Remittance Transfer Rule Enforcement Heats Up

Via a consent order issued last week, the Bureau of Consumer Financial Protection (CFPB) settled its first enforcement action based on violations of the Remittance Transfer Rule (“Rule”) with Maxitransfers Corp. (“Maxi”), a company serving U.S. consumers seeking to send money overseas. The CFPB's first-of-its-kind enforcement action emphasizes the importance of compliance with the Rule, and should be of interest to providers of remittance transfers including depository institutions, traditional money services businesses, and FinTech companies.

The Rule, which was first promulgated in 2012, implements the Electronic Fund Transfer Act (EFTA), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Rule generally applies to remittance transfers and to remittance transfer providers. For purposes of the Rule, a “remittance transfer” is an electronic transfer of funds over $15 requested by a U.S. consumer primarily for personal, family, or household purposes to a recipient who will receive the transfer in a foreign country. To qualify as a “remittance transfer,” a transfer must be sent by a “remittance transfer provider,” which is a person or entity that provides remittance transfers in the normal course of its business.

By way of background, the Rule imposes three major obligations on remittance transfer providers. First, a remittance transfer provider must generally provide clear and conspicuous pre-payment disclosures and receipts to remittance transfer senders that contain specific information about remittance transfers, such as information about fees and taxes, exchange rates, and the amount to be received by the recipient. Relevant to the Maxi consent order, these disclosures must include the amount that will be transferred to the recipient in the currency in which the remittance transfer is funded (e.g., U.S. Dollars), using the termTransfer Amount or a substantially similar term, as well as the amount that will be received by the recipient in the currency in which funds will be received (e.g., Mexican Pesos), using the termTotal to Recipient or a substantially similar term. Second, the Rule provides a remittance transfer sender with the right to cancel certain remittance transfers for up to 30 minutes after the remittance transfer sender makes payment, as well as the concomitant right to a refund. Third, the Rule contains error resolution procedures that require remittance transfer providers to investigate...