Foreign Remittance

Dodd-Frank International Remittance Transfer Regulations

The Consumer Financial Protection Bureau’s (CFPB) final International Remittance Rule (“Remittance Rule”) is effective October 28, 2013. Alloya has been working with its various business partners to understand their individual approach to compliance, what changes might be necessary to Alloya systems and processes, and what changes you may need to make.

Information was originally published in December 2012 when the Remittance Rule was first published for public comment. While it has been updated based on the final rule, our overall approach is unchanged.

Please Note: Required changes to Alloya’s Premier View system will be implemented in two releases. In addition, pricing for these services will increase due to the additional reporting and compliance requirements. Specific information regarding Premier View updates, pricing and training can be found by clicking here.

Dodd-Frank Background

The Consumer Financial Protection Bureau is responsible for implementing the Remittance Rule. The Remittance Rule helps protect consumers by requiring disclosures and error resolution notices in connection with transfers sent by an individual, to either a business or an individual in a foreign country. In particular, the rule calls for new consumer protections; new processes and requirements for disclosing transaction information; new error resolution standards and procedures; new procedures regarding cancellation and refunds; and foreign language disclosure requirements for all remittance transfer providers in the United States.

In May 2013 the Consumer Financial Protection Bureau’s amendments to the Rules contained several important changes for financial institutions conducting international remittances including:

  • Revised the implementation date of the rule to Oct. 28, 2013.
  • The disclosure of fees imposed by a recipient’s institution is optional in certain circumstances.
  • The disclosure of taxes collected by a person other than the remittance transfer provider is optional.
  • A sender’s mistake in providing an account number or recipient institution identifier is not considered an “Error,” provided certain other requirements are met.
  • Created lesser remedy to senders providing incorrect or insufficient information.

All remittance transfer providers must comply with this rule by October 28, 2013. If you process international funds transfers on behalf of your members, you are considered a remittance transfer provider.

Important Note: The Remittance Rule DOES NOT apply to financial institutions that process fewer than 100 international remittance transfers in a year. However, if you are currently processing fewer than 100 transactions and in the future exceeds 100 transactions, according to the rule you would have six months to become compliant. We recommend that your keep track of the number of transactions you process across all of your products.

The Remittance Rule covers any “remittance transfer,” meaning any electronic transfer of money from a consumer in the U.S. to a designated person or business located in another country, including, but not limited to:

  • International Wire Transfers
  • International ACH 
  • International Western Union Transfers
  • International Bill Payment
  • Prepaid Cards sent to an International Beneficiary

The Remittance Rule covers the following transfer types:

  • Consumer to Consumer
  • Consumer to Business

The Remittance Rule DOES NOT cover the following transfer types:

  • Business to Business
  • Business to Consumer
  • Sale/Issuance and clearance of paper instruments (such as drafts)
  • The Remittance Rule also DOES NOT apply to financial institutions that process fewer than 100 international remittance transfers in a year.