This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

56631 

Vol. 79, No. 184 

Tuesday, September 23, 2014 

1 79 FR 5302 (Jan. 31, 2014). 

2Public Law 111–203, section 1024, 124 Stat. 

1376, 1987 (2010) (codified at 12 U.S.C. 5514). 

3The provisions of 12 U.S.C. 5514 apply to 

certain categories of covered persons, described in 

subsection (a)(1), and expressly exclude from 

coverage persons described in 12 U.S.C. 5515(a) or 

5516(a). ‘‘Covered persons’’ include ‘‘(A) any 

person that engages in offering or providing a 

consumer financial product or service; and (B) any 

affiliate of a person described [in (A)] if such 

affiliate acts as a service provider to such person.’’ 

12 U.S.C. 5481(6). 

4 12 U.S.C. 5514(a)(1)(A), (D), (E). The Bureau also 

has the authority to supervise any nonbank covered 

person that it ‘‘has reasonable cause to determine, 

by order, after notice to the covered person and a 

reasonable opportunity . . . to respond . . . is 

engaging, or has engaged, in conduct that poses 

risks to consumers with regard to the offering or 

provision of consumer financial products or 

services.’’ 12 U.S.C. 5514(a)(1)(C); see also 12 CFR 

part 1091 (prescribing procedures for making 

determinations under 12 U.S.C. 5514(a)(1)(C)). In 

addition, the Bureau has supervisory authority over 

very large depository institutions and credit unions 

and their affiliates. 12 U.S.C. 5515(a). Furthermore, 

the Bureau has certain authorities relating to the 

supervision of other depository institutions and 

credit unions. 12 U.S.C. 5516(c)(1), (e). One of the 

Bureau’s mandates under the Dodd-Frank Act is to 

ensure that ‘‘Federal consumer financial law is 

enforced consistently without regard to the status 

of a person as a depository institution, in order to 

promote fair competition.’’ 12 U.S.C. 5511(b)(4). 

5 12 U.S.C. 5514(a)(1)(B), (a)(2) see also 12 U.S.C. 

5481(5) (defining ‘‘consumer financial product or 

service’’). The Final Rule describes one market for 

consumer financial products or services, which the 

rule labels ‘‘international money transfers.’’ The 

definition does not encompass all activities that 

could be considered international money transfers. 

Any reference herein to ‘‘the international money 

transfer market’’ means only the particular market 

for international money transfers identified by the 

Final Rule. 

6 12 U.S.C. 5514(b)(1). 

7See 12 U.S.C. 5514(b) (authorizing the Bureau 

both to conduct examinations and to require reports 

from entities subject to supervision). 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1090 

[Docket No. CFPB–2014–0003] 

RIN 3170–AA25 

Defining Larger Participants of the 

International Money Transfer Market 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau or CFPB) 

amends the regulation defining larger 

participants of certain consumer 

financial product and service markets 

by adding a new section to define larger 

participants of a market for international 

money transfers. The Bureau is issuing 

this final rule pursuant to its authority, 

under the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, to 

supervise certain nonbank covered 

persons for compliance with Federal 

consumer financial law and for other 

purposes. The Bureau has the authority 

to supervise nonbank covered persons 

of all sizes in the residential mortgage, 

private education lending, and payday 

lending markets. In addition, the Bureau 

has the authority to supervise nonbank 

‘‘larger participant[s]’’ of markets for 

other consumer financial products or 

services, as the Bureau defines by rule. 

The Bureau has issued rules defining 

larger participants of markets for 

consumer reporting, consumer debt 

collection, and student loan servicing. 

This final rule identifies a market for 

international money transfers and 

defines ‘‘larger participants’’ of this 

market that are subject to the Bureau’s 

supervisory authority. 

DATES: Effective December 1, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Edna Boateng, Senior Consumer 

Financial Protection Analyst, Office of 

Supervision Policy, (202) 435–7697, 

Amanda Quester, Senior Counsel, Office 

of Regulations, (202) 365–0702, or Brian 

Shearer, Attorney, Office of Supervision 

Policy, (202) 435–7794. 

SUPPLEMENTARY INFORMATION: On 

January 31, 2014, the Bureau published 

a notice of proposed rulemaking 

proposing to define larger participants 

of a market for international money 

transfers.1 The Bureau is issuing this 

final rule to define larger participants of 

the identified market (Final Rule). 

I. Overview 

Section 1024 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (Dodd-Frank Act), codified at 12 

U.S.C. 5514,2 gives the Bureau 

supervisory authority over all nonbank 

covered persons 3 offering or providing 

three enumerated types of consumer 

financial products or services: (1) 

Origination, brokerage, or servicing of 

consumer loans secured by real estate, 

and related mortgage loan modification 

or foreclosure relief services; (2) private 

education loans; and (3) payday loans.4

The Bureau also has supervisory 

authority over ‘‘larger participant[s] of a 

market for other consumer financial 

products or services,’’ as the Bureau 

defines by rule.5

The Bureau is authorized to supervise 

nonbank covered persons subject to 12 

U.S.C. 5514 for purposes of: (1) 

Assessing compliance with Federal 

consumer financial law; (2) obtaining 

information about such persons’ 

activities and compliance systems or 

procedures; and (3) detecting and 

assessing risks to consumers and 

consumer financial markets.6 The 

Bureau conducts examinations, of 

various scopes, of supervised entities. In 

addition, the Bureau may, as 

appropriate, request information from 

supervised entities without conducting 

examinations.7

The Bureau prioritizes supervisory 

activity among nonbank covered 

persons on the basis of risk, taking into 

account, among other factors, the size of 

each entity, the volume of its 

transactions involving consumer 

financial products or services, the size 

and risk presented by the market in 

which it is a participant, the extent of 

relevant State oversight, and any field 

and market information that the Bureau 

has on the entity. Such field and market 

information might include, for example, 

information from consumer complaints 

and any other information the Bureau 

has about risks to consumers. 

The specifics of how an examination 

takes place vary by market and entity. 

However, the examination process 

generally proceeds as follows. Bureau 

examiners contact the entity for an 

initial conference with management and 

often request records and other 

information. Bureau examiners will 

ordinarily also review the components 

of the supervised entity’s compliance 

management system. Based on these 

discussions and a preliminary review of 

the information received, examiners 

determine the scope of an on-site 

examination and then coordinate with 

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56632 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

8CFPB Supervision and Examination Manual 

(Oct. 1, 2012), available at http://

www.consumerfinance.gov/guidance/supervision/

manual/. 

9CFPB Supervision and Examination Manual, 

Remittance Transfer Examination Procedures (Oct. 

22, 2013), available at http://

www.consumerfinance.gov/guidance/supervision/

manual/. In a joint comment, several large money 

transmitters encouraged the Bureau to provide 

additional guidance regarding supervisory 

expectations, similar to the CFPB Dodd-Frank 

Mortgage Rules Readiness Guide. A compliance 

guide for the Remittance Rule, along with a webinar 

and other helpful materials, may be found 

at http://www.consumerfinance.gov/remittancestransfer-rule-amendment-to-regulation-e/. The 

Bureau also periodically publishes Supervisory 

Highlights to share general information about the 

Bureau’s examination findings without identifying 

specific companies (except for companies subject to 

enforcement actions already made public). 

10 77 FR 6194 (Feb. 7, 2012); 77 FR 40459 (July 

10, 2012); 77 FR 50244 (Aug. 20, 2012); 78 FR 6025 

(Jan. 29, 2013); 78 FR 30662 (May 22, 2013); 78 FR 

49365 (Aug. 14, 2013) (codified at 12 CFR part 

1005, subpart B). On August 22, 2014, the Bureau 

released further amendments to the Remittance 

Rule, which are available at http://

files.consumerfinance.gov/f/201408_cfpb_finalrule_intl-money-transfer-small-entity.pdf. For 

additional information about the Remittance Rule, 

see http://www.consumerfinance.gov/remittancestransfer-rule-amendment-to-regulation-e/. 

11 In commenting on this proposal, the State 

regulator associations also recommended that the 

Bureau consider a risk-scoped approach to 

examining larger participants. Although the 

Bureau’s examination approach is not the subject of 

this rulemaking, the Bureau prioritizes supervisory 

activity among nonbank covered persons on the 

basis of risk; conducts risk-focused examinations to 

direct resources toward areas with higher degrees 

of risk to consumers; and focuses on an institution’s 

ability to detect, prevent, and correct practices that 

present a significant risk of violating the law and 

causing consumer harm. See generally CFPB 

Supervision and Examination Manual 9, 10, 15, 19– 

22 (Oct. 1, 2012), available at http://

www.consumerfinance.gov/guidance/supervision/

manual/. 

12The Bureau’s supervisory authority also 

extends to service providers of those covered 

persons that are subject to supervision under 12 

U.S.C. 5514(a)(1). 12 U.S.C. 5514(e); see also 12 

U.S.C. 5481(26) (defining ‘‘service provider’’). 

13The Bureau received a comment requesting the 

Bureau to preempt State regulation of money 

transmission. As noted, the purpose of this 

rulemaking is to define larger participants of a 

market for consumer financial products or services 

that will be subject to the Bureau’s supervisory 

authority. Preemption of State regulation of money 

transmission is not required for that purpose, is not 

intended by the Bureau, and is beyond the scope 

of this rulemaking. 

14 79 FR 5302 (Jan. 31, 2014). 

15 12 CFR 1090.100–.103. 

16 12 CFR 1090.104 (consumer reporting); 12 CFR 

1090.105 (consumer debt collection); 12 CFR 

1090.106 (student loan servicing). 

17 15 U.S.C. 1693o–1(g); 12 CFR 1005.2, 1005.30. 

the entity to initiate the on-site portion 

of the examination. While on-site, 

examiners spend a period of time 

holding discussions with management 

about the entity’s policies, processes, 

and procedures; reviewing documents 

and records; testing transactions and 

accounts for compliance; and evaluating 

the entity’s compliance management 

system. Examinations may involve 

issuing confidential examination 

reports, supervisory letters, and 

compliance ratings. In addition to the 

process described above, the Bureau 

may also conduct off-site examinations. 

The Bureau has published a general 

examination manual describing the 

Bureau’s supervisory approach and 

procedures.8 As explained in the 

manual, the Bureau will structure 

examinations to address various factors 

related to a supervised entity’s 

compliance with Federal consumer 

financial law and other relevant 

considerations. On October 22, 2013, 

the Bureau released procedures specific 

to remittance transfers for use in the 

Bureau’s examinations of entities within 

its supervisory authority.9 The Bureau 

plans to use those examination 

procedures (or an updated version, as 

appropriate) in supervising 

international money transfers. The 

procedures include instructions on 

examining for compliance with, among 

other laws and regulations, new 

requirements in subpart B of Regulation 

E relating to remittance transfers 

(Remittance Rule), which went into 

effect on October 28, 2013.10

The States have been active in 

regulation of money transmission, with 

forty-seven States and the District of 

Columbia requiring entities to obtain a 

license to engage in money 

transmission, as defined by applicable 

law. Many States actively examine 

money transmitters, and State money 

transmitter regulator associations have 

indicated that the State regulators look 

forward to collaborating with the 

Bureau in supervising international 

money transfer providers.11 In response 

to the proposal, industry commenters 

also emphasized the need to coordinate 

with the States in this market. The 

Bureau agrees that this collaboration is 

important and will coordinate with 

appropriate State regulatory authorities 

in examining larger participants of the 

international money transfer market. 

This Final Rule establishes a category 

of nonbank covered persons that is 

subject to the Bureau’s supervisory 

authority under 12 U.S.C. 5514 by 

defining ‘‘larger participants’’ of a 

market for international money 

transfers.12 The Final Rule pertains only 

to that purpose and does not impose 

new substantive consumer protection 

requirements.13 Nonbank covered 

persons generally are subject to the 

Bureau’s regulatory and enforcement 

authority and any applicable Federal 

consumer financial law, regardless of 

whether they are subject to the Bureau’s 

supervisory authority. 

II. Background 

On January 31, 2014, the Bureau 

published a notice of proposed 

rulemaking proposing to define larger 

participants of a market for international 

money transfers (Proposed Rule).14 The 

Bureau requested public comment on 

the Proposed Rule. The Bureau received 

16 comments from consumer advocates, 

industry participants, trade associations, 

State regulator associations, and 

individual consumers. The comments 

are discussed in more detail below. 

The Proposed Rule included a test to 

assess whether a nonbank covered 

person is a larger participant of the 

international money transfer market. 

Under the proposed test, a nonbank 

covered person with at least one million 

aggregate annual international money 

transfers, as described in the Proposed 

Rule, would be a larger participant of 

the international money transfer market. 

III. Summary of the Final Rule 

The Bureau’s existing largerparticipant rule, 12 CFR part 1090, 

prescribes various procedures, 

definitions, standards, and protocols 

that apply with respect to all markets in 

which the Bureau has defined larger 

participants.15 Those generally 

applicable provisions, which are 

codified in subpart A, also are 

applicable for the international money 

transfer market described by this Final 

Rule. The definitions in § 1090.101 

should be used, unless otherwise 

specified, when interpreting terms in 

this Final Rule. 

The Bureau includes relevant market 

descriptions and larger-participant tests, 

as it develops them, in subpart B.16

Accordingly, the Final Rule defining 

larger participants of the international 

money transfer market amends Part 

1090 by adding § 1090.107 in subpart B. 

The Bureau is finalizing the Proposed 

Rule largely as proposed. The Final Rule 

defines an international money transfer 

market that covers certain electronic 

transfers of funds sent by nonbanks that 

are international money transfer 

providers. To be included in this 

market, transfers must be requested by 

a sender in a State to be sent to a 

designated recipient in a foreign 

country. The Final Rule’s definitions are 

modeled in part on the definitions of 

‘‘remittance transfer’’ and related terms 

in the Electronic Fund Transfer Act 

(EFTA) and its implementing regulation, 

Regulation E, but are not co-extensive 

with those definitions.17 For example, 

transfers of $15 or less can be 

‘‘international money transfers’’ but not 

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Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 56633 

18 12 CFR 1005.30(e)(2)(i). 

19As a result, some terms may have different 

definitions for purposes of the Proposed Rule than 

they do for purposes of Regulation E. The definition 

of ‘‘consumer’’ in § 1090.101 is ‘‘an individual or 

an agent, trustee, or representative acting on behalf 

of an individual,’’ 12 CFR 1090.101, while the 

definition of ‘‘consumer’’ in Regulation E is ‘‘a 

natural person,’’ 12 CFR 1005.2(e). The definition 

of ‘‘person’’ in § 1090.101 is ‘‘an individual, 

partnership, company, corporation, association 

(incorporated or unincorporated), trust, estate, 

cooperative organization, or other entity,’’ 12 CFR 

1090.101, while the definition of ‘‘person’’ in 

Regulation E is ‘‘a natural person or an 

organization, including a corporation, government 

agency, estate, trust, partnership, proprietorship, 

cooperative, or association,’’ 12 CFR 1005.2(j). 

20As the Bureau has explained in prior 

rulemakings, the criterion selected for one market 

in a larger-participant rulemaking is not necessarily 

appropriate for any other market that may be the 

subject of a future rulemaking. Instead, the Bureau 

tailors each test to the market to which it will be 

applied. 77 FR 42874, 42876 (consumer reporting) 

(July 20, 2012); 77 FR 65775, 65778 (consumer debt 

collection) (Oct. 31, 2012); 78 FR 73383, 73384 n.16 

(student loan servicing) (Dec. 6, 2013). 

21 12 CFR 1090.102. 

22 5 U.S.C. 553(d). 

23As noted above, the term ‘‘international money 

transfer’’ is very similar to the term ‘‘remittance 

transfer’’ as defined in the Remittance Rule, 12 CFR 

1005.30(e), but differs in some substantive respects 

as specified below. Other definitions in this Final 

Rule are similarly based on Regulation E. Usage, or 

omission, of specific language from EFTA or 

Regulation E in the Final Rule is not an 

endorsement by the Bureau of any specific 

interpretation of EFTA or Regulation E. 

24Although this Final Rule applies only to 

nonbank covered persons, similar services are also 

provided by depository institutions and credit 

unions, including those already subject to the 

Bureau’s supervisory authority. 

25CFPB, Report on Remittance Transfers 6 (July 

20, 2011), available at http://

www.consumerfinance.gov/wp-content/uploads/

2011/07/Report_20110720_

RemittanceTransfers.pdf. Federal law requires 

money transmitters that meet certain criteria to 

register as a ‘‘money services business’’ with the 

U.S. Department of the Treasury’s Financial Crimes 

Enforcement Network (FinCEN). 31 U.S.C. 5330; 31 

CFR 1010.100(ff), 1022.380. Most States also have 

licensing requirements for similar types of entities. 

‘‘remittance transfers.’’ 18 The 

definitions in existing § 1090.101 apply 

for terms that the Final Rule does not 

define, such as ‘‘person’’ and 

‘‘consumer.’’ 19

The Final Rule also sets forth a test to 

determine whether a nonbank covered 

person is a larger participant of the 

international money transfer market. An 

entity is a larger participant if it has at 

least one million aggregate annual 

international money transfers.20 As 

prescribed by existing § 1090.102, any 

nonbank covered person that qualifies 

as a larger participant will remain a 

larger participant until two years after 

the first day of the tax year in which the 

person last met the applicable test.21

Pursuant to existing § 1090.103, a 

person can dispute whether it qualifies 

as a larger participant in the 

international money transfer market. 

