The Consumer Financial Protection Bureau's ("CFPB") Remittance Transfer Rule, also known as Regulation E, became effective on October 28, 2013. The Rule established the basic rights, liabilities, and responsibilities of consumers who use remittance transfer services and of financial institutions or other persons that offer these services. The Rule generally applies to transactions that qualify as remittance transfers and are sent by people or companies that qualify as remittance transfer providers. Remittance transfers are electronic transfers of funds that are more than $15 requested by consumers in the United States and sent to people or companies in foreign countries. The rule applies to most companies that offer remittance transfers, including banks, thrifts and credit unions, among others.
Pursuant to the Remittance Transfer Rule, companies must comply with disclosure obligations and establish cancellation and error resolution procedures as follows:
- Disclosure Obligations (§1005.31(b)(1): Remittance transfer providers must provide a pre-payment disclosure to a consumer before the consumer pays for a remittance transfer. The pre-payment disclosure must include the amount to be transferred, front-end fees and taxes, exchange rate, covered third-party fees, total amount to be received by the designated recipient and disclaimer regarding non-covered third-party fees and foreign taxes (if applicable). Sample disclosure forms can be accessed here.
- Disclosure Obligations (§1005.31(b)(2): Remittance transfer providers must also provide a receipt when the consumer/sender pays for the remittance transfer. The receipt must include the pre-payment disclosure information, the date the funds will be made available to the recipient, the recipient's contact information, the statement of sender's error resolution and cancellation rights, the provider's contact information and CFPB's contact information. If the provider is licensed or chartered by a state regulator, it must also provide the contact information for the state regulator. Sample Receipt forms can be accessed here.
- Cancellation/Error Resolution Procedures (§1005.33 and §1005.34): The Rule gives senders 30 minutes to cancel a remittance transfer and receive a refund. Special cancellation rules apply to transfers scheduled three or more business days before the transfer date. The rule also requires remittance transfer providers to develop and maintain written policies and procedures designed to ensure compliance with the error resolution requirements of the Rule. Remittance transfer providers are responsible for mistakes made by their agents.
Additional information, including exceptions to the Rule, and compliance aids are also featured on CFPB's Remittance Transfer Rule page.
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