Vol. 77 Monday, 

No. 250 December 31, 2012 

Part II 

Bureau of Consumer Financial Protection 

12 CFR Part 1005 

Electronic Fund Transfers (Regulation E); Proposed Rule 


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77188 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

1Public Law 111–203, 124 Stat. 1376, section 

1073 (2010). 

2 15 U.S.C. 1693 et seq. EFTA section 919 is 

codified in 15 U.S.C. 1693o–1. 

3A technical correction to the February Final 

Rule was published on July 10, 2012. 77 FR 40459. 

For simplicity, that technical correction is 

incorporated into the term ‘‘February Final Rule.’’ 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1005 

[Docket No. CFPB–2012–0050] 

RIN 3170–AA33 

Electronic Fund Transfers (Regulation 

E) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Proposed rule; request for 

public comment. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

proposing to amend subpart B of 

Regulation E, which implements the 

Electronic Fund Transfer Act, and the 

official interpretation to the regulation. 

The proposal would refine a final rule 

issued by the Bureau earlier in 2012 that 

implements section 1073 of the DoddFrank Wall Street Reform and Consumer 

Protection Act regarding remittance 

transfers. The proposal addresses three 

narrow issues. First, the proposal would 

provide additional flexibility regarding 

the disclosure of foreign taxes, as well 

as fees imposed by a designated 

recipient’s institution for receiving a 

remittance transfer in an account. 

Second, the proposal would limit a 

remittance transfer provider’s obligation 

to disclose foreign taxes to those 

imposed by a country’s central 

government. Third, the proposal would 

revise the error resolution provisions 

that apply when a remittance transfer is 

not delivered to a designated recipient 

because the sender provided incorrect 

or insufficient information, and, in 

particular, when a sender provides an 

incorrect account number and that 

incorrect account number results in the 

funds being deposited in the wrong 

account. The Bureau is also proposing 

to temporarily delay and extend the 

effective date of the rule. 

DATES: Comments on the proposed 

temporary delay of the February 7, 2013 

effective date of the rules published 

February 7, 2012 (77 FR 6194) and 

August 20, 2012 (77 FR 50244) must be 

received by January 15, 2013. Comments 

on the remainder of the proposal must 

be received by January 30, 2013. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2012– 

0050 or RIN 3170–AA33, by any of the 

following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail/Hand Delivery/Courier in Lieu 

of Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1700 G 

Street NW., Washington, DC 20552. 

Instructions: All submissions must 

include the agency name and docket 

number or Regulatory Information 

Number (RIN) for this rulemaking. In 

general, all comments received will be 

posted without change to http:// 

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1700 G Street 

NW., Washington, DC 20552, on official 

business days between the hours of 10 

a.m. and 5 p.m. Eastern Time. You can 

make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FOR FURTHER INFORMATION CONTACT: Eric 

Goldberg or Lauren Weldon, Counsel, or 

Dana Miller, Senior Counsel, Division of 

Research, Markets, and Regulations, 

Bureau of Consumer Financial 

Protection, 1700 G Street NW., 

Washington, DC 20552, at (202) 435– 

7700. 

SUPPLEMENTARY INFORMATION: 

I. Overview 

Section 1073 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (Dodd-Frank Act) 1 amended the 

Electronic Fund Transfer Act (EFTA) 2

to create a new comprehensive 

consumer protection regime for 

remittance transfers sent by consumers 

in the United States to individuals and 

businesses in foreign countries. For 

covered transactions sent by remittance 

transfer providers, section 1073 creates 

a new EFTA section 919, and generally 

requires: (i) The provision of disclosures 

prior to and at the time of payment by 

the sender for the transfer; (ii) 

cancellation and refund rights; (iii) the 

investigation and remedy of errors by 

providers; and (iv) liability standards for 

providers for the acts of their agents. 

On February 7, 2012, the Bureau of 

Consumer Financial Protection (Bureau) 

published a final rule to implement 

section 1073 of the Dodd-Frank Act. 77 

FR 6194 (February Final Rule).3 On 

August 20, 2012, the Bureau published 

a supplemental rule adopting a safe 

harbor for determining which 

companies are not remittance transfer 

providers subject to the February Final 

Rule because they do not provide 

remittance transfers in the normal 

course of business, and modifying 

several aspects of the February Final 

Rule regarding remittance transfers that 

are scheduled before the date of transfer 

(August Final Rule, and collectively 

with the February Final Rule, the Final 

Rule). 77 FR 50244. The Final Rule has 

an effective date of February 7, 2013. 

The Final Rule governs certain 

electronic transfers of funds sent by 

consumers in the United States to 

designated recipients in other countries 

and, for covered transactions, imposes a 

number of requirements on remittance 

transfer providers. In particular, the 

Final Rule implements EFTA sections 

919(a)(2)(A) and (B), which require a 

provider to disclose, among other 

things, the amount to be received by the 

designated recipient in the currency to 

be received. The Final Rule requires a 

provider to provide a written prepayment disclosure to a sender 

containing detailed information about 

the transfer requested by the sender, 

specifically including the exchange rate, 

applicable fees and taxes, and the 

amount to be received by the designated 

recipient. In addition to the prepayment disclosure, the provider also 

must provide a written receipt when 

payment is made for the transfer. The 

receipt must include the information 

provided on the pre-payment 

disclosure, as well as additional 

information such as the date of 

availability of the funds, the designated 

recipient’s contact information, and 

information regarding the sender’s error 

resolution and cancellation rights. 

Though the final rule permits providers 

to provide estimates in three narrow 

circumstances, the Final Rule generally 

requires that disclosures state the actual 

exchange rate that will apply to a 

remittance transfer and the actual 

amount that will be received by the 

designated recipient of a remittance 

transfer. 

As noted above, the statute requires 

the disclosure of the amount to be 

received by the designated recipient. 

Because fees and taxes imposed on the 

remittance transfer by persons other 

than the provider can affect the amount 

received by the designated recipient, the 

Final Rule requires that remittance 

transfer providers take such fees and 

taxes into account when calculating the 

disclosure of the amount to be received 

under § 1005.31(b)(1)(vii), and that such 

fees and taxes be disclosed under 


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§ 1005.31(b)(1)(vi). Comment 31(b)(1)–ii 

explains that a provider must disclose 

any fees and taxes imposed on the 

remittance transfer by a person other 

than the provider that specifically relate 

to the remittance transfer, including fees 

charged by a recipient institution or 

agent. Foreign taxes that must be 

disclosed include regional, provincial, 

state, or other local taxes, as well as 

taxes imposed by a country’s central 

government. 

In the February Final Rule, the Bureau 

recognized the challenges for remittance 

transfer providers in determining fees 

and taxes imposed by third parties, but 

believed that the statute specifically 

required providers to disclose the 

amount to be received and authorized 

estimates only in narrow circumstances. 

The Bureau also noted the significant 

consumer benefits afforded by these 

disclosures. The Bureau further stated 

its belief that it was necessary and 

proper to exercise its authority under 

EFTA sections 904(a) and (c) to adopt 

§ 1005.31(b)(1)(vi) to require the 

itemized disclosure of these fees and 

taxes in order to effectuate the purposes 

of the EFTA. 

The Final Rule also implements EFTA 

sections 919(d) and (f), which direct the 

Bureau to promulgate error resolution 

standards and rules regarding 

appropriate cancellation and refund 

policies, as well as standards of liability 

for remittance transfer providers. The 

Final Rule thus defines in § 1005.33 

what constitutes an error with respect to 

a remittance transfer, as well as the 

remedies when an error occurs. Of 

relevance to this proposal, the Final 

Rule provides that, subject to specified 

exceptions, an error includes the failure 

to make available to a designated 

recipient the amount of currency 

promised in the disclosure provided to 

the sender, as well as the failure to make 

funds available to a designated recipient 

by the date of availability stated in the 

disclosure. §§ 1005.33(a)(1)(iii) and 

(a)(1)(iv). Where the error is the result 

of the sender providing insufficient or 

incorrect information, § 1005.33(c)(2)(ii) 

specifies the two remedies available: 

The provider must either refund the 

funds provided by the sender in 

connection with the remittance transfer 

(or the amount appropriate to correct 

the error) or resend the transfer at no 

cost to the sender, except that the 

provider may collect third party fees 

imposed for resending the transfer. If 

the transfer is resent, comment 33(c)–2 

explains that a request to resend is a 

request for a remittance transfer, and 

thus the provider must provide the 

disclosures required by § 1005.31. 

Under § 1005.33(c)(2), even if the 

provider cannot retrieve the funds once 

they are sent, the provider still must 

provide the stated remedies if an error 

occurred. 

Consistent with the statute, the Final 

Rule applies to all remittance transfer 

providers, whether transfers are sent 

through closed network or open 

network systems, or some hybrid of the 

two. Generally, in closed networks, a 

principal provider offers a service 

through a network of agents or other 

partners that help collect funds in the 

United States and disburse the funds 

abroad. Through the provider’s own 

contractual arrangements with those 

agents or other partners, or through the 

contractual relationships owned by the 

provider’s business partner, the 

principal provider can exercise some 

control over the transfer from end-toend. In general, closed networks can be 

used to send transfers that can be 

received in a variety of forms, but they 

are most frequently used to send 

transfers that are not received in 

accounts. In contrast, in an open 

network, no single provider has control 

over or relationships with all of the 

participants that may collect funds in 

the United States or disburse funds 

abroad. Under current practice, in open 

networks, there is generally no global 

practice of communications by 

intermediary and recipient institutions 

with originating entities regarding fees 

and exchange rates applied to transfers. 

Unlike closed networks, open networks 

are typically used to send funds to 

accounts. Though they are primarily 

used by depository institutions and 

credit unions, open networks also may 

be used by non-depository institutions. 

In the February Final Rule, the Bureau 

stated that it would continue to monitor 

implementation of the new statutory 

and regulatory requirements. The 

Bureau has subsequently engaged in 

dialogue with both industry and 

consumer groups regarding 

implementation efforts and compliance 

concerns. Most frequently, and as 

discussed in more detail below in the 

Section-by-Section Analysis, industry 

has expressed concern about the costs 

and challenges to remittance transfer 

providers of: (1) The requirement to 

disclose certain fees imposed by 

recipient institutions on remittance 

transfers; (2) the requirement to disclose 

foreign taxes, including taxes charged 

by foreign regional, provincial, state, or 

other local governments; and (3) the 

inclusion as an error a failure to deliver 

a transfer where the error occurs 

because the sender provided an 

incorrect account number to the 

provider and funds are deposited into 

the wrong account. 

With respect to both recipient 

institution fees and foreign taxes, 

industry has stated that, to determine 

the appropriate disclosure, remittance 

transfer providers may have to ask 

numerous questions of senders that 

senders may not understand, and to 

which both senders and providers may 

not reasonably be expected to know the 

answer. For example, industry has 

noted that certain recipient institution 

fees can vary based on the recipient’s 

status with the institution (i.e., a 

preferred customer status), the quantity 

of transfers received by the recipient, or 

other variables that neither the sender 

nor the provider are likely to know. 

Thus, industry has asserted that certain 

recipient institution fees and similar 

foreign taxes are impracticable to 

disclose under the Final Rule. 

Separately, industry has argued that it is 

exponentially more burdensome to 

research and disclose regional, 

provincial, state, and other local taxes 

(‘‘subnational taxes’’) than to research 

and disclose only those taxes imposed 

by a country’s central government, and 

that there is little commensurate benefit 

to consumers gained by disclosure of 

subnational taxes. 

Further, since the issuance of the 

February Final Rule, industry has 

expressed concerns about the remedies 

that apply with respect to errors that 

occur because the sender of a remittance 

transfer provided incorrect or 

insufficient information to the 

remittance transfer provider. Providers 

have stated that, while generally rare, in 

some cases when a sender provides an 

incorrect account number, the 

remittance transfer may be deposited 

into the wrong account and, despite 

reasonable efforts by the provider, 

cannot be recovered, thus requiring 

providers to bear the cost of the lost 

principal transfer amount. In addition, 

providers have expressed concern about 

the risks of fraudulent activity by 

senders attempting to take advantage of 

this part of the rule. With regard to cases 

in which there are errors, providers 

have also asked technical questions 

about how disclosures should be 

provided in certain circumstances 

where a sender designates a resend 

remedy when reporting an error, or 

never designates a remedy at all, 

particularly in situations where the 

provider is unable to make direct 

contact with the sender upon 

completing its investigation. 

Concerns about recipient institution 

fees and remedies for account number 

errors stem in large part from the nature 

of the open networks used to transfer 

funds, as described above. However, 

while depository institutions and credit 


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77190 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

unions that are remittance transfer 

providers are more likely to be affected 

by these concerns, other providers may 

also be impacted to the extent they offer 

the ability to transfer funds into a 

recipient’s account abroad. For example, 

whereas providers that use closed 

networks to send remittance transfers 

typically are able to determine the fees 

imposed by paying agents that distribute 

funds in cash, originating providers 

(whether depository or non-depository) 

using open networks or other systems 

that deposit transfers into accounts 

generally cannot, under current 

practice, determine fees for receiving 

transfers imposed by institutions that 

provide accounts and assess fees 

pursuant to an agreement between the 

recipient institution and the recipient. 

In addition, the type of network used by 

the provider does not drive concerns 

about taxes, although the magnitude of 

the concern may be greater for providers 

that allow senders to send remittances 

to a broad range of geographic areas, 

which traditionally have included open 

network providers. 

Upon further review and analysis, the 

Bureau believes it is appropriate to 

propose narrow adjustments to the Final 

Rule regarding these three issues. Due in 

part to the concerns expressed above, 

some remittance transfer providers and 

industry associations have indicated 

that some providers are considering 

exiting the market or reducing their 

offerings, such as by not sending 

transfers to corridors where tax or fee 

information is particularly difficult to 

obtain, or by limiting the size or type of 

transfers sent in order to reduce any risk 

associated with mis-deposited transfers. 

The Bureau is concerned that this 

would be detrimental to consumers, 

both in decreasing market competition 

and consumers’ access to remittance 

transfer products. The Bureau believes 

that the proposed revisions may help to 

reduce or mitigate these risks. In each 

case, the Bureau believes that the 

proposed adjustments to the Final Rule 

would facilitate compliance, while 

maintaining the Final Rule’s valuable 

new consumer protections and ensuring 

that these protections can be effectively 

delivered to consumers. 

II. Summary of the Proposed Rule 

The proposal would refine three 

narrow aspects of the Final Rule. First, 

the proposal would provide additional 

flexibility and guidance on how foreign 

taxes and recipient institution fees may 

be disclosed. If a remittance transfer 

provider does not have specific 

knowledge regarding variables that 

affect the amount of foreign taxes 

imposed on the transfer, the proposal 

would continue to permit a provider to 

rely on a sender’s representations 

regarding these variables. However, the 

proposal would separately permit 

providers to estimate by disclosing the 

highest possible foreign tax that could 

be imposed with respect to any 

unknown variable. Similarly, if a 

provider does not have specific 

knowledge regarding variables that 

affect the amount of fees imposed by a 

recipient’s institution for receiving a 

remittance transfer in an account, the 

proposal would permit a provider to 

rely on a sender’s representations 

regarding these variables. Separately, 

the proposal would also permit the 

provider to estimate by disclosing the 

highest possible recipient institution 

fees that could be imposed on the 

remittance transfer with respect to any 

unknown variable, as determined based 

on either fee schedules made available 

by the recipient institution or 

information ascertained from prior 

transfers to the same recipient 

institution. If the provider cannot obtain 

such fee schedules or information from 

prior transfers, the proposal would 

allow a provider to rely on other 

reasonable sources of information. 

