The Consumer Financial Protection Bureau (“Bureau”) issued a final rule amending the Remittance Rule of the Electronic Fund Transfer Act. As part of the final rule, the Bureau is amending the normal course of business safe harbor threshold in which case a person is not deemed to be providing remittance transfers for a consumer in the normal course of business if the person provided 500 or fewer remittance transfers in the previous calendar year and provides 500 or fewer remittance transfers in the current calendar year. Prior to this amendment, the threshold was 100 remittance transfers annually. This increase of threshold is effective July 21, 2021.
The Bureau also adopted a new, permanent exception to the Remittance Rule permitting financial institutions to estimate the exchange rate for a remittance transfer to a particular country if the designated recipient will receive funds in the country’s local currency and the financial institution made 1,000 or fewer remittance transfers in the prior calendar year to that country when the designated recipients received funds in the country’s local currency. Additionally, the Bureau adopted a new, permanent exception allowing financial institutions to estimate covered third-party fees for a remittance transfer to a designated recipient’s institution if the financial institution made 500 or fewer remittance transfers to that designated recipient’s institution in the prior calendar year. These new exceptions address financial institutions’ concerns of the expiration of the statutory exception that allows financial institutions to disclose estimates to consumers of the exchange rate and covered third-party fees instead of exact amounts that expires on July 21, 2020.
The Bureau is providing a transition period for financial institutions to comply with these exceptions for those that exceed the 1,000-transfer or 500-transfer thresholds in a certain year. This transition period will allow these institutions to continue to provide estimates for a reasonable period of time while they come into compliance with the requirement to provide exact amounts. Lastly, on April 10, 2020, the Bureau released a statement announcing that in light of the COVID-19 pandemic, for remittance transfers that occur on or after July 21, 2020, and before January 1, 2021, the Bureau does not intend to cite in an examination or initiate an enforcement action related to the disclosure of exact third-party fees and exchange rates against any financial institution that will now be required to disclose exact third-party fees and exchange rates after the temporary exception expires. You can read more about this policy statement here.