ii) and (b)(2)(vii), is no longer
accurate with respect to a subsequent
preauthorized remittance transfer for reasons
other than as permitted by § 1005.32, the
provider must provide, within a reasonable
time prior to the scheduled date of the next
preauthorized remittance transfer, a receipt
that complies with § 1005.31(b)(2) and which
discloses, among the other disclosures
required by § 1005.31(b)(2), the changed
terms. For example, if the provider discloses
in the pre-payment disclosure for the first in
the series of preauthorized remittance
transfers that its fee for each remittance
transfer is $20 and, after six preauthorized
remittance transfers, the provider increases
its fee to $30 (to the extent permitted by
contract law), the provider must provide the
sender a receipt that complies with
§§ 1005.31(b)(2) and 1005.36(b)(2) within a
reasonable time prior to the seventh transfer.
Barring a further change, this receipt will
apply to transfers after the seventh transfer.
Or, if, after the sixth transfer, a tax increases
from 1.5% of the amount that will be
transferred to the designated recipient to
2.0% of the amount that will be transferred
to the designated recipient, the provider must
provide the sender a receipt that complies
with §§ 1005.31(b)(2) and 1005.36(b)(2)
within a reasonable time prior to the seventh
transfer. In contrast, § 1005.36(a)(2)(i) does
not require an updated receipt where an
exchange rate, estimated as permitted by
§ 1005.32(b)(2), changes.
2. Clearly and conspicuously. In order to
indicate clearly and conspicuously that the
provider’s fee has changed as required by
§ 1005.36(a)(2)(i), the provider could, for
example, state on the receipt: ‘‘Transfer Fees
(UPDATED) * * * $30.’’ To the extent that
other figures on the receipt must be revised
because of the new fee, the receipt should
also indicate that those figures are updated.
3. Reasonable time. If a disclosure required
by § 1005.36(a)(2)(i) or (d)(1) is mailed, the
disclosure would be considered to be
received by the sender five business days
after it is posted in the mail. If hand
delivered or provided electronically, the
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Fmt 4701
Sfmt 4700
50287
receipt would be considered to be received
by the sender at the time of delivery. Thus,
if the provider mails a disclosure required by
§ 1005.36(a)(2)(i) or (d)(1) not later than ten
business days before the scheduled date of
the transfer, or hand or electronically
delivers a disclosure not later than five
business days before the scheduled date of
the transfer, the provider would be deemed
to have provided the disclosure within a
reasonable time prior to the scheduled date
of the subsequent preauthorized remittance
transfer.
36(b) Accuracy
1. Use of estimates. In providing the
disclosures described in § 1005.36(a)(1)(i) or
(a)(2)(i), remittance transfer providers may
use estimates to the extent permitted by any
of the exceptions in § 1005.32. When
estimates are permitted, however, they must
be disclosed in accordance with § 1005.31(d).
2. Subsequent preauthorized remittance
transfers. For a subsequent transfer in a series
of preauthorized remittance transfers, the
receipt provided pursuant to
§ 1005.36(a)(1)(i), except for the temporal
disclosures in that receipt required by
§ 1005.31(b)(2)(ii) (Date Available) and
(b)(2)(vii) (Transfer Date), applies to each
subsequent preauthorized remittance transfer
unless and until it is superseded by a receipt
provided pursuant to § 1005.36(a)(2)(i). For
each subsequent preauthorized remittance
transfer, only the most recent receipt
provided pursuant to § 1005.36(a)(1)(i) or
(a)(2)(i) must be accurate as of the date each
subsequent transfer is made.
3. Receipts. A receipt required by
§ 1005.36(a)(1)(ii) or (a)(2)(ii) must accurately
reflect the details of the transfer to which it
pertains and may not contain estimates
pursuant to § 1005.32(b)(2). However, the
remittance transfer provider may continue to
disclose estimates to the extent permitted by
§ 1005.32(a) or (b)(1). In providing receipts
pursuant to § 1005.36(a)(1)(ii) or (a)(2)(ii),
§ 1005.36(b)(2) and (3) do not allow a
remittance transfer provider to change figures
previously disclosed on a receipt provided
pursuant to § 1005.36(a)(1)(i) or (a)(2)(i),
unless a figure was an estimate or based on
an estimate disclosed pursuant to § 1005.32.
Thus, for example, if a provider disclosed its
fee as $10 in a receipt provided pursuant to
§ 1005.36(a)(1)(i) and that receipt contained
an estimate of the exchange rate pursuant to
§ 1005.32(b)(2), the second receipt provided
pursuant to § 1005.36(a)(1)(ii) must also
disclose the fee as $10.
*
*
*
*
*
36(d) Date of Transfer for Subsequent
Preauthorized Remittance Transfers
1. General. Section 1005.36(d)(2)(i) permits
remittance transfer providers some flexibility
in determining how and when the
disclosures required by § 1005.36(d)(1) may
be provided to senders. The disclosure
described in § 1005.36(d)(1) may be provided
as a separate disclosure, or on or with any
other disclosure required by this subpart B
related to the same series of preauthorized
remittance transfers, provided that the
disclosure and timing requirements in
§ 1005.36(d)(2) and other applicable
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mstockstill on DSK4VPTVN1PROD with RULES2
provisions in subpart B are satisfied. For
example, the required disclosures may be
made on or with a receipt provided pursuant
to § 1005.36(a)(1)(i); a receipt provided
pursuant to § 1005.36(a)(2); or in a separate
disclosure created by the provider. Thus, for
example, a remittance transfer provider
complies with § 1005.36(d)(1) for a period of
one year if it provides in the receipt provided
to the sender when payment is made for the
initial preauthorized remittance transfer, a
schedule or summary of the dates of transfer
of all the subsequent preauthorized
remittance transfers in the series scheduled
to occur over the next 12 months (and the
applicable cancellation requirements and
contact information).
2. Delivery of disclosure. Section
1005.36(d)(2)(i) requires that the sender
receive disclosure of the date of transfer,
applicable cancellation requirements, and the
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Jkt 226001
provider’s contact information no more than
12 months, and no less than 5 business days
prior to the date of transfer of the subsequent
preauthorized remittance transfer. For
purposes of determining when a disclosure
required by § 1005.36(d)(1) is received by the
sender, refer to comment 36(a)(2)–3.
3. Disclosure of the date of transfer. The
date of transfer of a subsequent preauthorized
remittance transfer may be disclosed as a
specific date (e.g., July 19, 2013) or by using
a method that clearly permits identification
of the date of the transfer, such as periodic
intervals (e.g., the third Monday of every
month, or the 15th of every month). If the
future dates of transfer are disclosed as
occurring periodically and there is a break in
the sequence, or the date of transfer does not
otherwise conform to the described period,
e.g., if a holiday or weekend causes the
provider to deviate from the normal
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schedule, the remittance transfer provider
should disclose the specific date of transfer
for the affected transfer.
4. Accuracy requirements. Section
1005.36(d)(4) sets forth accuracy
requirements for disclosures required for
subsequent preauthorized remittance
transfers under § 1005.36(d)(1). If any of the
information provided in these disclosures
change, the provider must provide an
updated disclosure with the revised
information that is accurate as of when the
transfer is made, pursuant to § 1005.36(d)(2).