Second, the Bureau proposes to 

exercise its exception authority under 

section 904(c) of the EFTA to eliminate 

the requirement to disclose foreign taxes 

at the regional, state, provincial or local 

level. Thus, under the proposal, a 

remittance transfer provider’s disclosure 

obligation would be limited to foreign 

taxes imposed on the remittance transfer 

by a country’s central government. 

Because the proposed changes regarding 

recipient institution fees and taxes, 

taken together, could mean that a 

provider could be making disclosures 

that are not exact, the proposal also 

solicits comment on whether the 

existing requirement in the Final Rule to 

state that a disclosure is ‘‘Estimated’’ 

when estimates are provided under 

§ 1005.32 should be extended to 

scenarios where disclosures are not 

exact, to the extent permitted by the 

proposed revisions. 

Third, the proposal also would revise 

the error resolution provisions that 

apply when a sender provides incorrect 

or insufficient information and, in 

particular, when a remittance transfer is 

not delivered to a designated recipient 

because the sender provided an 

incorrect account number to the 

remittance transfer provider and the 

incorrect account number results in the 

funds being deposited in the wrong 

account. Under the proposal, where the 

provider can demonstrate that the 

sender provided the incorrect account 

number and that the sender had notice 

that the sender could lose the transfer 

amount, the provider would be required 

to attempt to recover the funds but 

would not be liable for the funds if 

those efforts were unsuccessful. The 

Bureau also proposes to revise the 

existing remedy procedures in 

situations where a sender provides 

incorrect or insufficient information 

other than an incorrect account number 

to allow providers additional flexibility 

when resending funds at a new 

exchange rate. Under the proposed rule, 

providers would be able to provide oral, 

streamlined disclosures and need not 

treat the resend as an entirely new 

remittance transfer. The Bureau also 

proposes to make conforming revisions 

in light of the proposed revisions 

regarding recipient institution fees and 

foreign taxes. 

Finally, the Bureau proposes to 

temporarily delay the effective date of 

the Final Rule. The Bureau further 

proposes to extend the Final Rule’s 

effective date until 90 days after this 

proposal is finalized. 

The Bureau solicits comment on all 

aspects of this proposal. In particular, 

the Bureau seeks for commenters to 

provide, in conjunction with any 

opinions expressed, specific detail and 

any available data regarding current and 

planned practices, as well as relevant 

knowledge and specific facts about any 

benefits, costs, or other impacts on both 

industry and consumers of either the 

Final Rule, this proposal, or alternatives 

suggested by the commenter. The 

Bureau emphasizes that the purpose of 

this rulemaking is to clarify and 

facilitate compliance with the Final 

Rule on these narrow issues, not to 

reconsider the general need for—or the 

extent of—the protections that the 

general rule affords consumers. The 

Bureau also believes the market would 

benefit from quicker resolution of these 

issues. Thus, commenters are 

encouraged to frame their submissions 

accordingly. 

The proposed adjustments are 

intended to facilitate compliance in part 

due to concerns about the practicability 

of the Final Rule given market models 

and available information today. After 

any changes are finalized, and 

consistent with the Bureau’s approach 

to the Final Rule, the Bureau will 

continue to monitor implementation 

efforts and market developments, 

including whether better information 

about recipient institution fees or 

foreign taxes becomes more available 

over time, whether communication 

mechanisms in open network systems 

improve, and whether there are 

developments in security and 

verification procedures and practices. 


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Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77191 

4Pursuant to the statute, that temporary 

exception sunsets on July 21, 2015, but the Bureau 

may extend that date for no more than five years 

if the Bureau determines that termination of the 

exception would negatively affect the ability of 

depository institutions and credit unions to send 

remittances to locations in foreign countries. 

The Bureau expects to conduct a more 

comprehensive review of these issues 

and the status of the market over the 

next two years as it also evaluates 

whether to extend a temporary 

exception that permits insured 

institutions to estimate certain 

disclosures, as permitted by the DoddFrank Act.4

III. Legal Authority 

Section 1073 of the Dodd-Frank Act 

created a new section 919 of the EFTA 

and requires remittance transfer 

providers to provide disclosures to 

senders of remittance transfers, 

pursuant to rules prescribed by the 

Bureau. In particular, providers must 

give a sender a written pre-payment 

disclosure containing specified 

information applicable to the sender’s 

remittance transfer, including the 

amount to be received by the designated 

recipient. The provider must also 

provide a written receipt that includes 

the information provided on the prepayment disclosure, as well as 

additional specified information. EFTA 

section 919(a). 

In addition, EFTA section 919(d) 

provides for specific error resolution 

procedures and directs the Bureau to 

promulgate rules regarding appropriate 

cancellation and refund policies. Except 

as described below, the proposed rule is 

proposed under the authority provided 

to the Bureau in EFTA section 919, and 

as more specifically described in this 

SUPPLEMENTARY INFORMATION. 

In addition to the Dodd-Frank Act’s 

statutory mandates, EFTA section 904(a) 

authorizes the Bureau to prescribe 

regulations necessary to carry out the 

purposes of the title. The express 

purposes of the EFTA, as amended by 

the Dodd-Frank Act, are to establish 

‘‘the rights, liabilities, and 

responsibilities of participants in 

electronic fund and remittance transfer 

systems’’ and to provide ‘‘individual 

consumer rights.’’ EFTA section 902(b). 

EFTA section 904(c) further provides 

that regulations prescribed by the 

Bureau may contain any classifications, 

differentiations, or other provisions, and 

may provide for such adjustments or 

exceptions for any class of electronic 

fund transfers or remittance transfers 

that the Bureau deems necessary or 

proper to effectuate the purposes of the 

title, to prevent circumvention or 

evasion, or to facilitate compliance. As 

described in more detail below, 

§ 1005.31(b)(1)(vi), 1005.32(b)(3) and 

(b)(4) are proposed pursuant to the 

Bureau’s authority in EFTA section 

904(c). 

IV. Section-by-Section Analysis 

Section 1005.31 Disclosures 

EFTA sections 919(a)(2)(A) and (B) 

require a remittance transfer provider to 

disclose, among other things, the 

amount to be received by the designated 

recipient in the currency to be received. 

Because fees and taxes imposed on the 

remittance transfer by foreign 

institutions and governments can affect 

the amount ultimately received by the 

designated recipient, the Final Rule 

requires that providers take fees and 

taxes imposed by persons other than the 

provider into account when calculating 

the disclosure of the amount to be 

received under § 1005.31(b)(1)(vii), and 

that such fees and taxes be separately 

disclosed under § 1005.31(b)(1)(vi). 

Since the rule was finalized, industry 

has continued to express concern that, 

where a designated recipient’s 

institution charges the recipient fees for 

receiving a transfer in an account, the 

remittance transfer provider would not 

reasonably know whether the recipient 

has agreed to pay such fees or how 

much the recipient has agreed to pay. 

Industry has also requested guidance on 

whether and how to disclose recipient 

institution fees that can vary based on 

the recipient’s status with the 

institution, quantity of transfers 

received, or other variables that are not 

easily knowable by the sender or the 

provider. 

Separately, industry has expressed 

concern about the disclosure of foreign 

taxes, in two respects. First, industry 

has argued that it is significantly more 

burdensome to research and disclose 

subnational taxes than foreign taxes 

imposed by a country’s central 

government, with little commensurate 

benefit to consumers. Second, industry 

has suggested that the existing guidance 

on the disclosure of foreign taxes is 

insufficient where variables that 

influence the applicability of foreign 

taxes are not easily knowable by the 

sender or the provider. 

With respect to both recipient 

institution fees and foreign taxes, 

industry has stated that, to determine 

the appropriate disclosure, remittance 

transfer providers may have to ask 

numerous questions of senders that 

senders may not understand; to which 

senders may not know the answer; and 

(with respect to fees) which may be 

unique to each recipient institution. 

The Bureau has considered these 

concerns. Upon further review and 

analysis, the Bureau believes it is 

appropriate to provide additional 

flexibility and guidance on how fees 

and taxes imposed by a person other 

than the remittance transfer provider 

may be disclosed. The Bureau also 

believes it is appropriate to exercise its 

exception authority under section 904(c) 

of the EFTA to eliminate the 

requirement to disclose regional, 

provincial, state, and other local foreign 

taxes. Accordingly, the proposed rule 

would revise § 1005.31(b)(1)(vi) and the 

related commentary, and would add two 

new provisions to § 1005.32 (as 

discussed in more detail below). Given 

this additional flexibility, the proposed 

rule also would extend § 1005.31(d) to 

require providers to disclose to senders 

that amounts are estimated in these 

circumstances, and would make other 

conforming revisions to the Final Rule. 

In each case, the Bureau believes that 

the proposed adjustments to the Final 

Rule would facilitate compliance, while 

maintaining the rule’s valuable, new 

consumer protections and ensuring that 

they can be effectively delivered to 

consumers. Under the proposal, senders 

would continue to receive disclosures 

with important information about fees 

and taxes that may be imposed by the 

foreign country’s central government. 

Although not quite as precise, this 

information is still useful to help 

consumers determine the minimum 

necessary to pay bills and to provide the 

intended funds to a recipient. 

As noted above, the proposed 

adjustments to the required fee and tax 

disclosures are intended to facilitate 

compliance in part due to concerns 

about the practicability of the Final 

Rule. The Bureau solicits comment on 

whether additional guidance is 

necessary to address similar practical or 

operational questions as those described 

here. After any changes are finalized, 

and consistent with the Bureau’s prior 

approach, the Bureau will continue to 

monitor implementation efforts and 

market developments, including 

whether better information about 

recipient institution fees or foreign taxes 

becomes more readily available over 

time. 

31(b) Disclosure requirements 

31(b)(1) Pre-Payment Disclosures 

Comment 31(b)(1)–1 Fees and Taxes 

Comment 31(b)(1)–1 provides 

guidance on the disclosure of all fees 

and taxes, both foreign and domestic. 

Comment 31(b)(1)–1.ii focuses more 

specifically on how to disclose fees and 

taxes imposed on the remittance transfer 


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77192 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

by a person other than the remittance 

transfer provider. Specifically, the 

comment explains that fees and taxes 

imposed on the remittance transfer 

include only those fees and taxes that 

are charged to the sender or designated 

recipient and that are specifically 

related to the remittance transfer. Under 

this framework, a provider must 

disclose fees imposed on a remittance 

transfer by the receiving institution or 

agent at pick-up for receiving the 

remittance transfer, fees imposed on a 

remittance transfer by intermediary 

institutions in connection with an 

international wire transfer, and taxes 

imposed on a remittance transfer by a 

foreign country’s central government. 

However, a provider need not disclose, 

for example, overdraft fees that are 

imposed by a recipient’s bank or funds 

that are garnished from the proceeds of 

a remittance transfer to satisfy an 

unrelated debt, because these charges 

are not specifically related to the 

remittance transfer. 

Since the issuance of the Final Rule, 

industry has requested guidance on 

whether and how to disclose various 

recipient institution fees, including 

those that can vary based on the 

recipient’s status with the institution, 

the quantity of transfers received, or 

other variables that are unlikely to be 

known by the sender or the provider. As 

stated in existing comment 31(b)(1)–1.ii, 

fees that are specifically related to the 

remittance transfer must be disclosed, 

including fees that are imposed by a 

recipient’s institution for receiving a 

wire transfer. For example, flat pertransfer incoming wire transfer fees 

must be disclosed, including flat fees 

that are tied to a particular transfer but 

charged at a later date (such as a 

‘‘November 4 wire’’ fee that is not 

assessed until the end of the November 

billing cycle), as these fees are clearly 

linked to a particular remittance 

transfer. 

While the proposal would generally 

provide further flexibility on how these 

fees may be determined, as discussed 

below with respect to proposed 

comment 31(b)(1)(vi)–4, the Bureau 

believes it would facilitate compliance 

to provide additional clarification in 

comment 31(b)(1)–1.ii on other types of 

recipient institution fees that are or are 

not specifically related to a remittance 

transfer. As the proposed guidance 

would significantly lengthen the 

existing comment, the proposal divides 

comment 31(b)(1)–1.ii into new 

subsections 31(b)(1)–1.ii through –1.v. 

The Bureau also proposes minor 

wording adjustments to ensure 

consistency with other comments in the 

Final Rule. 

Proposed comment 31(b)(1)–1.iii first 

revises the reference to taxes imposed 

by a foreign government to taxes 

imposed by a foreign country’s central 

government, to conform to the proposal 

to eliminate the requirement to disclose 

subnational taxes, discussed below. The 

proposed comment also builds on the 

guidance described above, and clarifies 

that account fees are not specifically 

related to a remittance transfer if such 

fees are merely assessed based on 

general account activity and not for 

receiving transfers. Thus, where an 

incoming remittance transfer results in 

a balance increase that triggers a 

monthly maintenance fee, that fee is not 

specifically related to a remittance 

transfer. 

Proposed comment 31(b)(1)–1.iv then 

explains that a fee that specifically 

relates to a remittance transfer may be 

structured on a flat per-transaction 

basis, or may be conditioned on other 

factors (such as account status or the 

quantity of remittance transfers 

received) in addition to the remittance 

transfer itself. For example, where an 

institution charges an incoming wire fee 

on most customers’ accounts, but not on 

preferred accounts, the Bureau believes 

such a fee is nonetheless specifically 

related to a remittance transfer. 

Similarly, if the institution assesses a 

fee for every transfer beyond the fifth 

received each month, the Bureau 

believes such a fee would be specifically 

related to the remittance transfer 

regardless of how many remittance 

transfers preceded it that month. In both 

situations, while additional variables 

may determine whether a fee is imposed 

or waived in a particular case, the fee 

itself is assessed specifically for 

receiving a particular transfer. In either 

case, the fee would be subject to 

disclosure under § 1005.31(b)(1)(vi), but 

as discussed below, § 1005.32(b)(4) 

would offer providers some flexibility in 

how to disclose the fee. 

31(b)(1)(vi) Fees and Taxes Imposed by 

a Person Other Than the Provider 

Section 1005.31(b)(1)(vi) contains the 

Final Rule’s requirement to disclose any 

fees and taxes imposed on the 

remittance transfer by a person other 

than the remittance transfer provider, in 

the currency in which the funds will be 

received by the designated recipient. 

Specifically with respect to taxes, the 

Final Rule currently requires the 

disclosure of any applicable foreign 

taxes, including regional, provincial, 

state, or other local taxes as well as 

taxes imposed by a country’s central 

government. 

After further consideration, and for 

the reasons discussed below, the Bureau 

believes that it is appropriate to propose 

revising the Final Rule regarding foreign 

tax disclosures. The proposal would 

revise § 1005.31(b)(1)(vi) to state that 

only foreign taxes imposed by a 

country’s central government on the 

remittance transfer need be disclosed. 

New proposed comment 31(b)(1)(vi)–3 

would further clarify that regional, 

provincial, state, or other local foreign 

taxes need not be disclosed, although 

the provider could choose to disclose 

them. 