The Bureau will notify an entity when 

the Bureau intends to undertake 

supervisory activity; the entity will then 

have an opportunity to submit 

documentary evidence and written 

arguments in support of its claim that it 

is not a larger participant. Section 

1090.103(d) provides that the Bureau 

may require submission of certain 

records, documents, and other 

information for purposes of assessing 

whether a person is a larger participant 

of a covered market; this authority will 

be available to the Bureau to facilitate 

its identification of larger participants of 

the international money transfer market, 

just as in other markets. 

IV. Legal Authority and Procedural 

Matters 

A. Rulemaking Authority 

The Bureau is issuing this Final Rule 

pursuant to its authority under: (1) 12 

U.S.C. 5514(a)(1)(B) and (a)(2), which 

authorize the Bureau to supervise larger 

participants of markets for consumer 

financial products or services, as 

defined by rule; (2) 12 U.S.C. 5514(b)(7), 

which, among other things, authorizes 

the Bureau to prescribe rules to facilitate 

the supervision of covered persons 

under 12 U.S.C. 5514; and (3) 12 U.S.C. 

5512(b)(1), which grants the Bureau the 

authority to prescribe rules as may be 

necessary or appropriate to enable the 

Bureau to administer and carry out the 

purposes and objectives of Federal 

consumer financial law, and to prevent 

evasions of such law. 

B. Effective Date of Final Rule 

The Administrative Procedure Act 

generally requires that rules be 

published not less than 30 days before 

their effective dates.22 The Bureau 

proposed that the Final Rule would be 

effective no earlier than 60 days after 

publication and received no comments 

relating to the effective date. The Bureau 

adopts December 1, 2014 as the effective 

date for the Final Rule, which is more 

than 60 days after publication. 

V. Section-By-Section Analysis 

Section 1090.107—International Money 

Transfer Market 

Proposed § 1090.107 defined a market 

for international money transfers.23 The 

Bureau received some comments that 

supported the proposed market scope 

and other comments that suggested that 

the Bureau should expand the scope of 

the market definition to include 

domestic money transfers. For the 

reasons that follow, the Bureau has 

opted to include only international 

money transfers in the market definition 

for this Final Rule. 

As a general matter, international 

money transfers are electronic transfers 

of funds sent by nonbanks from 

consumers in the United States to 

persons or entities abroad.24 Consumers 

who send money abroad often do so 

through money transmitter companies 

that are nonbanks.25 Many money 

transmitters operate through closed 

networks, receiving and disbursing 

funds through their own outlets or 

through agents such as grocery stores, 

neighborhood convenience stores, or 

depository institutions. Some money 

transmitters may send transfers of any 

size, while others cap the size of 

transfers they send. 

For an international transfer 

conducted through a money transmitter, 

a consumer typically provides basic 

identifying information about himself 

and the recipient and often pays cash 

sufficient to cover the transfer amount 

and any fees charged by the money 

transmitter. The consumer may be 

provided a confirmation code, which 

the consumer relays to the recipient. 

The money transmitter sends an 

instruction to a specified payout 

location or locations in the recipient’s 

country where the recipient may pick 

up the transferred funds, often in cash 

and local currency, upon presentation of 

the confirmation code and/or other 

identification on or after a specified 

date. These transfers generally are 

referred to as cash-to-cash transfers. 

Many money transmitters provide 

other types of transfers. For example, 

money transmitters may permit transfers 

to be initiated using credit cards, debit 

cards, or bank account debits and may 

use Web sites, agent locations, standalone kiosks, or telephone lines to do so. 

Abroad, money transmitters and their 

partners may allow funds to be 

deposited into recipients’ bank 

accounts, distributed directly onto 

prepaid cards, or credited to mobile 

phone accounts. Funds also can be 

transferred among consumers’ nonbank 

accounts identified by individuals’ 

email addresses or mobile phone 

numbers. According to one survey of 

companies that send funds from the 

United States to Latin America and the 

Caribbean, 75 percent permit consumers 

to send transfers of funds that can be 

deposited directly into recipients’ bank 

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56634 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

26Manuel Orozco et al., Inter-American Dialogue, 

The Market for Money Transfers: Ranking of 

Remittance Service Providers in Latin America and 

the Caribbean 4 (Oct. 23, 2012), available at 

http://www.thedialogue.org/uploads/Remittances_

and_Development/LatAm_Final_120712.pdf. Like 

cash-to-cash transfers, some of the transfers to bank 

accounts rely on closed networks, though others 

rely on open networks (between an entity and nonagents or non-affiliates) or reflect some 

characteristics of both open and closed network 

transactions. 

27Fed. Deposit Ins. Corp., National Survey of 

Unbanked and Underbanked Households 32 (Sept. 

2012), available at http://www.fdic.gov/

householdsurvey/2012_unbankedreport.pdf (2011 

CPS Report) (stating that 3.7 percent of households 

used ‘‘nonbank remittances’’ as defined in the 

survey in the preceding year); id at 142–43 

(providing estimate of 120 million U.S. households 

in 2011 for purposes of the survey); id. at 79 

(estimating the number of households that have 

used ‘‘nonbank remittances’’ as defined in the 

survey at any time in the past). 

28See CFPB, Report on Remittance Transfers 17– 

21 (July 20, 2011); see also 77 FR 6194, 6199 (Feb. 

7, 2012). 

29See 77 FR 6194, 6199 (Feb. 7, 2012). 

30Public Law 111–203, section 1073, 124 Stat. 

1376, 2060 (2010). 

31 77 FR 6194 (Feb. 7, 2012); 77 FR 40459 (July 

10, 2012); 77 FR 50244 (Aug. 20, 2012); 78 FR 6025 

(Jan. 29, 2013); 78 FR 30662 (May 22, 2013); 78 FR 

49365 (Aug. 14, 2013) (codified at 12 CFR part 

1005, subpart B). On August 22, 2014, the Bureau 

released further amendments to the Remittance 

Rule, which are available at http://

files.consumerfinance.gov/f/201408_cfpb_finalrule_intl-money-transfer-small-entity.pdf. 

32Public Law 111–203, section 1073(a)(4), 124 

Stat. 1376, 2060 (2010) (codified at 15 U.S.C. 

1693o–1(a)); 12 CFR 1005.31–.32. 

33Public Law 111–203, section 1073(a)(4), 124 

Stat. 1376, 2060 (2010) (codified at 15 U.S.C. 

1693o–1(d)(3)); 12 CFR 1005.34. 

34Public Law 111–203, section 1073(a)(4), 124 

Stat. 1376, 2060 (2010) (codified at 15 U.S.C. 

1693o–1(d)); 12 CFR 1005.33. 

35 International money transfers are consumer 

financial products or services pursuant to the DoddFrank Act. See 12 U.S.C. 5481(15)(A)(iv) (defining 

‘‘financial product or service’’ to include ‘‘engaging 

in deposit-taking activities, transmitting or 

exchanging funds, or otherwise acting as a 

custodian of funds or any financial instrument for 

use by or on behalf of a consumer’’); 12 U.S.C. 

5481(5)(A) (defining ‘‘consumer financial product 

or service’’ to include financial products or services 

that are offered or provided for use by consumers 

primarily for personal, family, or household 

purposes); see also 12 U.S.C. 5481(15)(A)(v) 

(defining ‘‘financial product or service’’ to include 

generally ‘‘selling, providing, or issuing stored 

value or payment instruments,’’ with specific 

exclusions); 12 U.S.C. 5481(15)(A)(vii) (defining 

‘‘financial product or service’’ to include generally 

‘‘providing payments or other financial data 

processing products or services to a consumer by 

any technological means,’’ with specific 

exclusions). 

36 12 U.S.C. 5511(b)(4). 

37For a description of the data sources used by 

the Bureau in deriving its estimates, see 79 FR 5302, 

5305 n.34 (Jan. 31, 2014). The proposal identified 

several sources of uncertainty, which are discussed 

at 79 FR 5305–08. 

38Prior to issuing its proposal, the Bureau 

conducted entity-level analyses and produced 

accounts, including transfers initiated 

through the internet.26

International transfers play a critical 

role in the lives of many consumers in 

the United States. U.S. consumers send 

funds abroad for a number of reasons, 

including to assist family or friends 

with their expenses, to pay for 

purchases of goods, to pay the tuition of 

children studying abroad, or to purchase 

real estate. Data from the 2011 Current 

Population Survey (2011 CPS) show that 

more than 4 million households 

nationwide had used nonbanks to 

transfer funds to friends and family 

abroad in the preceding year, and more 

than 7 million households had used 

nonbanks to make such transfers at 

some time in the past.27

Transferring money to international 

recipients can present unique 

challenges for consumers and providers, 

many of which are addressed in the 

Bureau’s Remittance Rule. Pricing for 

transfers is complex and may depend 

not only on fees and taxes, but also on 

exchange rates. Because wholesale 

currency markets fluctuate constantly, 

the exchange rates applied to individual 

international transfers may change from 

day to day, or even over the course of 

the day, depending on how frequently 

providers update their retail rates. 

Providers may also vary their exchange 

rates and fees charged based on a range 

of other factors, such as the sending and 

receiving locations, and the size and 

speed of the transfer. Taxes may vary 

depending on the type of provider, the 

laws of the recipient country, and 

various other factors. As a result, 

determining how much money will 

actually be received and which provider 

offers the lowest price can be 

challenging for consumers, particularly 

when not provided with proper 

disclosures.28 In some cases, language 

barriers may further complicate 

consumers’ ability to obtain and 

understand transaction information 

from providers and their agents.29

The Bureau believes that compliance 

with recent legislative and regulatory 

changes will significantly improve the 

predictability of remittances and 

provide consumers with better price 

information and recourse if they 

experience a problem with a transfer. 

Congress amended EFTA in the DoddFrank Act.30 The Bureau then 

implemented the amendments to EFTA 

by promulgating the Remittance Rule, 

which went into effect on October 28, 

2013.31 Amendments to EFTA and the 

Remittance Rule created a 

comprehensive new system of consumer 

protections for remittance transfers sent 

by consumers in the United States to 

individuals and businesses in foreign 

countries. First, the Remittance Rule 

generally requires that information be 

disclosed prior to and at the time of 

payment by the sender for the 

remittance transfer.32 Second, under the 

Remittance Rule, consumers generally 

have thirty minutes after making 

payment to cancel a transfer.33 Third, 

the Remittance Rule increases consumer 

protections when transfers go awry by 

requiring providers to investigate 

disputes and remedy certain types of 

errors.34 The Remittance Rule applies to 

any institutions that send remittance 

transfers in the normal course of their 

business, including banks, credit 

unions, money transmitters, brokerdealers, and others. The Bureau and 

prudential regulators can examine 

depository institutions and credit 

unions within their supervisory 

authority for compliance with 

Regulation E, including the new 

Remittance Rule. 

One objective of the Bureau’s 

proposal was to bring nonbanks that are 

larger participants of the international 

money transfer market 35 within the 

Bureau’s supervisory jurisdiction in 

order to promote the Bureau’s goal of 

enforcing Federal consumer financial 

law consistently without regard to 

whether a person is a depository 

institution.36 Supervision of larger 

participants of the international money 

transfer market will help to ensure that 

nonbank entities that provide a 

significant portion of the transactions to 

which the Remittance Rule applies are 

complying with these new and 

important consumer protections, as well 

as with other applicable requirements of 

Federal consumer financial law, 

including the prohibition on unfair, 

deceptive, or abusive acts or practices. 

The Bureau lacks precise data on the 

international money transfer market and 

did not receive any comments that 

provided detailed information about the 

market. However, available data 

sources, including public information 

and confidential State supervisory data 

provided by three States, enabled the 

Bureau to conduct three analyses during 

the proposal stage to gain a general 

understanding of the basic contours of 

this nonbank market.37 These analyses 

produced rough estimates of (1) the 

overall number of nonbanks that 

provide international money transfers; 

(2) the dollar volume and number of 

international money transfers marketwide; and (3) the dollar volume and 

number of international money transfers 

provided by nonbanks that provide at 

least 500,000, one million, or three 

million transactions per year.38 The 

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highly approximated entity-by-entity estimates to 

inform its general understanding of the market and 

of the likely market coverage associated with 

potential activity thresholds. These entity-level 

approximations of dollar volume and number of 

transfers are not dispositive of whether the Bureau 

would ever seek to initiate supervisory activity or 

whether, in the event of a person’s assertion that it 

is not a larger participant, the person would be 

found to be a larger participant. 

39The Bureau’s review of State licensing 

information is described at 79 FR 5302, 5306 n.36 

(Jan. 31, 2014). As with its other market estimates 

for this rulemaking, the Bureau emphasizes that the 

estimate of 340 international money transfer 

providers could be either high or low due to 

limitations in the data utilized. 

40For a description of how the Bureau used the 

California data to generate nationwide estimates 

and the assumptions made by the Bureau in doing 

the extrapolation, see 79 FR 5302, 5306–07 n.37 

(Jan. 31, 2014). 

41For a description of how the Bureau conducted 

this analysis and potential sources of inaccuracy, 

see 79 FR 5302, 5307 n.38 (Jan. 31, 2014). 

42 79 FR 5302, 5307 n.39 (Jan. 31, 2014). 

43 In a joint comment, a group of industry 

participants also asked the Bureau to clarify that the 

market definition in this Final Rule has no antitrust 

implications. The Bureau neither defines markets 

for purposes of antitrust law, nor intends the market 

definition in this Final Rule to be used for any 

purpose other than determining larger-participant 

status. 

44 Industry participants cited to the volume of 

complaints relating to domestic transfers in the 

Bureau’s consumer complaint database, to support 

their assertion that the benefits of supervision 

should be spread to consumers of domestic 

transfers. In addition to complaints about 

international money transfers, the Bureau has 

received consumer complaints about domestic 

transfers and a variety of other consumer financial 

products and services. The existence of complaints 

about other products and services does not, 

however, change the Bureau’s view that it is 

appropriate to treat international money transfers as 

a distinct market for purposes of this largerparticipant rule. 

45 In light of the close similarity between the 

Remittance Rule’s definition of ‘‘remittance 

transfer’’ and the international money transfer 

market, the Bureau expects that most transfers in 

the international money transfer market would be 

subject to the Remittance Rule. However, some 

transfers that are in the international money transfer 

market under the Final Rule are not ‘‘remittance 

transfers,’’ as discussed in the section-by-section 

discussion of § 1090.107(a)’s ‘‘international money 

transfer’’ definition below. 

Bureau did not receive any comments 

questioning or criticizing these analyses, 

which were described in the Bureau’s 

proposal. 

For its first analysis, the Bureau 

reviewed State licensing information 

and estimated that approximately 340 

nonbanks provide international money 

transfers.39 The Bureau’s second 

analysis, an extrapolation of 

confidential supervisory data from 

California to generate nationwide 

estimates, indicates that the nonbank 

market of international money transfers, 

as defined here, accounted for roughly 

$50 billion transferred and 150 million 

individual transfers in 2012.40

The Bureau’s third analysis developed 

entity-specific estimates of the number 

of international money transfers sent in 

2012. Estimates were mostly derived 

using confidential supervisory data 

obtained from California, New York, 

and Ohio pursuant to memoranda of 

understanding. Using this analysis, the 

Bureau generated the following highly 

approximated estimates for the year 

2012: (1) The highest tier of the market 

consists of about 10 nonbanks that each 

sent over 3 million international money 

transfers and together accounted for 

about three-fourths of all international 

money transfers; (2) The second tier of 

the market consists of about 15 

nonbanks that each sent between 1 and 

3 million international money transfers, 

accounting collectively for about onesixth of all international money 

transfers; (3) Very few nonbanks sent 

between 500,000 and 1 million 

international money transfers, 

accounting collectively for about 1.5 

percent of all international money 

transfers; and (4) The limited remaining 

market share is divided among a few 

hundred nonbanks that each sent less 

than 500,000 transfers in 2012.41 These 

estimates do not include providers that 

are not licensed in California, New 

York, or Ohio, but as explained in the 

proposal, the Bureau’s market research 

and review of licensing data suggest that 

most entities that provide over 500,000 

international money transfers per year 

are licensed in at least one of those three 

States.42

The Bureau’s proposal defined a 

nonbank market consisting solely of 

international money transfers. While a 

number of commenters expressed 

support for the Bureau’s proposed 

definitions and approach to defining the 

market, several requested that the 

Bureau expand this larger-participant 

rule to include domestic transfers.43

Those advocating for inclusion of 

domestic transfers offered differing 

reasons, including that (1) domestic and 

international money transfers are 

similar and are often treated similarly 

by State regulators, (2) including 

domestic transfers in this Final Rule 

could encourage providers to 

voluntarily apply the Remittance Rule 

requirements to domestic transfers even 

though such application is not required 

by the Remittance Rule, (3) it would be 

difficult to determine whether mobile 

payments are domestic or international 

money transfers, and (4) the benefits of 

supervision should be made available to 

consumers of domestic transfers as 

well.44

While transfers of money to domestic 

and international locations have some 

similar characteristics, several consumer 

advocacy group commenters recognized 

that international money transfers 

present challenges to providers and 

consumers that distinguish international 

money transfers from other transactions, 

such as domestic money transfers. As 

the Bureau noted in its proposal, these 

challenges can include, for example, 

foreign exchange rates, foreign taxes, 

and legal, administrative, and language 

complexities related to the fact that the 

funds are transferred to a foreign 

country. Many international money 

transfers are also subject to new 

protections under the Remittance 

Rule.45 In light of these differences, the 

Bureau continues to believe it is 

appropriate to treat the international 

money transfer market as a separate 

market for purposes of this largerparticipant rule. 

