CFPB to Amend, Delay Contentious Remittance Rule
Witkowski, Rachel, American Banker
Byline: Rachel Witkowski
WASHINGTON a The Consumer Financial Protection Bureau said Tuesday it will amend its rule establishing new disclosures for international money transfers in a move designed to ease bankers' fears that the regulation is overburdensome.
The agency also said it would delay, by 90 days, implementation of the rule, which had been scheduled to go into effect Feb. 7.
The changes, to be specified next month, are in response to some financial institutions that raised "practical challenges" in implementing the new rule, the agency said. While it did not detail all of the proposed alterations, the CFPB said one change would ease how banks must disclose certain foreign taxes.
The news comes on the heels of the Federal Home Loan Bank of New York saying last week A that it would stop processing international wire transfers because of the remittance rule. Since the rule was finalized in January, many smaller institutions have argued the increased disclosure requirements would squeeze them out of the business due to higher compliance costs.
"The initial rules were very aggressive," said Isaac Boltansky, a policy analyst at Compass Point Research & Trading. "There were so many layers of disclosures" that "we've seen banks pull back from offering this service."
In August, the CFPB amended its rule to exclude banks that made less than 100 remittances a year. But Boltansky said that was well below what the industry wanted. The second round of proposed amendments relates to three issues: when a consumer gives an incorrect account number for a money transfer; how to disclose certain third-party fees and foreign taxes; and the disclosure of sub-national, foreign taxes. …