Since the adoption of the Final Rule, 

the Bureau has continued to monitor the 

availability to remittance transfer 

providers of pertinent foreign tax 

information. The Bureau believes that, 

while significant efforts are likely to 

permit industry members in general to 

access reliable and current information 

on the relevant foreign taxes imposed by 

a country’s central government, there 

does not appear to be a reasonable 

prospect that comparable resources will 

soon exist across the market to permit 

access to reliable and current 

information on foreign taxes imposed at 

the subnational level (including 

confirmation of the absence of such 

taxes in most jurisdictions). Industry 

has suggested that subnational taxes on 

remittance transfers are comparatively 

infrequent as compared with such taxes 

at the national level, and that when they 

do exist, the tax rates at the subnational 

level are typically lower. Moreover, the 

number of potential taxing jurisdictions 

is exponentially larger at the 

subnational level, and the Final Rule 

would imply compliance obligations to 

assess tax incidence and rates relating to 

all such subnational jurisdictions to 

which a provider sends remittance 

transfers. 

The Bureau is concerned that if 

disclosure of foreign subnational taxes 

is required, a number of remittance 

transfer providers could exit the market 

or significantly reduce their offerings 

because of the current lack of ongoing 

reliable and complete information 

sources. The Bureau also believes that 

the loss of these market participants 

would be detrimental to consumers, in 

decreasing market competition and the 

convenient availability of remittance 

transfer services. 

Accordingly, the Bureau believes the 

proposed elimination of the requirement 

to disclose subnational taxes is an 

exception that is necessary and proper 

under EFTA section 904(c) both to 

effectuate the purposes of the EFTA and 

to facilitate compliance. Under the 

proposed revision, remittance transfer 

providers would remain required to 

disclose only those foreign taxes 

imposed by a country’s central 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77193 

government. The Bureau believes the 

revision would mitigate the compliance 

cost imposed on providers, and 

potentially passed on to their customers, 

that may be associated with the required 

disclosure of subnational tax 

information. Particularly if there is a 

comparatively infrequent incidence and 

lesser amount of subnational taxes, the 

Bureau believes that elimination of the 

compliance costs associated with 

subnational tax disclosures and the 

reduced risk of market departures (or 

other limitations) owing to such 

compliance costs would effectuate the 

purposes of the statute and facilitate 

compliance. 

While the revised § 1005.31(b)(1)(vi) 

would provide that only the amount of 

foreign taxes imposed by a country’s 

central government on the remittance 

transfer needs to be disclosed, a 

remittance transfer provider would 

remain free to disclose an amount that 

includes subnational taxes of which it is 

aware. 

The Bureau seeks comment on 

whether limiting the required 

disclosures of foreign taxes to taxes 

imposed by a country’s central 

government strikes the appropriate 

balance between easing compliance 

burden and protecting consumers, or 

whether there are circumstances in 

which a provider should be required to 

disclose additional foreign tax 

information. In particular, the Bureau 

seeks comment on whether resources 

have developed or are developing (and 

if so, how quickly) for remittance 

transfer providers to obtain reliable 

foreign subnational tax rate information. 

The Bureau also seeks comment on the 

practical significance to consumers if 

remittance service providers are not 

required to disclose such information 

under the rule, including any 

information on the incidence and 

magnitude of foreign subnational taxes, 

particularly in countries that receive 

substantial flows of remittance transfers. 

Comment 31(b)(1)(vi)–2 

Comment 31(b)(1)(vi)–2 of the Final 

Rule provides guidance on how to 

determine taxes for purposes of the 

disclosure required by 

§ 1005.31(b)(1)(vi). In particular, the 

existing comment states that if a 

remittance transfer provider does not 

have specific knowledge regarding 

variables that affect the amount of taxes 

imposed by a person other than the 

provider for purposes of determining 

these taxes, the provider may rely on a 

sender’s representations regarding these 

variables. Further, the comment states 

that if a sender does not know the 

information relating to the variables that 

affect the amount of taxes imposed by 

a person other than the provider, the 

provider may disclose the highest 

possible tax that could be imposed for 

the remittance transfer with respect to 

any unknown variable. The Bureau 

adopted this comment in the Final Rule 

in response to industry comments that 

taxes can vary depending on a number 

of variables, such as the tax status of the 

sender or recipient, or the type of 

accounts or financial institutions 

involved in the transfer. In adopting 

comment 31(b)(1)(vi)–2, the Bureau 

stated its belief that it is necessary to 

provide a reasonable mechanism by 

which the provider may disclose the 

foreign tax where information may not 

be known by the sender or the provider. 

As discussed in more detail below, 

the Bureau is proposing to provide 

additional flexibility regarding the 

determination of foreign taxes where 

applicability may be impacted by 

certain variables in a new 

§ 1005.32(b)(3). Accordingly, the Bureau 

is proposing to delete portions of the 

guidance in existing comment 

31(b)(1)(vi)–2 as being superseded by 

the new proposed provision and related 

guidance. 

Comment 31(b)(1)(vi)–2 would 

continue to state that if a remittance 

transfer provider does not have specific 

knowledge regarding variables that 

affect the amount of taxes imposed by 

a person other than the provider for 

purposes of determining these taxes, the 

provider may rely on a sender’s 

representations regarding these 

variables. The Bureau believes providers 

should continue to be permitted to rely 

on senders’ representations regarding 

variables that affect foreign taxes, 

because providers should be permitted 

to take senders’ representations as true, 

and because such representations could 

result in a more accurate approximation 

of the applicable taxes. Accordingly, as 

discussed below regarding the error 

resolution requirements in proposed 

§ 1005.33(a)(2)(iv) and comment 

33(a)(2)(iv)–9, to the extent a provider 

relies on a sender’s representations in 

this manner, any resulting discrepancy 

between the amount disclosed and the 

amount actually received would not 

constitute an error. Thus, for example, 

it would not be an error if reliance on 

a sender’s representations results in a 

disclosed foreign tax amount that is less 

than what is actually imposed on the 

transfer. As discussed below, the 

proposed revisions would provide the 

same result with regard to situations in 

which providers rely on a sender’s 

representations regarding possible 

recipient institution fees in accordance 

with proposed comment 31(b)(1)(vi)–4. 

Comment 31(b)(1)(vi)–3 

New proposed comment 31(b)(1)(vi)– 

3 is described above in the discussion 

of the proposed revisions to 

§ 1005.31(b)(1)(vi) concerning 

disclosure of foreign taxes imposed by 

a country’s central government. 

Comment 31(b)(1)(vi)–4 

While the Final Rule provided 

guidance in comment 31(b)(1)(vi)–2 on 

how to determine foreign taxes where 

variables could affect the amount to be 

disclosed, the rule did not provide 

guidance with respect to variables that 

could affect the fees imposed on the 

designated recipient by the recipient’s 

institution for receiving the transfer in 

an account. For the reasons discussed 

below, the Bureau is proposing to 

provide additional flexibility in a new 

proposed § 1005.32(b)(4) regarding the 

determination of such fees. 

In addition, the Bureau believes it is 

appropriate to provide similar guidance 

regarding reliance on a sender’s 

representations with respect to recipient 

institution fees, as exists addressing 

foreign taxes. New proposed comment 

31(b)(1)(vi)–4 is structured similarly to 

proposed comment 31(b)(1)(vi)–2. The 

proposed comment explains that in 

some cases, where a remittance transfer 

is sent to a designated recipient at an 

account at a financial institution, the 

institution imposes a fee on the 

remittance transfer pursuant to an 

agreement with the recipient. The 

amount of the fee imposed by the 

institution may vary based on whether 

the designated recipient holds a 

preferred status account with a financial 

institution, the quantity of transfers 

received, or other variables. In this 

scenario, if a remittance transfer 

provider does not have specific 

knowledge regarding variables that 

affect the amount of fees imposed by the 

recipient’s institution for receiving a 

transfer in an account, the proposed 

comment would allow the provider to 

rely on a sender’s representations 

regarding these variables. 

§ 1005.31(d) Estimates 

Under the Final Rule, remittance 

transfer providers generally must 

disclose exact amounts, except under 

the limited circumstances permitted by 

§ 1005.32. Therefore, under § 1005.31(d) 

of the Final Rule, where providers 

estimate disclosures under § 1005.32, 

the estimated disclosure must be 

described using the term ‘‘Estimated’’ or 

a substantially similar term, which 

appears in close proximity to the 

disclosure. 

Due to the proposed revisions to 

§ 1005.31(b)(1)(vi) and the related 


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77194 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

commentary concerning subnational 

foreign taxes, as described above, 

remittance transfer providers would be 

permitted to disclose as the total 

amount of transfer pursuant to 

§ 1005.31(b)(1)(vii) an amount that 

would not match the amount actually 

received by the designated recipient. 

Thus, the Bureau proposes amending 

§ 1005.31(d) to require that a provider 

also use the term ‘‘Estimated’’ on 

disclosure forms if it is not disclosing 

regional, provincial, state, or local 

foreign taxes, as permitted by 

§ 1005.31(b)(1)(vi). As § 1005.31(d) 

already references § 1005.32, the same 

requirement would apply to proposed 

§§ 1005.32(b)(3) and (b)(4), discussed 

below, which would provide further 

flexibility for determining foreign taxes 

and recipient institution fees. The 

proposal would make conforming 

revisions to comment 31(d)–1. 

The proposed comment would further 

explain that, if the provider is relying on 

the sender’s representations or has 

specific knowledge regarding variables 

that affect the amount of fees disclosed 

under § 1005.31(b)(1)(vi), and is not 

otherwise providing estimated 

disclosures, § 1005.31(d) does not apply 

and therefore no ‘‘Estimated’’ label is 

required. The Bureau believes that 

providers that rely on sender’s 

representations regarding variables 

should be able to take the information 

provided as representations that lead to 

exact disclosures, even if the 

representations later turn out to be 

incorrect. For similar reasons, the 

proposed comment also explains that 

§ 1005.31(d) does not apply to foreign 

tax disclosures if the provider discloses 

all applicable taxes (including 

applicable regional, provincial, state, or 

other local foreign taxes), if the provider 

is relying on the sender’s 

representations or has specific 

knowledge regarding variables that 

affect the amount of foreign taxes 

imposed by a country’s central 

government, and if the provider is not 

otherwise providing estimated 

disclosures. 

The Bureau believes that the use of 

the term ‘‘Estimated,’’ either when 

subnational taxes are not disclosed or 

when foreign tax and recipient 

institution fee estimates are provided in 

accordance with proposed 

§§ 1005.32(b)(3) and (b)(4), would 

provide sufficient disclosure to the 

sender to warn that disclosed amounts 

may not be precise, without requiring 

substantial changes to the disclosure 

form that could delay implementation of 

the statutory scheme. Further, the 

Bureau anticipates that compared to 

other mechanisms for giving senders 

notice, this proposed mechanism for 

alerting senders that amounts received 

may not be exact will minimize the 

systems changes that could be required, 

because the Final Rule already sets forth 

circumstances in which the term 

‘‘Estimated’’ (or a substantially similar 

term) must be used. 

At the same time, the Bureau is 

concerned that, particularly where 

subnational taxes are not disclosed, 

senders may receive disclosures that use 

the term ‘‘Estimated’’ the vast majority 

of the time, which could impair their 

ability to compare disclosures among 

remittance transfer providers, and could 

have an adverse impact on the exercise 

of error resolution rights. An alternative 

approach would be to require that a 

more specific statement be added to the 

disclosure to note, for instance, that 

‘‘Additional taxes by regional or local 

governments may apply’’ rather than to 

require use of the ‘‘Estimated’’ label for 

every case in which a provider has 

decided not to disclose any subnational 

taxes. However, it is unclear whether 

such a disclosure would substantially 

benefit consumers over the simpler 

label, whether it would be 

understandable to consumers, and how 

much additional time and expense 

would be required for providers to 

modify their forms in this way. 

Thus, the Bureau solicits comment on 

whether remittance transfer providers 

should be required to indicate those 

circumstances in which subnational 

taxes are not disclosed or in which fees 

and taxes are estimated in accordance 

with proposed § 1005.32(b)(3) or (4) 

with an ‘‘Estimated’’ label, and in 

particular, whether such labeling should 

be required in circumstances where 

amounts disclosed would be exact, but 

for the non-disclosure of foreign 

subnational taxes. To the extent foreign 

subnational taxes apply less frequently 

than foreign taxes imposed by a central 

government, or if such taxes tend to be 

lower than taxes imposed by central 

governments in the same country, the 

Bureau seeks comment on whether 

disclosures may be clearer without 

much detriment to accuracy if providers 

do not use the term ‘‘Estimated.’’ The 

Bureau solicits comment on the extent 

to which either circumstance is true, 

and also solicits comment on alternative 

disclosures that could be provided, and 

on the time and expense to implement 

either the ‘‘Estimated’’ label or a more 

detailed disclosure. 

Section 1005.32 Estimates 

31(b) Permanent Exceptions 

32(b)(3) Permanent Exception Where 

Variables Affect Taxes Imposed by a 

Person Other Than the Provider 

For the reasons described above, 

comment 31(b)(1)(vi)–2 of the Final 

Rule provides guidance on how to 

determine taxes for purposes of the 

disclosure required by 

§ 1005.31(b)(1)(vi). Industry has 

requested further guidance on how to 

disclose foreign taxes where variables 

that influence the applicability of taxes 

are not easily knowable by the sender or 

the remittance transfer provider. 

Industry has expressed concern that 

under the current guidance, to 

determine the appropriate disclosure, 

providers may have to ask numerous 

questions of senders that senders may 

not understand, and to which senders 

may not know the answer. 

The Bureau agrees that there may be 

certain variables that a sender and a 

remittance transfer provider may not 

reasonably be expected to know, and 

that further guidance is appropriate. The 

Bureau believes that providing an 

additional mechanism for disclosing 

foreign taxes will facilitate compliance 

with the rule. Thus, the Bureau believes 

it is appropriate to exercise its exception 

authority under section 904(c) of the 

EFTA to propose a new permanent 

exception in § 1005.32(b)(3). Proposed 

§ 1005.32(b)(3) states that, for purposes 

of determining the taxes to be disclosed 

under § 1005.31(b)(1)(vi), if a provider 

does not have specific knowledge 

regarding variables that affect the 

amount of taxes imposed by a person 

other than the provider, the provider 

may disclose the highest possible tax 

that could be imposed on the remittance 

transfer with respect to any unknown 

variable. 

Proposed comment 32(b)(3)–1 

clarifies the exception. The proposed 

comment explains that the amount of 

taxes imposed by a person other than 

the provider may depend on certain 

variables. Under proposed 

§ 1005.32(b)(3), a provider may disclose 

the highest possible tax that could be 

imposed on the remittance transfer with 

respect to any unknown variable. For 

example, if a tax may vary based upon 

whether a recipient’s institution is 

grandfathered under existing law, or 

whether the recipient has reached a 

transaction threshold above which taxes 

are assessed, the provider may simply 

assume that the tax applies without 

having to ask the sender first. In such a 

case, the proposed comment explains 

that the provider should disclose the 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77195 

5To the extent that subnational taxes are not 

applicable, then the disclosure of foreign taxes 

would be complete. 

highest possible tax that could be 

imposed. If the provider expects that 

variations may result from differing 

interpretations of law or regulation by 

the paying agent or recipient institution, 

the provider may assume that the 

highest possible tax that could be 

imposed applies. 

The Bureau believes that permitting 

remittance transfer providers to make 

assumptions about variables as a 

distinct alternative to asking senders for 

information (as discussed in comment 

31(b)(1)(vi)–2) would provide additional 

flexibility and would resolve concerns 

about senders not understanding or 

knowing the answer to questions about 

the variables. Permitting providers to 

disclose the highest possible tax that 

could be imposed also would allow 

providers to make assumptions about 

variables that providers themselves do 

not know, such as those discussed in 

the proposed examples. As a result, the 

Bureau believes that proposed 

§ 1005.32(b)(3) would provide a more 

practicable mechanism for disclosing 

foreign taxes than current comment 

31(b)(1)(vi)–2, discussed above. 