The Bureau also does not deem it 

appropriate to adjust the scope of the 

larger-participant rule based on the 

assertion that doing so might encourage 

entities to apply Remittance Rule 

standards to transactions that are not 

subject to the Remittance Rule. The 

larger-participant rule does not impose 

any new business conduct obligations. 

Specifically, it does not change or 

expand the application of the 

Remittance Rule. Accordingly, the 

Bureau has no reason to believe that 

expanding the scope of this rule beyond 

what the Bureau has proposed would 

cause entities to apply Remittance Rule 

standards to their domestic transfers. 

Another commenter expressed 

concern that mobile payment providers 

may not be able to determine whether 

their mobile payments are international 

money transfers or domestic transfers. 

Whether a transfer, including a mobile 

payment, is an international money 

transfer depends, in part, on whether it 

is sent by a ‘‘sender’’ to a ‘‘designated 

recipient’’ as those terms are defined in 

§ 1090.107(a). As explained in the 

section-by-section discussion below, the 

Bureau intends that ‘‘designated 

recipient’’ and ‘‘sender’’ in the Final 

Rule will be interpreted in a manner 

consistent with the way the same terms 

in the Remittance Rule are interpreted. 

The commentary to the Remittance Rule 

interpreting ‘‘designated recipient’’ and 

‘‘sender’’ provides relevant guidance 

and examples to help covered entities 

distinguish which transfers originate 

from a consumer in a State and which 

are to be received at a location 

physically outside of any State. This 

commentary should assist money 

transfer providers in determining 

whether their mobile payments are 

international money transfers for 

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56636 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

46See Official Interpretations to Regulation E, 12 

CFR part 1005, Supp. I, comment 30(c)(2)–1 to –3 

and comment 30(g). Providers should already be 

applying this commentary to determine whether 

their mobile payments comply with the Remittance 

Rule. 

47The Bureau’s decision to define a market 

consisting solely of international money transfers 

will not prevent it from examining other consumer 

financial products or services offered by entities 

that qualify as larger participants of that market. If 

a larger participant of the international money 

transfer market offers domestic money transfer 

services to consumers, the Bureau can examine 

those transfers as part of its mission to assess 

compliance with Federal consumer financial law 

and to detect risks to consumers or to markets for 

consumer financial products and services. 12 U.S.C. 

5514(b); 77 FR 42874, 42880 (July 20, 2012). 

48As noted above and in the Bureau’s proposal, 

some terms may have different definitions for 

purposes of the Final Rule than they do for 

purposes of Regulation E due to the largerparticipant rule definitions in 12 CFR 1090.101. 

The definition of ‘‘consumer’’ in § 1090.101 is ‘‘an 

individual or an agent, trustee, or representative 

acting on behalf of an individual,’’ 12 CFR 

1090.101, while the definition of ‘‘consumer’’ in 

Regulation E is ‘‘a natural person,’’ 12 CFR 

1005.2(e). The definition of ‘‘person’’ in § 1090.101 

is ‘‘an individual, partnership, company, 

corporation, association (incorporated or 

unincorporated), trust, estate, cooperative 

organization, or other entity,’’ 12 CFR 1090.101, 

while the definition of ‘‘person’’ in Regulation E is 

‘‘a natural person or an organization, including a 

corporation, government agency, estate, trust, 

partnership, proprietorship, cooperative, or 

association,’’ 12 CFR 1005.2(j). One commenter 

asserted that using different definitions than are 

used in Regulation E could cause confusion. The 

Bureau believes that having multiple definitions for 

the same term within 12 CFR part 1090 would 

cause more confusion than having different 

definitions for the same term in Regulation E and 

12 CFR part 1090. 

49 12 CFR 1090.104(a) (Consumer Reporting 

Rule); 12 CFR 1090.105(a) (Debt Collection Rule); 

13 CFR 121.104 (SBA). 

50The Proposed Rule provided that the annual 

international money transfers of each affiliated 

company of a nonbank covered person would be 

calculated separately prior to the aggregation, 

treating the affiliated company as if it were an 

independent nonbank covered person for purposes 

purposes of this larger-participant 

rule.46

In light of the distinguishing 

characteristics of international money 

transfers and the other reasons set forth 

above, the Bureau declines to include 

domestic transfers in the market for 

which this Final Rule defines larger 

participants.47 As the Bureau has 

explained, this larger-participant 

rulemaking is only one in a series. 

Nothing in this Final Rule precludes the 

Bureau from considering in future 

larger-participant rulemakings other 

markets for consumer financial products 

or services that might include domestic 

money transfers or other money 

services. 

Section 1090.107(a)—Market-Related 

Definitions 

Unless otherwise specified, the 

definitions in § 1090.101 should be used 

when interpreting terms in the Final 

Rule. Proposed § 1090.107(a) defined 

additional terms relevant to the 

international money transfer market. 

These terms include ‘‘international 

money transfer,’’ which delineates the 

scope of the identified market; 

‘‘designated recipient,’’ ‘‘international 

money transfer provider,’’ ‘‘sender,’’ and 

‘‘State,’’ which help to clarify the 

meaning of ‘‘international money 

transfer’’; and ‘‘aggregate annual 

international money transfers,’’ which is 

the criterion for assessing largerparticipant status. The Bureau is 

adopting the definitions as proposed 

with the exception that it is 

streamlining the definition of ‘‘aggregate 

annual international money transfer’’ to 

facilitate application of the largerparticipant test. 

In the proposal, the Bureau noted that 

it had used the definition of ‘‘remittance 

transfer’’ and related definitions from 

Regulation E as a model in drafting the 

definitions applicable in this largerparticipant rulemaking because 

remittance transfers make up a very 

substantial portion of the market 

activity in the international money 

transfer market that the Bureau sought 

to define. Additionally, the Remittance 

Rule definitions are familiar to industry 

and the Bureau. As explained in the 

proposal and below, the Bureau believes 

it is appropriate to deviate from the 

Remittance Rule definitions in specific 

ways to reflect the distinct needs of this 

larger-participant rulemaking. 

Several industry commenters 

expressed support for the Bureau’s 

general approach in developing 

definitions, while State regulator 

associations and one industry 

commenter suggested that greater 

conformity to the Remittance Rule 

would be preferable. The deviations that 

the Bureau proposed to make from the 

Remittance Rule definitions stem in part 

from the fact that the Remittance Rule 

imposes substantive consumer 

protection requirements, while the 

larger-participant rule differentiates 

larger participants from other 

participants in the international money 

transfer market in order to establish a 

supervisory program. To account for the 

different regulatory purposes and the 

specific needs of this rulemaking, the 

Bureau continues to believe that the 

proposed differences between the 

definitions in the Proposed Rule and the 

Regulation E definitions are necessary, 

as discussed below.48

Aggregate Annual International Money 

Transfers 

The Bureau proposed aggregate 

annual international money transfers as 

the criterion that would be used in 

assessing whether an entity is a larger 

participant of the international money 

transfer market. The proposed definition 

of ‘‘aggregate annual international 

money transfers’’ was informed by the 

method of calculating ‘‘annual receipts’’ 

used by the Bureau in prior largerparticipant rulemakings, which in turn 

is modeled in part on the method used 

by the U.S. Small Business 

Administration (SBA) in calculating 

‘‘annual receipts’’ to determine whether 

an entity is a small business.49 Proposed 

§ 1090.107(a) defined the term 

‘‘aggregate annual international money 

transfers’’ as the ‘‘annual international 

money transfers’’ of a nonbank covered 

person, aggregated with the ‘‘annual 

international money transfers’’ of its 

affiliated companies. Commenters 

generally expressed support for the 

substance of this definition, but some 

commenters expressed concern that the 

definition was confusing. For the 

reasons described below, the Bureau is 

streamlining the definition by counting 

transfers from the preceding year as 

opposed to using an average over up to 

three years, making corresponding 

technical changes, and otherwise 

adopting the definition as proposed. 

Calculating annual international 

money transfers. The Bureau proposed 

that ‘‘annual international money 

transfers’’ of a nonbank covered person 

would be calculated in one of two ways 

depending on how long a person had 

been in business. The proposed 

definition annualized the number of 

transfers over the shorter of three years 

or the period an entity had been in 

business. One commenter stated that it 

seemed logical to use an average over 

several years but questioned whether 

the complexity of the proposed 

calculations was necessary. The 

commenter noted that the more complex 

the calculations, the greater the chance 

for error. 

The Bureau agrees that a simpler 

approach is preferable for calculating 

annual international money transfers. 

The proposed approach would have 

smoothed out year-to-year fluctuations 

in an entity’s transaction volume but 

would have resulted in more involved 

calculations, especially for affiliated 

companies. Because affiliated 

companies may be in business for 

varying lengths of time, the annual 

international money transfers of 

affiliated companies in some instances 

would have been calculated over 

different time periods using different 

calculation methods.50

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Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 56637 

of the calculation. The Bureau is finalizing this 

aspect of the rule as proposed, as discussed below. 

51Additionally, existing § 1090.102 provides that 

a person qualifying as a larger participant under 

this rule will remain a larger participant for at least 

two years after the beginning of the tax year in 

which it last met the larger-participant test. This 

provision will ensure that the Bureau has sufficient 

time to undertake and complete supervisory 

activities relating to a larger participant, even if the 

participant’s market activity declines unexpectedly. 

52 In other words, an international money transfer 

provided by an international money transfer 

provider with the help of an agent acting on the 

provider’s behalf would count towards the annual 

international money transfers of the provider but 

not the agent. However, a nonbank covered person’s 

aggregate annual international money transfers may 

include transfers in which the nonbank covered 

person acted as an agent on behalf of an affiliated 

company that provided the transfer. This is because 

such transfers are included in the annual 

international money transfers of the affiliated 

company and a nonbank covered person’s aggregate 

annual international money transfers include the 

annual international money transfers of each of its 

affiliated companies due to the affiliate-aggregation 

requirement discussed below. 

53The definition of ‘‘affiliated company’’ is found 

in 12 CFR 1090.101. 

54 12 CFR 1005.35. This is also consistent with 

the data analyzed by the Bureau prior to issuing the 

proposal, which generally include transactions 

conducted by agents on behalf of a provider in the 

transaction total for the provider. 

55See Official Interpretations to Regulation E, 12 

CFR part 1005, Supp. I, comment 30(f)–1. 

56 12 U.S.C. 5514(e); see also 12 U.S.C. 

5481(26)(A) (defining service provider). 

57The Bureau also has the authority to supervise 

any nonbank covered person that it ‘‘has reasonable 

cause to determine, by order, after notice to the 

covered person and a reasonable opportunity . . . 

to respond . . . is engaging, or has engaged, in 

conduct that poses risks to consumers with regard 

to the offering or provision of consumer financial 

products or services.’’ 12 U.S.C. 5514(a)(1)(C). 58 12 U.S.C. 5514(a)(3)(B). 

The Bureau has weighed the benefits 

of the proposed multi-year approach 

against the additional complexity it 

entails and concludes that it is 

preferable to calculate annual 

international money transfers in the 

Final Rule based on international 

money transfers sent in the preceding 

year. Because the criterion directly 

measures the number of transfers in the 

market, it should not be subject to 

temporary fluctuations that are 

unrelated to an entity’s market 

participation.51 The Bureau believes 

that the single-year approach will make 

the Final Rule’s definitions easier to 

apply, which should facilitate 

application of the detailed agent and 

affiliate-aggregation principles 

described below and alleviate the 

concern expressed by some commenters 

about the overall complexity of the 

definition of ‘‘aggregate annual 

international money transfers.’’ The 

Final Rule therefore provides that 

annual international money transfers of 

a nonbank covered person means the 

international money transfers provided 

by the nonbank covered person during 

the preceding calendar year. 

Transfers involving agents. The 

proposed definition specified how to 

count transfers provided with the 

assistance of an agent. Under the 

proposal, the annual international 

money transfers of a nonbank covered 

person included international money 

transfers in which an agent acts on that 

person’s behalf. The annual 

international money transfers of a 

nonbank covered person did not include 

international money transfers in which 

another person provided the 

international money transfers and the 

nonbank covered person performed 

activities as an agent on behalf of that 

other person.52 For purposes of this part 

of the definition, the Bureau proposed 

to define an ‘‘agent’’ to include an agent 

or authorized delegate, as defined under 

State or other applicable law, or an 

affiliated company of a person that 

provides international money transfers 

when such agent, authorized delegate, 

or affiliated company acts for that 

person.53 Comments from industry and 

a consumer advocacy group generally 

supported this approach. For the 

reasons that follow, the Bureau is 

finalizing the approach to agents as 

proposed. 

Including transactions conducted by 

an agent in calculating a provider’s 

annual international money transfers is 

consistent with the Remittance Rule, 

which places liability on the remittance 

transfer provider for violations by an 

agent when the agent is acting for the 

provider.54 Not counting transactions 

conducted solely as an agent for a 

provider in assessing the agent’s annual 

international money transfers is also 

consistent with the Bureau’s 

determination that, for purposes of the 

Remittance Rule, agents acting on behalf 

of a remittance transfer provider are not, 

in doing so, themselves acting as 

remittance transfer providers.55

Although entities that act solely as 

agents are not normally larger 

participants of the market under the 

Final Rule, the Bureau has the authority 

to supervise service providers to larger 

participants.56 Accordingly, where an 

agent acts as a service provider to a 

larger participant, the Bureau has the 

authority to supervise the agent’s 

performance of services for the larger 

participant.57 In light of these 

considerations, the Bureau believes it is 

appropriate to count transactions in 

which an agent acts on behalf of a 

provider towards the annual 

international money transfers of that 

provider, and not towards the annual 

international money transfers of the 

agent itself. 

Several commenters expressed 

support for this approach to handling 

transactions provided with the 

assistance of agents. One commenter 

stated that it agreed with including 

transfers by an agent when determining 

whether a provider is covered and 

agreed that transfers that an agent 

conducts for other providers should not 

be included in determining coverage. 

This commenter nevertheless urged the 

Bureau to simplify the specification of 

which transfers by agents are included 

in the calculation, without providing a 

specific suggestion. The Bureau is 

concerned that any such simplification 

could alter how transactions involving 

agents are handled, which the Bureau 

believes the commenter did not intend. 

In light of the important role that agents 

play in the international money transfer 

market, the Bureau has not changed this 

aspect of the definition but believes that 

streamlining the definition in the 

manner described above will simplify 

application of the agent provision as 

well. 

One commenter supported the 

Bureau’s approach to defining ‘‘agent,’’ 

noting that it is consistent with the 

approach taken in other applications, 

such as the Remittance Rule. Another 

commenter stated that, to the extent 

agency relationships are not already 

well-defined, the Bureau should offer a 

definition of ‘‘agent’’ that takes modern 

methods of money transmission into 

account. Rather than creating a selfcontained definition of ‘‘agent,’’ the 

Bureau believes it is appropriate to 

define the term ‘‘agent’’ for purposes of 

this larger-participant rule by reference 

to the law of agency from the States and 

other applicable sources, which will 

continue to develop and evolve as the 

market changes. The Bureau is thus 

finalizing the proposed definition of 

‘‘agent’’ and the approach to handling 

transfers provided with the assistance of 

an agent as proposed. 

Affiliate aggregation. Under the DoddFrank Act, the activities of affiliated 

companies are to be aggregated for 

purposes of computing activity levels 

for rules under 12 U.S.C. 5514(a)(1).58

The Proposed Rule laid out an approach 

for affiliate aggregation that was 

consistent with the dual methods 

proposed for calculating annual 

international money transfers described 

above. Several commenters expressed 

support for affiliate aggregation, though 

some requested clarification regarding 

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59As discussed below, ‘‘sender’’ is defined to 

mean ‘‘a consumer in a State who primarily for 

personal, family, or household purposes requests an 

international money transfer provider to send an 

international money transfer to a designated 

recipient.’’ The Bureau recently provided further 

guidance in the Remittance Rule commentary 

relating to when senders are considered to be 

requesting a transfer primarily for personal, family, 

or household purposes, which may help to clarify 

the meaning of the same terms in § 1090.107(a). 12 

CFR part 1005, Supp. I, comment 30(g)–2 and 

30(g)–3, available at http:// 

files.consumerfinance.gov/f/201408_cfpb_finalrule_intl-money-transfer-small-entity.pdf. 

60Pursuant to the definition in § 1090.101, a 

nonbank covered person does not include any 

persons described in 12 U.S.C. 5515(a) and 5516(a). 

61This is because the affiliate-aggregation 

requirement only applies to ‘‘affiliated companies,’’ 

and the definition of ‘‘affiliated company’’ in 12 

CFR 1090.101 specifically excludes insured 

depository institutions and insured credit unions. 

62 12 CFR 1005.30(c). 

63See Official Interpretations to Regulation E, 12 

CFR part 1005, Supp. I, comment 30(c). The Bureau 

recently added to comment 30(c) in the Remittance 

Rule commentary, which is available at http:// 

files.consumerfinance.gov/f/201408_cfpb_finalrule_intl-money-transfer-small-entity.pdf. The 

Bureau intends that this additional commentary 

and any future amendments to the Remittance Rule 

commentary will be used when interpreting the 

definition of ‘‘designated recipient’’ in this Final 

Rule, to the extent appropriate given the different 

regulatory contexts. 

the aggregation method in the Proposed 

Rule. 

In light of the adjustments described 

above regarding the method of 

calculating annual international money 

transfers, the Bureau is making some 

corresponding modifications to the 

method for affiliate aggregation in the 

Final Rule. Consistent with the 

Proposed Rule, the Final Rule provides 

that the annual international money 

transfers of each affiliated company of a 

nonbank covered person are calculated 

separately in accordance with 

paragraphs (i) and (ii) of the definition, 

treating the affiliated company as if it 

were an independent nonbank covered 

person for purposes of the calculation. 