Dated: August 7, 2012.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2012–19702 Filed 8–14–12; 4:15 pm]
BILLING CODE 4810–AM–P
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Agencies
[Federal Register Volume 77, Number 161 (Monday, August 20, 2012)]
[Rules and Regulations]
[Pages 50243-50288]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19702]
[[Page 50243]]
Vol. 77
Monday,
No. 161
August 20, 2012
Part III
Bureau of Consumer Financial Protection
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12 CFR Part 1005
Electronic Fund Transfers (Regulation E); Final Rule
Federal Register / Vol. 77 , No. 161 / Monday, August 20, 2012 /
Rules and Regulations
[[Page 50244]]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1005
[Docket No. CFPB-2011-0009]
RIN 3170-AA15
Electronic Fund Transfers (Regulation E)
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final rule; official interpretation.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection is amending
Regulation E, which implements the Electronic Fund Transfer Act, and
the official interpretation to the regulation, which interprets the
requirements of Regulation E. The final rule modifies a final rule
published in February 2012 implementing section 1073 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act regarding remittance
transfers. The final rule adopts a safe harbor with respect to the
phrase ``normal course of business'' in the definition of ``remittance
transfer provider,'' which determines whether a person is covered by
the rule. The final rule also revises several aspects of the February
2012 final rule regarding remittance transfers that are scheduled
before the date of transfer, including preauthorized remittance
transfers.
DATES: This rule is effective February 7, 2013.
FOR FURTHER INFORMATION CONTACT: Eric Goldberg, Counsel, or Andrea
Edmonds or Dana Miller, Senior Counsels, Division of Research, Markets,
and Regulations, Bureau of Consumer Financial Protection, 1700 G Street
NW., Washington, DC 20552, at (202) 435-7700.
SUPPLEMENTARY INFORMATION:
I. Overview
Section 1073 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act) \1\ amended the Electronic Fund
Transfer Act (EFTA) to create a new comprehensive consumer protection
regime for remittance transfers sent by consumers in the United States
to individuals and businesses in foreign countries. For covered
transactions conducted by remittance transfer providers, the statute
generally requires: (i) The provision of disclosures prior to and at
the time of payment by the sender for the transfer; (ii) cancellation
and refund rights; (iii) the investigation and remedy of errors by
remittance transfer providers; and (iv) liability standards for
remittance transfer providers for the acts of their agents. The Bureau
of Consumer Financial Protection (Bureau) published a final rule on
February 7, 2012, to implement section 1073 of the Dodd-Frank Act. 77
FR 6194, Feb. 7, 2012 (February Final Rule). The February Final Rule
takes effect February 7, 2013. The Bureau concurrently published a
proposed rule with request for public comment seeking comment on
whether to provide additional safe harbors and flexibility in applying
the February Final Rule to certain transactions and persons. 77 FR
6310, Feb. 7, 2012 (February Proposal).\2\
---------------------------------------------------------------------------
\1\ Public Law 111-203, 124 Stat. 1376, section 1073 (2010).
\2\ The Bureau issued the February Final Rule and the February
Proposal on January 20, 2012. Consequently, when referencing the
final rule, the February Proposal used the term ``January 2012 Final
Rule.'' That term is being replaced in today's rule with ``February
Final Rule'' to reflect the date the rule was published in the
Federal Register (i.e., February 7, 2012). Similarly, the term
``February Proposal'' is being used here in place of the term
``January 2012 Proposed Rule,'' which was used in the February Final
Rule. Additionally, a technical correction to the February Final
Rule was published on July 10, 2012. 77 FR 40459. For simplicity,
that technical correction is incorporated into the term ``February
Final Rule.''
---------------------------------------------------------------------------
The February Proposal addressed two aspects of the February Final
Rule. First, the Bureau proposed to adopt a safe harbor for determining
whether a person is providing remittance transfers in the ``normal
course of business,'' and thus is a ``remittance transfer provider.''
Second, it sought comment on possible refinements to disclosure and
cancellation requirements for certain remittance transfers that are
scheduled before the date of transfer, including ``preauthorized
remittance transfers,'' which are authorized in advance to recur at
substantially regular intervals. The Bureau noted that providing
further clarification on these issues might reduce compliance burdens
for remittance transfer providers and provide better disclosures and
cancellation rights to consumers. The Bureau also stated that it
expected to complete any further rulemaking on matters raised in the
February Proposal on an expedited basis before the February 7, 2013
effective date for the February Final Rule.
The final rule adopts a safe harbor with respect to the phrase
``normal course of business'' in the definition of ``remittance
transfer provider,'' which determines whether a person is covered by
subpart B of Regulation E. The final rule states that if a person
provided 100 or fewer remittance transfers in the previous calendar
year, and provides 100 or fewer remittance transfers in the current
calendar year, then the person is deemed not to be providing remittance
transfers for a consumer in the normal course of its business. For a
person that crosses the 100-transfer threshold, and is then providing
remittance transfers for a consumer in the normal course of its
business, the final rule permits a reasonable time period, not to
exceed six months, to begin complying with subpart B of Regulation E.
The final rule also modifies several aspects of the February Final
Rule regarding remittance transfers that are scheduled before the date
of transfer, including preauthorized remittance transfers. First, when
a sender schedules a one-time transfer or the first in a series of
preauthorized remittance transfers five or more business days before
the date of transfer, the final rule permits remittance transfer
providers to estimate certain information in the pre-payment disclosure
and the receipt provided when payment is made. If estimates are
provided under this exception, the provider generally must give the
sender an additional receipt with accurate figures after the transfer
is made. With respect to subsequent preauthorized remittance transfers,
the final rule generally eliminates the requirement that a remittance
transfer provider mail or deliver a pre-payment disclosure for each
subsequent transfer, unless certain specified information has changed.
However, the final rule generally requires a remittance transfer
provider to provide accurate receipts after subsequent transfers are
made.
The final rule also modifies the February Final Rule in several
respects with regard to the disclosure requirements for remittance
transfers scheduled at least three business days before the date of
transfer and for preauthorized remittance transfers. The final rule
generally requires disclosure of the date of transfer on the initial
receipt and on any subsequent receipts provided with respect to a
particular transfer. For subsequent preauthorized remittance transfers,
the final rule also requires the remittance transfer provider to
disclose the future date or dates the remittance transfer provider will
execute subsequent transfers in the series; in most cases, the final
rule offers some flexibility in how such disclosures can be made.
As noted in the February Final Rule, the Bureau intends to continue
working with consumers, industry, and other regulators in the coming
months regarding implementation issues. In the near future, the Bureau
expects to release a small business compliance guide and a list of
countries that providers may rely on for purposes of
[[Page 50245]]
determining whether estimates may be provided under certain
circumstances. The Bureau also expects to conduct a public awareness
campaign to educate consumers about the new disclosures and their other
rights under the Dodd-Frank Act with respect to remittance transfers.