Even with these proposed changes, 

senders would continue to receive tax 

disclosures. The Bureau believes it is 

appropriate to continue to focus the 

guidance on providing the highest 

possible tax that could be imposed, so 

that the sender is not surprised by a 

deduction for taxes that is larger than 

the amount disclosed (except in cases in 

which taxes other than those imposed 

by central governments may apply).5 As 

stated in the February Final Rule, the 

Bureau believes that tax information is 

useful to consumers who are trying to 

make sure that they send enough 

money, e.g., to assist a family member 

or pay a bill. The Bureau believes that 

the proposed revisions would preserve 

the intent and valuable consumer 

benefits of the statute while balancing 

the need to provide a reasonable 

disclosure mechanism. 

In addition to factual questions 

regarding variables, industry has also 

expressed concern about remittance 

transfer providers’ ability to determine 

the applicable foreign tax given 

variations in the application of foreign 

tax requirements. For example, industry 

has suggested that foreign payout agents 

or recipient institutions may interpret 

and apply foreign tax requirements 

differently from one another, which may 

result in some uncertainty around 

whether a tax will be assessed, and if so, 

what precisely it will be. Thus, 

proposed comment 32(b)(3)–1 states that 

if the provider expects that variations 

may result from differing interpretations 

of law or regulation by the paying agent 

or recipient institution, the provider 

may assume that the highest possible 

tax that could be imposed applies. 

Under this proposed revision, providers 

would continue to be responsible for 

researching and identifying applicable 

foreign tax laws assessed by a country’s 

central government. However, the 

proposed revision would provide 

flexibility by allowing providers to 

disclose the highest amount revealed by 

their research. 

Under the Final Rule and this 

proposal, providers generally must 

provide accurate tax information. While 

the Bureau expects that changes in 

foreign tax law are generally announced 

in advance of their effective date, thus 

affording providers time to update their 

disclosures, the Bureau is concerned 

that this may not always be the case. 

The Bureau therefore requests comment 

on whether the Final Rule should be 

revised to incorporate a grace period for 

implementing changes in foreign tax 

law, and if so, how long. 

32(b)(4) Permanent Exception Where 

Variables Affect Recipient Institution 

Fees 

As noted above, the Final Rule did 

not provide guidance on how to 

determine fees imposed by the 

designated recipient’s institution for 

receiving the transfer in an account. As 

with foreign taxes, industry has 

expressed concern that in some cases, a 

remittance transfer provider would not 

know whether the recipient has agreed 

to pay such fees or how much the 

recipient may have agreed to pay. 

Industry has also requested clarification 

on whether and how to disclose 

recipient institution fees that can vary 

based on the recipient’s status with the 

institution, the quantity of transfers 

received, or other variables that are not 

easily knowable by the sender or the 

provider. Without further guidance and 

flexibility, industry has argued that the 

requirement to disclose recipient 

institution fees is impracticable, which 

could drive providers to exit the market 

or significantly reduce their offerings. 

The Bureau acknowledges these 

concerns and agrees that, for recipient 

institution fees that are specifically 

related to a remittance transfer and 

therefore required to be disclosed, 

additional flexibility in determining 

how to disclose these fees would 

facilitate compliance with the rule 

without significantly undermining its 

benefits. Accordingly, the Bureau 

believes it is appropriate to exercise its 

exception authority under section 904(c) 

of the EFTA to propose a new 

§ 1005.32(b)(4). Proposed 

§ 1005.32(b)(4)(i) would state that, for 

purposes of determining the fees to be 

disclosed under § 1005.31(b)(1)(vi), if a 

remittance transfer provider does not 

have specific knowledge regarding 

variables that affect the amount of fees 

imposed by a designated recipient’s 

institution for receiving a transfer in an 

account, the provider may disclose the 

highest possible recipient institution 

fees that could be imposed on the 

remittance transfer with respect to any 

unknown variable, as determined based 

on either fee schedules made available 

by the recipient institution or 

information ascertained from prior 

transfers to the same recipient 

institution. Proposed comment 32(b)(4)– 

1 explains proposed § 1005.32(b)(4)(i) 

and adds as an example that if a 

provider relies on an institution’s fee 

schedules, and the institution offers 

three accounts with different incoming 

wire fees, the provider should take the 

highest fee and use that as the basis for 

disclosure. 

Proposed § 1005.32(b)(4)(ii) states 

that, if the provider cannot obtain such 

fee schedules or does not have such 

information, a provider may rely on 

other reasonable sources of information, 

if the provider discloses the highest fees 

identified through the relied-upon 

source. Proposed comment 32(b)(4)–2 

states that reasonable sources of 

information include: Fee schedules 

published by competitor institutions; 

surveys of financial institution fees; or 

information provided by the recipient 

institution’s regulator or central bank. 

Proposed § 1005.32(b)(4) would only 

address fees for receiving transfers in an 

account that are based on an agreement 

between the recipient institution and 

the recipient. Currently, determination 

of these fees by originating providers 

(whether depository or non-depository) 

is particularly difficult or impracticable 

due to the nature of open networks. In 

contrast, providers using closed 

networks can generally exercise some 

control over transfers from end-to-end 

and are often not making transfers into 

accounts, making determination of fees 

assessed by payout agents more 

practicable. 

The proposed mechanism for 

determining these fees differs from the 

mechanism in proposed § 1005.32(b)(3) 

for determining foreign taxes in 

recognition of the fact that, while 

identifying applicable foreign taxes 

presents challenges, these taxes are 

based on laws or regulations that are 

generally publicly available in some 

form, even if information may be 


srobinson on DSK4SPTVN1PROD with 
77196 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

6 ICF Macro International, Inc., Summary of 

Findings: Design and Testing of Remittance 

Disclosures, at iv (Apr. 2011), available at http:// 

www.federalreserve.gov/newsevents/press/bcreg/ 

bcreg20110512_ICF_Report_Remittance_

Disclosures_(FINAL).pdf. 

difficult to ascertain in some instances. 

In contrast, the Bureau understands that 

foreign institutions may be prohibited 

by law from sharing, or unwilling to 

share, specific accountholder fee 

information. Further, it may be 

impracticable to obtain a fee schedule 

for every recipient, or to contact 

institutions in real time. Thus, the 

Bureau believes that proposed 

§ 1005.32(b)(4) will provide a more 

practicable mechanism for disclosing 

recipient institution fees. 

The Bureau further believes that a 

recipient institution’s fee schedule, and 

information ascertained from prior 

transfers to the same recipient 

institution, are likely the best resources 

for estimating the fees that would be 

applicable to a remittance transfer, and 

thus providers should rely upon those 

sources, if available. However, in some 

cases, foreign institutions may not be 

willing to share institution-level fee 

schedules, or such schedules may not be 

easily obtainable. Accordingly, the 

proposed rule provides for alternative 

reasonable sources of information upon 

which providers can rely. 

The Bureau acknowledges that 

permitting providers to base disclosures 

on sources other than institutionspecific sources may result in a provider 

disclosing fees that underestimate those 

charged by an individual recipient 

institution. Nonetheless, the Bureau 

believes that the sources of information 

set out in the proposed comment should 

result in a reasonable approximation of 

the amount of fees that could be 

assessed, and provide the sender 

sufficient information about the amount 

to be received. For example, competitor 

institutions likely charge fees within a 

similar range as the recipient 

institution, and thus their fee schedules 

may provide an indication as to market 

practice. Further, the Bureau believes 

that the flexibility provided by the 

proposed rule and related comment 

should encourage providers to remain in 

the market. The Bureau solicits 

comment on whether the sources of 

information set forth in proposed 

§ 1005.32(b)(4) and proposed comment 

32(b)(4)–1 should be included, and 

whether additional reasonable sources 

of information should be added. In any 

case, for similar reasons, as discussed 

above with respect to proposed 

§ 1005.32(b)(3), the Bureau believes that 

it is appropriate to focus the guidance 

on providing the highest possible fees 

that could be imposed. 

As proposed, the sources of 

information set forth in proposed 

§ 1005.32(b)(4) and the related 

commentary are not time-limited. The 

Bureau believes that reliance on the 

most updated source would provide the 

sender with the best information. 

However, the Bureau is concerned that 

imposing a duty to update relied-upon 

sources on a frequent basis could 

become unduly burdensome, 

particularly as providers are working to 

implement the rule, and because 

resources collecting this information 

have not yet fully developed or become 

widely available to providers. The 

Bureau solicits comment on whether 

reasonable sources of information 

should be time-limited. For example, 

should the rule require relied-upon fee 

schedules to have been published or 

confirmed as valid within the last year? 

Even if proposed § 1005.32(b)(4) is 

adopted, senders will continue to 

receive fee disclosures. Some remittance 

transfer providers have suggested that 

the Bureau exercise its exception 

authority under the EFTA to eliminate 

the requirement to disclose recipient 

institution fees mandated by the statute. 

As stated in the February Final Rule, the 

Bureau believes that this fee information 

provides valuable consumer benefits by 

ensuring that senders are aware of the 

impact of back-end fees, including 

knowing whether the amount received 

will be sufficient to pay important 

expenses. These disclosures also 

provide senders with greater 

transparency regarding the costs of 

remittance transfers, and assist senders 

in comparing costs among providers, for 

example, where such fees may impact a 

sender’s decision whether to send funds 

for cash pick-up or to an account, or 

where a recipient may have accounts at 

different institutions and the sender is 

deciding to which account to send 

funds. 

Further, eliminating the requirement 

to disclose recipient institution fees 

would create inconsistency between the 

disclosures provided for transfers where 

fees are imposed by a designated 

recipient’s institution for receiving a 

transfer in an account, and those 

provided for other types of transfers, 

such as where fees are charged by 

paying agents, regarding which the 

Bureau does not think it is appropriate 

to adjust the requirement under the 

Final Rule. Notably, during the Federal 

Reserve Board’s consumer testing on 

remittances, consumer participants 

cited unexpected third-party fees as a 

source of concern.6 Therefore, the 

Bureau does not believe that it is 

appropriate to exercise its exception 

authority to eliminate the disclosure of 

recipient institution fees altogether. The 

Bureau believes that the proposed 

revisions would preserve the intent and 

consumer benefits of the statute while 

balancing the need to provide a 

reasonable mechanism for determining 

applicable fees. 

Section 1005.33 Procedures for 

Resolving Errors 

EFTA section 919(d) provides that 

remittance transfer providers shall 

investigate and resolve errors where a 

sender provides a notice of an error 

within 180 days of the promised date of 

delivery of a remittance transfer. The 

statute generally does not define what 

types of transfers and inquiries 

constitute errors, but rather gives the 

Bureau the authority to define ‘‘error’’ 

and to prescribe standards for the error 

resolution process. In the Final Rule, the 

Bureau adopted § 1005.33 to implement 

new error resolution requirements for 

remittance transfers. 

Since the issuance of the Final Rule, 

industry has expressed concerns about 

the remedies available when a sender of 

a remittance transfer provides an 

incorrect account number to the 

remittance transfer provider. Providers 

have stated that in some cases, a 

remittance transfer may be deposited 

into the wrong account and, despite 

reasonable efforts, cannot be recovered. 

Under the Final Rule, a provider is 

obligated to resend or refund the total 

amount of the remittance transfer 

regardless of whether it can recover the 

funds. Industry has noted that this 

problem is of particular concern with 

respect to transfers of large sums, 

particularly for smaller institutions that 

might have more difficulty bearing the 

cost of the entire transfer amount. In 

addition, providers have expressed 

concern that the Final Rule creates a 

potential for fraud, despite an exception 

in the Final Rule for fraud. See 

§ 1005.33(a)(1)(iv)(C). Due to these and 

other concerns, discussed in detail 

below, the Bureau is proposing to 

amend § 1005.33 and the accompanying 

commentary. 

The Bureau is also proposing several 

other changes to the error resolution 

procedures in § 1005.33 to address 

questions about how remittance transfer 

providers should provide remedies to 

senders under the Final Rule’s error 

resolution provisions, and to streamline 

providers’ provision of remedies. In 

addition, the Bureau is proposing 

conforming changes to the error 

resolution procedures in light of 

proposed revisions regarding the 

disclosure of foreign taxes and recipient 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77197 

institution fees, and to make several 

technical, non-substantive changes. 

33(a) Definition of Error 

33(a)(1) Types of Transfers or Inquiries 

Covered 

Section 1005.33(a)(1) lists the type of 

transfers or inquiries that constitute 

‘‘errors’’ under the Final Rule. The types 

of errors relevant to this proposal are 

discussed in detail below. 

33(a)(1)(iii) Incorrect Amount Received 

by the Designated Recipient 

The Bureau proposes to revise 

comment 33(a)–4 to make technical 

corrections to the comment. Comment 

33(a)–4, which addresses the 

extraordinary circumstances exception 

to the error defined in 

§ 1005.33(a)(1)(iii), improperly cites to 

§ 1005.33(a)(1)(iv) instead of 

§ 1005.33(a)(1)(iii)(B). The proposed 

revisions to comment 33(a)–4 correct 

this error and a related error regarding 

the description of the exception. 

33(a)(1)(iv) Failure To Make Funds 

Available by Date of Availability 

Section 1005.33(a)(1)(iv) defines 

‘‘error’’ to include a remittance transfer 

provider’s failure to make funds 

available to the designated recipient by 

the date of availability stated on the 

receipt or combined disclosure, subject 

to three listed exceptions, including an 

exception for remittance transfers made 

with fraudulent intent by the sender or 

any person acting in concert with the 

sender. See § 1005.33(a)(1)(iv)(C). 

Comment 33(a)–5 explains the scope of 

the error in § 1005.33(a)(1)(iv) and notes 

that the error includes, among other 

things, the late delivery of funds, the 

total non-delivery of a remittance 

transfer, and the delivery of funds to the 

wrong account. See comments 33(a)–5.i 

and .ii. 

Although several industry 

commenters had objected that 

remittance transfer providers should not 

have to bear the cost of mistakes caused 

by parties outside the provider’s control, 

the Bureau noted in the February Final 

Rule that a number of other federal 

consumer financial protection regimes 

require financial service providers to 

investigate and correct errors for which 

they may not be at fault. The Bureau 

also noted that providers are generally 

in a better position than consumers to 

identify errors and to seek recovery from 

downstream institutions. Furthermore, 

the Bureau noted that placing 

responsibility on providers to resolve 

errors strengthens their incentives to 

develop policies, procedures, and 

controls to reduce and minimize errors 

in the first instance and similarly to 

work with downstream institutions and 

business partners to improve controls 

and to develop contractual solutions to 

address errors. 

In particular, however, with regard to 

situations in which the sender provides 

incorrect or insufficient information, the 

Bureau acknowledged that there were 

unique equities. Specifically, the Bureau 

concluded that it was important that 

error resolution procedures apply to 

such cases, but also agreed with 

commenters that a sender’s mistake 

should not obligate a remittance transfer 

provider to bear all of the costs for 

resending a transfer, including the 

principal transfer amount. Accordingly, 

the Final Rule sets forth special remedy 

provisions that allow providers to 

collect third-party fees a second time 

when resending a remittance transfer 

that had previously not been delivered 

due to incorrect or insufficient 

information provided by the sender. 