As explained above, paragraphs (i) and 

(ii) of the definition in the Final Rule 

provide that annual international money 

transfers are the international money 

transfers provided in the preceding year. 

To aggregate the annual international 

money transfers of affiliated companies, 

the Final Rule provides that the annual 

international money transfers of a 

nonbank covered person must be 

aggregated with the annual international 

money transfers of any person that was 

an affiliated company of the nonbank 

covered person at any time during the 

preceding calendar year. The Final Rule 

further provides that the annual 

international money transfers of the 

nonbank covered person and its 

affiliated companies are aggregated for 

the entire preceding calendar year, even 

if the affiliation did not exist for the 

entire calendar year. Because annual 

international money transfers will in all 

cases be calculated over the preceding 

year, the Bureau is finalizing the rule 

without the provisions in the Proposed 

Rule that explained how to aggregate 

affiliated companies’ annual 

international money transfers if 

calculations were done over different 

time periods. These adjustments further 

clarify and streamline the ‘‘aggregate 

annual international money transfer’’ 

definition, while accomplishing the 

statutory requirement of affiliate 

aggregation. 

In their joint comment, two State 

regulator associations requested 

clarification regarding the operation of 

the proposed ‘‘aggregate annual 

international money transfer’’ 

definition. They noted that many banks 

utilize nonbank providers for remittance 

transfers and suggested that issues could 

arise if international transfers are 

aggregated between affiliates and agents 

without regard to the source of the 

transfers. They also expressed concern 

that there may be an issue with double 

counting or artificially inflating the size 

of measured entities, if business 

customers, consumers, bank-to-bank 

account transactions, and authorization 

agents are all counted together. 

The Bureau has crafted the Final 

Rule’s definitions to ensure that the 

term ‘‘aggregate annual international 

money transfers’’ only includes certain 

transfers. Transactions for business 

customers are not part of the criterion 

because the rule only counts 

transactions initiated by a consumer 

primarily for personal, family, or 

household purposes.59 With respect to 

bank transactions, the rule as proposed 

and finalized operates as follows: First, 

only nonbank covered persons can be 

larger participants under the test in 

§ 1090.107(b).60 Second, if a larger 

participant has an affiliate that is an 

insured depository institution or 

insured credit union, that affiliate is not 

subject to the affiliate-aggregation 

requirements of part (iii) of the 

definition of ‘‘aggregate annual 

international money transfers.’’ 61 Third, 

if a bank is operating as an agent on 

behalf of an international money 

transfer provider for some international 

money transfers, those transfers would 

be included in the provider’s count 

pursuant to the agent provisions in part 

(ii) of the definition. The Bureau expects 

that the Final Rule’s streamlined 

definition of ‘‘aggregate annual 

international money transfers’’ will 

make these aspects of the rule easier to 

understand and apply. 

The Bureau also received a joint 

comment from a group of money 

services providers requesting guidance 

on how the Bureau plans to conduct 

examinations of smaller affiliated 

companies that would not be larger 

participants but for their affiliation with 

larger companies. The Bureau may 

supervise these smaller affiliated 

companies as part of an examination of 

the larger affiliated company or 

independently. Although the Bureau’s 

approach to examinations is not the 

subject of this rulemaking, the Bureau 

will exercise its supervisory authority 

with respect to affiliated companies 

using a risk-based approach and will 

coordinate with appropriate State 

regulators, just as it does with respect to 

other supervised nonbank entities. 

In light of the considerations 

described above, the Bureau is finalizing 

the definition of ‘‘aggregate annual 

international money transfers’’ largely 

as proposed. As noted, the Final Rule 

includes a revised calculation method 

based on the preceding year’s transfers 

with corresponding changes in the 

affiliate-aggregation approach. 

Designated Recipient 

The Bureau proposed to define 

‘‘designated recipient’’ in § 1090.107(a) 

as any person specified by the sender as 

the authorized recipient of an 

international money transfer to be 

received at a location in a foreign 

country. This proposed definition was 

based on the definition of ‘‘designated 

recipient’’ in the Remittance Rule,62 but 

replaced ‘‘remittance transfer’’ with 

‘‘international money transfer’’ and 

incorporated the larger-participant 

definition of ‘‘person’’ from § 1090.101. 

The Bureau intends the term 

‘‘designated recipient’’ to be interpreted 

based on the interpretation of the term 

in the Remittance Rule, including its 

commentary,63 to the extent appropriate 

given the different regulatory contexts of 

the definitions. The Bureau did not 

receive any comments that specifically 

addressed the definition of ‘‘designated 

recipient’’ and is adopting the definition 

of ‘‘designated recipient’’ as proposed. 

International Money Transfer 

Proposed § 1090.107(a) defined the 

term ‘‘international money transfer’’ to 

mean the electronic transfer of funds 

requested by a sender that is sent by an 

international money transfer provider to 

a designated recipient. As proposed, the 

term applied regardless of whether the 

sender holds an account with the 

international money transfer provider, 

and regardless of whether the 

transaction also is an ‘‘electronic fund 

transfer,’’ as defined in Regulation E, 12 

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Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 56639 

64 12 CFR 1005.30(e). 

65 12 CFR 1005.30(e)(2)(i). 

66 Id. 

67 15 U.S.C. 1693o–1(g)(2)(B). The Board of 

Governors of the Federal Reserve System previously 

determined by rule that financial institutions are 

not subject to the EFTA section 906(a) requirement 

to provide electronic terminal receipts for smallvalue transfers of $15 or less. 12 CFR 1005.9(e). 

68For example, as noted above transfers of $15 or 

less may be international money transfers but are 

not remittance transfers. Additionally, transfers that 

are sent by depository institutions may be 

remittance transfers but cannot be international 

money transfers because, as explained below, an 

international money transfer provider must be a 

nonbank covered person. 

69 12 U.S.C. 5514(b); 77 FR 42874, 42880 (July 20, 

2012). 

70The commenters did not identify any 

significant administrative challenges that would 

make it difficult to include small-value transactions 

when counting the total number of international 

money transfers provided by a nonbank covered 

person. Indeed, as the Bureau mentioned in the 

Proposed Rule, the State supervisory data obtained 

by the Bureau for this rulemaking include transfers 

of $15 or less. 

71See Official Interpretations to Regulation E, 12 

CFR part 1005, Supp. I, comment 30(e). 

CFR 1005.3(b). The proposed definition 

did not include certain transfers related 

to the purchase or sale of a security or 

commodity that are excluded from the 

definition of ‘‘electronic fund transfer’’ 

under 12 CFR 1005.3(c)(4). The Bureau 

received several comments discussing 

the relationship of the term 

‘‘international money transfer’’ to the 

term ‘‘remittance transfer’’ in the 

Remittance Rule, as well as one 

comment that requested clarification 

about the Proposed Rule’s impact on 

broker-dealers. For the reasons set forth 

below, the Bureau is finalizing the 

definition of ‘‘international money 

transfer’’ as proposed. 

The proposed definition of 

‘‘international money transfer’’ tracked 

the Remittance Rule’s definition of 

‘‘remittance transfer,’’ 64 except in two 

respects. First, the proposed definition 

substituted ‘‘international money 

transfer provider’’ in each place where 

the term ‘‘remittance transfer provider’’ 

appears in 12 CFR 1005.30(e). Second, 

the Proposed Rule defined 

‘‘international money transfer’’ without 

regard to the amount of the transfer, 

unlike the Remittance Rule, which 

excludes transfers of $15 or less from 

the definition of ‘‘remittance 

transfer.’’ 65

The Bureau received several 

comments on the proposed definition of 

‘‘international money transfer.’’ These 

commenters generally agreed with the 

approach of basing the definition of 

‘‘international money transfer’’ on the 

definition of ‘‘remittance transfer’’ in 

the Remittance Rule, and some 

expressed support for the specific 

changes in the Proposed Rule. One 

commenter encouraged the Bureau to 

use the definition of ‘‘remittance 

transfer’’ in the Remittance Rule 

without any changes, on the ground that 

the proposed changes would needlessly 

invite confusion and disparate 

interpretations by courts and other 

officials. Another commenter 

recommended that the Bureau exclude 

transfers of $15 or less in order to be 

consistent with the Remittance Rule, 

expressing concern that not doing so 

would cause confusion and inconsistent 

application of standards in 

examinations because examiners will be 

examining for compliance with the 

Remittance Rule. 

The Bureau does not agree that the 

differences between the Proposed Rule’s 

definition of ‘‘international money 

transfer’’ and the definition of 

‘‘remittance transfer’’ are needless or 

that it would be clearer to use the term 

‘‘remittance transfer’’ in this rule. The 

Remittance Rule includes an exclusion 

for transfers of $15 or less 66 because the 

Dodd-Frank Act’s definition of 

‘‘remittance transfer’’ does not include 

transfers ‘‘in an amount that is equal to 

or lesser than the amount of a smallvalue transaction determined, by rule, to 

be excluded from the requirements 

under section 906(a) [of EFTA].’’ 67

While the Dodd-Frank Act’s definition 

of ‘‘remittance transfer’’ is applicable to 

the Remittance Rule, it is not applicable 

to the Bureau’s authority to supervise 

larger participants in markets for 

consumer financial products or services. 

The Bureau proposed to include smallvalue transactions as ‘‘international 

money transfers’’ on the ground that 

small-value transactions comprise part 

of the same market as larger transactions 

and the number of international money 

transfers provided by an international 

money transfer provider reflects the 

extent of a provider’s market 

participation. The comments did not 

provide new information to the 

contrary. Because the scope of transfers 

covered by the term ‘‘international 

money transfer’’ differs from the scope 

of the term ‘‘remittance transfer,’’ 68 the 

Bureau believes it is appropriate to use 

a different name than ‘‘remittance 

transfer.’’ 

The Bureau does not believe that 

different definitions in the Remittance 

Rule and this rule will create significant 

confusion or result in inconsistent 

application of standards in the 

examination process because the two 

rules serve different purposes. The 

definition of ‘‘international money 

transfer’’ will be used to identify the 

transfers to be counted when assessing 

whether an entity is large enough to be 

subject to Bureau supervision as a larger 

participant. It does not determine the 

scope of any substantive consumer 

protection requirement, nor does it 

determine the limits of the Bureau’s 

examination authority over entities that 

are larger participants. If an entity is 

determined to be a larger participant, 

the Bureau may examine the entire 

entity for compliance with all Federal 

consumer financial law and assess and 

detect risks to consumers or to markets 

for consumer financial products and 

services posed by any activity of the 

entity, not just the activities that 

initially rendered the entity subject to 

Bureau supervision.69 By contrast, the 

definition of ‘‘remittance transfer’’ in 

the Remittance Rule determines which 

transfers are subject to the substantive 

requirements of the Remittance Rule. In 

light of the different functions of these 

two definitions, the Bureau believes that 

the differences in the definitions are 

warranted and unlikely to result in 

significant confusion.70

The Bureau also does not expect the 

difference in definitions between 

‘‘remittance transfer’’ and ‘‘international 

money transfer’’ to cause courts or 

others to misinterpret the term 

‘‘international money transfer.’’ As the 

Bureau stated in its proposal, the 

Bureau intends the term ‘‘international 

money transfer’’ to be interpreted in the 

same manner as the term ‘‘remittance 

transfer,’’ with the terms ‘‘electronic 

transfer of funds’’ and ‘‘sent by an 

international money transfer provider’’ 

interpreted based on the interpretation 

of parallel terms in Regulation E,71 to 

the extent appropriate given the 

definitions’ different regulatory 

contexts. Of course, where the 

definitions differ (as, for example, with 

the small-value transaction exclusion), 

differing interpretations would be 

appropriate. The Bureau therefore 

declines to make any changes based on 

the comments received. 

In addition to the comments that 

specifically addressed the definition of 

‘‘international money transfers,’’ the 

Bureau also received a comment from a 

trade association working group made 

up of broker-dealers that provide 

remittance transfer services. The group 

noted that the Bureau’s Proposed Rule 

does not specifically discuss brokerdealers regulated by the Securities and 

Exchange Commission (SEC). The group 

cited Dodd-Frank Act section 1027(i)(1), 

which provides that ‘‘[t]he Bureau shall 

have no authority to exercise any power 

to enforce this title with respect to a 

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56640 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

72 12 U.S.C. 5481(21) defines ‘‘person regulated 

by the Commission’’ as a person who is: 

(A) a broker or dealer that is required to be 

registered under the Securities Exchange Act of 

1934; 

(B) an investment adviser that is registered under 

the Investment Advisers Act of 1940; 

(C) an investment company that is required to be 

registered under the Investment Company Act of 

1940, and any company that has elected to be 

regulated as a business development company 

under that Act; 

(D) a national securities exchange that is required 

to be registered under the Securities Exchange Act 

of 1934; 

(E) a transfer agent that is required to be 

registered under the Securities Exchange Act of 

1934; 

(F) a clearing corporation that is required to be 

registered under the Securities Exchange Act of 

1934; 

(G) any self-regulatory organization that is 

required to be registered with the Commission; 

(H) any nationally recognized statistical rating 

organization that is required to be registered with 

the Commission; 

(I) any securities information processor that is 

required to be registered with the Commission; 

(J) any municipal securities dealer that is required 

to be registered with the Commission; 

(K) any other person that is required to be 

registered with the Commission under the 

Securities Exchange Act of 1934; and 

(L) any employee, agent, or contractor acting on 

behalf of, registered with, or providing services to, 

any person described in any of subparagraphs (A) 

through (K), but only to the extent that any person 

described in any of subparagraphs (A) through (K), 

or the employee, agent, or contractor of such 

person, acts in a regulated capacity. 

73This is because the proposed definition 

excludes any transfer that is excluded from the 

definition of ‘‘electronic fund transfer’’ under 12 

CFR 1005.3(c)(4). 

74 In a letter sent outside this rulemaking, one 

industry trade association working group indicated 

that its broker-dealer members send an average of 

approximately 43,000 wires annually per firm. 

Letter from Manisha Kimmel, Executive Director, 

Financial Information Forum, to David Blass, Chief 

Counsel, SEC Division of Trading and Markets (Dec. 

12, 2012), available at http://www.sec.gov/

divisions/marketreg/mr-noaction/2012/financialinformation-forum-121412-rege.pdf. While this 

figure reflects only wires sent by the group’s 

members, the low average suggests that most 

broker-dealers do not send anywhere near the 

proposed threshold of one million aggregate annual 

international money transfers per year. Further, the 

average could include some transfers that would 

not be annual international money transfers as that 

term is defined in the Proposed Rule. For example, 

a primary purpose of a portion of broker-dealers’ 

transfers could be the purchase or sale of a security 

or commodity regulated by the SEC, or purchased 

or sold through a broker-dealer regulated by the 

SEC. Still other broker-dealer transfers could be 

transfers that are not sent primarily for personal, 

family, or household purposes. Further, it is 

possible that the figure includes some domestic 

wire transfers. 

75 12 CFR 1005.30(f). 

76 ‘‘Nonbank covered person’’ includes (1) any 

person that engages in offering or providing a 

consumer financial product or service; and (2) any 

affiliate of a person that engages in offering or 

providing a consumer product or service if such 

affiliate acts as a service provider to such person, 

but does not include any persons described in 12 

U.S.C. 5515(a) and 5516(a). 12 CFR 1090.101. 

77 12 CFR 1005.30(f). 

78Official Interpretations to Regulation E, 12 CFR 

part 1005, Supp. I, comment 30(f). 

person regulated by the Commission.’’ 72

It asked the Bureau to acknowledge this 

statutory exclusion in the Final Rule 

itself on the ground that this would 

alleviate any potential confusion or 

misinterpretation among broker-dealers. 

The commenter did not suggest how the 

Proposed Rule might contravene the 

limitations on the Bureau’s authority to 

exercise its power to enforce title X with 

respect to persons regulated by the 

Commission, and the Bureau does not 

believe that the Proposed Rule is 

inconsistent with these limitations. 

Moreover, the Final Rule does not 

require persons to take any action 

except in response to the initiation of 

supervisory activity by the Bureau, and 

the Bureau does not initiate supervisory 

activity if it believes that doing so 

would exceed its authority under the 

Dodd-Frank Act, or any other applicable 

law. Accordingly, the Bureau does not 

believe that it is necessary to recite the 

section 1027(i) exclusion or any other 

statutory exclusion in the Final Rule. 

The Bureau notes that like the 

Remittance Rule and Regulation E 

generally, the proposed definition of 

‘‘international money transfer’’ already 

excludes a transfer of funds if the 

primary purpose of the transfer was the 

purchase or sale of a security or 

commodity regulated by the 

Commission, or purchased or sold 

through a broker-dealer regulated by the 

Commission.73 The broker-dealer trade 

association working group did not 

address this proposed exclusion in its 

comment, and the Bureau did not 

receive any other comments relating to 

this particular exception. 

The Bureau has limited information 

about the volume of broker-dealers’ 

transactions that are international 

money transfers under the Proposed 

Rule because the primary data sources 

used by the Bureau in this rulemaking 

do not include any broker-dealers 

registered with the Commission and the 

trade group commenter and other 

commenters did not provide any data. 

However, the Bureau is not aware of any 

broker-dealer registered with the 

Commission that would meet the 

threshold of one million aggregate 

annual international money transfers 

under the definitions as proposed, and 

no commenter identified any.74 The 

Proposed Rule incorporates an 

exclusion from Regulation E that 

encompasses those broker-dealer 

transactions that the Bureau believes 

should be excluded from the 

international money transfer market. 