II. Background
A. Summary of February Final Rule
The February Final Rule imposes on remittance transfer providers
new disclosure, error resolution, and other substantive requirements
relating to remittance transfers. These requirements are set forth in
subpart B of Regulation E. Consistent with the statute, the February
Final Rule provides that the term remittance transfer provider means
any person that provides remittance transfers for a consumer in the
normal course of its business, regardless of whether the consumer holds
an account with such person. 12 CFR 1005.30(f). The February Final Rule
provides guidance in the commentary indicating that whether a person
provides remittance transfers in the ``normal course of business'' will
be evaluated based on the facts and circumstances, and does not set
forth a numerical threshold.
Among other requirements, the February Final Rule imposes several
new disclosure requirements on remittance transfer providers. First,
the rule generally requires a remittance transfer provider to provide a
written pre-payment disclosure to a sender containing information about
the specific transfer requested by the sender, such as the exchange
rate, applicable fees and taxes, and the amount to be received by the
designated recipient. Second, the provider also must provide a written
receipt when payment is made for the transfer. The receipt must include
the information provided on the pre-payment disclosure, as well as
additional information such as the date of availability of the funds,
the designated recipient's contact information, and information
regarding the sender's error resolution and cancellation rights.
Consistent with the statute, which permits remittance transfer
providers to provide estimates only in two narrow circumstances, the
February Final Rule generally requires that disclosures state the
actual exchange rate that will apply to a remittance transfer and the
actual amount that will be received by the designated recipient of a
remittance transfer.
The February Final Rule also sets forth special requirements for
the timing and accuracy of disclosures with respect to ``preauthorized
remittance transfers,'' which are defined as remittance transfers
authorized in advance to recur at substantially regular intervals. As
discussed in the February Final Rule, 77 FR 6194, 6267, the Bureau
recognizes that the market for preauthorized remittance transfers is
still developing.
The February Final Rule differentiates between the first and
subsequent transfers in a series of preauthorized remittance transfers.
The first transfer in a series is treated the same as other standalone
remittance transfers. Accordingly, the February Final Rule requires,
for the first transaction in a series of preauthorized remittance
transfers, that the provider provide a pre-payment disclosure at the
time the sender requests the transfer and a receipt at the time payment
for the transfer is made, which the commentary explains means when
payment is authorized. In addition, the disclosures must be accurate as
of when the payment for the transfer is made, unless a statutory
exception applies.
However, recognizing the potential risks to providers associated
with setting exchange rates and determining the amount to be provided
to a designated recipient weeks or months before any subsequent
transfer, and the potentially limited utility to consumers of
information provided far in advance, the February Final Rule does not
require that disclosures for the entire series of preauthorized
remittance transfers be provided at the time of the sender's initial
request and payment authorization. Rather, the February Final Rule
requires providers to issue pre-payment disclosures and receipts for
each subsequent transfer near the date of the individual transfer.
Specifically, the pre-payment disclosure for each subsequent transfer
must be provided within a reasonable time prior to the scheduled date
of the transfer. The receipt for each subsequent transfer generally
must be provided no later than one business day after the date on which
the transfer is made.
Finally, the February Final Rule also provides senders specified
cancellation and refund rights. Under the rule, a sender generally has
30 minutes after payment is made to cancel a remittance transfer. The
February Final Rule, however, contains special cancellation procedures
for any remittance transfer scheduled by the sender at least three
business days before the date of the transfer, including preauthorized
remittance transfers. In such case, the provider would be required to
cancel the remittance transfer if it received a request to cancel the
transfer from the sender at least three business days before the date
of the transfer.
B. Summary of the February Proposal
Concurrent with the February Final Rule, the Bureau issued a
proposed rule that sought comment on two aspects of the February Final
Rule. First, the Bureau proposed to adopt in commentary a safe harbor
clarifying when certain persons are excluded from the statutory scheme
because they do not provide remittance transfers in the normal course
of business. Second, the February Proposal sought comment on a possible
safe harbor and other refinements to the disclosure and cancellation
requirements for remittance transfers that are scheduled before the
date of the transfer, including preauthorized remittance transfers. The
Bureau indicated that these proposed amendments to the February Final
Rule may reduce compliance burden for providers and allow for better
disclosure and cancellation rights for senders. The Bureau stated its
belief that these issues would benefit from further public comment.
Regarding the first aspect of the February Proposal, the Bureau
sought comment on a proposed safe harbor interpreting the phrase
``normal course of business.'' The Bureau proposed commentary stating
that if a person made no more than 25 remittance transfers in the
previous calendar year, the person does not provide remittance
transfers in the normal course of business during the current calendar
year if it provides no more than 25 remittance transfers in that year.
The Bureau also specifically solicited comment on whether, if such a
safe harbor is appropriate, the threshold number should be higher or
lower than 25 remittance transfers, such as 10 or 50 transfers, or some
other number.
Regarding the second aspect of the February Proposal, the Bureau
sought comment on refinements to the disclosure and cancellation
requirements for remittance transfers that are scheduled before the
date of transfer, including preauthorized remittance transfers.
Specifically, the February Proposal solicited comment on whether
estimates should be permitted to be disclosed in the pre-payment
disclosure and receipt given at the time the transfer is requested and
authorized when: (i) A consumer schedules a one-time transfer or the
first in a series of preauthorized remittance transfers more than ten
days in advance; or (ii) a consumer enters into an agreement for
preauthorized remittance transfers under which the amount of the
transfers can vary and the provider does not
[[Page 50246]]
know the exact amount of the first transfer at the time the disclosures
for that transfer are given. The February Proposal further requested
comment on whether a remittance transfer provider that uses estimates
in the two situations described above should be required to provide a
second receipt with accurate information within a reasonable time
closer to the scheduled date of the transfer. In addition, the February
Proposal sought comment on whether the second receipt should be
provided to senders ten days before the date of the transfer or whether
the period should be longer or shorter.
The February Proposal also solicited comment on possible
refinements to the disclosure provisions applicable to subsequent
preauthorized remittance transfers. For example, the Bureau sought
comment on two alternative approaches to the disclosure provisions for
subsequent preauthorized remittance transfers: (i) Whether the Bureau
should retain the requirement that a remittance transfer provider
provide a pre-payment disclosure for each subsequent transfer and
provide a safe harbor for what constitutes ``a reasonable time'' for
providing this disclosure; or (ii) whether the Bureau should eliminate
the requirement to provide a pre-payment disclosure for each subsequent
transfer.
The February Proposal also sought comment on possible changes to
the cancellation requirements for remittance transfers that are
scheduled before the date of the transfer, including preauthorized
remittance transfers. The February Proposal solicited comment on
whether the three-business-day period for canceling such remittances
transfers adopted in the February Final Rule is appropriate, or whether
the rule should require a deadline to cancel these transfer that is
more or less than three business days. Further, the February Proposal
solicited comment on three issues related to the disclosure of the
deadline to cancel as set forth in the February Final Rule: first,
whether the three-business-day deadline to cancel transfers scheduled
before the date of transfer should be disclosed to senders, such as by
requiring a remittance transfer provider to disclose in the receipt the
specific date on which the right to cancel will expire; second, whether
a remittance transfer provider should be allowed to describe both the
three-business-day and 30-minute deadline-to-cancel time frames on a
single receipt and either describe the transfers to which each deadline
is applicable, or alternatively, use a checkbox or other method to
designate which deadline is applicable to the transfer to which the
receipt relates; third, whether the disclosure of the deadline to
cancel should be disclosed in the pre-payment disclosure, rather than
in the receipt, for each subsequent preauthorized remittance transfer.
