|Photo credit: epSos.de|
By way of reminder, remittance transfers are transfers of money from the U.S. to a foreign country, usually by immigrants or temporary workers in the U.S. to family members in another country.
One aspect of the new rules is the requirement to disclose to consumers, at the outset of the transaction, not only the fees imposed by the initial service provider, but also all third party fees and exchange rates.
The Dodd-Frank Act contained an exception from this requirement for federally-insured depository institutions (banks, thrifts, credit unions, etc.) allowing them to estimate third-party fees and exchange rates when they cannot determine exact amounts, but the exception was set to expire on July 21, 2015.
Today, the CFPB proposed to extend that temporary exception by five years, until July 21, 2020.
The reason for the extension is that some financial institutions reported that the markets have not yet adjusted to allow them to determine in advance what the exact fees and exchange rates would be imposed on some foreign remittance transfers. Without the exemption, these institutions would be unable to send some transfers to certain parts of the world that they currently serve. Obviously, a termination of services to certain areas is not the result the CFPB had in mind, so the CFPB is allowing more time for the remittance market to adjust to the new rules.
You can read more about the partial extension here. For a refresher on the new foreign remittance transfer rules, you can review the piece from last summer, available here.