Accordingly, the Bureau is finalizing the 

definition of ‘‘international money 

transfer’’ as proposed. 

International Money Transfer Provider 

Proposed § 1090.107(a) defined the 

term ‘‘international money transfer 

provider’’ to mean any nonbank covered 

person that provides international 

money transfers for a consumer, 

regardless of whether the consumer 

holds an account with such person. 

Consistent with the Proposed Rule’s 

definition of ‘‘international money 

transfer,’’ the proposed definition of 

‘‘international money transfer provider’’ 

tracked the definition of ‘‘remittance 

transfer provider’’ in the Remittance 

Rule closely,75 with the following 

exceptions. First, the proposed 

definition replaced ‘‘remittance 

transfer’’ with ‘‘international money 

transfer.’’ Second, for consistency with 

the rest of the larger-participant rule, the 

proposed definition replaced the first 

reference to ‘‘person’’ with ‘‘nonbank 

covered person’’ 76 and incorporated the 

larger-participant rule’s definition of 

‘‘consumer’’ rather than the Regulation 

E definition. Third, the Bureau did not 

incorporate the ‘‘remittance transfer 

provider’’ definition’s requirement that 

transfers be provided ‘‘in the normal 

course of business.’’ 77 The Bureau 

explained that such a limitation is 

unnecessary in the definition of 

‘‘international money transfer provider’’ 

because the Proposed Rule would not 

impose any new business conduct 

obligations and would require that an 

international money transfer provider 

have at least one million aggregate 

annual international money transfers to 

be a larger participant. 

The Bureau received several 

comments expressing support and no 

comments raising concerns regarding 

this proposed definition and adopts the 

definition as proposed. As the Bureau 

explained in the proposal, the Bureau 

intends the commentary to the 

Remittance Rule 78 to be used to guide 

in interpreting the term ‘‘international 

money transfer provider’’ in 

§ 1090.107(a), to the extent appropriate 

given the definitions’ different 

regulatory contexts. 

Sender 

Proposed § 1090.107(a) defined the 

term ‘‘sender’’ to mean a consumer in a 

State who primarily for personal, 

family, or household purposes requests 

an international money transfer 

provider to send an international money 

transfer to a designated recipient. This 

proposed definition largely tracked the 

definition of ‘‘sender’’ in the Remittance 

Rule, but replaced ‘‘remittance transfer’’ 

with ‘‘international money transfer’’ and 

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Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 56641 

79 12 CFR 1005.30(g). 

80Official Interpretations to Regulation E, 12 CFR 

part 1005, Supp. I, comment 30(g). 

81The Bureau proposed adopting the definition in 

Regulation E with minor stylistic changes to the last 

clause of the definition. Cf. 12 CFR 1005.2(l) 

(‘‘ ‘State’ means any State, territory, or possession of 

the United States; the District of Columbia; the 

Commonwealth of Puerto Rico; or any political 

subdivision of the thereof in this paragraph (l).’’) 

(emphasis added). 

82As noted above, some commenters suggested 

that the Bureau should expand the market to 

include domestic transfers, an issue discussed in 

the section-by-section discussion of § 1090.107 

above. Other commenters discussed the proposed 

definitions of ‘‘aggregate annual international 

money transfer’’ and related terms such as 

‘‘international money transfer.’’ Those comments 

and the changes the Bureau has made to those 

definitions are discussed in the section-by-section 

analysis of § 1090.107(a) above. 

83For example, the Bureau could revisit the 

criterion decision for this larger-participant rule or 

could establish supervisory authority over 

particular entities that pose risks to consumers 

based on a reasonable-cause determination 

pursuant to the Bureau’s risk determination rule, 12 

CFR part 1091. It could also use non-supervisory 

approaches, including initiating enforcement 

investigations where appropriate. 

84The Bureau expects that many market 

participants already assemble data generally related 

to the number of international transactions that they 

provide for internal business purposes, particularly 

because many providers are compensated on a pertransfer basis. Moreover, many providers are 

required to report transaction data to State 

regulators. The Bureau believes that these existing 

practices will help providers to estimate their 

aggregate annual international money transfers, and 

no commenters suggested otherwise. The Bureau 

expects that some market participants may choose 

to track the number of remittance transfers they 

provide each year, which could provide another 

source for estimates of aggregate annual 

international money transfers because the definition 

of the criterion roughly tracks the definition of 

‘‘remittance transfer’’ used in the Remittance Rule. 

Accordingly, the Bureau believes that many market 

participants interested in doing so already have 

sufficient data to estimate whether their aggregate 

annual international money transfers exceed a given 

transaction threshold. 

‘‘remittance transfer provider’’ with 

‘‘international money transfer 

provider.’’ 79 The Proposed Rule also 

incorporated the definition of 

‘‘consumer’’ from the larger-participant 

rule rather than the definition from 

Regulation E, and the Bureau has 

decided to finalize this aspect of the 

proposal to minimize confusion and 

maintain consistency with the rest of 

the larger-participant rule. The Bureau 

did not receive any comments that 

specifically addressed the proposed 

definition of ‘‘sender’’ and adopts the 

definition as proposed. The Bureau 

intends the term ‘‘sender’’ to be 

interpreted in the same manner as the 

term ‘‘sender’’ in the Remittance Rule,80

to the extent appropriate given the 

definitions’ different regulatory 

contexts. 

State 

Proposed § 1090.107(a) defined the 

term ‘‘State’’ to mean any State, 

territory, or possession of the United 

States; the District of Columbia; the 

Commonwealth of Puerto Rico; or any 

political subdivision thereof. This 

proposed definition was drawn from the 

definition of ‘‘State’’ in Regulation E 

subpart A,81 and the Bureau intends for 

it to be interpreted accordingly. The 

Bureau did not receive any comments 

that specifically addressed the proposed 

definition of ‘‘State’’ and adopts the 

definition as proposed. 

1090.107(b)—Test To Define Larger 

Participants 

Criterion 

The Bureau noted in its proposal that 

it was considering a number of possible 

criteria that could be used alone or in 

combination to assess whether a 

nonbank covered person is a larger 

participant of the market for 

international money transfers, including 

aggregate annual international money 

transfers, annual receipts, and annual 

transmitted dollar volume. The Bureau 

proposed to use aggregate annual 

international money transfers as the 

criterion and invited comment on the 

proposed criterion, the alternatives 

identified in the proposal, and any other 

possible criteria that commenters 

believed might be superior. In addition 

to the comments discussed above 

regarding whether the market should 

include domestic transfers and how 

‘‘aggregate annual international money 

transfer’’ should be defined,82 the 

Bureau received some comments 

supporting its proposed criterion and 

one comment advocating the use of two 

criteria rather than a single criterion. 

For the reasons that follow, the Bureau 

has decided to adopt ‘‘aggregate annual 

international money transfers’’ as the 

sole criterion in the Final Rule, with the 

definitional modifications described 

above. 

Several commenters expressed 

support for the Bureau’s proposed 

criterion. A consumer advocacy group 

indicated that it was pleased that the 

proposed criterion counts all transfers, 

regardless of amount. This commenter 

noted that as mobile technologies 

advance and other market innovations 

take place, more consumers may choose 

to send smaller, more frequent 

payments abroad. 

Another commenter expressed 

concern that using aggregate annual 

international money transfers could 

prompt providers to encourage 

consumers to restructure their 

transactions in order to avoid 

supervision. The commenter speculated, 

for example, that it would not be 

surprising if some money transfer 

providers offered discounts to 

consumers who send fewer transfers in 

order to stay below the threshold. To 

avoid this, the commenter suggested 

that the Bureau should use two 

criteria—dollar volume and aggregate 

annual international money transfers— 

and treat an entity as a larger participant 

if it meets the threshold set for either of 

two criteria. 

The Bureau does not believe that a 

second criterion is necessary in this 

market and is not inclined to add one 

due to the complexity it would entail for 

the Bureau and any industry 

participants who seek to assess whether 

they are larger participants. The Bureau 

believes that market conditions and 

consumer preferences are more likely to 

drive how transactions are structured 

than a desire to evade supervision. 

Moreover, the Bureau has an array of 

tools available if it learns that entities 

are in fact restructuring their 

transactions in an effort to evade 

supervision as larger participants.83

As the Bureau explained in the 

Proposed Rule, the Bureau believes that 

aggregate annual international money 

transfers is an appropriate criterion by 

itself because it measures, in several 

meaningful ways, the nonbank 

provider’s level of participation in the 

market and impact on consumers. First, 

the number of transfers reflects the 

extent of interactions an international 

money transfer provider has with 

consumers because each transfer 

represents a single interaction with at 

least one consumer. Second, the number 

of transfers is a relatively durable metric 

in the face of changing market 

conditions such as fluctuating exchange 

rates or inflation. Third, because 

international money transfer providers 

often are paid, in part, on a per-transfer 

basis, the number of transfers is related 

to the revenue received, another 

indicator of market participation. 

The Bureau anticipates that the 

streamlined definition of ‘‘aggregate 

annual international money transfers’’ 

described above will be relatively 

straightforward and objective for an 

international money transfer provider to 

calculate, should the occasion to do so 

arise.84 Adding an alternative criterion 

of dollars transmitted would 

significantly increase the complexity of 

the rule, by requiring additional 

definitions, data, and calculations. The 

Bureau declines to complicate the test 

for defining larger participants in this 

market by adding a second criterion 

with its own threshold. In light of all of 

the considerations described above, the 

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56642 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

85 79 FR 5302, 5307 n.38, 5311 & n.67 (Jan. 31, 

2014) (explaining methodology used and its 

potential limitations). According to the Bureau’s 

estimates, these 25 providers constitute less than 10 

percent of all participants in this nonbank market. 

Id. at 5306 n.36, 5307 n.38, 5311 n.69. 

86While agreeing with the proposed threshold, 

one of these commenters encouraged the Bureau to 

monitor smaller nonbank market participants and to 

use its authority under 12 U.S.C. 5514(a)(1)(c), 

which authorizes the Bureau to supervise entities 

that pose risks to consumers based on a reasonablecause determination. 

87 12 CFR 1005.30(f)(2)(i) creates a safe harbor 

with respect to the phrase ‘‘normal course of 

business’’ in the definition of ‘‘remittance transfer 

provider,’’ which determines whether a person is 

required to comply with the Remittance Rule. 

Pursuant to § 1005.30(f)(2)(i), a person is deemed 

not to be providing remittance transfers for a 

consumer in the normal course of its business if the 

person provided 100 or fewer remittance transfers 

in the previous calendar year, and provides 100 or 

fewer remittance transfers in the current calendar 

year. A person that sends more than 100 remittance 

transfers in a calendar year does not necessarily 

provide remittance transfers for consumers in the 

normal course of business. Rather, whether such a 

person provides remittance transfers in the normal 

course of business depends on the facts and 

circumstances, including the total number and 

frequency of remittance transfers sent by the 

provider. See Official Interpretations to Regulation 

E, 12 CFR part 1005, Supp. I, comment 30(f)–2. 

88 79 FR 5302, 5307 n.38, 5311 & n.68 (Jan. 31, 

2014) (explaining methodology used and its 

potential limitations). The Bureau estimates that the 

nonbanks that send between 500,000 and 1 million 

international money transfers per year account 

collectively for only about 1.5 percent of all 

international money transfers. Id. at 5307 & n.38. 

89Like the proposal, the Final Rule’s definition of 

‘‘international money transfer provider’’ does not 

incorporate the ‘‘normal course of business’’ 

language from the Remittance Rule’s definition of 

‘‘remittance transfer provider,’’ for the reasons 

explained in the section-by-section analysis of the 

definition of ‘‘international money transfer 

provider’’ above. 

Bureau has adopted ‘‘aggregate annual 

international money transfers’’ as the 

sole criterion, as proposed. 

Threshold 

Under the Proposed Rule, a nonbank 

covered person would be a larger 

participant of the international money 

transfer market if the nonbank covered 

person has at least one million aggregate 

annual international money transfers. 

The Bureau proposed to apply a single 

threshold regardless of where the 

provider operates in the United States or 

where the recipient is located outside of 

the United States. The Bureau received 

comments supporting the Bureau’s 

proposed approach, as well as 

comments advocating a higher or lower 

threshold or suggesting that the Bureau 

should add regional or localized 

alternative tests. For the reasons that 

follow, the Bureau has decided to 

finalize the single threshold of one 

million aggregate annual international 

money transfers as proposed. 

The Bureau’s estimates described 

above indicate that a threshold of one 

million aggregate annual international 

money transfers will bring within the 

Bureau’s supervisory authority 

approximately 25 international money 

transfer providers that collectively 

provided about 140 million transfers in 

2012, with a total volume of about $40 

billion.85 These nonbanks consist of 

both entities that send money to most of 

the countries in the world and entities 

that focus on sending money to 

particular recipient countries or regions. 

Some commenters expressed support 

for the proposed threshold.86 One noted 

that it agreed with the Bureau that the 

threshold would further the Bureau’s 

goal of supervising market participants 

that represent a substantial portion of 

the market and have a significant impact 

on consumers. 

Other commenters encouraged the 

Bureau to lower the threshold to 

500,000 aggregate annual international 

money transfers. In a joint comment, 

five large money transmitters suggested 

that lowering the threshold would 

extend the benefits of supervision to 

more entities. Relying on Bureau 

estimates, these commenters also noted 

that even with this lower threshold 

there would be more larger participants 

in the consumer debt collection market 

than there would be in the international 

money transfer market. A comment from 

a consumer advocacy group asserted 

that there may be a natural dividing line 

at 500,000 transfers because the 

Bureau’s data suggest that there are a 

small number of entities that have 

between 500,000 and 1,000,000 

aggregate annual international money 

transfers and a much larger number of 

entities with less than 500,000 aggregate 

annual international money transfers. 

A trade association representing 

banks urged the Bureau to adopt an 

even lower threshold of 100,000 

transfers. It argued that this would 

further the Bureau’s goal of parity 

between banks and nonbanks and be 

more consistent with the 100-transfer 

safe harbor that the Bureau established 

in the Remittance Rule definition of 

‘‘remittance transfer provider’’ for 

purposes of determining whether an 

entity provides transfers in the ‘‘normal 

course of business’’.87

The Bureau does not agree that 

500,000 or 100,000 aggregate annual 

international money transfers would be 

a more appropriate or natural threshold 

than one million in this market at this 

time. According to the Bureau’s 

estimates, over 90 percent of market 

activity is conducted by entities with 

over one million aggregate international 

money transfers, and cutting the 

proposed threshold in half or reducing 

it by an even larger factor would only 

marginally increase the proportion of 

market activity covered by the rule, 

while extending coverage to companies 

that are substantially smaller in size.88

The Bureau also does not agree with 

one commenter’s suggestion that the 

number of larger participants in this 

market should align with the number in 

the consumer debt collection market. 

There is no reason to expect that the 

number of larger participants in this 

market would be the same as the 

number in any other market because the 

Bureau tailors the criterion and 

threshold to the specific characteristics 

of each distinct market. 

Similarly, there is no reason to think 

that the threshold for this largerparticipant rule should in any way 

resemble the number of transfers that 

disqualifies an entity from claiming a 

safe harbor when assessing whether the 

entity is providing transfers in the 

‘‘normal course of business’’ for 

purposes of the Remittance Rule’s 

definition of ‘‘remittance transfer 

provider’’.89 The two provisions serve 

different purposes: One determines 

which entities are larger participants in 

the international money transfer market, 

while the other helps to determine 

which entities are exempt from the 

substantive requirements of the 

Remittance Rule because they do not 

provide remittance transfers in the 

normal course of their business. The 

commenter that cited the Remittance 

Rule’s ‘‘normal course of business’’ safe 

harbor as a basis for lowering the largerparticipant threshold also implied that 

the safe harbor applies only to banks. In 

fact, the Remittance Rule and its 

‘‘normal course of business’’ safe harbor 

apply to both banks and nonbanks. 

Although it is true that a lower 

threshold could bring more entities 

under the Bureau’s supervisory 

authority, that is not a reason by itself 

to lower the threshold. The Bureau has 

a variety of tools that it can use should 

concerns emerge regarding nonbank 

market participants that have less than 

one million aggregate annual 

international money transfers. The 

Bureau could, for example, establish 

supervisory authority over a particular 

company that poses risks to consumers 

based on a reasonable-cause 

determination pursuant to the Bureau’s 

risk determination rule, 12 CFR part 

1091. It could also use non-supervisory 

approaches where appropriate, such as 

initiating enforcement investigations, 

coordinating with State regulators, State 

attorneys general, and the Federal Trade 

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90According to the Bureau’s estimates, the 

entities that would be removed from coverage if this 

shift were made are collectively responsible for 

roughly one-sixth of all international money 

transfers. 79 FR 5302, 5307 & n.38 (Jan. 31, 2014). 

91As noted above, nonbank covered persons 

generally are subject to the Bureau’s regulatory and 

enforcement authority and any applicable Federal 

consumer financial law, regardless of whether they 

are subject to the Bureau’s supervisory authority. 

92The Bureau noted in its proposal that it was not 

aware of data sources that would support regional 

segmentation of this nature. In addressing this 

issue, the large money transmitter commenters 

suggested that the Bureau might be able to request 

transactional data from individual companies and/ 

or from State regulators, but indicated that they did 

not themselves have such information available. 

93As noted above, the Bureau has other tools that 

it could use to address these entities, should they 

raise concerns, including (1) establishing 

supervision authority over a particular company 

based on a reasonable-cause determination 

pursuant to the Bureau’s risk determination rule, 12 

CFR part 1091; (2) enforcement investigations 

where warranted; (3) coordination with State 

regulators, State attorneys general, and the Federal 

Trade Commission; and (4) research and 

monitoring. 