The Final Rule does not differentiate, 

however, between those situations 

where the sender’s mistake regarding 

the account number results in a deposit 

to the wrong account and those 

situations in which the remittance 

transfer simply does not go through. In 

the former situation, where the transfer 

results in a deposit into the wrong 

account, if a remittance transfer 

provider is unable to recover the money 

from the account after working with the 

recipient institution, the Final Rule 

requires that the provider, at its own 

expense, resend or refund the funds, 

depending on which remedy was 

selected by the sender. The Bureau 

noted that situations in which funds 

cannot be recovered after a deposit to 

the wrong account appear to be quite 

rare, and explained that it believed that 

the approach adopted with respect to 

errors by senders would encourage 

providers and other involved parties to 

develop security procedures to limit 

further the risk of funds being deposited 

in an account when the designated 

recipient named in the receipt does not 

match the name associated with the 

account number. In addition, the Bureau 

expected that the exception for transfers 

made with fraudulent intent by the 

sender or those working in concert with 

the sender in § 1005.33(a)(1)(iv)(C) of 

the Final Rule would address industry’s 

concerns about the risk of fraud created 

by the error rules. 

Nevertheless, upon further analysis, 

and for the reasons discussed below, the 

Bureau is proposing to revise the 

definition of error in § 1005.33(a)(1)(iv) 

by adding a fourth, conditional 

exception. Proposed 

§ 1005.33(a)(1)(iv)(D) would exclude 

from the definition of error a failure to 

make funds available to the designated 

recipient by the disclosed date of 

availability, where such failure results 

from the sender having given the 

remittance transfer provider an incorrect 

account number, provided that the 

provider meets the conditions set forth 

in proposed § 1005.33(h). These 

conditions, discussed in detail below, 

would require providers to notify 

senders of the risk that their funds could 

be lost, to investigate reported errors, 

and to attempt to recover funds that are 

deposited in the wrong account. 

However, if the proposed exception 

applies, providers would not be 

required to bear the cost of refunding or 

resending transfers if funds ultimately 

could not be recovered. 

Since the Bureau published the 

February Final Rule, it has monitored 

industry’s efforts towards implementing 

the rule. Industry has elaborated on its 

concerns expressed during the initial 

comment period that the systems used 

to send remittance transfers to foreign 

accounts do not allow remittance 

transfer providers to verify designated 

recipients’ account numbers before 

remittance transfers are sent. More 

generally, many providers have also 

reported that they have not yet 

developed security procedures that 

enable them to be able to confirm the 

accuracy of account numbers provided 

by senders before sending a transfer. 

Remittance transfer providers have 

explained that they send remittance 

transfers to accounts through a number 

of different systems. In many of these 

systems, intermediary and receiving 

institutions are permitted to rely on the 

account number provided by the sender 

of the remittance transfer to route the 

transfer. In using these systems, 

providers, as well as intermediary and 

recipient institutions, often do not 

cross-check account numbers with the 

name of the accountholder or other 

identifier in the remittance transfer to 

confirm that they match before 

transmitting or crediting the transfer to 

an account. Furthermore, providers and 

intermediary institutions’ systems are 

designed to allow straight-through 

processing, whereby they process 

incoming transfers using automated 

systems that rely on account numbers 

and not the name of the recipient. Even 

where straight-through processing is not 

used, it may be common for providers 

and intermediary and recipient 

institutions to rely, as a matter of 

practice, on account numbers because it 

may be challenging for a foreign 

institution to verify a name on a 

payment order from the United States 

due to spelling and language variances, 


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77198 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

7UCC Article 4A generally applies to wire 

transfers but not automated clearinghouse (ACH) 

transfers or transfers that are not to an account. UCC 

Article 4A–108 provides that UCC Article 4A does 

not apply ‘‘to a funds transfer, any part of which 

is governed by the Electronic Fund Transfer Act.’’ 

When EFTA section 919, as implemented by this 

rule, becomes effective, wire transfers sent on a 

consumer’s behalf that are remittance transfers will 

be governed in part by the EFTA. The February 

Final Rule (77 FR 6194, 6210–12 (Feb. 7, 2012)) 

contains a more detailed discussion regarding UCC 

Article 4A and remittance transfers. 

truncation of long names, and other 

systems limitations. 

The Bureau, therefore, believes that 

the proposed changes will more closely 

match existing practice. To the extent 

remittance transfer providers’ existing 

methods for sending transfers do not 

allow or facilitate verification of account 

numbers before sending the remittance 

transfer, the Bureau is aware that 

individual providers, particularly 

smaller providers, sending transfers 

through an open network have limited 

ability to influence these global systems 

in the short term. The Bureau continues 

to believe it is important for industry to 

develop improved security procedures 

and expects to engage in a dialogue with 

industry about how to encourage the 

growth of improved controls and 

communication mechanisms, but the 

Bureau understands that such changes 

are unlikely to be implemented in the 

near future. The Bureau believes an 

interim disruption would not be in 

consumers’ best interests and will 

instead continue to evaluate the 

development of procedures as it 

monitors providers’ implementation of 

the rule. 

Where there is a deposit into the 

wrong account, the Bureau believes that 

many, if not most, remittance transfer 

providers already attempt to recover the 

principal amount of the transfer. 

However, because providers have 

reported that they often do not have 

direct relationships with receiving 

institutions and that in some instances 

those institutions may be unresponsive, 

providers may face difficulties in 

recovering funds from the wrong 

account. The Bureau believes that, in 

many instances, to reverse these 

transactions requires the accountholder 

to authorize a debit from the account 

and, thus, the lack of this authority may 

prohibit a recipient institution from 

debiting the account in the amount of 

the incorrect deposit absent an 

authorization. Relatedly, a provider in 

the United States may be able to do little 

to assist the foreign institution in its 

attempt to persuade its accountholder to 

provide debit authorization due to the 

lack of privity between the provider and 

the recipient institution or the 

accountholder. 

In addition to these concerns, the 

Bureau also believes that the proposed 

changes will adhere more closely state 

law as it existed prior to EFTA § 919. In 

particular, Uniform Commercial Code 

(UCC) Article 4A covers the transfer of 

money between banks, including 

transfers by banks on behalf of 

customers, and into institutions have 

incorporated many of its provisions into 

existing policies and disclosures to 

customers.7 UCC 4A–207 generally 

addresses those circumstances where a 

supplied account number refers to an 

incorrect account; that is, the account 

number identifies an account that 

differs from the named designated 

recipient’s account. Under UCC 4A–207, 

when a sender provides an incorrect 

account number and funds are 

transmitted to an incorrect account and 

cannot be recovered, it is the sender— 

not the bank—that can lose the transfer 

amount if the bank has met certain 

conditions. While the UCC is a U.S. 

state law regime, industry has stated 

that many foreign countries’ laws and/ 

or banking agreements also contain 

analogous rules. 

Remittance transfer providers have 

also stated that the Final Rule’s fraud 

exception in § 1005.33(a)(1)(iv)(C) is 

difficult to apply in practice because, 

due to their limited ability to know 

what occurs at a recipient’s institution, 

a provider may have difficulty 

determining whether the holder of an 

account into which a transfer was misdeposited is attempting to commit a 

fraud, including by working in concert 

with the sender. Although providers do 

not believe such fraud is widespread 

today, they have expressed concerns 

that the Final Rule will enable 

fraudulent activity to flourish because 

providers may have to send the transfer 

amount again without first recovering it 

from the foreign institution, which is a 

departure from current practice. 

To the extent remittance transfer 

providers believe they can neither verify 

account numbers nor prevent fraud, 

many have indicated that they may limit 

which of their customers can send 

remittance transfers and/or the value of 

those transfers or even withdraw from 

the market altogether. Absent such 

limitations (or even despite them), some 

providers have indicated to the Bureau 

that they may have difficulties 

managing the risk posed by this part of 

the Final Rule. Particularly for smaller 

institutions, the impact of even one 

large transaction where the provider 

would have to resend or refund funds it 

did not recover, could be substantial. 

That said, the Bureau does harbor 

some doubts about the extent of the 

fraud risk posed by the Final Rule. To 

be successful, a sender with fraudulent 

intent would first need to supply funds 

for the initial transfer and then report an 

error. If the provider claimed that the 

sender acted with fraudulent intent, the 

fraudulent sender would need to pursue 

his or her claim in court, something the 

Bureau believes many criminals are 

unlikely to do. 

Additionally, the Bureau believes that 

deposits into the wrong account 

resulting from a sender’s error that 

cannot be recovered occur relatively 

infrequently today, largely due to three 

factors. First, remittance transfer 

providers typically take steps to ensure 

that senders carefully enter and review 

account numbers. Second, most 

incorrect account numbers do not 

correspond to an actual account at the 

recipient’s institution. In those 

situations, the Bureau understands that 

the transactions are typically reversed 

and the funds returned. Third, the 

Bureau understands that some recipient 

institutions take further measures to 

limit transfers being deposited into the 

wrong account, such as by developing 

systems that allow for additional 

verification of account numbers or by 

working with senders to improve 

accuracy at the time transfers are 

requested. 

Nevertheless, the Bureau understands 

that the uncertainty created by existing 

§ 1005.33(a)(1)(iv), if left unchanged, 

could decrease consumers’ access to 

remittance transfers if a number of 

remittance transfer providers exit the 

market rather than risk liability, or limit 

their service offerings in order to 

minimize their exposure. Overall, the 

Bureau intends for proposed revisions 

to create appropriate incentives for 

providers to prevent these errors from 

occurring and to assist senders as much 

as practicable if an incorrect deposit 

occurs, while relieving tension with 

other laws and existing practice and 

reducing risk to providers. The Bureau 

thus seeks comment on whether 

proposed § 1005.33(a)(1)(iv)(D) achieves 

these goals, or whether the existing 

rules or another alternative is preferable. 

To clarify the application of this new 

exception, the Bureau is also proposing 

new comment 33(a)–7. Proposed 

comment 33(a)–7 provides that the 

exception in proposed 

§ 1005.33(a)(1)(iv)(D) applies where a 

sender gives the remittance transfer 

provider an incorrect account number 

that results in the deposit of the 

remittance transfer into a customer’s 

account at the recipient institution other 

than the designated recipient’s account. 

The proposed comment further provides 

that this exception does not apply 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77199 

8 In light of new proposed comment 33(a)–7 

(discussed above), existing comment 33(a)–7 and 

33(a)–8 are proposed to be redesignated as 

comments 33(a)–8 and –9, respectively. 

where the failure to make funds 

available is the result of a mistake by a 

provider or a third party or due to 

incorrect or insufficient information 

other than an incorrect account number. 

The Bureau is limiting the scope of 

proposed § 1005.33(a)(1)(iv)(D) because 

the Bureau believes that, compared to 

other types of sender mistakes, the 

provision of an incorrect account 

number poses unique problems for 

remittance transfer providers, in that 

such incorrect information may result in 

remittance transfers being deposited 

into the wrong account. In particular, 

the proposed exception does not 

include a sender’s provision of an 

incorrect routing number designating 

the recipient institution. The Bureau 

believes that in many instances, 

providers either already verify routing 

numbers or are in a position to do so 

when sending transfers to accounts. 

However, the Bureau seeks comment on 

whether the concerns identified above 

regarding incorrect account numbers 

apply equally to incorrect routing 

numbers, and if so, whether the 

proposed exception should be expanded 

to include a sender’s provision of an 

incorrect routing number. 

Similarly, the Bureau believes that 

other types of sender mistakes in 

connection with transfers to accounts 

also do not pose the same risks as 

incorrect account numbers, because 

remittance transfers with other types of 

mistakes are unlikely to result in a 

deposit in the wrong account. Thus, it 

should be significantly easier for a 

remittance transfer provider to unwind 

the transfer under the existing error 

resolution procedures. For example, 

where a sender misidentifies the 

designated recipient or the designated 

recipient’s institution but provides a 

correct account number, the Bureau 

believes that the remittance transfer is 

still likely to be deposited into the 

designated recipient’s account, due to 

the practice of relying on account 

numbers rather than this other 

information, as described above. 

Accordingly, the Bureau does not 

believe such mistakes by a sender are 

likely to result in a deposit into the 

wrong account or other ‘‘error’’ as 

defined under the regulation. Nor does 

the Bureau think that mistakes by 

senders in connection with transfers 

that are not deposited into accounts 

pose these problems, because these 

transfers generally do not involve 

unverified information, such as account 

numbers. Nevertheless, the Bureau also 

seeks comment on whether other types 

of mistakes by senders pose a similar 

risk to providers as a mistake in 

providing an incorrect account number 

and whether modified remedies would 

be appropriate. 

33(a)(2) Types of Inquiries and 

Transfers Not Covered 

Section 1005.33(a)(2) and the 

accompanying commentary address 

circumstances that do not constitute 

errors in the Final Rule. Section 

1005.33(a)(2)(iv) of the Final Rule 

provides that an error does not include 

a change in the amount or type of 

currency received by the designated 

recipient from the amount or type of 

currency stated in the disclosure 

provided to the sender under 

§ 1005.31(b)(2) or (3), if the remittance 

transfer provider relied on information 

provided by the sender as permitted by 

the commentary accompanying 

§ 1005.31 in making such disclosure. 

Comment 33(a)–8 of the Final Rule 

provides two illustrative examples, 

including that, where a provider relies 

on the sender’s representations 

regarding variables that affect the 

amount of taxes imposed by a person 

other than the provider for purposes of 

determining these taxes, the change in 

the amount of currency the designated 

recipient actually receives due to the 

taxes actually imposed does not 

constitute an error. 

Given the proposed revisions to 

§ 1005.31(b)(1)(vi) and the 

accompanying commentary, the 

proposed rule would make consistent 

revisions to § 1005.33(a)(2)(iv) and 

comment 33(a)–8 (redesignated as 

comment 33(a)–9) and other nonsubstantive revisions for clarity.8 As 

revised, § 1005.33(a)(2)(iv) would add 

that there is no error if there is a change 

in the amount or type of currency 

received by the designated recipient 

from the amount or type of currency 

stated in the disclosure provided to the 

sender under § 1005.31(b)(2) or (3) 

because the provider did not disclose 

foreign taxes other than those imposed 

by a country’s central government. 

Revised comment 33(a)–9 would 

explain that under § 1005.31(b)(1)(vi), 

providers need not disclose regional, 

provincial, state, or other local foreign 

taxes. Further, under the commentary 

accompanying § 1005.31, the remittance 

transfer provider may rely on the 

sender’s representations in making 

certain disclosures. The revised 

comment would explain that any 

discrepancy between the amount 

disclosed and the actual amount 

received resulting from the provider’s 

reliance upon these provisions does not 

constitute an error under 

§ 1005.33(a)(2)(iv). The proposed 

comment would revise the illustrative 

example to explain that, if the provider 

relies on the sender’s representations 

regarding variables that affect the 

amount of recipient institution fees or 

taxes imposed by a person other than 

the provider for purposes of 

determining fees or taxes required to be 

disclosed under § 1005.31(b)(1)(vi), or 

does not disclose regional, provincial, 

state, or other local foreign taxes, as 

permitted by § 1005.31(b)(1)(vi), the 

change in the amount of currency the 

designated recipient actually receives 

due to the recipient institution fees or 

foreign taxes actually imposed does not 

constitute an error. The proposed 

revision to the comment also makes 

conforming changes to internal crossreferences and other minor, nonsubstantive edits for clarity. 

