The CFPB has issued a final rule amending its remittance rule.  The final rule is effective July 21, 2020.

The key amendments consist of the following:

• Safe harbor threshold.  Currently, the rule’s safe harbor threshold removes from the rule’s coverage an entity that provided 100 or fewer remittance transfers in the previous calendar year and provides 100 or fewer remittance transfers in the current calendar year.  The final rule increases the safe harbor threshold from 100 transfers to 500 transfers annually.
• Use of estimates.  To mitigate the effects of the July 21, 2020 expiration of the statutory exception that allows insured institutions, under certain conditions, to disclose estimates to consumers of the exchange rate and covered third-party fees instead of exact amounts, the final rule creates two new, permanent exceptions:
  • Insured institutions are permitted to estimate the exchange rate for transfers to a particular country if, among other things, the insured institution made 1,000 or fewer transfers in the prior calendar year to the particular country for which the designated recipients of such transfers received funds in that country’s local currency.
  • Insured institutions are permitted to estimate third-party fees for a transfer to a particular designated recipient’s institution if, among other things, the insured institution made 500 or fewer transfers to the designated recipient’s institution in the prior calendar year.

The final rule includes a transition period for insured institutions that exceed, as applicable, the 1,000 transfer or 500 transfer thresholds in a certain year.  During the transition period, an institution can continue to provide estimates for a reasonable period of time after crossing such thresholds while coming into compliance with the requirement to provide exact amounts.

In connection with its proposed amendments, the Bureau sought comment on the rule’s permanent exception that allows providers to use estimates for transfers to certain countries as determined by the Bureau.  The Bureau has currently identified five countries that qualify for this exception.  Among other issues, the Bureau asked for suggestions regarding possible changes to the substantive criteria used to determine whether a country qualifies for the list and the process the Bureau uses for adding countries to the list.  In the Supplementary Information accompanying the final rule, the Bureau states that it is not amending this exception or the countries list as part of the final rule but will update the process it uses to consider requests to add or remove countries from its countries list.  In addition, the Bureau indicates that it will make decisions on pending requests to add two countries to the list.

Also in the Supplementary Information, the Bureau references the policy statement it issued last month regarding its approach to supervision and enforcement of remittance transfers during the COVID-19 pandemic.  The policy statement is intended to mitigate the challenges that the COVID-19 pandemic creates for institutions that will no longer be able to provide estimates of the exchange rate and covered third-party fees when the temporary exception expires on July 21, 2020.  In the policy statement, the CFPB advises that for remittance transfers that occur on or after July 21, 2020 and before January 1, 2021, it does not intend to cite in an examination or initiate an enforcement action “in connection with the disclosure of actual third-party fees and exchange rates against any insured institution that will be newly required to disclose actual costs after the temporary exception expires, and instead continues to provide estimated disclosures that would have been allowed under the temporary exception.”