94Specifically, 12 U.S.C. 5512(b)(2)(A) calls for 

the Bureau to consider the potential benefits and 

costs of a regulation to consumers and covered 

persons, including the potential reduction of access 

by consumers to consumer financial products or 

services, the impact on depository institutions and 

credit unions with $10 billion or less in total assets 

as described in 12 U.S.C. 5516, and the impact on 

consumers in rural areas. In addition, 12 U.S.C. 

5512(b)(2)(B) directs the Bureau to consult, before 

and during the rulemaking, with appropriate 

prudential regulators or other Federal agencies, 

regarding consistency with objectives those 

agencies administer. The manner and extent to 

which the provisions of 12 U.S.C. 5512(b)(2) apply 

Continued 

Commission, and engaging in research 

and monitoring. In light of all of the 

considerations described above, the 

Bureau declines to lower the threshold. 

In contrast to the comments received 

from industry and consumer groups, 

two State regulator associations 

suggested raising the threshold to three 

million aggregate annual international 

money transfers due to the States’ 

supervisory activity in the market. The 

State regulator associations suggested 

that three million transfers would be 

more in line with the larger-participant 

thresholds that the Bureau has set in 

other markets. 

As noted above, the Bureau tailors the 

threshold in each market to the specific 

characteristics of the particular market. 

According to the Bureau’s estimates, 

raising the threshold from one to three 

million aggregate annual international 

money transfers in this market would 

remove from the rule’s coverage more 

than half of the nonbanks covered by 

the proposal (approximately 15 out of 

25 entities) and would significantly 

decrease the proportion of market 

activity covered by the rule.90 The 

Bureau recognizes the important role 

that State regulators play in this market. 

As indicated in the Proposed Rule, the 

Bureau will coordinate with appropriate 

State regulatory authorities and will 

consider the extent of State supervisory 

activity when prioritizing individual 

examinations. The Bureau does not, 

however, believe it is appropriate to 

remove entities with between one and 

three million aggregate annual 

international money transfers 

categorically from supervision as larger 

participants, given the significant role 

that these entities play in the market. 

One commenter suggested that the 

Bureau should supervise all providers, 

regardless of size, while others 

suggested that the Bureau should 

include all publicly-traded providers in 

its larger-participant definition. The 

Bureau does not believe that including 

a category of providers regardless of size 

would be consistent with 12 U.S.C. 

5514(a)(1)(B), which authorizes the 

Bureau to define ‘‘larger participants’’ of 

other markets for consumer financial 

products or services.91 The Bureau 

therefore declines to make the changes 

suggested by these commenters. 

The Bureau proposed a single 

threshold regardless of the destination 

of a provider’s transfers but also 

indicated that it was considering, as an 

alternative, establishing different 

thresholds based on destination region. 

In their joint comment five large money 

transmitters encouraged the Bureau to 

supplement the Bureau’s proposed test 

with an alternative test that focuses on 

providers that send transfers to key 

geographic corridors. In support, they 

explained that providers focusing on 

specific destination regions can have a 

large impact on particular consumer 

segments. Another banking industry 

commenter took the opposite view, 

arguing that using different thresholds 

would add too much complexity. 

The Bureau agrees that using different 

thresholds would further complicate the 

rule and would make it much more 

difficult to administer. The Bureau is 

not aware of, and commenters did not 

identify, any existing data compilation 

that would provide the information 

necessary to establish corridor-specific 

thresholds.92 Furthermore, even if data 

could be collected to support corridor 

segmentation, it would be extremely 

difficult and time-consuming to define 

all of the corridors, assess 

corresponding volumes, and set and 

maintain corridor-specific thresholds 

over time, as corridors could be defined 

in a wide variety of ways and corridor 

volumes could shift in response to any 

number of factors. While using different 

thresholds for different destination 

corridors might increase the number of 

larger participants that focus on specific 

destination regions, the Bureau’s 

analysis and market research indicates 

that the threshold of one million 

aggregate annual international money 

transfers already defines a number of 

entities that focus on specific 

destination regions as larger 

participants. The Bureau is therefore 

finalizing the rule without adding any 

corridor-specific thresholds. 

The Bureau also received comments 

from three consumer groups requesting 

that the Bureau supervise major regional 

or local money transmitters that 

dominate certain submarkets within the 

United States even if such transmitters 

do not have a nationwide presence. 

These commenters suggested that the 

Bureau could consider a company’s 

market share (e.g., revenues or volume 

of transactions) relative to the 

population density of the area of the 

United States in which it operates. They 

suggested that a money transfer 

company located in a highly urbanized 

area doing 300,000 transactions 

annually would not be considered a 

major participant in that market, but 

that a money transfer company in a 

more rural area doing the same volume 

of transactions could be the 

predominant transmitter in the 

community. 

The challenges associated with 

assessing regional or local dominance in 

the United States are similar to those 

posed by setting multiple thresholds for 

different destination regions. In addition 

to volume information for market 

participants, the Bureau would need to 

gather data on each market participant’s 

area(s) of operation and population 

information for each identified area. 

Each of these factors could change over 

time, making it very difficult to assess 

which entities would be larger 

participants. The Bureau believes that 

such an approach would be burdensome 

and that it is reasonable instead to 

identify larger participants in this 

market by considering the overall 

number of international money transfers 

that each international money transfer 

provider sends from the entire United 

States.93 The Bureau is therefore 

adopting a single threshold of one 

million aggregate annual international 

money transfers, as proposed. 

VI. Section 1022(b)(2)(A) of the DoddFrank Act 

A. Overview 

The Bureau considered potential 

benefits, costs, and impacts of the Final 

Rule.94 The Proposed Rule set forth a 

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56644 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

to a rulemaking of this kind that does not establish 

standards of conduct are unclear. Nevertheless, to 

inform this rulemaking more fully, the Bureau 

performed the analysis and consultations described 

in those provisions of the Dodd-Frank Act. 

95The Bureau has discretion in any rulemaking 

to choose an appropriate scope of analysis with 

respect to potential benefits and costs and an 

appropriate baseline. The Bureau, as a matter of 

discretion, has chosen to describe a broader range 

of potential effects to inform the rulemaking more 

fully. 

96Another approach to considering the benefits, 

costs, and impacts of the Final Rule would be to 

focus almost entirely on the supervision-related 

costs for larger participants and omit a broader 

consideration of the benefits and costs of increased 

compliance. As noted above, the Bureau has, as a 

matter of discretion, chosen to describe a broader 

range of potential effects to inform the rulemaking 

more fully. 

preliminary analysis of these effects, 

and the Bureau requested and received 

comments on the topic. In addition, the 

Bureau has consulted with or offered to 

consult with the Federal Trade 

Commission, the Board of Governors of 

the Federal Reserve System, the Federal 

Deposit Insurance Corporation, the 

Office of the Comptroller of the 

Currency, the National Credit Union 

Administration, and the Securities and 

Exchange Commission regarding, among 

other things, consistency with any 

prudential, market, or systemic 

objectives administered by such 

agencies. 

The Final Rule defines a category of 

nonbanks that would be subject to the 

Bureau’s nonbank supervision program 

pursuant to 12 U.S. C. 5514(a)(1)(B). The 

category includes ‘‘larger participants’’ 

of a market for ‘‘international money 

transfers’’ described in the Final Rule. 

Whether an entity is a larger participant 

in this market will be measured on the 

basis of aggregate annual international 

money transfers. If a nonbank covered 

person’s aggregate annual international 

money transfers equal or exceed one 

million, it will be a larger participant. 

B. Potential Benefits and Costs to 

Consumers and Covered Persons 

This analysis considers the benefits, 

costs, and impacts of the key provisions 

of the Final Rule against a baseline that 

includes the Bureau’s existing rules 

defining larger participants in certain 

markets.95 Many States have 

supervisory programs relating to money 

transfers, which may consider aspects of 

Federal consumer financial law. 

However, at present, there is no Federal 

program for supervision of nonbanks 

that are international money transfer 

providers with respect to Federal 

consumer financial law. The Final Rule 

extends the Bureau’s supervisory 

authority over international money 

transfer providers that are larger 

participants of the international money 

transfer market. This includes the 

authority to supervise for compliance 

with EFTA and the Remittance Rule. 

As the Bureau noted in the Proposed 

Rule, limited data are available with 

which to quantify the potential benefits, 

costs, and impacts of the Final Rule. For 

example, although the Bureau has 

confidential supervisory data from 

California, New York, and Ohio from 

which it can estimate the number and 

size of international money transfer 

providers, the Bureau lacks detailed or 

comprehensive information about their 

rates of compliance or noncompliance 

with Federal consumer financial law 

and about the range of, and costs of, 

compliance mechanisms used by market 

participants. 

In light of these data limitations, this 

analysis generally provides a qualitative 

discussion of the benefits, costs, and 

impacts of the Final Rule. General 

economic principles, together with the 

limited data that are available, provide 

insight into these benefits, costs, and 

impacts. Where possible, the Bureau has 

made quantitative estimates based on 

these principles and data as well as on 

its experience of undertaking 

supervision in other markets. 

The discussion below describes three 

categories of potential benefits and 

costs. First, the Final Rule authorizes 

the Bureau’s supervision of larger 

participants of the international money 

transfer market. Larger participants of 

the proposed market might respond to 

the possibility of supervision by 

changing their systems and conduct, 

and those changes might result in costs, 

benefits, or other impacts. Second, if the 

Bureau undertakes supervisory activity 

at specific larger participants, those 

entities would incur costs from 

responding to supervisory activity, and 

the results of these individual 

supervisory activities might also 

produce benefits and costs. Third, the 

Bureau analyzes the costs that might be 

associated with entities’ efforts to assess 

whether they qualify as larger 

participants under the rule. 

1. Benefits and Costs of Responses to the 

Possibility of Supervision 

The Final Rule will subject larger 

participants of the international money 

transfer market to the possibility of 

Bureau supervision. That the Bureau 

will be authorized to undertake 

supervisory activities with respect to a 

nonbank covered person that qualifies 

as a larger participant does not 

necessarily mean the Bureau will in fact 

undertake such activities regarding that 

covered person in the near future. 

Rather, supervision of any particular 

larger participant as a result of this 

rulemaking is probabilistic in nature. 

For example, the Bureau will examine 

certain larger participants on a periodic 

or occasional basis. The Bureau’s 

decisions about supervision will be 

informed, as applicable, by the factors 

set forth in 12 U.S.C. 5514(b)(2), relating 

to the size and transaction volume of 

individual participants, the risks their 

consumer financial products and 

services pose to consumers, the extent 

of State consumer protection oversight, 

and other factors the Bureau may 

determine are relevant. Each entity that 

believes it qualifies as a larger 

participant will know that it may be 

supervised and may gauge, given its 

circumstances, the likelihood that the 

Bureau will initiate an examination or 

other supervisory activity. 

The prospect of potential supervisory 

activity could create an incentive for 

larger participants to allocate additional 

resources and attention to compliance 

with Federal consumer financial law, 

potentially leading to an increase in the 

level of compliance. They might 

anticipate that by doing so (and thereby 

decreasing risk to consumers), they 

could decrease the likelihood of their 

actually being subject to supervisory 

activities as the Bureau evaluates the 

factors outlined above. In addition, an 

actual examination will be likely to 

reveal any past or present 

noncompliance, which the Bureau 

could seek to correct through 

supervisory activity or, in some cases, 

enforcement actions. Larger participants 

might therefore judge that the prospect 

of supervision increases the potential 

consequences of noncompliance with 

Federal consumer financial law, and 

they might seek to decrease that risk by 

taking steps to identify and cure or 

mitigate any noncompliance. 

The Bureau believes it is likely that 

many market participants will increase 

compliance in response to the Bureau’s 

supervisory activity authorized by the 

Final Rule. However, because the Final 

Rule itself does not require any larger 

participant to alter its performance of 

international money transfers, any 

estimate of the amount of increased 

compliance would be both an estimate 

of current compliance levels and a 

prediction of market participants’ 

behavior in response to the Final Rule. 

The data that the Bureau currently has 

do not support a specific quantitative 

estimate or prediction. But, to the extent 

larger participants allocate resources to 

increasing their compliance in response 

to the Final Rule, that response would 

result in both benefits and costs.96

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Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 56645 

97 2011 CPS Report 32, 142–43. 

98 12 U.S.C. 5531. 

99The CFPB Supervision and Examination 

Manual provides further guidance on how the 

UDAAP prohibition applies to supervised entities 

and is available at http://

www.consumerfinance.gov/guidance/supervision/

manual. 

100Bureau estimate based on 2011 CPS data, 

which are available at http://

thedataweb.rm.census.gov/ftp/cps_ftp.html and 

described at http://www.census.gov/prod/techdoc/

cps/cpsjun11.pdf. 

a. Benefits From Increased Compliance 

Increased compliance with Federal 

consumer financial laws by larger 

participants in the international money 

transfer market will be beneficial to 

consumers who send international 

money transfers. The number of 

American consumers who could 

potentially be affected is significant. As 

noted above, data from the 2011 CPS 

show that more than 4 million U.S. 

households had used nonbanks to send 

money abroad to friends and family in 

the preceding year.97 Increasing the rate 

of compliance with Federal consumer 

financial laws will benefit consumers 

and the consumer financial market by 

providing more of the protections 

mandated by those laws. 

EFTA and the Remittance Rule offer 

substantial consumer protections for 

consumers sending remittance transfers. 

Together, EFTA and the Remittance 

Rule clarify the remittance process for 

consumers by, among other things, 

requiring the provision of standardized 

disclosures about pricing and increasing 

consumer protections when transfers do 

not go as planned. For consumers, this 

should increase the transparency of 

remittance prices and facilitate dispute 

resolution when errors occur. 

More broadly, the Bureau will be 

examining for compliance with other 

Federal consumer financial laws, 

including whether larger participants of 

the international money transfer market 

engage in unfair, deceptive, or abusive 

acts or practices (UDAAPs).98 Conduct 

that does not violate an express 

prohibition of another Federal consumer 

financial law may nonetheless 

constitute a UDAAP.99 To the extent 

that any larger participant is currently 

engaged in any UDAAPs, the cessation 

of the unlawful act or practice would 

benefit consumers. Larger participants 

might improve policies and procedures 

in response to possible supervision in 

order to avoid engaging in UDAAPs. 

The possibility of supervision also 

may help make incentives to comply 

with Federal consumer financial laws 

more consistent between the likely 

larger participants and banks and credit 

unions, which are already subject to 

Federal supervision with respect to 

Federal consumer financial laws. 

Although some nonbanks are already 

subject to State supervision, introducing 

the possibility of Federal supervision 

could encourage nonbanks that are 

likely larger participants to devote 

additional resources to compliance. It 

could also help ensure that the benefits 

of Federal oversight reach consumers 

who do not have ready access to bankor credit union-provided international 

transfers. In 2011, approximately onesixth of individuals who sent money 

abroad to friends and family through a 

nonbank did not have a bank or credit 

union account.100

b. Costs of Increased Compliance 

To the extent that nonbank larger 

participants decide to increase resources 

dedicated to compliance in response to 

the possibility of increased supervision, 

the entities will bear any direct cost of 

any changes to their systems, protocols, 

or personnel. Any such increase in costs 

could be passed on in part to 

consumers. Whether and to what extent 

entities increase resources dedicated to 

compliance and/or pass those costs to 

consumers will depend not only on the 

entities’ current practices and the 

changes they decide to make, but also 

on market conditions. The Bureau lacks 

detailed information with which to 

predict what portion of any cost of any 

increased compliance will be borne by 

larger participants or passed on to 

consumers. When or if such a cost were 

borne by consumers, consumers might 

respond by changing the frequency or 

amount of international money transfers 

sent. 

In considering any potential price 

effect of the Final Rule, it is important 

to take into account the fact that 

nonbanks below the larger-participant 

threshold will not be subject to 

supervision as a result of this rule. In 

the Proposed Rule, the Bureau stated 

that because the costs incurred by 

nonbanks below the larger-participant 

threshold would be unaffected by the 

rule, their pricing should also not be 

affected. The Bureau stated that the 

competition from these smaller entities 

could reduce the likelihood that larger 

participants would choose to increase 

their prices in response to the rule. 

One commenter disagreed, stating that 

(1) costs incurred by a larger participant 

could be passed down to a smaller 

provider if there is a relationship 

between the larger participant and the 

smaller provider, (2) smaller providers 

might increase fees to take advantage of 

market factors including an increase in 

prices charged by larger participants, 

and (3) other factors including 

compliance obligations imposed by laws 

and regulations other than this largerparticipant rule could result in 

increasing prices. The commenter did 

not specify what it meant by a 

relationship between the larger and 

smaller provider, or how exactly costs 

would be passed between providers. 

The Bureau’s market research suggests 

that there are hundreds of international 

money transfer providers that will not 

be subject to supervision under the 

Final Rule. In noting that smaller 

entities will not be subject to 

supervision as larger participants under 

this rule, the Bureau merely identified 

one factor that may make it less likely 

that larger participants will increase 

their prices. Even if some smaller 

entities are indirectly affected by the 

rule (together with larger participants), 

the Bureau believes that competition 

from unaffected smaller entities could 

still reduce the likelihood that any 

market participants would choose to 

increase their prices in response to the 

rule. To the extent other laws and 

regulations, or any other factors, affect 

prices, those are beyond the scope of 

this analysis under section 1022 of the 

Dodd-Frank Act, which is focused on 

the costs and benefits of this individual 

rule. 