33(c) Time Limits and Extent of 

Investigation 

33(c)(2) Remedies 

Section 1005.33(c)(2) implements 

EFTA section 919(d)(1)(B) and 

establishes procedures and remedies for 

correcting an error under the rule. In 

particular, where there has been an error 

under § 1005.31(a)(1)(iv) for failure to 

make funds available to a designated 

recipient by the disclosed date of 

availability, § 1005.33(c)(2)(ii) permits a 

sender to choose either: (1) to obtain a 

refund of the amount tendered in 

connection with the remittance transfer 

that was not properly transmitted, or an 

amount appropriate to resolve the error, 

or (2) to have the remittance transfer 

provider resend to the designated 

recipient the amount appropriate to 

resolve the error, at no additional cost 

to the sender or designated recipient. 

See §§ 1005.33(c)(2)(ii)(A). However, if 

the error resulted from the sender 

providing incorrect or insufficient 

information, § 1005.33(c)(2)(ii)(A)(2) 

permits third party fees to be imposed 

for resending the remittance transfer 

with the corrected information. 

Comment 33(c)–2 in the Final Rule 

provides additional guidance regarding 

remedies in circumstances where a 

remittance transfer provider’s failure to 

make funds available to a designated 

recipient by the disclosed date of 

availability occurred because the sender 

provided incorrect or insufficient 

information in connection with the 

transfer. The comment then gives, as 

one example of incorrect or insufficient 

information provided by a sender, a 

sender erroneously identifying the 

recipient’s account number. In light of 


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77200 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

9As noted below, while the Bureau does not 

believe that other mistakes by a sender are likely 

to result in a mis-deposit, other mistakes, such as 

an incorrect recipient address, still could prevent a 

transfer from being completed. 

10Section 1005.33(c)(1) requires a remittance 

transfer provider to report the results to the sender 

of the provider’s investigation into a reported error. 

This report, which may be provided orally, must 

include notice of any remedies available for 

correcting any error that the provider determines 

has occurred. 

11Section 1005.31(b)(2)(i) requires all of the 

applicable disclosures contained in the prepayment 

disclosure (§ 1005.31(b)(1)), (b)(2)(ii) requires 

disclosure of the date in the foreign country on 

which funds will be available, and (b)(2)(iii) 

requires disclosure of the name, and if provided by 

the sender, address of the designated recipient. 

the proposal to revise the definition of 

‘‘error’’ in § 1005.33(a)(1)(iv), proposed 

comment 33(c)–2 removes this example, 

and replaces it with examples of a 

sender erroneously identifying the 

designated recipient’s address or by 

providing insufficient information to 

enable the entity distributing the funds 

to identify the correct designated 

recipient.9 As with existing comment 

33(c)–2, the Bureau does not intend 

proposed comment 33(c)–2 to contain 

an exhaustive list of incorrect or 

insufficient information that a sender 

could provide or fail to provide. The 

Bureau is also proposing language, in 

accordance with proposed 

§ 1005.33(a)(1)(iv)(D), to clarify that a 

sender does not provide incorrect or 

insufficient information if the sender 

provides an incorrect account number 

that results in a mis-deposit and the 

provider has satisfied the requirements 

of § 1005.33(h). 

In addition, existing comment 33(c)– 

2 also explains the procedure for 

resending funds when an error occurred 

due to incorrect or insufficient 

information provided by the sender. The 

procedure explained in comment 33(c)– 

2 is distinct from the procedure used for 

all other situations in which funds are 

to be resent to resolve an error. For most 

of these other errors, comment 33(c)–3 

explains that the resend is to occur at no 

additional cost to the sender and that 

the provider is to apply the same 

exchange rate, fees and taxes stated in 

the disclosure provided under 

§ 1005.31(b)(2) or (3). By contrast, 

existing comment 33(c)–2 explains that 

for errors under § 1005.33(a)(1)(iv), 

where the error occurred due to 

incorrect or insufficient information 

provided by the sender, a request to 

resend is a request for a remittance 

transfer, that the provider must provide 

the disclosures required by § 1005.31 for 

a resend, and that the provider must use 

the exchange rate it is using for such 

transfers on the date of the resend if 

funds were not already exchanged in the 

first unsuccessful remittance transfer 

attempt. 

Since the Bureau issued the Final 

Rule, industry has requested more 

guidance as to the timing and content of 

the disclosures that must be provided 

for resends following errors that 

occurred because a sender provided 

incorrect or insufficient information. 

Specifically, industry has asked how to 

provide disclosures where a sender 

either designates a remedy at the time 

that the sender reports the error or never 

designates a remedy, particularly in 

situations where the provider does not 

make direct contact with the sender 

when providing a § 1005.33(c)(1) 

report.10

In addition, as originally adopted, 

comment 33(c)–2 has created 

uncertainty for remittance transfer 

providers, as it does not provide 

guidance on how or when to provide the 

§ 1005.31 disclosures to senders, how 

providers can reasonably ensure the 

accuracy of the disclosures to the extent 

providers must disclose and guarantee 

an exchange rate for the resend, and 

how providers should administer 

senders’ cancellation rights. 

Specifically, the Final Rule may not 

have adequately addressed potential 

operational tensions between the timing 

and accuracy provisions in 

§§ 1005.31(e) and (f), as referenced in 

comment 33(c)–2, and comments 33(c)– 

3 and 33(c)–4. Comment 33(c)–3 

explains that a sender may designate a 

remedy when first reporting an error, 

while comment 33(c)–4 explains that a 

provider may implement a default 

remedy if a sender does not select one. 

To address these issues, the proposed 

rule proposes additional revisions to 

comment 33(c)–2, adds proposed 

§ 1005.33(c)(3), which provides for 

streamlined disclosures, and adds new 

comment 33(c)–11 explaining the 

proposed provision. 

First, the Bureau proposes to make 

additional revisions to comment 33(c)– 

2. As noted, the existing comment states 

that a request to resend is a request for 

a remittance transfer and, therefore, that 

a remittance transfer provider must 

provide the disclosures required by 

§ 1005.31 for a resend of a remittance 

transfer. Further, the comment states 

that the provider must use the exchange 

rate it is using for such transfers on the 

date of the resend if funds were not 

already exchanged in the first 

unsuccessful remittance transfer 

attempt. The proposed revision deletes 

the bulk of these references, retaining 

only the language stating that a provider 

should use the exchange rate on the date 

of the resend when resending the funds 

and clarifies that this is only necessary 

to the extent currency must be 

exchanged when resending the funds. 

The Bureau also proposes to revise a 

corresponding reference in 

§ 1005.33(c)(2)(ii)(A)(2). 

Second, in lieu of the abovereferenced language in comment 33(c)– 

2 that states that a request to resend is 

a request for a remittance transfer, the 

Bureau proposes to add new 

§ 1005.33(c)(3). Proposed § 1005.33(c)(3) 

provides that if an error under 

§ 1005.33(a)(1)(iv) occurred because the 

sender provided incorrect or insufficient 

information, and if the sender has not 

previously designated a refund remedy 

pursuant to § 1005.33(c)(2)(ii)(A)(1), 

then the provider must comply with 

§ 1005.33(c)(3)(i) or (c)(3)(ii). 

Proposed § 1005.33(c)(3)(i) provides 

that if the remittance transfer provider 

does not make direct contact with the 

sender when providing the report 

required by § 1005.33(c)(1), the provider 

shall provide, orally or in writing, as 

applicable, the following disclosures: 

(A) The disclosures required by 

§§ 1005.31(b)(2)(i) through (iii) for 

remittance transfers and the date the 

provider will complete the resend, using 

the term ‘‘Transfer Date’’ or a 

substantially similar term.11 These 

disclosures must be accurate when the 

resend is made except that these 

disclosures may contain estimates to the 

extent permitted by § 1005.32(a) or (b) 

for remittance transfers; and (B) If this 

transfer is scheduled three or more 

business days before the date of transfer, 

a statement about the rights of the 

sender regarding cancellation reflecting 

the requirements of § 1005.36(c), the 

requirements of which shall apply to the 

resend. Proposed § 1005.33(c)(3)(ii) 

provides that if the provider makes 

direct contact with the sender at the 

same or after the provider provides the 

report required by § 1005.33(c)(1), the 

provider shall provide, orally or in 

writing, as applicable, the disclosures 

required by §§ 1005.31(b)(2)(i) through 

(iii) for remittance transfers. These 

disclosures must be accurate when the 

resend is made except that the 

disclosures may contain estimates to the 

extent permitted by § 1005.32(a), (b)(1), 

or proposed § 1005.32(b)(3) or (b)(4) for 

remittance transfers. 

The Bureau expects that proposed 

§ 1005.33(c)(3) and the proposed 

changes to the commentary would 

facilitate compliance in a number of 

ways. First, if remittance transfer 

providers are unable to directly contact 

the sender when providing the error 

report, the transfer date would generally 

be set in the future and the provider 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77201 

12As proposed, disclosures would be required by 

proposed § 1005.33(c)(3) even if the rate that would 

be disclosed in connection with the resend happens 

to be the same rate that was initially disclosed to 

the sender. Furthermore, in addition to providing 

estimates pursuant to § 1005.32(b)(2), proposed 

§ 1005.33(c)(3)(i) permits providers to disclose 

estimates pursuant to § 1005.32(a), (b)(1), and 

proposed § 1005.32(b)(3) and (b)(4). 

13Section 1005.32(b)(2) permits a remittance 

transfer provider to estimate certain information in 

the pre-payment disclosure and the receipt 

provided when payment is made for a remittance 

transfer. Pursuant to § 1005.32(d), an estimated 

exchange rate in this circumstance generally must 

be based on the exchange rate that the provider 

would have used or did use that day in providing 

disclosures to a sender requesting such a remittance 

transfer to be made on the same day. 

would be permitted to disclose an 

estimated exchange rate pursuant to 

§ 1005.32(b)(2). Second, once the 

disclosure was delivered, the provider 

need not provide anything additional to 

the sender. Third, the cancellation rules 

of § 1005.34(a), which otherwise would 

allow the sender thirty minutes to 

cancel the resend, would not apply 

(though, in certain cases, the alternate 

cancellation rule in § 1005.36(c) would 

apply). 

At the same time, the proposed 

changes would ensure that senders 

receive notice and an ability to cancel 

in cases in which the exchange rate that 

would be applied to the resent 

remittance transfer is not the rate that 

was initially disclosed to the sender 

(even if the sender has already chosen 

to have the funds resent).12 The Bureau 

believes this would be helpful to 

consumers and consistent with the 

intent of the original comment. For this 

reason, the Bureau is adapting, in 

proposed § 1005.33(c)(3)(i), the 

procedures used in § 1005.36 for 

remittance transfers scheduled before 

the date of transfer. The Bureau believes 

the proposed revisions will balance 

senders’ interests in obtaining notice in 

situations where the exchange rate may 

change with their interest in swift error 

resolution. The proposal would, for 

example, permit providers to leave 

phone messages, or to mail, or email the 

required disclosures. Under the Final 

Rule, this may have been impracticable 

because of the need to provide an exact 

exchange rate and to determine when 

the sender’s right to cancel begins and 

ends. 

Proposed § 1005.33(c)(3)(i) will allow 

remittance transfer providers to set a 

future date of transfer, and to disclose 

estimates pursuant to § 1005.32(b)(2) if 

the provider does not make direct 

contact with the sender.13 A sender 

would be able to cancel the remittance 

transfer once the sender received the 

§ 1005.33(c)(1) and (3)(i) notices, up to 

three business days before the date of 

transfer. However, the revised 

disclosure regime would not 

indefinitely delay the resend beyond the 

date of transfer if the provider does not 

receive confirmation from the sender 

and either the default remedy was to 

resend, or the sender elected resend 

when reporting the error. Where the 

provider does make direct contact, 

proposed § 1005.33(c)(3)(ii) would 

require the provider to disclose the 

exchange rate used for remittance 

transfers on the date of the resend. 

The Bureau is not proposing to 

require the disclosures in proposed 

§ 1005.33(c)(3) every time a remittance 

transfer provider resends funds when 

remedying an error. Rather, the Bureau 

intends that disclosures pursuant to 

proposed § 1005.33(c)(3) are only 

required if the exchange rate used for 

the resent remittance transfer is not the 

exchange rate originally disclosed and 

currency must be exchanged to 

complete the resend. Moreover, a resend 

under this proposed provision can only 

occur when the error occurred due to 

incorrect or insufficient information 

provided by the sender. 

The Bureau is also proposing a 

conforming change to § 1005.33(c)(2), to 

allow for situations in which proposed 

§ 1005.33(c)(3)(i) permits resends to 

occur later than one business day after, 

or as soon as reasonably practicable, 

after receiving the sender’s instructions 

or the provider determines an error had 

occurred. Separately, the Bureau notes 

that in the Final Rule, 

§ 1005.33(c)(2)(ii)(A)(2) allows a 

provider to impose third party fees for 

resending the remittance transfer when 

an error occurred because the sender 

provided incorrect or insufficient 

information. The Bureau seeks comment 

on whether the provider should also be 

permitted to also impose taxes incurred 

when resending funds for the same 

reason. 

Finally, proposed comment 33(c)–11 

explains that the disclosures in 

proposed § 1005.33(c)(3) need not be 

provided either if the sender has elected 

a refund remedy or if the remittance 

transfer provider’s default remedy is a 

refund and the sender has not selected 

a remedy prior to the time the provider 

is providing the § 1005.33(c)(1) report. 

Furthermore, to the extent that the 

resend is not properly transmitted, the 

initial error has not been resolved and 

the provider’s duty to resolve it remains 

not fully satisfied. Proposed comment 

33(c)–11.i further clarifies that, for 

purposes of determining the date of 

transfer for disclosures made in 

accordance with proposed 

§ 1005.33(c)(3)(i), if the provider is 

unable to speak to or otherwise make 

direct contact with the sender, the 

provider may use the same date on 

which it would provide a default 

remedy (i.e. one business day after 10 

days after the provider has sent the 

report provided under § 1005.33(c)(1)). 

See comment 33(c)–4. Proposed 

comment 33(c)–11.ii explains that if the 

provider makes direct contact with the 

sender at the same time or after 

providing the report required by 

§ 1005.33(c)(1), and if the time to cancel 

a resend disclosed pursuant to 

§ 1005.33(c)(3)(i)(B) has not passed, 

§ 1005.33(c)(2) requires the provider to 

resend the funds the next business day 

or as soon as reasonably practicable 

thereafter if the sender elects a resend 

remedy. For such a resend, the provider 

must provide the disclosures required 

by proposed § 1005.33(c)(3)(ii) and use 

the exchange rate it is using for such 

transfers on the date of resend to the 

extent that currency must be exchanged 

when resending funds. When providing 

disclosures pursuant to proposed 

§ 1005.33(c)(3)(ii), the provider need not 

allow the sender to cancel the resend. 

To illustrate, assume that when an 

error is first reported, a sender elects to 

have the remittance transfer provider 

resend the funds should an error be 

found to have occurred. Upon 

completion of the investigation, the 

provider provides an oral or written 

report on February 1, in accordance 

with § 1005.33(c)(1), informing the 

sender that an error occurred and that 

it was a result of incorrect information 

provided by the sender, that currency 

must be exchanged on the resend, and 

thus the exchange rate may change. At 

the same time and if no direct contact 

is made, pursuant to proposed 

§ 1005.33(c)(3)(i), the provider will also 

deliver notice that it will resend the 

remittance transfer on February 12 

(assuming that is a business day) and 

that a sender’s request to cancel must be 

received by three business days prior to 

the date of transfer. If necessary, the 

provider also would disclose the 

estimated exchange rate pursuant to 

§ 1005.32(b)(2), among other required 

items. Any time before February 9 (the 

deadline to exercise cancellation rights), 

the sender may contact the provider and 

request that the remittance transfer be 

completed within one business day, if 

reasonably possible. If earlier resend 

occurs, the provider will then provide 

the disclosures required by proposed 

§ 1005.33(c)(ii). If the sender does not 

contact the provider, the funds will be 

resent, as disclosed, on February 12. 

