[author: Barbara S. Mishkin]
When CFPB Director Cordray recently testified before Congress, he heard a great deal about the concerns small businesses have about the costs of complying with new CFPB rules. In a nod to those concerns, the final supplementary remittance transfer rule issued by the CFPB this week contains an exemption for institutions that conduct 100 or fewer remittance transfers per year. Although not as generous an exemption as the American Bankers Association and others had sought, the exemption is still more generous than the one the CFPB originally proposed, which would have only covered institutions conducting up to 25 transfers per year.
The final rule also provides a transition period for compliance with the remittance transfer requirements if a company loses its eligibility for the exemption by providing more than 100 transfers in a year and adjusts the requirements for remittance transfers scheduled in advance.
In its discussion of the final rule, the CFPB stated that it did “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.” For purposes of identifying who provides remittance transfer in the normal course of business, the CFPB believed that the number of transfers per year was a more appropriate basis for an exemption. Nevertheless, the new exemption is likely to benefit many community banks, credit unions and other institutions that would be considered a small business under SBA or other standards.
In the CFPB’s press release on the final rule, Director Cordray commented that “[w]e recognize that in regulations, one size does not necessarily fit all.” The small business community is undoubtedly hoping that such recognition will be reflected in future CFPB rulemaking through thresholds, exemptions or other approaches that will ease the burden on small businesses.