2. Benefits and Costs of Individual 

Supervisory Activities 

In addition to the responses of market 

participants anticipating supervision, 

the possible consequences of the Final 

Rule include the responses to and 

effects of individual examinations or 

other supervisory activities that the 

Bureau might conduct in the 

international money transfer market. 

a. Benefits of Supervisory Activities 

Supervisory activity could provide 

several types of benefits. For example, 

as a result of supervisory activity, the 

Bureau and an entity might uncover 

deficiencies in the entity’s policies and 

procedures. The Bureau’s examination 

manual calls for the Bureau generally to 

prepare a report of each examination, to 

assess the strength of the entity’s 

compliance mechanisms, and to assess 

the risks the entity poses to consumers, 

among other things. The Bureau shares 

examination findings with the examined 

entity because one purpose of 

supervision is to inform the entity of 

problems detected by examiners. Thus, 

for example, an examination might find 

evidence of widespread noncompliance 

with Federal consumer financial law, or 

it might identify specific areas where an 

entity has inadvertently failed to 

comply. These examples are only 

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56646 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

101Further potential benefits to consumers, 

covered persons, or both might arise from the 

Bureau’s gathering of information during 

supervisory activities. The goals of supervision 

include informing the Bureau about activities of 

market participants and assessing risks to 

consumers and to markets for consumer financial 

products and services. The Bureau may use this 

information to improve regulation of consumer 

financial products and services and to improve 

enforcement of Federal consumer financial law, in 

order to better serve its mission of ensuring 

consumers’ access to fair, transparent, and 

competitive markets for such products and services. 

Benefits of this type will depend on what the 

Bureau learns during supervision and how it uses 

that knowledge. For example, because the Bureau 

will examine a number of covered persons in the 

international money transfer market, the Bureau 

will build an understanding of how effective 

compliance systems and processes function in that 

market. 

102This estimate was derived using confidential 

supervisory Bureau data on the duration of on-site 

payday loan examinations at nonbanks. For 

purposes of this calculation, the Bureau counted its 

payday loan examinations for which the on-site 

portion had been completed. The Bureau counted 

only the on-site portion of an examination, which 

included time during the on-site period of the 

examination that examiners spent while off-site for 

travel or holidays. However, the Bureau did not 

count time spent scoping an examination before the 

on-site portion of the examination or summarizing 

findings or preparing reports of examination 

afterwards. 

103Bureau of Labor Statistics Occupational 

Employment Statistics (OES) Survey, May 2013 

estimates for NAICS code 522300, available at 

http://www.bls.gov/oes/current/naics4_522300.htm. 

104Bureau of Labor Statistics series 

CMU2025220000000D, Quarter 2 2013, available at 

http://data.bls.gov/timeseries/

CMU2025220000000D?data_tool=XGtable. 

illustrative of the kinds of information 

an examination might uncover. 

Detecting and informing entities about 

such problems should be beneficial to 

consumers. When the Bureau notifies an 

entity about risks associated with an 

aspect of its activities, the entity is 

expected to adjust its practices to reduce 

those risks. That response may result in 

increased compliance with Federal 

consumer financial law, with benefits 

like those described above. Or it may 

avert a violation that would have 

occurred had Bureau supervision not 

detected the risk promptly. The Bureau 

may also inform entities about risks 

posed to consumers that fall short of 

violating the law. Action to reduce those 

risks would also be a benefit to 

consumers. 

Given the obligations international 

money transfer providers have under 

Federal consumer financial law and the 

existence of efforts to enforce such law, 

the results of supervision also may 

benefit larger participants by detecting 

compliance problems early. When an 

entity’s noncompliance results in 

litigation or an enforcement action, the 

entity must face both the costs of 

defending its actions and the penalties 

for noncompliance, including potential 

liability for damages to private 

plaintiffs. The entity must also adjust its 

systems to ensure future compliance. 

Changing practices that have been in 

place for long periods of time can be 

expected to be relatively difficult 

because the practices may be severe 

enough to represent a serious failing of 

an entity’s systems. Supervision may 

detect flaws at a point when correcting 

them would be relatively inexpensive. 

Catching problems early can, in some 

situations, forestall costly litigation. To 

the extent early correction limits the 

amount of consumer harm caused by a 

violation, it can help limit the cost of 

redress. In short, supervision might 

benefit larger participants by, in the 

aggregate, reducing the need for other 

more expensive activities to achieve 

compliance.101

b. Costs of Supervisory Activities 

The potential costs of actual 

supervisory activities arise in two 

categories. The first involves any costs 

to individual larger participants of 

increasing compliance in response to 

the Bureau’s findings during 

supervisory activity and to supervisory 

actions. These costs are similar in 

nature to the possible compliance costs, 

described above, that larger participants 

in general might incur in anticipation of 

possible supervisory actions. This 

analysis will not repeat that discussion. 

The second category is the cost of 

supporting supervisory activity. 

Supervisory activity may involve 

requests for information or records, onsite or off-site examinations, or some 

combination of these activities. For 

example, in an on-site examination, 

Bureau examiners generally contact the 

entity for an initial conference with 

management. That initial contact is 

often accompanied by a request for 

information or records. Based on the 

discussion with management and an 

initial review of the information 

received, examiners determine the 

scope of the on-site exam. While on-site, 

examiners spend some time in further 

conversation with management about 

the entity’s policies, procedures, and 

processes. The examiners also review 

documents, records, and accounts to 

assess the entity’s compliance and 

evaluate the entity’s compliance 

management system. As with the 

Bureau’s other examinations, 

examinations of nonbank larger 

participants in the international money 

transfer market could involve issuing 

confidential examination reports and 

compliance ratings. The Bureau’s 

examination manual describes the 

supervision process and indicates what 

materials and information an entity 

could expect examiners to request and 

review, both before they arrive and 

during their time on-site. 

The primary cost an entity will face 

in connection with an examination is 

the cost of employees’ time to collect 

and provide the necessary information. 

The frequency and duration of 

examinations of any particular entity 

would depend on a number of factors, 

including the size of the entity, the 

compliance or other risks identified, 

whether the entity has been examined 

previously, and the demands on the 

Bureau’s supervisory resources imposed 

by other entities and markets. 

Nevertheless, some rough estimates may 

be useful to provide a sense of the 

magnitude of potential staff costs that 

entities might incur. 

The cost of supporting supervisory 

activity may be calibrated using prior 

Bureau experience in supervision. The 

Bureau considers its nonbank payday 

lender examinations as a reasonable 

proxy for the duration and labor 

intensity of future international money 

transfer provider examinations. 

Although there are many differences, 

the nonbank payday lending market is 

more like the nonbank market for 

international money transfers than other 

nonbank markets the Bureau currently 

supervises because both markets involve 

point-of-sale transactions involving 

similar dollar amounts. 

The average duration of the on-site 

portion of Bureau nonbank payday 

exams is approximately 8 weeks.102

Assuming that each exam requires 2 

weeks of preparation time by 

international money transfer provider 

staff prior to the exam as well as on-site 

assistance by staff throughout the 

duration of the exam, the Bureau 

assumes that the typical examination in 

this nonbank market would require 10 

weeks of staff time. The Bureau has not 

suggested that counsel or any particular 

staffing level is required during an 

examination. However, for purposes of 

this analysis, the Bureau assumes, 

conservatively, that an entity might 

dedicate the equivalent of one full-time 

compliance officer and one-tenth of a 

full-time attorney to the exam. The 

average hourly wage of a compliance 

officer in a nonbank entity that operates 

in activities related to credit 

intermediation is $30.66, and the 

average hourly wage of a lawyer in the 

same industry is $80.95.103 Assuming 

that wages account for 67.5 percent of 

total compensation,104 the total labor 

cost of an examination would be about 

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Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 56647 

105Assuming that individuals are compensated 

for 40 hour work weeks, this is calculated as 

follows: [(0.1*80.95+30.66)/0.675]*40*10. 

106This assumption is based on research on 

remittances suggesting that the average price of 

sending money abroad from the United States is 

roughly 6.42 percent of the total amount sent. 

World Bank, Remittance Prices Worldwide, An 

Analysis of Trends in the Average Total Cost of 

Migrant Remittance Services (Sept. 2013), 11 

(percentage is average price of $200 transfers in Q3 

2013), available at https://

remittanceprices.worldbank.org/sites/default/files/

RPW_Report_Sep2013.pdf. The Bureau measured 

proportion of revenues using the following 

equation: Proportion of 

revenues={[(0.1*80.95+30.66)/0.675]*40*10}/

{1,000,000*200*0.0642}. 

107A $200 average transfer size is a conservative 

estimate. Review of the CA Extrapolation figures 

($49 billion total market dollar volume and 152 

million total market transfers) suggests that the 

average transaction size is just over $300. For 

entities reporting to California, New York, and Ohio 

that sent over 500,000 transfers, the Analysis of 

State Supervisory Data suggests that the average 

transfer size is about $300. Using a $300 average 

transfer size, the cost of supervision would be 

approximately 0.12 percent of total revenues for an 

entity that sends 1 million transfers per year. Other 

sources from 2005 and 2008 also suggest a higher 

average transfer size. Ole E. Andreassen, Remittance 

Service Providers in the United States: How 

Remittance Firms Operate and How They Perceive 

Their Business Environment 15–16 (June 2006), 

available at http://siteresources.worldbank.org/

INTPAYMENTREMMITTANCE/Resources/

BusinessmodelsFSEseries.pdf ($550); Bendixen & 

Amandi, Survey of Latin American Immigrants in 

the United States 23 (Apr. 30, 2008), available at 

idbdocs.iadb.org/wsdocs/

getdocument.aspx?docnum=35063818 ($325). 

108 Industry commenters also requested guidance 

as to scope of examinations. As noted above, the 

Bureau typically determines the scope of each 

examination based on initial review of the 

information received and discussions with 

management. 

109The Bureau declines to predict at this time 

precisely how many examinations it would 

undertake at each larger participant. However, if the 

Bureau were to examine each larger participant of 

the international money transfer market once every 

two years, the expected annual labor cost of 

supervision per larger participant would be 

approximately $11,500 (the cost of one 

examination, divided by two). This would account 

for 0.09 percent of the international money transfer 

revenue of an entity that sends one million transfers 

in a year, assuming an average transaction amount 

of $200. 

$23,000.105 The Bureau estimates that 

the cost for an entity that sends 1 

million transfers per year, with an 

average transfer amount of $200, would 

be approximately 0.18 percent of total 

revenue from such transfers for that 

year.106 Note that this is a conservative 

estimate in several respects because it 

reflects revenue only from this line of 

business and uses a relatively small 

average international money transfer 

size as well as the minimum number of 

transactions that a larger participant 

would provide.107

One banking industry association 

commenter stated that it suspects that 

this estimate grossly understates the 

time and effort that a covered entity will 

need to prepare for an examination. 

That commenter identified the 

employee time needed to provide data 

and information to examiners, as well as 

the time needed to support the Bureau’s 

examination teams, as sources of costs. 

The commenter did not offer an 

alternative estimate on the amount of 

staff time an examination would 

require. Based on its experience with 

similar exams, the Bureau has estimated 

the total cost for international money 

transfer providers, including the staff 

time necessary to prepare for an 

examination as well as the staff time 

necessary to support the Bureau’s 

examination team once examiners arrive 

on site. Depending on the 

circumstances, the amount may be an 

underestimate or overestimate for some 

supervisory activities. But even if an 

examination required twice as much 

compliance officer time as the Bureau 

estimated, based on the assumptions 

mentioned above, the cost would still 

only be approximately 0.3 percent of 

annual revenue from one million 

transfers. 

The overall costs of supervision in the 

international money transfer market will 

depend on the frequency and extent of 

Bureau examinations. Industry 

commenters suggested that it would be 

helpful if the Bureau provided some 

expectations or guidance as to frequency 

and timing of examinations and 

recommended that no covered 

institution be examined more frequently 

than once every two years.108 Neither 

the Dodd-Frank Act nor the Final Rule 

specifies a particular level or frequency 

of examinations.109 The frequency of 

examinations will depend on a number 

of factors, including the Bureau’s 

understanding of the conduct of market 

participants and the specific risks they 

pose to consumers; the responses of 

larger participants to prior 

examinations; and the demands that 

other markets make on the Bureau’s 

supervisory resources. These factors can 

be expected to change over time, and 

the Bureau’s understanding of these 

factors may change as it gathers more 

information about the market through 

its supervision and by other means. The 

Bureau therefore declines to predict, at 

this point, precisely how many 

examinations in the international 

money transfer market it will undertake 

in a given year or how often it will 

examine any particular entity. 

3. Costs of Assessing Larger-Participant 

Status 

The Final Rule does not require 

nonbanks to assess whether they are 

larger participants. However, the Bureau 

acknowledges that in some cases 

international money transfer providers 

might decide to incur costs to assess 

whether they qualify as larger 

participants or potentially dispute their 

status. 

One banking industry commenter 

stated that the Bureau’s proposed 

analysis of costs did not include costs 

for determining whether an entity is a 

larger participant under the rule. This 

commenter stated that nonbanks will be 

likely to make this determination 

because it will be an important element 

of the nonbank’s strategic plan and 

budget. In the proposal, the Bureau 

acknowledged that some nonbanks may 

choose to incur the cost of assessing 

whether they are larger participants 

even though the rule does not require 

them to do so. The Bureau discussed 

this cost qualitatively rather than 

quantitatively, because the data that the 

Bureau had did not support a detailed 

estimate of how many international 

money transfer providers would choose 

to incur this cost or how much they 

would spend. The commenter did not 

provide any additional data that the 

Bureau could use for a quantitative 

analysis, and the Bureau has not 

acquired additional data from other 

sources. Therefore, in this final analysis 

as in the proposed analysis, the Bureau 

has chosen to address this possible cost 

qualitatively. No commenters objected 

to the other elements of the qualitative 

analysis presented in the Proposed Rule, 

and repeated below, including the 

Bureau’s assumption that international 

money transfer providers are unlikely to 

incur substantially greater costs to 

determine their larger-participant status 

than they expect to incur from Bureau 

supervision. 

Larger-participant status depends on a 

nonbank’s aggregate annual 

international money transfers. As noted 

above, the Bureau expects that many 

market participants already assemble 

general data related to the number of 

international transactions that they 

provide for internal business purposes. 

Moreover, many providers are required 

to report transaction data to State 

regulators. Further, the definition of the 

criterion in this rule roughly tracks the 

definition of ‘‘remittance transfer’’ used 

in the Remittance Rule, and the Bureau 

expects that some market participants 

may choose to track the number of 

remittance transfers they provide each 

year. These preexisting activities could 

assist entities in estimating whether 

they are larger participants. 

To the extent that some international 

money transfer providers do not already 

know whether their transactions exceed 

the threshold, such nonbanks might, in 

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56648 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

110Another alternative under consideration is 

setting different thresholds for each global region in 

which transfers are received. As alluded to earlier, 

international money transfer submarkets tend to be 

segmented by corridor: Individuals wishing to send 

remittances to El Salvador, for example, cannot 

easily substitute transfers to Moldova. The Bureau 

could define a larger-participant threshold for 

different geographic regions so that the entities that 

provide the most transfers to a given region could 

be supervised. Given the paucity of data on regionspecific transactions, however, any definition of 

these thresholds might be more difficult to establish 

and to administer over time. The Bureau also 

considered a similar suggestion by commenters that 

the Bureau consider a company’s market share 

relative to the population density of the area of the 

United States in which it operates. The Bureau 

declined to use this approach, again due to 

concerns about data availability and ease of 

administration over time. 

111 5 U.S.C. 601 et seq. The term ‘‘ ‘small 

organization’ means any not-for-profit enterprise 

which is independently owned and operated and is 

not dominant in its field, unless an agency 

establishes [an alternative definition after notice 

and comment].’’ Id. at 601(4). The term ‘‘ ‘small 

governmental jurisdiction’ means governments of 

cities, counties, towns, townships, villages, school 

districts, or special districts, with a population of 

less than fifty thousand, unless an agency 

establishes [an alternative definition after notice 

and comment].’’ Id. at 601(5). The Bureau is not 

aware of any small governmental units or small notfor-profit organizations to which the Final Rule will 

apply. 

112 5 U.S.C. 601(3). The Bureau may establish an 

alternative definition after consultation with SBA 

and an opportunity for public comment. 

113 5 U.S.C. 605(b). 

114 5 U.S.C. 609. 

response to the Final Rule, develop new 

systems to count their transactions in 

accordance with the definition of 

‘‘international money transfer.’’ The 

data that the Bureau currently has do 

not support a detailed estimate of how 

many international money transfer 

providers will engage in such 

development or how much they would 

spend. Regardless, international money 

transfer providers are unlikely to spend 

significantly more on specialized 

systems to count transactions than their 

expected cost of being supervised by the 

Bureau as larger participants. It bears 

emphasizing that even if expenditures 

on a counting system successfully 

proved that an international money 

transfer provider was not a larger 

participant, it would not necessarily 

follow that the entity could not be 

supervised. The Bureau can supervise 

specific international money transfer 

providers whose conduct the Bureau 

determines, pursuant to 12 U.S.C. 

5514(a)(1)(C), poses risks to consumers. 

Thus, an international money transfer 

provider choosing to spend significant 

amounts on an accounting system 

directed toward the larger-participant 

test could not be sure it would not be 

subject to Bureau supervision 

notwithstanding those expenses. The 

Bureau therefore believes very few if 

any international money transfer 

providers would undertake such 

expenditures. 

4. Consideration of Alternatives 

The Bureau considered two major 

alternatives: Using a measure other than 

number of international money transfers 

to define the market and choosing a 

different threshold to define larger 

participants. 