The Bureau seeks comment on 

whether, in lieu of the proposed regime 

outlined above, the Bureau should 

adjust the procedure for resending funds 


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77202 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

to resolve an error described in 

§ 1005.33(a)(1)(iv) that occurred because 

the sender provided incorrect or 

insufficient information (other than an 

incorrect account number). In adopting 

the Final Rule, the Bureau explained 

that when the sender providing 

incorrect or insufficient information 

causes the error, the Bureau believed 

that it is appropriate generally to put the 

provider and the sender in the same 

position as if the first unsuccessful 

remittance transfer had never occurred. 

Thus, the provider would use the 

exchange rate it is using for such 

transfers on the date of the resend. 

Nevertheless, the Bureau seeks 

comment on whether it would be 

preferable to adopt instead the resend 

procedure that exists for other errors, 

see § 1005.33(c)(2)(ii)(A)(1), or another 

alternative. Using the procedure for 

other errors would require a provider to 

resend funds at the original exchange 

rate, but it could further simplify the 

rule by eliminating the need to provide 

disclosures required by proposed 

§ 1005.33(c)(3). 

33(h) Incorrect Account Number 

Provided by the Sender 

The Bureau proposes to add a new 

§ 1005.33(h), which would contain the 

conditions a remittance transfer 

provider must satisfy before the new 

exception to the definition of error in 

proposed § 1005.33(a)(1)(iv)(D) could 

apply to situations in which a sender 

provides a wrong account number, 

which results in a mis-deposit. 

Proposed § 1005.33(h) provides that no 

error has occurred pursuant to 

§ 1005.33(a)(1)(iv) for the failure to 

make funds available to a designated 

recipient by the date of availability 

stated in the disclosure provided 

pursuant to § 1005.31(b)(2) or (3) if the 

provider can satisfy each of the 

conditions in proposed §§ 1005.33(h)(1) 

through (4). 

Proposed § 1005.33(h)(1) provides the 

first condition that must be met for no 

error to have occurred pursuant to 

proposed § 1005.33(a)(1)(iv)(D). 

Specifically, this condition could be 

satisfied if the remittance transfer 

provider can demonstrate that the 

sender provided an incorrect account 

number to the provider in connection 

with the remittance transfer. Under 

proposed § 1005.33(h)(1), if the provider 

did not know or could not demonstrate 

that the sender provided an improper 

account number, then the failure to 

deliver the transfer by the promised date 

of availability because of an incorrect 

account number would continue to be 

an error to which existing error 

procedures and remedies would apply. 

The Bureau does not believe that this is 

a substantial change from the existing 

rule, which already provides an 

incentive for providers to document 

whether the sender has provided 

inaccurate information in order to 

invoke the ability to charge certain 

related fees in connection with the 

resent transaction. See 

§ 1005.33(c)(2)(ii)(A)(2). The Bureau 

does believe, however, that this 

proposed change further incentivizes 

providers to implement procedures to 

limit the possibility of a sender 

providing an incorrect account number. 

Proposed § 1005.33(h)(2) contains the 

second condition, which is that the 

remittance transfer provider be able to 

demonstrate that the sender had notice 

that, in the event the sender provided an 

incorrect account number, that the 

sender could lose the transfer amount. 

The Bureau believes it is important for 

senders to be notified that they could 

potentially be required to bear the cost 

of providing an incorrect account 

number. The Bureau understands that 

many providers’ current practices 

incorporate such a notice to senders in 

their disclosures in connection with 

their obligation under UCC Article 4A. 

In particular, under UCC 4A–207, a 

sender cannot bear the cost of a mistake 

if the provider did not notify the sender 

that the payment on the transfer order 

might be made even if the sender’s 

account number specifies a person 

different from the named beneficiary. 

The UCC does not specify the form of 

the notice. See UCC 4A–207(c)(2). The 

Bureau similarly has not specified the 

form of the notice required by proposed 

§ 1005.33(h)(2) but seeks comment on 

whether the Bureau should specify the 

form of the notice and how and when 

it should be delivered. 

Proposed § 1005.33(h)(3) provides the 

third condition for the exception in 

proposed § 1005.33(a)(1)(iv)(D) to apply. 

It provides that the incorrect account 

number resulted in the deposit of the 

remittance transfer into a customer’s 

account at the recipient institution other 

than the designated recipient’s account. 

The Bureau believes that once a 

remittance transfer is deposited into the 

wrong account, a remittance transfer 

provider is much less likely to be able 

to recover the funds. The Bureau does 

not believe that similar concerns exist 

for transfers that are sent to accounts 

and are either rejected by the recipient 

institution or otherwise reversed before 

deposit. In such cases, the Bureau 

believes that the provider would be 

much more likely to be able to recover 

the funds and either refund or resend 

the transfer and the proposed exception 

in proposed § 1005.33(a)(1)(iv)(D) would 

be unnecessary. 

Proposed § 1005.33(h)(4) provides the 

fourth condition for the exception in 

proposed § 1005.33(a)(1)(iv)(D) to apply. 

It states that a remittance transfer 

provider to promptly use reasonable 

efforts to recover the amount that was to 

be received by the designated recipient. 

Currently, the Bureau believes that as a 

customer service, many providers 

attempt to recover transfers even when 

they are not transfer deposited into the 

correct account. Thus, the Bureau does 

not believe proposed § 1005.33(h)(4) 

constitutes a significant departure from 

market practice in many cases today. 

Proposed comment 33(h)–1 explains 

that proposed § 1005.33(h)(4) requires a 

remittance transfer provider to use 

reasonable efforts to recover the amount 

that was to be received by the 

designated recipient. Whether a 

provider has used reasonable efforts 

does not depend on whether the 

provider is ultimately successful in 

recovering the amount that was to be 

received by the designated recipient. 

The proposed comment accounts for the 

fact that the options available to a 

provider to recover funds may vary 

depending on the method used to send 

the remittance transfer, the destination 

of the remittance transfer, the provider’s 

relationship with the receiving 

institution, and when and by whom the 

error was discovered. The proposed 

comment also provides examples of 

how a provider might use reasonable 

efforts: (i) The provider promptly calls 

or otherwise contacts the recipient’s 

institution, either directly or indirectly 

through any correspondent(s) or other 

intermediaries or service providers used 

for the particular transfer, to request that 

the amount that was to be received by 

the designated recipient be returned, 

and if required by law or contract, by 

requesting that the recipient institution 

obtain a debit authorization from the 

incorrectly credited accountholder; (ii) 

the provider promptly uses a messaging 

service through a funds transfer system 

to contact the recipient’s institution, 

either directly or indirectly through any 

correspondent(s) or other intermediaries 

or service providers used for the 

particular transfer, to request that the 

amount that was to be received by the 

designated recipient be returned, in 

accordance with the messaging service’s 

rules and protocol, and if required by 

law or contract, by requesting that the 

recipient institution obtain a debit 

authorization from the holder of the 

incorrectly credited account; and (iii) in 

addition to the methods outlined above, 

to the extent that a correspondent 

institution, other service providers to 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77203 

14Comments on this second aspect of the 

proposal may be submitted within the comment 

period applicable to the remainder of the proposal. 

15Section 1022(b)(2)(A) of the Dodd-Frank Act 

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 section 1026 of 

the Dodd-Frank Act; and the impact on consumers 

in rural areas. 

16The Bureau also solicited feedback from other 

agencies regarding the proposed rule. 

17Benefits and costs incurred by remittance 

transfer providers may, in practice, be shared 

among providers’ business partners, such as agents, 

correspondent banks, or foreign exchange 

providers. To the extent that any of these business 

partners are covered persons, the proposal could 

have benefits or costs for these covered persons as 

well. 

the recipient institution, or the recipient 

institution requests documentation or 

other supporting information, the 

provider promptly provides such 

documentation or other supporting 

information to the extent available. 

The Bureau does not believe it is 

appropriate to propose specific methods 

that a remittance transfer provider must 

use to recover the funds due to the 

varying ways in which providers and 

other institutions communicate. For 

example, in many instances, financial 

institutions might use correspondent 

networks to send remittance transfers to 

designated recipients’ accounts abroad. 

In these instances, the provider, its 

correspondent institution, other 

intermediary institutions, and possibly 

the recipient institution may 

communicate through a shared 

messaging system. It is through this 

system that a provider might attempt to 

recover a mis-deposited remittance 

transfer. In this circumstance, 

mandating other efforts—such as 

directly contacting the recipient’s 

institution—might not be as feasible or 

productive, although in some instances, 

a provider might determine it to be 

reasonable to contact the foreign 

institution directly. The Bureau solicits 

comment on the proposed examples and 

whether there are additional examples 

of how a provider might use reasonable 

efforts to recover funds. 

Finally, proposed comment 33(h)–2 

explains that § 1005.33(c)(1) requires a 

remittance transfer provider to act 

promptly in using reasonable efforts to 

recover the amount that was to be 

received by the designated recipient. 

While promptness may depend on the 

circumstances, generally a provider acts 

promptly when it does not delay in 

seeking recovery of the mis-deposited 

funds. For example, if the sender 

informs the provider of the error before 

the date of availability disclosed 

pursuant to § 1005.31(b)(2)(ii), the 

provider should act to contact the 

recipient’s institution before the date of 

delivery, if possible, as doing so may 

prevent the funds from being misdeposited. In other circumstances as 

well, prompt reasonable efforts will 

increase the chances that the funds 

remain in the incorrect account. 

Generally, the Bureau believes that 

providers will be more successful in 

securing the return of mis-deposited 

funds if providers act quickly. 

Miscellaneous Conforming Edits 

Given the proposed revisions to 

§ 1005.31(b)(1)(vi) and new proposed 

§§ 1005.32(b)(3) and (4), conforming 

revisions are proposed in the following 

provisions of the Final Rule as 

necessary: § 1005.36(b)(3); comment 32– 

1; comment 32(d)–1; comment 33(a)– 

3.ii; and comment 36(b)–3. 

Effective Date 

The Final Rule is scheduled to be 

effective on February 7, 2013, which is 

one year after publication of the 

February Final Rule in the Federal 

Register. However, in light of this 

proposal, the Bureau is proposing to 

extend the effective date in two steps. 

First, the Bureau is proposing to 

temporarily delay the effective date of 

the Final Rule until the Bureau finalizes 

this proposal. The Bureau realizes that 

regardless of how or whether the Final 

Rule is changed, remittance transfer 

providers’ preparations for its 

implementation may be affected until 

the Bureau finalizes the rule. The 

Bureau seeks comment on the proposal 

to temporarily delay the effective date of 

the Final Rule, by issuing a temporary 

extension before February 7, 2013. The 

Bureau requests comment on this aspect 

of the proposed rule only by January 15, 

2013. 

Second, the Bureau is also proposing 

that the Final Rule, and any revisions 

thereto resulting from this proposal, 

would become effective 90 days after 

the Bureau finalizes this proposal. 

Given the limited scope of the proposed 

revisions, the Bureau believes that this 

90-day period will be sufficient for 

providers to implement any necessary 

changes to their systems. The Bureau 

also believes that providers should be 

working toward implementing those 

portions of the Final Rule unaffected by 

this proposal during the interim period, 

for instance by continuing to research 

foreign central governments’ taxes. 

Thus, the Bureau believes that, apart 

from the temporary delay, this proposed 

90-day extension period would balance 

the need for consumers to receive the 

protections afforded by the rule as 

quickly as possible with industry’s need 

to make adjustments to comply with the 

provisions of the rule. The Bureau seeks 

comment on whether the rule should be 

effective 90 days after the Bureau 

finalizes this proposal.14

V. Section 1022(b)(2) Analysis 

A. Overview 

In developing the proposed rule, the 

Bureau has considered potential 

benefits, costs, and impacts 15 and has 

consulted or offered to consult with the 

prudential regulators and the Federal 

Trade Commission, including regarding 

the consistency of the proposed rule 

with prudential, market, or systemic 

objectives administered by such 

agencies.16

The analysis below considers the 

benefits, costs, and impacts of the key 

provisions of the proposal against the 

baseline provided by the Final Rule. 

Those provisions regard: Recipient 

institution fees and foreign taxes, 

incorrect or insufficient information 

regarding transfers, and the effective 

date. With respect to these provisions, 

the analysis considers the benefits and 

costs to senders (consumers) and 

remittance transfer providers (covered 

persons).17 The Bureau has discretion in 

future rulemakings to choose the most 

appropriate baseline for that particular 

rulemaking. 

The Bureau notes at the outset that 

quantification of the potential benefits, 

costs, and impacts of the proposal is not 

possible due to the lack of available 

data. As discussed in the February Final 

Rule, there is a limited amount of data 

about remittance transfers and 

remittance transfer providers that are 

publicly available and representative of 

the full market. Similarly, there are 

limited data on consumer behavior, 

which would be essential for 

quantifying the benefits or costs to 

consumers. Furthermore, the Final Rule 

is not yet effective and providers are 

still in the process of implementing its 

requirements. Therefore, the analysis 

generally provides a qualitative 

discussion of the benefits, costs, and 

impacts of the proposed rule. As 

discussed in more detail below, the 

Bureau expects that the proposed 

provisions will generally benefit 

providers by facilitating compliance, 

while maintaining the Final Rule’s 

valuable new consumer protections and 

ensuring that these protections can be 

effectively delivered to consumers. 


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77204 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

B. Potential Benefits and Costs to 

Consumers and Covered Persons 

1. Recipient Institution Fees and 

Foreign Taxes 

a. Benefits and Costs to Covered Persons 

Compared to the Final Rule, the 

proposal would benefit remittance 

transfer providers by giving them 

options that could reduce the cost of 

providing required disclosures. 

Allowing providers to rely on senders’ 

representations regarding certain 

recipient institution fees, or to estimate 

such fees and foreign taxes based on 

certain assumptions or sources of 

information would reduce the cost of 

preparing required disclosures. The 

proposal would further reduce the cost 

of gathering information by limiting 

providers’ obligation to disclose foreign 

taxes to those imposed by a country’s 

central government. 

The proposed changes regarding fee 

and tax disclosures might additionally 

benefit remittance transfer providers by 

facilitating their continued participation 

in the market. Industry has suggested 

that due in part to the Final Rule’s third 

party fee and foreign tax disclosure 

requirements, some providers might 

eliminate or reduce their remittance 

transfer offerings, such as by not 

sending transfers to countries where tax 

or fee information is particularly 

difficult to obtain, due to the lack of 

ongoing reliable and complete 

information sources. By reducing the 

amount of information needed to 

provide disclosures, the proposal could 

encourage more providers to retain their 

current services (and thus any 

associated profit, revenue and 

customers). 

To take advantage of the new 

flexibility that would be provided by the 

proposed rule, some remittance transfer 

providers might choose to bear some 

modest cost to modify their systems to 

calculate disclosures using the new 

methods permitted by the proposal, or 

to describe certain disclosures using the 

term ‘‘Estimated’’ or a substantially 

similar term. However, the Bureau 

believes that any such cost would 

generally be small. Any modification 

would be to existing forms and systems 

changes would be particularly minimal 

for many providers, because the Final 

Rule already sets forth certain 

circumstances in which the term 

‘‘Estimated’’ or a substantially similar 

term must be used. Furthermore, the 

Bureau expects that some providers may 

not have finished any systems 

modifications necessary to comply with 

the Final Rule, and thus may be able to 

incorporate any changes into previously 

planned work. 