C. Overview of Comments and Outreach
The Bureau received more than 50 comments on the proposed rule. The
majority of comments were submitted by industry commenters, including
depository institutions, credit unions, a money transmitter, and
industry trade associations. In addition, letters were submitted by
individual consumers, consumer groups, and an association of state
banking regulators.
Commenters generally supported, or did not oppose, clarifying the
meaning of ``normal course of business'' with a safe harbor. Consumer
group commenters supported the proposed threshold of 25 transfers per
year. The majority of industry commenters argued that the proposed safe
harbor threshold was insufficient and suggested higher numerical
thresholds, ranging from 50 remittance transfers annually to 25
transfers daily. Some industry commenters suggested alternative
benchmarks for the safe harbor, including tests based on a percentage
of an entity's revenues or transactions processed. A number of industry
commenters stated that they or others would cease to offer remittance
transfers if they did not qualify for the safe harbor. Some commenters
also suggested changes in how any safe harbor was implemented, such as
that the Bureau should provide time for an entity to come into
compliance if the entity becomes a remittance transfer provider once
the safe harbor threshold is exceeded.
Commenters also generally supported revisions to the February Final
Rule regarding remittance transfers that are scheduled before the date
of the transfer. Commenters generally supported providing additional
flexibility in disclosure requirements and expanding the use of
estimates in order to reduce risks and costs that might be passed
through to senders. Industry commenters cited various operational and
financial challenges, as well as legal risks, associated with
disclosing an accurate exchange rate for a future transfer. (Although
the February Proposal asked about estimates for one-time transfers or
the first in a series of preauthorized remittance transfers, most
commenters addressed the use of estimates generally for any transfer
scheduled before the date of such transfer.) Some industry commenters
argued that small remittance transfer providers in particular would not
have the scale or expertise to create the risk management practices
necessary to comply. Other industry commenters expressed concern about
the potential for behavior by consumers that would increase providers'
exposure to foreign exchange risk in light of the February Final Rule's
three-business-day cancellation period for transfers scheduled before
the date of the transfer. Thus, these commenters supported permitting
estimates in pre-payment disclosures and receipts provided for
remittance transfers scheduled before the date of transfer. Separately,
some commenters thought the Bureau should allow providers, in lieu of
(or in addition to) providing an estimate of the exchange rate on a
disclosure for a transfer scheduled before the date of the transfer, to
disclose the formula the provider will use to calculate the exchange
rate that will apply to a transfer.
For similar reasons, industry commenters further stated that the
proposed ten-day period after which estimates would not be permitted
was too long, and should be shortened. Industry commenters suggested
shorter time periods ranging from one to seven business days. Several
industry commenters suggested that, even if estimates were permitted,
remittance transfer providers might respond to the requirement to
provide accurate disclosures for other one-time transfers scheduled
before the date of the transfer or initial transfers in series of
preauthorized remittance transfers scheduled in advance by only
offering same-day remittance transfers, or remittance transfers
scheduled ten or more days before the date of the transfer.
Consumer group commenters agreed that the use of estimates in
disclosures may be appropriate for the first remittance transfers in
series of preauthorized remittance transfers, but stated that if
remittance transfer providers were allowed to use estimates in
disclosures for such transfers, senders should be informed they would
not receive actual notice of the price of the transfer or of the amount
to be received by the designated recipient during the periods when the
senders can cancel the transfers. Alternatively, consumer group
commenters suggested requiring providers to later give senders
disclosures for such transfers that include accurate information about
any amounts previously estimated.
Industry commenters urged the Bureau to eliminate the requirement
to provide pre-payment disclosures a reasonable time prior to each
subsequent preauthorized remittance
[[Page 50247]]
transfer. Commenters stated that such disclosures could cause consumer
confusion in cases where senders receive pre-payment disclosures in
close proximity to receipts for previous preauthorized remittance
transfers. Further, industry commenters argued that many senders
scheduling preauthorized remittance transfers are more concerned with
the convenience allowed by the scheduling of transfers before the date
of the transfer and having transfers made on time than with comparison
shopping with pre-payment disclosures for each transfer. Thus, these
commenters stated that the cost of providing pre-payment disclosures
would outweigh any potential consumer benefit. Industry commenters also
stated that if the requirement to provide updated pre-payment
disclosures was not eliminated, the Bureau should permit estimates to
be provided in those disclosures. Consumer group commenters stated that
the Bureau should maintain the requirement to provide pre-payment
disclosures before all subsequent preauthorized remittance transfers,
but while allowing providers to provide estimates in those disclosures.
These commenters also supported the Bureau's proposal that ten days
before the date of transfer constitute a ``reasonable time.''
Most industry commenters argued that three business days is an
appropriate time period for a sender to cancel a remittance transfer
that is scheduled at least three business days before the date of the
transfer. Some industry commenters conditioned their support for the
three-business-day cancellation period on whether a remittance transfer
provider would be required to disclose to the sender the exchange rate
that would apply to a transfer scheduled more than three business days
before the date of such transfer. One commenter suggested that the
Bureau adopt a five-business-day cancellation deadline in lieu of the
three-business-day deadline adopted in the February Final Rule.
With respect to the content and format of disclosures related to
the cancellation period, most industry commenters argued against
requiring that remittance transfer providers disclose the specific
cancellation deadline in the receipt provided to a sender for a
remittance transfer scheduled more than three business days before the
date of the transfer. One commenter asserted that requiring disclosure
of the specific cancellation deadline would create significant
technical challenges for service providers. Commenters, however,
generally supported the proposal to permit remittance transfer
providers that provide both transfers scheduled at least three business
days before and transfers less than three business days before the date
of the transfer to include both the 30-minute and three-business-day
cancellation periods in their receipts along with a checkbox or other
method that allows the provider to designate which cancellation period
is applicable to the transfer at issue.
The Bureau received few comments in response to its inquiry
regarding disclosure of cancellation requirements for subsequent
preauthorized remittance transfers. Among those received, there was
little consensus regarding how cancellation rights for subsequent
transfers should be disclosed. Some commenters asserted that the
cancellation provision should be included on the pre-payment disclosure
and one industry commenter supported including it on the receipt.
In addition to the comments received on the February Proposal,
Bureau staff conducted outreach with various parties to gather more
data regarding issues discussed in the proposal or raised in comments.
Records of these outreach conversations are reflected in ex parte
submissions included in the rulemaking record (accessible by searching
by the docket number associated with this final rule at
www.regulations.gov).
