Nov 27 The U.S. consumer finance watchdog plans
to relax rules requiring firms that provide foreign money
transfers to disclose more about fees and exchange rates after
industry groups said the requirements could lead some banks to
halt the service.
The Consumer Financial Protection Bureau said it will issue
a proposal next month to ease some of the fee and tax disclosure
requirements and to ensure that banks are not liable when a
sender provides the wrong account number for a money transfer.
And the new rules regulating such transfers, or remittances,
will take effect sometime in the spring of 2013, rather than in
February as initially planned, the bureau said in a statement on
The consumer agency approved rules in January 2012 that
require banks to explain fees being charged during transfers to
people in other countries, the exchange rate and the total
amount of money the person on the other end will receive.
Regulators already adjusted the rules in August to exempt
firms that conduct 100 or fewer remittances each year.
"The CFPB's proposed adjustments will be designed to
facilitate implementation and compliance with the rule's
requirements while maintaining the rule's valuable new consumer
protections," the agency said in a statement on its website.
Transfers to people in other countries through banks and
companies such as Western Union and MoneyGram
International add up to billions of dollars each year,
but the transactions have been mostly excluded from federal
consumer protection rules, the consumer bureau has said.
The 2010 Dodd-Frank financial oversight law established the
agency and called for it to write remittance rules. The CFPB
said disclosures, as well as new error resolution and
cancellation rights for consumers, would help protect people who
send money to foreign countries.
But banks have said they would struggle to determine all of
the taxes imposed in countries where money is being sent, as
well as the fees charged by recipients' banks. Industry
representatives said some firms might stop offering remittances
"It requires the bank to disclose things that they don't
know and are outside of their control," said Cary Whaley, vice
president for payments and technology policy with the
Independent Community Bankers of America.
The CFPB said it would give banks more flexibility by
letting them base fee disclosures on published fee schedules.
Banks will have to disclose national-level taxes but not taxes
imposed by local governments or other smaller foreign entities.
Financial firms also said provisions giving companies more
responsibility for mistakes with transfers might unfairly put
them on the hook if money did not reach the intended recipient
because a sender accidentally gave the wrong account number.
Companies must attempt to recover misdirected funds but will
not be liable for the funds if the firm can demonstrate that the
customer provided the wrong information, the consumer bureau
said on Tuesday.
"If these changes are made and they're made correctly, in a
way that doesn't add regulatory burden, the consumers will win,
remittance providers will win, and this industry will continue
to grow," Whaley said.