First, the Bureau considered various 

other criteria for assessing largerparticipant status, including annual 

receipts from international money 

transfers and annual transmitted dollar 

volume. Calculating either of those 

metrics could be more involved than 

calculating the number of international 

money transfers. If so, a given nonbank 

might face greater costs for evaluating or 

disputing whether it qualified as a larger 

participant should the occasion to do so 

arise. The Bureau expects that for both 

annual receipts and annual transmitted 

dollar volume it could choose a suitable 

threshold for which the number of 

larger participants, among those 

nonbanks participating in the market 

today, would be the same as the number 

of nonbanks expected to qualify under 

the Final Rule. Consequently, the costs, 

benefits, and impacts of supervisory 

activities should not depend on which 

criterion the Bureau uses. 

The second possible alternative the 

Bureau considered is selecting a 

different threshold. One alternative 

would be to set the threshold 

substantially higher—for example at 

three million aggregate annual 

international money transfers as two 

commenters suggested—and cover only 

the very largest nonbanks in the market. 

Under such an alternative, the benefits 

of supervision to both consumers and 

covered persons would likely be 

reduced because entities impacting a 

substantial number of consumers and/or 

consumers in particular market 

segments might be omitted. Conversely, 

lowering the threshold as other 

commenters suggested would subject 

more entities to the Bureau’s 

supervisory authority. Raising or 

lowering the threshold could decrease 

or increase, respectively, some potential 

costs to covered persons if fewer or 

more entities were defined as larger 

participants and thus were subject to the 

Bureau’s supervisory authority on that 

basis. However, the total direct costs for 

actual supervisory activity might not 

change substantially because the Bureau 

conducts exams on a risk basis and 

would not necessarily examine more or 

fewer entities if the rule’s coverage were 

broader or narrower.110

C. Potential Specific Impacts of the 

Final Rule 

1. Depository Institutions and Credit 

Unions With $10 Billion or Less in Total 

Assets, as Described in Dodd-Frank Act 

Section 1026 

The Final Rule does not apply to 

depository institutions or credit unions 

of any size. However, it might have 

some impact on depository institutions 

or credit unions that provide 

international transfers. For example, if 

the relative price of nonbanks’ 

international money transfers were to 

increase due to increased costs related 

to supervision, then depository 

institutions or credit unions of any size 

might benefit by the relative change in 

costs. The Bureau believes these effects, 

if any, would likely be small. 

2. Impact of the Provisions on 

Consumers in Rural Areas 

Because the Final Rule applies 

uniformly to international money 

transfers of both rural and non-rural 

consumers, the rule should not have a 

unique impact on rural consumers. The 

Bureau did not receive and is not aware 

of any evidence suggesting that rural 

consumers have been disproportionately 

harmed by international money transfer 

providers’ failure to comply with 

Federal consumer financial law. 

VII. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996, requires each agency to consider 

the potential impact of its regulations on 

small entities, including small 

businesses, small governmental units, 

and small not-for-profit 

organizations.111 The RFA defines a 

‘‘small business’’ as a business that 

meets the size standard developed by 

the Small Business Administration 

pursuant to the Small Business Act.112

The RFA generally requires an agency 

to conduct an initial regulatory 

flexibility analysis (IRFA) of any 

proposed rule subject to notice-andcomment rulemaking requirements, 

unless the agency certifies that the 

proposed rule would not have a 

significant economic impact on a 

substantial number of small entities.113

The Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small entity 

representatives prior to proposing a rule 

for which an IRFA is required.114

The undersigned certified that the 

Proposed Rule, if adopted, would not 

have a significant economic impact on 

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Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 56649 

115 78 FR 37409, 37416 (June 20, 2013) (NAICS 

code 522390), later amended by 79 FR 33647 (June 

12, 2014). The Bureau believes that larger 

participants in the proposed international money 

transfer market are likely to be classified in North 

American Industry Classification System (NAICS) 

code 522390, ‘‘Other Activities Related to Credit 

Intermediation.’’ NAICS lists ‘‘[m]oney 

transmission services’’ as an index entry 

corresponding to this code. See http://

www.census.gov/cgi-bin/sssd/naics/

naicsrch?code=522390&search=2012 NAICS 

Search. The Bureau requested comment on whether 

this or any other NAICS code is most appropriate 

for this market and did not receive any comments. 

The Bureau is aware that a nonbank larger 

participant of the proposed international money 

transfer market might be classified in a NAICS code 

other than the one that includes money 

transmission services. For example, some larger 

participants may be classified under NAICS code 

522320 for financial transactions processing, 

reserve, and clearing house activities. NAICS lists 

‘‘[e]lectronic funds transfer services’’ as an index 

entry corresponding to code 522320. See http://

www.census.gov/cgi-bin/sssd/naics/

naicsrch?code=522320&search=2012. 

116 79 FR 5302, 5316 n.93 (Jan. 31, 2014). 

117The SBA issued an Interim Final Rule 

increasing many of its small business standards to 

account for inflation, which became effective on 

July 14, 2014. 79 FR 33647 (June 12, 2014). The size 

standard for NAICS code 522390 increased from 

$19 million to $20.5 million. This does not, 

however, affect the Bureau’s analysis because 

according to the Bureau’s estimates, the same 

number of potential larger participants have under 

$20.5 million as have under $19 million in annual 

receipts. Likewise, even if the relevant NAICS code 

were instead 522320, the same number of potential 

larger participants would qualify under that code’s 

new size standard of $38.5 million as under the 

prior standard of $35.5 million that the Bureau 

considered in the proposal. 

118U.S. Census Bureau, 2007 Economic Census, 

American FactFinder, Finance and Insurance: 

Subject Series—Estab. and Firm Size: Summary 

Statistics by Revenue Size of Firms for the United 

States, available at http://factfinder2.census.gov/

faces/tableservices/jsf/pages/

productview.xhtml?pid=ECN_2007_US_

52SSSZ4&prodType=table (NAICS code 522390). 

119 79 FR 5302, 5316 n.95 (Jan. 31, 2014). 

120Because the Bureau has not assessed the 

affiliations of potential larger participants, the 

Bureau’s estimate of small entity larger participants 

may include some larger participants that are not 

in fact small entities due to the receipts of their 

affiliates, which are counted towards an entity’s 

annual receipts for purposes of assessing whether 

an entity is a small business concern under the 

SBA’s definition. 13 CFR 121.104(d). Conversely, it 

is possible there are additional small firms that 

have less than one million annual international 

money transfers on their own, but that would meet 

the proposed threshold of one million aggregate 

annual international money transfers when their 

transfers are aggregated with their affiliated 

companies’ transfers. However, the Bureau 

anticipates no more than a very few such cases, if 

any, in the international money transfer market. 

121As discussed above, the Bureau estimates that 

the cost of participating in an examination would 

be approximately 0.18 percent of annual revenue 

from international money transfers for an entity at 

the threshold of 1 million aggregate annual 

international money transfers. If an examination 

required double the compliance officer time 

estimated by the Bureau, the Bureau’s estimates 

suggest that it would still only require about 0.3 

percent of annual revenue from international 

money transfers for an entity at the threshold of 1 

million aggregate annual international money 

transfers. 

122The Bureau is aware that there are likely 

thousands of service providers to larger participants 

of the international money transfer market. Many of 

these service providers might be considered to be 

in the industry with NAICS code 522390 for other 

activities related to credit intermediation. As 

discussed above, according to the 2007 Economics 

Census, there are more than 5,000 small firms in the 

industry. Other service providers may be classified 

in NAICS code 522320 for financial transactions 

processing, reserve, and clearing house activities, 

which includes at least 1,800 small firms. Still other 

service providers, including many retail agents, are 

likely to be considered in other NAICS codes 

corresponding to the service provider’s primary 

business activities. As noted above with respect to 

larger participants themselves, the frequency and 

duration of examinations that would be conducted 

at any particular service provider would depend on 

a variety of factors. However, it is implausible that 

in any given year the Bureau would conduct 

examinations of a substantial number of the more 

than 5,000 small firms in NAICS code 522390, the 

more than 1,800 small firms in NAICS code 522320, 

or the small firm service providers that happen to 

be in any other NAICS code. Moreover, the impact 

of supervisory activities, including examinations, at 

such small firm service providers can be expected 

to be less, given the Bureau’s exercise of its 

discretion in supervision, than at the larger 

participants themselves. 

a substantial number of small entities 

and that an IRFA was therefore not 

required. The Bureau did not receive 

any comments objecting to the Bureau’s 

certification. The Final Rule adopts the 

Proposed Rule, with some modifications 

that do not lead to a different 

conclusion. Therefore, a final regulatory 

flexibility analysis is not required. 

The Final Rule defines a class of 

international money transfer providers 

as larger participants of the 

international money transfer market and 

thereby authorizes the Bureau to 

undertake supervisory activities with 

respect to those nonbanks. The rule 

adopts a threshold for larger-participant 

status of one million aggregate annual 

international money transfers. Under 

what the Bureau believes was the most 

relevant SBA size standard at the time 

the Proposed Rule was issued, an 

international money transfer provider 

qualified as a small business only if its 

annual receipts were below $19 

million.115 Of the approximately 25 

potential larger participants identified 

by the Bureau among the California, 

New York, and Ohio licensees, the 

Bureau estimated there were 

approximately 10 providers with annual 

receipts under $19 million.116 Since the 

Proposed Rule was issued, the SBA 

increased this size standard from $19 

million to $20.5 million, but this 

adjustment would not change the 

Bureau’s estimate of the number of 

potential larger participants that qualify 

as small businesses.117

According to the 2007 Economic 

Census, there are more than 5,000 small 

firms in the North American Industry 

Classification System (NAICS) industry 

the Bureau believes is applicable to 

most international money transfer 

providers.118 Therefore, according to the 

Bureau’s analysis, this rule impacts less 

than one percent of the small businesses 

in the industry.119 For these reasons, the 

Final Rule will not have a significant 

impact on a substantial number of small 

entities.120

Additionally, and in any event, the 

Bureau believes that the Final Rule will 

not result in a ‘‘significant impact’’ on 

any small entities that could be affected. 

The rule does not itself impose any 

business conduct obligations. As 

previously noted, when and how often 

the Bureau would in fact engage in 

supervisory activity, such as an 

examination, with respect to a larger 

participant (and, if so, the extent of such 

activity) will depend on a number of 

considerations, including the Bureau’s 

allocation of resources and the 

application of the statutory factors set 

forth in 12 U.S.C. 5514(b)(2). Given the 

Bureau’s finite supervisory resources, 

and the range of industries over which 

it has supervisory responsibility for 

consumer financial protection, when 

and how often a given larger participant 

will be supervised is uncertain. 

Moreover, when supervisory activity 

occurred, the costs that result from such 

activity are expected to be minimal in 

relation to the overall activities of a 

larger participant.121

Finally, 12 U.S.C. 5514(e) authorizes 

the Bureau to supervise service 

providers to nonbank covered persons 

encompassed by 12 U.S.C. 5514(a)(1), 

which includes larger participants. 

Because the Final Rule does not address 

service providers, effects on service 

providers need not be discussed for 

purposes of this RFA analysis. Even 

were such effects relevant, the Bureau 

believes that it would be very unlikely 

that any supervisory activities with 

respect to the service providers to the 

approximately 25 larger participants of 

the nonbank market for international 

money transfers would result in a 

significant economic impact on a 

substantial number of small entities.122

Accordingly, the Bureau adheres to 

the certification, in the Proposed Rule, 

that the Final Rule will not have a 

significant economic impact on a 

substantial number of small entities. 

VIII. Paperwork Reduction Act 

The Bureau determined that the 

Proposed Rule would not impose any 

new recordkeeping, reporting, or 

disclosure requirements on covered 

entities or members of the public that 

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56650 Federal Register / Vol. 79, No. 184 / Tuesday, September 23, 2014 / Rules and Regulations 

would constitute collections of 

information requiring approval under 

the Paperwork Reduction Act, 44 U.S.C. 

3501, et seq. The Bureau did not receive 

any comments regarding this 

conclusion, to which the Bureau 

adheres. The Bureau concludes that the 

Final Rule, which adopts the Proposed 

Rule in relevant respects, also imposes 

no new information collection 

requirements subject to the Paperwork 

Reduction Act. 

List of Subjects in 12 CFR Part 1090 

Consumer protection, Credit. 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Bureau amends 12 CFR 

part 1090, subpart B, as follows: 

PART 1090—DEFINING LARGER 

PARTICIPANTS OF CERTAIN 

CONSUMER FINANCIAL PRODUCT 

AND SERVICE MARKETS 

■ 1. The authority citation for part 1090 

continues to read as follows: 

Authority: 12 U.S.C. 5514(a)(1)(B); 12 

U.S.C. 5514(a)(2); 12 U.S.C. 5514(b)(7)(A); 

and 12 U.S.C. 5512(b)(1). 

■ 2. Add § 1090.107 to subpart B to read 

as follows: 

§ 1090.107 International Money Transfer 

Market. 

(a) Market-related definitions. As used 

in this subpart: 

Aggregate annual international 

money transfers means the sum of the 

annual international money transfers of 

a nonbank covered person and the 

annual international money transfers of 

each of the nonbank covered person’s 

affiliated companies. 

(i) Annual international money 

transfers. Annual international money 

transfers of a nonbank covered person 

means the international money transfers 

provided by the nonbank covered 

person during the preceding calendar 

year. 

(ii) Agents. (A) Annual international 

money transfers of a nonbank covered 

person include international money 

transfers in which another person acts 

as an agent on behalf of the nonbank 

covered person. 

(B) Annual international money 

transfers of a nonbank covered person 

do not include international money 

transfers in which another person 

provided the international money 

transfers and the nonbank covered 

person performed activities as an agent 

on behalf of that other person. 

(C) For purposes of this paragraph (ii), 

agent means an agent or authorized 

delegate, as defined under State or other 

applicable law, or affiliated company of 

a person that provides international 

money transfers when such agent, 

authorized delegate, or affiliated 

company acts for that person. 

(iii) Aggregating the annual 

international money transfers of 

affiliated companies. (A) The annual 

international money transfers of each 

affiliated company of a nonbank 

covered person are calculated separately 

in accordance with paragraphs (i) and 

(ii) of this definition, treating the 

affiliated company as if it were an 

independent nonbank covered person 

for purposes of the calculation. 

(B) The annual international money 

transfers of a nonbank covered person 

must be aggregated with the annual 

international money transfers of any 

person that was an affiliated company of 

the nonbank covered person at any time 

during the preceding calendar year. The 

annual international money transfers of 

the nonbank covered person and its 

affiliated companies are aggregated for 

the entire preceding calendar year, even 

if the affiliation did not exist for the 

entire calendar year. 

Designated recipient means any 

person specified by the sender as the 

authorized recipient of an international 

money transfer to be received at a 

location in a foreign country. 

International money transfer means 

the electronic transfer of funds 

requested by a sender to a designated 

recipient that is sent by an international 

money transfer provider. The term 

applies regardless of whether the sender 

holds an account with the international 

money transfer provider, and regardless 

of whether the transaction is also an 

electronic fund transfer, as defined in 

§ 1005.3(b) of this chapter. The term 

does not include any transfer that is 

excluded from the definition of 

‘‘electronic fund transfer’’ under 

§ 1005.3(c)(4) of this chapter. 

International money transfer provider 

means any nonbank covered person that 

provides international money transfers 

for a consumer, regardless of whether 

the consumer holds an account with 

such person. 

Sender means a consumer in a State 

who primarily for personal, family, or 

household purposes requests an 

international money transfer provider to 

send an international money transfer to 

a designated recipient. 

State means any State, territory, or 

possession of the United States; the 

District of Columbia; the 

Commonwealth of Puerto Rico; or any 

political subdivision thereof. 

(b) Test to define larger participants. 

A nonbank covered person is a larger 

participant of the international money 

transfer market if the nonbank covered 

person has at least one million aggregate 

annual international money transfers. 

Dated: September 9, 2014. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2014–22310 Filed 9–22–14; 8:45 am] 

BILLING CODE 4810–AM–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2014–0294; Airspace 

Docket No. 14–ACE–2] 

Amendment of Class D Airspace; 

Wichita, McConnell AFB, KS 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This action amends Class D 

airspace at Wichita, McConnell AFB, 

KS. The closure of nearby Derby, 

Hamilton Field has necessitated the 

need to amend Class D airspace at 

McConnell AFB. This action enhances 

the safety and management of aircraft 

operations at the airport. 

DATES: Effective date: 0901 UTC, 

November 13, 2014. The Director of the 

Federal Register approves this 

incorporation by reference action under 

1 CFR part 51, subject to the annual 

revision of FAA Order 7400.9 and 

publication of conforming amendments. 

ADDRESSES: FAA Order 7400.9Y, 

Airspace Designations and Reporting 

Points and subsequent amendments can 

be viewed online at http://www.faa.gov/ 

air_traffic/publications/. The Order is 

also available for inspection at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to http://www.archives.gov/

federal_register/code_of_federalregulations/ibr_locations.html. 

FAA Order 7400.9, Airspace 

Designations and Reporting Points, is 

published yearly and effective on 

September 15. For further information, 

you can contact the Airspace Policy and 

Regulations Group, Federal Aviation 

Administration, 800 Independence 

Avenue SW., Washington, DC 20591; 

telephone: 202–267–8783. 

FOR FURTHER INFORMATION CONTACT: Raul 

Garza, Jr., Central Service Center, 

Operations Support Group, Federal 

Aviation Administration, Southwest 

Region, 2601 Meacham Blvd., Fort 

mstockstill on DSK4VPTVN1PROD with RULES