III. Summary of the Final Rule
A. Normal Course of Business
The final rule provides a new safe harbor clarifying when a person
provides remittance transfers in the normal course of business for
purposes of determining whether a person falls under the definition of
``remittance transfer provider.'' The proposed safe harbor was located
in the commentary; the final safe harbor is included in regulatory
text, with further guidance in the commentary. As adopted, the final
rule states that if a person provided 100 or fewer remittance transfers
in the previous calendar year, and provides 100 or fewer remittance
transfers in the current calendar year, then the person is deemed not
to be providing remittance transfers for a consumer in the normal
course of its business. For a person that crosses the 100-transfer
threshold, and is then providing remittance transfers for a consumer in
the normal course of its business, the final rule permits a reasonable
time period, not to exceed six months, to begin complying with subpart
B of Regulation E.
B. Disclosure Rules for Remittance Transfers Scheduled Before the Date
of Transfer
The final rule modifies the February Final Rule with respect to
remittance transfers that are scheduled before the date of transfer,
including preauthorized remittance transfers. First, when a sender
schedules a one-time transfer or the first in a series of preauthorized
remittance transfers five or more business days before the date of
transfer, the final rule permits remittance transfer providers to
estimate certain information in the pre-payment disclosure and the
receipt provided when payment is made. If a provider gives disclosures
that include estimates under this exception, the final rule also
requires that the provider give the sender an additional receipt with
accurate figures (unless a statutory exception applies), which
generally must be provided no later than one business day after the
date on which the transfer is made.
Second, with respect to subsequent preauthorized remittance
transfers, the final rule eliminates the requirement that a remittance
transfer provider mail or deliver a pre-payment disclosure for each
subsequent transfer. A receipt must be sent, however, a reasonable time
prior to the transfer if certain disclosed information is changed from
what was disclosed regarding the first preauthorized remittance
transfer. This receipt may also contain estimates. If estimates are
provided or no update is necessary, the final rule also requires a
remittance transfer provider to give an accurate receipt to a sender
after a transfer is made.
C. Cancellation Period and Disclosures
The final rule modifies the February Final Rule in several respects
with regard to the disclosure requirements for remittance transfers
scheduled at least three business days before the date of transfer and
for preauthorized remittance transfers. First, the final rule requires
a remittance transfer provider to disclose the date of transfer in the
receipt provided when payment is made with respect to remittance
transfers scheduled at least three business days before the date of the
transfer and the initial transfer in a series of preauthorized
transfers. The transfer date for a given transfer is also required to
be disclosed on any subsequent receipts provided with respect to that
transfer. The transfer date will enable a sender to identify the
transfer to which the receipt pertains, and, when received prior to the
date of the transfer,
[[Page 50248]]
generally calculate the date on which the right to cancel will expire.
Second, for subsequent preauthorized remittance transfers, the
final rule requires the remittance transfer provider to disclose the
date or dates on which the provider will make those subsequent
transfers in the series, with certain other information. The final rule
provides providers some flexibility in how they may make these
disclosures to senders. However, for subsequent preauthorized
remittance transfers for which the date of transfer is four or fewer
business days after payment is made for the transfer, the final rule
requires disclosure of future dates of transfer in the receipt provided
for the first transfer in the series.
Finally, the final rule also permits providers to describe on a
receipt both the three-business-day and 30-minute cancellation periods
and either describe the transfers to which each deadline applies, or
alternatively, use a checkbox or other method to designate which
cancellation period is applicable to the transfer. The final rule does
not change the three-business-day cancellation period for these
transfers.
IV. Legal Authority
Section 1073 of the Dodd-Frank Act creates a new section 919 of the
EFTA and requires remittance transfer providers to provide disclosures
to senders of remittance transfers, pursuant to rules prescribed by the
Bureau. In particular, providers must give a sender a written pre-
payment disclosure containing specified information applicable to the
sender's remittance transfer. The remittance transfer provider must
also provide a written receipt that includes the information provided
on the pre-payment disclosure, as well as additional specified
information. EFTA section 919(a).
In addition, EFTA section 919(d) directs the Bureau to promulgate
rules regarding appropriate cancellation and refund policies. Except as
described below, the final rule is adopted under the authority provided
to the Bureau in EFTA section 919, and as more specifically described
in this SUPPLEMENTARY INFORMATION.
In addition to the statutory mandates set forth in the Dodd-Frank
Act, EFTA section 904(a) authorizes the Bureau to prescribe regulations
necessary to carry out the purposes of the title. The express purposes
of the EFTA, as amended by the Dodd-Frank Act, are to establish ``the
rights, liabilities, and responsibilities of participants in electronic
fund and remittance transfer systems'' and to provide ``individual
consumer rights.'' EFTA section 902(b). EFTA section 904(c) further
provides that regulations prescribed by the Bureau may contain any
classifications, differentiations, or other provisions, and may provide
for such adjustments or exceptions for any class of electronic fund
transfers or remittance transfers that the Bureau deems necessary or
proper to effectuate the purposes of the title, to prevent
circumvention or evasion, or to facilitate compliance.
As described in more detail below, the provisions adopted in the
final rule in part or in whole pursuant to the Bureau's authority in
EFTA sections 904(a) and 904(c) \3\ include Sec. Sec.
1005.30(f)(2)(ii), 1005.32(b)(2), 1005.36(a), 1005.36(b) and
1005.36(d).\4\ The provisions adopted in whole or in part pursuant to
the Bureau's authority in EFTA section 919(a)(5)(A) include Sec.
1005.31(a)(3)(iv) and (a)(5)(iv).
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\3\ Throughout this SUPPLEMENTARY INFORMATION, the Bureau is
citing its authority under both EFTA section 904(a) and EFTA section
904(c) for purposes of simplicity. The Bureau notes, however, that
with respect to some of the provisions referenced in the text, use
of only EFTA section 904(a) is needed.
\4\ The consultation and economic impact analysis requirement
previously contained in EFTA sections 904(a)(1)-(a)(4) were not
amended to apply to the Bureau. Nevertheless, the Bureau consulted
with the appropriate prudential regulators and other Federal
agencies and considered the potential benefits, costs, and impacts
of the rule to consumers and covered persons as required under
section 1022 of the Dodd-Frank Act, and through these processes
would have satisfied the requirements of these EFTA provisions if
they had been applicable.
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V. Section-by-Section Analysis
Section 1005.30 Remittance Transfer Definitions
30(f) Definition of Remittance Transfer Provider
Overview
Section 1005.30(f) of the February Final Rule and the accompanying
commentary implement the definition of the term ``remittance transfer
provider'' in EFTA section 919(g)(3). Section 1005.30(f) states that a
``remittance transfer provider'' means any person that provides
remittance transfers for a consumer in the normal course of its
business, regardless of whether the consumer holds an account with such
person. A remittance transfer provider is required to comply with
subpart B of Regulation E relating to remittance transfers.
As adopted in the February Final Rule, comment 30(f)-2 provides
guidance interpreting the phrase ``normal course of business'' as used
in the definition of remittance transfer provider. Specifically,
comment 30(f)-2 to the February Final Rule states that whether a person
provides remittance transfers in the normal course of business depends
on the facts and circumstances, including the total number and
frequency of remittance transfers sent by the provider. Comment 30(f)-2
also sets forth illustrative examples.
