United States: CFPB Proposes Definition Of Larger Participants For The International Money Transfer Market

On January 23, 2014, the Consumer Financial Protection Bureau ("CFPB") issued a proposed rule that would define which nonbank covered persons1 would be designated "larger participants" for purposes of the international money transfer market (the "Proposal"). The Proposal would be the fourth rulemaking designating nonbank covered persons as larger participants of markets for "other consumer financial products or services" under section 1024 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").2 Prior rulemakings have defined larger participants in the consumer reporting, consumer debt collection, and student loan servicing markets.3 There is a 60-day comment period for the Proposal, beginning from the date the Proposal is published in the Federal Register.

A Level Playing Field?

By defining larger participants in the international money transfer market, the CFPB would be designating certain nonbanks for CFPB supervision. Such authority would enable the CFPB to supervise and examine designated nonbanks for compliance with the Electronic Fund Transfer Act and Regulation E (including Subpart B of Regulation E, the "Remittance Transfer Rule"), among other federal consumer financial laws, as well as the Dodd-Frank Act prohibition on unfair, deceptive or abusive acts or practices ("UDAAP"). The Remittance Transfer Rule, which took effect on October 28, 2013, sets forth certain protections for senders of remittance transfers: (1) remittance transfer providers are required to provide specific disclosures to each sender of a remittance transfer, (2) senders have the right to dispute errors for up to 180 days following a remittance transfer, and (3) senders have the right to cancel, under certain circumstances, remittance transfers within 30 minutes of requesting the transfer.4

On October 22, 2013, the CFPB released Remittance Transfer Rule exam procedures for use in the CFPB's examinations of entities within its supervisory authority. If adopted, the Proposal would enable the CFPB to use these exam procedures – the same exam procedures the CFPB uses for the largest banks and credit unions providing remittance transfers currently subject to its supervisory authority – to examine nonbank larger participants in the international money transfer market. The CFPB stated that "[f]inalization of this Proposed Rule would bring nonbanks that are larger participants of the international money transfer market within the Bureau's supervisory jurisdiction, thereby promoting the Bureau's objective of enforcing Federal consumer financial law consistently without regard to whether a person is a depository institution." Supervision and enforcement of the type that is applied to banks would represent a significant change for nonbank international money transfer providers. Significantly, supervision of nonbank international money transfer providers by the CFPB, as proposed, would not include capital requirements that would apply to a bank providing such services and investing the float in market investments.

The International Money Transfer Market

The Proposal defines an "international money transfer" as the electronic transfer of funds requested by a sender to a designated recipient that is sent by an international money transfer provider. Using different terminology than the Remittance Transfer Rule ("international money transfer" and "international money transfer provider," as compared to "remittance transfer" and "remittance transfer provider"), the Proposal also differs substantively from the Remittance Transfer Rule. The Proposal would cover all transfers without regard to the amount of the transfer, while the Remittance Transfer Rule excludes transfers of $15 or less (i.e., the Dodd-Frank Act's small-value transaction exclusion).5 In addition, the Proposal would not require that transfers be provided "in the normal course of business" in order for an entity to be considered a provider. Practically, however, this distinction would not matter for purposes of the Proposal because larger participants in the international money transfer market (i.e., providers that exceed the threshold defined below) must, by definition, be providing transfers "in the normal course of business."6

Other defined terms in the Proposal (e.g., sender, designated recipient) would substantively parallel the definitions in the Remittance Transfer Rule.

The Million Transfer Threshold

The Proposal would provide that a nonbank covered person is "a larger participant of the international money transfer market if the nonbank covered person has at least one million aggregate annual international money transfers." The Proposal provides additional detail on the calculation methodology, which, like the thresholds for larger participants in the consumer reporting and consumer debt collection markets, depends on how long the covered person has been in business.

Based on "highly approximated estimates," the CFPB has determined that approximately 25 nonbanks sent one million or more international money transfers, and these nonbanks account for more than 80 percent of all international money transfers. The vast majority of remaining international money transfers are sent by "a few hundred nonbanks that each sent less than 500,000 transfers in 2012." The CFPB acknowledged that the proposed threshold is based on a "lack[ of] precise data on the international money transfer market." Nonetheless, the CFPB concluded that the international money transfer market is concentrated in firms that provide more than one million transfers per year.

No Significant Impact on Small Businesses?

Under the Regulatory Flexibility Act ("RFA"),7 the CFPB is required to convene a small business review panel prior to publishing a proposed rule to consider the impact of the proposal on small businesses, unless the CFPB certifies that a proposed rule will not have a significant economic impact on a substantial number of small entities.8 "Small entities" under the RFA include "small businesses" that fall below thresholds developed by the Small Business Administration ("SBA") pursuant to the Small Business Act. Under the Proposal, the CFPB states that the most relevant SBA coding is for "Other Activities Related to Credit Intermediation," which includes "[m]oney transmission services." The SBA threshold for small businesses in this coding is annual receipts below $19 million. Of the approximately 25 potential larger participants identified by the CFPB, the CFPB approximates that 10 providers have annual receipts under $19 million. Despite the fact that "small businesses" compose more than one third of larger participants, the CFPB compared these 10 providers to the more than 5,000 small firms in this coding, and concluded that the Proposal would impact less than one percent of the small businesses in the industry. Accordingly, the CFPB certified that the Proposal, if adopted, would not have a significant economic impact on a substantial number of small entities.


1 "Covered person" means any person (or the affiliate of any person) that engages in offering or providing a consumer financial product or service. 12 U.S.C. § 5481(6).

2 12 U.S.C. § 5514(a)(1)(B).

3 For additional information on the rulemakings defining larger participant for these markets, see our alert here.

4 For additional information on the Remittance Transfer Rule, see our alert here.

5 15 U.S.C. § 1693o-1(g)(2)(B).

6 Under the Remittance Transfer Rule, 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. 12 C.F.R. § 1005.30(f)(2).

7 5 U.S.C. § 609(b).

8 See, e.g., Final Report of the Small Business Review Panel on CFPB's Proposals Under Consideration for Residential Mortgage Loan Origination Standards Rulemaking (July 11, 2012), http://files.consumerfinance.gov/f/201208_cfpb_LO_comp_SBREFA.pdf.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.