The Consumer Financial Protection Bureau recently finalized a larger participant rule for nonbank international money transfer providers and left it largely unchanged from the rule as originally proposed in January. The new rule, which will take effect on December 1, 2014, implements the CFPB’s oversight of such providers to ensure their compliance with the Remittance Transfer Rule (RTR) in Regulation E, which implements the Electronic Fund Transfer Act (EFTA). This action adds large nonbank providers to the categories of institutions subject to examination by the Bureau.

The RTR was enabled by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), which expanded the EFTA’s scope to provide protections for consumers who send remittance transfers. Prior to Dodd-Frank, international money transfers were not generally subject to consumer protection regulation. Title X of Dodd-Frank authorized the CFPB to supervise nonbank “larger participant[s]” of markets for other consumer financial products or services, as defined by rule.

The CFPB has already issued rules defining larger participants in markets for consumer reporting, consumer debt collection, and student loan servicing. The rule issued last week identifies larger participants in the market for international consumer funds transfers as those that engage annually in 1 million or more international money transfers. Note in this regard that not all international money transfers are remittance transfers; for example, an overseas funds transfer of $15 or less is an international money transfer but is not a remittance transfer under the RTR.

Prior to this rulemaking, the CFPB already enjoyed authority to examine and assess compliance with the RTR by large depository institutions and credit unions subject to the Bureau’s jurisdiction. Last week’s issuance completes the supervisory jigsaw puzzle by adding large nonbank providers to the mix. After the effective date, they will be subject to CFPB examination to assess their compliance with the RTR’s obligations, including mandatory disclosures, cancellation rights, and error resolution.

The Bureau estimates that nonbank remittance transfer providers send about $50 billion internationally each year via approximately 150 million individual funds transfers, and that 7 million U.S. households have wired money abroad. The agency’s research leads it to believe that the new rule will add about 25 of the largest remittance transfer providers in the market to the CFPB’s supervisory authority.

Lawyers in Ballard Spahr’s Consumer Financial Services Group and Bank Regulation and Supervision practice have considerable experience in counseling both bank and nonbank providers on the RTR and assisting them in preparing for CFPB examinations. For more information, please contact CFS Group Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, or Keith R. Fisher at 202.661.2284 fisherk@ballardspahr.com.


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