To provide clearer guidance on whether a person provides remittance
transfers in the normal course of business, the Bureau proposed to add
to comment 30(f)-2 an express safe harbor further interpreting the
phrase ``normal course of business.'' The proposed safe harbor was
based on the number of remittance transfers that a person provides.
Proposed comment 30(f)-2 stated that if a person provided no more than
25 remittance transfers in the previous calendar year, the person does
not provide remittance transfers in the normal course of business for
the current calendar year if it provides no more than 25 remittance
transfers in that year. The proposed comment clarified, however, that
if that person makes a 26th remittance transfer in the current calendar
year, the person would be evaluated under the facts and circumstances
test to determine whether the person is a remittance transfer provider
for that transfer and any other transfers provided through the rest of
the year.
The Bureau solicited comment on the proposal to adopt a safe harbor
interpreting the term ``normal course of business.'' The Bureau also
specifically solicited comment on whether, if such a safe harbor is
appropriate, the threshold number should be higher or lower than 25
remittance transfers, such as 10 or 50 transfers, or some other number.
Commenters generally supported or did not oppose clarifying the
meaning of ``normal course of business'' with a safe harbor. Consumer
group commenters supported the proposed threshold of 25 transfers per
year. Some industry commenters proposed that any safe harbor be based
on criteria other than or in addition to the number of transfers
provided per year. Furthermore, most industry commenters argued that if
the Bureau adopts a safe harbor based on the number of remittance
transfers provided per year, that the Bureau should use a threshold
number that is higher (and in some cases significantly higher) than 25
transfers per year. Finally, some commenters suggested changes in how
any safe harbor would be implemented, such as that the Bureau should
provide time for an entity to come into compliance if the person
becomes a remittance transfer provider once the safe harbor threshold
[[Page 50249]]
is exceeded. These comments are discussed in more detail below.
Regulatory Text
Consumer group commenters suggested that if the Bureau adopted a
safe harbor related to the term ``normal course of business,'' that the
safe harbor be included in the text of subpart B to Regulation E rather
than in the commentary to the rule in order to help consumers
understand when the protections in subpart B of Regulation E will apply
to their transactions. Upon further consideration, the Bureau believes
that, for clarity, it is appropriate to include the safe harbor
regarding the phrase ``normal course of business'' in the text of
subpart B of Regulation E. Consequently, the Bureau redesignates former
Sec. 1005.30(f) as Sec. 1005.30(f)(1), and adopts Sec.
1005.30(f)(2)(i), which creates the new safe harbor described below.
New Sec. 1005.30(f)(2)(ii) also creates a new transition period,
described below. Revised comment 30(f)-2 provides interpretive guidance
and illustrative examples.
Facts and Circumstances
Comment 30(f)-2 to the February Final Rule states that whether a
person provides remittance transfers in the normal course of business
depends on the facts and circumstances, including the total number and
frequency of remittance transfers sent by the provider. The Bureau did
not propose any modification to this guidance. However, one consumer
group commenter suggested a rewording of the proposed safe harbor that
would mean that any person who does not qualify for the safe harbor
should be subject to the requirements of subpart B of Regulation E,
regardless of the facts and circumstances. Furthermore, some commenters
appeared to misunderstand the relevance of the Bureau's guidance in
proposed comment 30(f)-2 regarding persons that do not qualify for the
safe harbor.
Comment 30(f)-2 to the February Final Rule is renumbered and
adopted with several non-substantive edits for clarity, and one minor
modification, as comment 30(f)-2.i to the final rule. The modification
is necessary because as discussed below, the final rule adopts a safe
harbor similar to the safe harbor in proposed comment 30(f)-2, but,
among other things, increases the threshold for that safe harbor from
25 to 100 remittance transfers per calendar year. For conformity, the
Bureau has changed its guidance regarding a person that provides
remittance transfers in the normal course of business. Final comment
30(f)-2.i interprets the phrase ``normal course of business'' to
include a financial institution that makes remittance transfers
generally available to customers and makes such transfers ``many''
times per month. Comment 30(f)-2 in the February Final Rule uses the
term ``multiple'' rather than ``many.'' The Bureau believes that the
term ``many'' is more consistent with the language and approach in the
safe harbor as adopted.
A Safe Harbor Based on the Number of Remittance Transfers Provided
Though most commenters did not oppose a safe harbor based on the
number of remittance transfers provided, several industry commenters
urged the Bureau to create a safe harbor based on other criteria. Some
industry commenters suggested that a safe harbor be based on
qualitative criteria, such as whether or not persons hold themselves
out to be remittance transfer providers. Alternatively, some industry
commenters suggested that the safe harbor apply to some or all
financial institutions with less than $10 billion in assets, and other
industry commenters suggested that the Bureau look to measures of the
relative size of a person's remittance transfer business, such as the
percent of a person's total transactions that are remittance transfers,
or the percent of a person's revenue or net income that is earned from
such transfers. Some industry commenters suggested the Bureau define a
safe harbor based on these relative size measures alone, while others
suggested that the relative size measures should apply only to certain
entities or business models, or that entities should qualify for the
safe harbor if they satisfy either of two alternative thresholds, such
as the number of remittance transfers provided and a relative size
measure. For example, one industry commenter suggested a safe harbor
that would exclude from coverage of subpart B of Regulation E credit
unions that (a) rely on unrelated third parties to send remittance
transfers, and do not provide remittance transfers as their primary
business, as long as (b) such transfers account for 30 percent or less
of the credit unions' total revenues. In general, commenters suggesting
relative size thresholds supported such measures because they would
take into account the size of a person's overall business, or because
the number of remittance transfers that a person provides may vary from
year to year.
The final rule adds a safe harbor, which is described in new Sec.
1005.30(f)(2)(i). The safe harbor in the final rule reflects several
modifications to the proposed commentary included in the February
Proposal, as well as several non-substantive edits for clarity. Similar
to the proposed comment, the safe harbor in Sec. 1005.30(f)(2)(i) is
based on a single bright line threshold, the number of remittance
transfers a person provides. It states that a person is deemed not to
be providing remittance transfers for a consumer in the normal course
of its business if the person provided 100 or fewer remittance
transfers in the previous calendar year and provides 100 or fewer
remittance transfers in the current calendar year. Comment 30(f)-2.ii
provides additional clarification. It states that a person that
qualifies for the safe harbor in Sec. 1005.30(f)(2)(i) is not a
remittance transfer provider, and is thus not subject to the
requirements of subpart B of Regulation E. The comment also clarifies
that for the purposes of determining whether a person qualifies for the
safe harbor, the number of remittance transfers provided includes any
transfers that are excluded from the definition of ``remittance
transfer'' due simply to this safe harbor. In contrast, the number of
remittance transfers provided in a calendar year does not include any
transfers that are excluded from the definition of ``remittance
transfer'' for reasons other than the safe harbor, such as the small
value transactions and securities and commodities transfers that are
excluded from the definition of ``remittance transfer'' by Sec.
1005.30(e)(2).
As stated in the February Proposal, 77 FR 6310, 6314-15, the Bureau
believes that a safe harbor can reduce compliance burden by increasing
legal certainty in the market. Without a safe harbor, some persons who
currently provide remittance transfers, or are contemplating doing so,
may face uncertainty and litigation risk as to whether they meet the
definition of ``remittance transfer provider'' when they provide a
small number of transfers in a given year. Increased legal certainty
may encourage some such persons to continue providing remittance
transfers, when they might not otherwise be inclined to offer such
products, due to concerns about legal uncertainty or the cost of
compliance with subpart B of Regulation E.
However, the Bureau also recognizes that a safe harbor interpreting
the phrase ``normal course of business'' can limit the protections
afforded to some consumers. The adoption of a numerical safe harbor may
result in consumers not receiving the disclosures, error resolution,
and other protections required by this rule in some instances
[[Page 50250]]
in which they might otherwise, because these consumers may be customers
of persons who qualify for the safe harbor and, therefore, will have
certainty that they are not ``remittance transfer providers'' for
purposes of subpart B of Regulation E.
Based on these considerations, the Bureau believes that the safe
harbor should be derived from the phrase ``normal course of business,''
should provide substantial certainty to potential providers, and should
be limited in scope so as to preserve the benefits of the statutory
protections as intended by Congress. The Bureau believes that a safe
harbor will provide the most certainty if it is based on a bright-line
measure that permits persons to identify easily whether or not they
qualify.
In addition, the Bureau continues to believe that the provision of
only a small number of remittance transfers per year is a reasonable
basis for identifying persons that do not provide remittance transfers
in the normal course of business. As explained in the February
Proposal, 77 FR 6310, 6315, the Bureau believes that the inclusion of
the phrase ``normal course of business'' in the statutory definition of
``remittance transfer provider'' was meant to exclude persons that
provide remittance transfers on a limited basis. As a result, the fact
that a person provides only a small number of remittance transfers can
strongly indicate that the person is not providing such transfers in
the normal course of its business. Furthermore, the number of transfers
provided is an objective standard that is easy to apply and should
provide substantial certainty to persons regarding whether or not they
qualify for the safe harbor.\5\
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\5\ As one industry commenter suggested, given the potential for
seasonal variation in the demand for remittance transfers, the
Bureau believes that an annual figure is the most appropriate for
the safe harbor threshold.
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The Bureau does not believe that it is appropriate, based on the
current administrative record, to define a safe harbor based on asset
size or a relative size measure such as percentage of revenue.
Commenters did not provide, and the Bureau does not have, data
suggesting, across the remittance transfer industry, why any of the
specific asset size or relative size thresholds suggested by the
comments would be an appropriate basis for defining normal course of
business. Moreover, the Bureau is concerned that there may not be a
measure of entity size that is currently used by all segments of the
remittance transfer industry. While some providers, such as banks and
credit unions, tend to measure their size in assets, in other segments
of the remittance transfer market, revenues or some other aspect of a
business may be a more widely used measure.
Additionally, the Bureau believes that due to the wide variety of
business models for offering remittance transfers and lack of currently
available data, it would be difficult to craft a single standalone
measure of relative size for identifying persons who provide remittance
transfers on only a limited basis. For example, a standalone revenue
threshold might exclude from the rule's coverage both a person who
makes few transfers, but at a high price, and a person who offers many
more transfers for free or at a very low price, as a value-added
service to its customers. The Bureau is concerned that many persons who
fall into the latter category may, in fact, make remittance transfers
generally available to customers and make many transfers each month.
The Bureau also believes that a safe harbor based on qualitative
criteria could require fact-intensive determinations, and thus, unlike
a bright-line threshold, would provide little additional clarity to the
market. For instance, a safe harbor based on whether a person ``holds
itself out'' as a remittance transfer provider would require context-
specific evaluation similar to the evaluation of whether a person
provides remittance transfers in the normal course of business based on
the facts and circumstances, in accordance with the guidance in final
comment 30(f)-2.i. Thus, such a safe harbor would not accomplish the
goals of the February Proposal.
Size of Numerical Threshold
In proposing comment 30(f)-2, the Bureau suggested 25 transfers as
a potential threshold, noting that the number would be consistent with
the general threshold for coverage under the Bureau's Regulation Z, 12
CFR part 1026, which relates to credit transactions. Under Regulation
Z, a creditor is defined as an entity that regularly extends consumer
credit under specified circumstances. Generally, under Regulation Z, a
person regularly extends consumer credit in the current calendar year
when it either extended consumer credit more than 25 times in the
preceding calendar year or more than 25 times in the current calendar
year.\6\ See Sec. 1026.2(a)(17) and comment 2(a)(17)(i)-4.\7\
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\6\ Regulation Z in some cases provides additional protections
for credit secured by a dwelling and certain high cost mortgages.
For example, with respect to whether a person is a creditor, a
person regularly extends consumer credit in the current calendar
year if it either extended consumer credit for transactions secured
by a dwelling more than five times in the previous calendar year or
more than five times in the current calendar year. In addition, a
person regularly extends consumer credit if it extends consumer
credit for just one high-cost mortgage in a 12-month period. See 12
CFR 1026.2(a)(17).
\7\ The Bureau notes that it has issued a separate notice of
request for information on whether it should revise these threshold
numbers in Regulation Z. See 76 FR 75825, Dec. 5, 2011.
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The Bureau received a number of comments regarding the appropriate
threshold on which to base any safe harbor regarding the definition of
``normal course of business.'' Consumer group commenters supported the
proposed threshold of 25 remittance transfers provided per year. In
contrast, most industry commenters suggested a range of higher
thresholds. For example, some commenters suggested thresholds based on
annual transfer volumes ranging from 50 to 5,000 remittance transfers,
or 1,000 remittance transfers per method of transfer. Other commenters
suggested thresholds of 75 remittance transfers per month, 25
remittance transfers per day, or other figures. State banking
regulators did not suggest a specific threshold, but maintained that
the Bureau should base the threshold on data received regarding the
number of remittance transfers sent by depository institutions with
under $10 billion in assets. These regulators also suggested that the
Bureau adopt a threshold for depository institutions that is higher
than the threshold for other entities.
Many of the commenters that explained why they believed a higher
threshold was appropriate focused on the cost of compliance with
subpart B of Regulation E. Both in commenting on the proposed ``normal
course of business'' safe harbor, and more generally, depository
institutions, credit unions, and trade associations of depository
institutions and credit unions described challenges associated with
complying with the February Final Rule. These industry commenters
stated that for open network transfers in particular,\8\ the
requirements to estimate
[[Page 50251]]
or disclose third-party fees and exchange rates, to disclose a
transfer's date of availability, and to refund transfers in certain
circumstances would be impossible, challenging, risky, or costly to
implement. Based on these and related concerns, industry commenters who
were focused on the concerns of depository institutions and credit
unions generally argued that a threshold higher than 25 was necessary
in order to relieve more persons from compliance, to encourage greater
continued market participation after subpart B of Regulation E takes
effect, or to promote the ability of smaller depository institutions to
compete with other providers. A number of industry commenters stated
that they expected that some (or many) individual depository
institutions and credit unions would limit the number of remittance
transfers provided in order to qualify for any safe harbor, or would
exit the market for remittance transfers, in order to avoid compliance
with subpart B of Regulation E.
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\8\ Depository institutions and credit unions have traditionally
offered consumers remittance transfers by way of wire transfers,
which are generally open network transactions. In an open network,
no single provider has control over, or relationships with, all of
the participants that may collect funds in the United States or
disburse funds abroad. A number of principal providers may access
the system. National laws, individual contracts, and the rules of
various messaging, settlement, or payment systems may constrain
certain parts of transfers sent through an open network system.
However, any participant may use the network to send transfers to
unaffiliated institutions abroad with which it has no contractual
relationship, and over which it has limited authority or ability to
monitor or control. See 77 FR 6194, 6195-97.
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Alternatively, some industry commenters urged the Bureau to
increase the size of the threshold based on what they described as
typical practice among banks. For example, one commenter stated that a
typical bank could reach 25 remittance transfers within the first few
weeks of a year. It suggested a threshold of 300 remittance transfers
per year because, it contended, that figure better represents the
number of such transfers that a small institution provides, is still
small enough that the excepted transactions would not generate a
material source of income for a financial institution, and amounts to,
on average, less than one transfer for every 25 accountholders for
small banks. That commenter and other industry commenters stated that
many or most depository institutions or credit unions are not ``in the
business'' of providing remittance transfers, do not advertise the
service, or generally offer remittance transfers only upon request.
Several industry commenters offered other rationales to support
thresholds higher than 25 remittance transfers per year. Some industry
commenters stated that a threshold of 25 would not be useful because of
the complexity of preparing for compliance if the threshold is crossed.
One industry commenter advocated for a threshold of 50 remittance
transfers, because that figure would constitute approximately one
remittance transfer per week. Suggesting a threshold of 75 remittance
transfers per year, another industry commenter argued that Regulation Z
was an inappropriate reference point for subpart B of Regulation E
because financial institutions tend to provide far more fund transfers
per year than they do loans. Another industry commenter contended that
a threshold of 600 remittance transfers per year was better to exclude
institutions that provide remittance transfers infrequently and in
response to specific consumer requests.
Industry commenters also suggested that the Bureau commit to
reevaluating the threshold on which the safe harbor is based. One
industry commenter suggested that the Bureau revisit the safe harbor
threshold nine months after the effective date of subpart B of
Regulation E to determine whether further adjustment is appropriate.
Similarly, another industry commenter suggested that the Bureau
annually adjust the safe harbor threshold.
The safe harbor described in Sec. 1005.30(f)(2)(i) of the final
rule establishes a threshold of 100 remittance transfers per calendar
year. The Bureau believes that it is reasonable to set a higher
transaction threshold for determining when remittance transfers are
provided ``in the normal course of business'' than for determining when
a person ``regularly extends'' consumer credit under Regulation Z.
There are several reasons why remittance transfers are different from
extensions of credit. A single extension of credit typically involves
an ongoing relationship between a consumer and creditor that may extend
over weeks, months, or years. Credit is often provided as a standalone
financial product in its own right, and can generate significant per-
transaction revenues over time. A remittance transfer, on the other
hand, is a one-time transaction, for which the provider generally
collects a one-time set of fees. Revenues per transaction are often
relatively low; additionally, remittance transfers are sometimes
provided as an adjunct to other financial products (such as a long-term
account relationship). As a result, a single extension of credit may be
more significant to a business than a single remittance transfer would
be to the business of a person that provides such transfers.
Furthermore, a single extension of credit may meet the demand of a
consumer with ongoing credit needs; on the other hand, multiple
remittance transfers may be needed to satisfy the annual demand of a
consumer with ongoing transaction needs. Similarly, the Bureau believes
that because it is not uncommon for consumers who send money abroad to
do so 12 or more times per year,\9\ a change in the demand of just one
or two customers might result in significant variance in the number of
remittance transfers provided by a person who sends only a small number
of transfers. The Bureau believes the same is less likely to be true of
extensions of credit.
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\9\ See, e.g., Bendixen & Amandi, Survey of Latin American
Immigrants in the United States 22 (Apr. 30, 2008), available at:
https://bendixenandamandi.com/wp-content/uploads/2010/08/IDB_2008_National_Survey_Presentation.pdf.
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The Bureau believes that a figure of 100 or fewer transfers per
year appropriately accounts for the differences between remittance
transfers and extensions of credit. It is high enough that persons will
not risk exceeding the safe harbor based on the needs of just two or
three customers seeking monthly transfers. At the same time, the Bureau
believes that a threshold of 100 is low enough to serve as a reasonable
basis for identifying persons who occasionally provide remittance
transfers, but not in the normal course of their business. One hundred
transfers per year is equivalent to an average of approximately two
remittance transfers per week, or the number of remittance transfers
needed to satisfy the needs of a handful of customers sending money
abroad monthly.
Though industry commenters suggested a number of thresholds higher
than 100 remittance transfers per year, the Bureau is concerned that a
person who provides more than 100 transfers in a calendar year is more
likely than other persons to be providing remittance transfers in the
normal course of its business, such as by making transfers generally
available to its customers, and by providing them more frequently.
Furthermore, the Bureau does not have industry-wide information linking
commenters' suggested higher thresholds either to the definition of
``normal course of business,'' or to other factors that commenters
suggested were relevant, such as the cost of compliance with subpart B
of Regulation E.
Industry commenters provided little data to support their
contentions that any particular threshold was the most appropriate. Two
trade associations provided high-level summaries of limited surveys of
member banks regarding the number of international funds transfers
sent. Otherwise, the comments received in response to the February
Proposal generally did not provide data on the overall distribution and
frequency of remittance transfers
[[Page 50252]]
across providers to support treating any particular number of
transactions as outside the normal course of business.
Through additional outreach, the Bureau obtained limited data from
several sources regarding the number of remittances transfers and
similar transactions provided by individual depository institutions and
credit unions, money transmitters, and other small businesses that may
also send money abroad. The Bureau hoped that such information might
enable the Bureau to better evaluate the comments received, and reveal
patterns in the numbers of transfers sent by different types of
providers.
The data received include results from several limited surveys of
depository institutions and/or credit unions regarding the number of
remittance transfers that they send; estimates of the number of
consumer-initiated outbound international wire transfers conducted by
individual banks and/or credit unions provided through one
correspondent bank or a corporate credit union; the number of
remittances and other transactions conducted by state-licensed money
transmitters in California, New York, and Ohio; and estimates of the
number of outbound international transfers provided by individual
credit unions using a specialized service. The Bureau also discussed
with an industry expert the characteristics of several types of small
businesses other than depository institutions and credit unions that
may send money abroad, including start-up enterprises and small
businesses that send money abroad that are not registered or licensed
as money transmitters.
The Bureau does not believe that it can extrapolate from any of the
data sets received to the remittance transfer market as a whole or any
segment of it, due to factors including the small sample sizes and the
Bureau's inability to determine whether the institutions covered in any
data set are representative of the market as a whole or any segm