Any alternative disclosures could also 

impose costs on any providers that 

chose to take advantage of the flexibility 

permitted by the proposal. The relative 

magnitude would depend on the type of 

disclosure required. But in any case, 

these costs would be optional; providers 

could disclose fees and taxes as required 

by the Final Rule. 

The Bureau expects that the proposed 

provisions regarding fee and tax 

disclosures would mostly affect 

depository institutions, credit unions, 

and broker-dealers that are remittance 

transfer providers. These types of 

providers tend to send most or all of 

their remittances transfers to foreign 

accounts, for which recipient institution 

fees may be charged. Furthermore, due 

to the mechanisms they use to send 

money, they generally have the ability 

to send transfers to virtually any 

destination country (for which tax 

research might be required). By contrast, 

money transmitters that are providers 

are more likely to send remittance 

transfers to be received in cash, for 

which recipient institution fees would 

not be relevant. Furthermore, most 

money transmitters, and particularly 

small ones, generally send transfers to a 

limited number of countries and 

institutions. 

b. Benefits and Costs to Consumers 

The proposed changes regarding 

recipient institution fees and foreign 

taxes would benefit senders to the 

extent that remittance transfer providers 

pass along any cost savings in the form 

of lower prices. Also, if the proposal 

facilitates providers’ continued 

participation in the market, it would 

facilitate senders’ access to remittance 

transfers, by giving them a wider set of 

options for sending transfers, preserving 

competition, and thus possibly avoiding 

increased prices. 

The proposal might impose costs on 

senders to the extent that it makes 

disclosures less accurate, or if different 

remittance transfer providers were to 

use substantially different approaches to 

identifying the recipient institution fees 

or foreign taxes that would apply. 

Different approaches might make 

comparison shopping more difficult. 

Less accurate information could make it 

more difficult for a sender to know 

whether a designated recipient is going 

to receive an intended sum of money, or 

how much the sender must spend to 

deliver a specific amount of foreign 

currency to a recipient. 

However, the Bureau expects that 

costs associated with reduced accuracy 

could be mitigated. First, the Bureau 

expects that competition might give 

providers incentives to disclose exact 

recipient institution fees and foreign 

taxes (at least those assessed by central 

governments) when reasonably possible, 

as in some cases this would allow 

providers to disclose lower fees and 

taxes than they would if they relied on 

the proposal’s provisions. Second, in 

circumstances where providers did take 

advantage of the flexibility permitted by 

the proposal, senders might still be able 

to engage in comparison shopping. To 

the extent that different providers used 

similar information and assumptions to 

estimate foreign taxes and recipient 

institution fees, the disclosures that 

senders received would generally 

remain useful for determining which 

provider is cheapest or for making 

decisions that trade off cost for other 

considerations. Finally, if foreign 

subnational taxes are imposed less 

frequently and in smaller amounts than 

foreign taxes assessed by central 

governments, then the Bureau believes 

that even with the proposed changes to 

the Final Rule, senders generally would 

have the most important information 

about the prices of remittance transfers. 

Even though the proposal would allow 

providers to rely on fee information that 

may not be specific to a recipient 

institution, the proposal’s focus on 

informing senders of the highest 

possible amount of foreign taxes or 

recipient institution fees that could be 

imposed would limit the circumstances 

in which senders might be surprised by 

deductions that are larger than what is 

disclosed. Senders would still generally 

receive a reasonable approximation of 

the foreign taxes and recipient 

institution fees that might be charged, 

and sufficient information to help them 

know whether they are sending enough 

money to cover recipients’ needs. 

The use of the term ‘‘Estimated’’ (or 

a substantially similar term) in cases in 

which subnational taxes were not 

disclosed or the new estimate 

provisions are used could aid senders, 

by indicating that disclosed amounts 

may differ from the amount received. 

But the use of the term ‘‘Estimated’’ in 

the vast majority of cases could impair 

senders’ ability to compare disclosures 

and have an adverse impact on the 

exercise of error resolution rights 

because it is difficult to know the 

reasons why two disclosures with 

estimates differ. In instances in which 

subnational taxes were not disclosed, 

alternative methods of alerting senders 

that figures are not exact (or not 

requiring any such notice) might impose 

fewer costs on senders. 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77205 

18Prior to the February Final Rule, the Credit 

Union National Association reported a rate of less 

than 1% for international wire ‘‘exceptions.’’ 

19A similar analysis regarding benefits would 

likely apply if the Bureau expanded the proposed 

exception to apply in instances in which a failure 

to make funds available to the designated recipient 

by the disclosed date of availability resulted from 

a mistake by a sender other than providing an 

incorrect account number. Any optional costs might 

depend on the nature of any such extension. 

2. Incorrect or Insufficient Information 

a. Benefits and Costs to Covered Persons 

The proposal includes two sets of 

proposed changes related to errors 

caused by the provision of incorrect or 

insufficient information. It would create 

a new exception to the definition of 

error. It would also adjust the 

requirements for resending remittance 

transfers in certain situations in which 

funds may be resent to correct errors. 

The exception to the definition of 

error would benefit remittance transfer 

providers in instances in which senders’ 

account number mistakes, which would 

have resulted in errors under the Final 

Rule, would not constitute errors, 

provided that providers could satisfy 

the conditions enumerated in proposed 

§ 1005.33(h). To the extent that the new 

exception applied, providers would no 

longer bear the costs of funds that they 

could not recover. The magnitude of the 

benefit would depend on the frequency 

of senders’ account number mistakes 

that result in funds being deposited in 

the wrong account with the provider 

unable to recover funds, and the sizes of 

those lost transfers.18 The magnitude 

would also depend on the extent to 

which providers maintain procedures 

necessary to satisfy the conditions 

enumerated in proposed § 1005.33(h). 

Remittance transfer providers might 

further benefit if the proposal reduced 

the potential for fraudulent account 

number mistakes made by unscrupulous 

senders, which providers have cited as 

a risk under the Final Rule. By reducing 

the remedies available in such cases, the 

proposal would reduce the direct costs 

of fraud and the indirect costs of fraud 

prevention and facilitate providers’ 

continued participation in the 

remittance transfer market, without (or 

with fewer) new limitations on service. 

Industry has indicated that, at least in 

part, due to the risk of such fraud under 

the Final Rule, providers might exit the 

market or limit the size or type of 

transfers sent. The magnitude of these 

benefits would depend on the 

magnitude of the actual and perceived 

risk of account number-related fraud 

under the Final Rule.19

The new exception to the definition of 

error would not impose any new 

requirements on remittance transfer 

providers and therefore would not 

directly impose costs on providers. But, 

to ensure that they can satisfy the 

conditions enumerated in proposed 

§ 1005.33(h) and thus trigger the new 

exception, providers may choose to bear 

some costs. For instance, providers 

might change their customer contracts 

or other communications to provide to 

senders the notice contemplated by 

proposed § 1005.33(h)(2). However, the 

Bureau expects that the cost of doing so 

would be modest, particularly because 

the proposed rule does not mandate any 

particular notice wording, form, or 

format, and the Bureau expects that 

many providers would integrate any 

such notice into existing 

communications. 

The Bureau expects that providers 

would generally not experience any 

other costs if they chose to satisfy the 

remainder of the conditions in proposed 

§ 1005.33(h), because their existing 

practices generally would already 

satisfy those conditions. In particular, 

based on outreach, the Bureau believes 

that keeping records or other documents 

that could demonstrate the conditions 

described in § 1005.33(h) would 

generally match providers’ usual and 

customary practices to serve their 

customers, to manage their risk, and to 

satisfy the requirements under the Final 

Rule to retain records of the findings of 

investigations of alleged errors. See 

§ 1005.33(g)(2). 

The extent to which remittance 

transfer providers would choose to bear 

any costs related to proposed 

§ 1005.33(h) and the magnitude of such 

costs would depend on providers’ 

individual business practices, their 

expectations about the frequency and 

size of transfers that are deposited into 

the wrong accounts and not recovered 

because of account number mistakes by 

senders, their expectations about the 

risk of fraud, as well as the extent to 

which providers have already begun 

adapting their practices to the Final 

Rule. The Bureau expects that providers 

would only develop their practices to 

comply with § 1005.33(h) if doing so 

would benefit the providers by more 

than the costs of implementing these 

practices. The Bureau believes that this 

could be the case for most providers that 

make transfers to accounts, particularly 

because the practices described in 

§ 1005.33(h) closely match existing 

practice, as well as, for the most part, 

the practices that providers would 

develop to comply with the Final Rule. 

The proposed changes regarding 

requests to resend for certain errors 

would also benefit remittance transfer 

providers. In instances in which they 

are applicable, as discussed above, the 

proposed changes would, in many 

cases, allow a provider to resend a 

transfer with less uncertainty about 

when and how to resend it and possibly 

to do so using an estimated exchange 

rate. The proposed changes also could 

mean that in the narrow circumstances 

in which they would apply, providers 

would not need to provide as many 

written disclosures as under the Final 

Rule. Providers could also benefit from 

the alternative on which the Bureau is 

seeking comment, to adjust the Final 

Rule’s remedy provisions so that 

anytime a remittance transfer is resent 

to resolve an error, the exchange rate 

would remain the rate stated in the 

original disclosure. This alternative 

would eliminate any cost of additional 

disclosures related to the covered 

resends. Unlike the Final Rule, 

however, the alternative would not 

permit a provider to charge the sender 

again for third party fees incurred when 

the transfer was sent the first time. 

Furthermore, the alternative could 

expose providers to additional exchange 

rate risk. When funds are resent, a 

provider might either gain or lose 

money related to the change in market 

exchange rates between the time of the 

original transfer and the time of the 

resend. 

Either the proposed changes regarding 

resend remedies, or the alternative on 

which the Bureau seeks comment, could 

impose a cost on remittance transfer 

providers to revise their procedures. 

Providers might also change their 

systems to generate the proposed 

streamlined disclosures, which could 

include the date of transfer, an element 

that is currently required on disclosures 

only for some remittance transfers. See 

§§ 1005.30(b)(2)(vii) and 1005.36(d). 

However, the Bureau expects these costs 

to be modest, because the modifications 

could be made based on an existing 

disclosure form. The Bureau also 

expects that many providers would 

incorporate such modifications into 

others they would carry out to comply 

with the Final Rule. 

b. Benefits and Costs to Consumers 

The new exception to the definition of 

error would benefit senders to the extent 

that remittance transfer providers pass 

along any cost savings in the form of 

lower prices. The new exception would 

also benefit senders, to the extent it 

would enable more providers to stay in 

the market or preserve the breadth of 

their current offerings, thus preserving 

competition. 

Under certain conditions, a sender 

who provided an incorrect account 

number resulting in funds being 

delivered to the wrong account would 


srobinson on DSK4SPTVN1PROD with 
77206 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

20A similar analysis would likely apply if the 

Bureau expanded the proposed exception to apply 

in instances in which a failure to make funds 

available to the designated recipient by the 

disclosed date of availability resulted from a 

mistake by a sender other than an incorrect account 

number. 

21Under this alternative, for any individual 

remittance transfer that is resent, a sender (like a 

remittance transfer provider) might either gain or 

lose money related to the change in market 

exchange rates between the time of the original 

transfer and the time of the resend. 

bear the costs of those mis-deposited 

funds. However, as discussed above, the 

Bureau expects that the incidence of 

such losses would be rare; furthermore, 

any such cost may be mitigated, because 

senders would have stronger incentives 

to ensure the accuracy of account 

number information to the extent 

possible.20

The Bureau expects that the proposed 

changes regarding remittance transfers 

that are resent would have very small 

impacts on senders. As described above, 

the Bureau expects that the 

circumstances in which the proposed 

changes would apply will arise 

infrequently. In instances in which the 

proposed changes would apply, the 

Bureau believes that senders, like 

remittance transfer providers, would 

benefit from the reduced uncertainty. 

However, the proposed changes would 

impose a modest cost on senders 

because they would reduce the 

disclosure requirements for the covered 

resends, including by allowing 

providers to give senders estimated 

rather than actual exchange rates under 

certain circumstances. Senders might 

experience some additional modest 

benefits or costs under the alternative 

on which comment is sought, to resend 

transfers at the original exchange rate. 

Unlike the Final Rule, the alternative 

would not permit a provider to charge 

the sender again for any third party fees 

that were incurred when the transfer 

was sent originally. But this alternative 

would eliminate the requirement for 

additional disclosures related to the 

resend of the transaction.21 However, 

the Bureau expects that under either 

scenario, and particularly the latter, the 

cost would be modest, as senders would 

have received pertinent information 

with the original remittance transfer. 

3. Effective Date 

The proposed temporary delay and 

extension of the Final Rule’s effective 

date would generally benefit remittance 

transfer providers by delaying the start 

of any ongoing compliance costs. The 

additional time might also enable 

providers (and their vendors) to build 

solutions that cost less than those that 

might otherwise have been possible. 

Senders would benefit to the extent that 

the changes eliminated any disruptions 

in the provision of remittance transfer 

services. But the proposed changes 

would impose costs on senders by 

delaying the time when they would 

receive the benefits of the Final Rule. 

C. Access to Consumer Financial 

Products and Services 

As discussed above, the Bureau 

expects that the proposal would not 

decrease and could increase consumers’ 

(senders’) access to consumer financial 

products and services. By reducing the 

costs that remittance transfer providers 

must bear to provide disclosures and 

resolve errors, the proposal could lead 

providers to reduce their prices, 

compared to what they might have 

charged under the Final Rule. By 

facilitating providers’ participation in 

the market, the proposal could give 

senders a wider set of options for 

sending transfers, as well as preserve 

competition. 

D. Impact on Depository Institutions 

and Credit Unions With $10 Billion or 

Less in Total Assets 

Given the lack of data on the 

characteristics of remittance transfers, 

the ability of the Bureau to distinguish 

the impact of the proposal on depository 

institutions and credit unions with $10 

billion or less in total assets (as 

described in section 1026 of the DoddFrank Act) from the impact on 

depository institutions and credit 

unions in general is quite limited. 

Overall, the impact of the proposal on 

depository institutions and credit 

unions would depend on a number of 

factors, including whether they are 

remittance transfer providers, the 

importance of remittance transfers for 

the institutions, how many institutions 

or countries they send to, the cost of 

complying with the Final Rule, and the 

progress made toward compliance with 

the Final Rule. 

However, information that the Bureau 

obtained prior to finalizing the August 

Final Rule suggests that among 

depository institutions and credit 

unions that provide any remittance 

transfers, an institution’s asset size and 

the number of remittance transfers sent 

by the institution are positively, though 

imperfectly, related. There are several 

inferences that can be drawn from this 

relationship. First, the Bureau expects 

that among depository institutions and 

credit unions with $10 billion or less in 

total assets that provide any remittance 

transfers, compared to larger such 

institutions, a greater share will qualify 

for the safe harbor related to the 

definition of ‘‘remittance transfer 

provider’’ and therefore would be 

entirely unaffected by this proposal 

because they are not subject to the 

requirements of the Final Rule. See 

§ 1005.30(f)(2). Second, the Bureau 

believes that depository institutions and 

credit unions with $10 billion or less in 

total assets that are covered by the Final 

Rule would experience, on a perinstitution basis, less of the variable 

benefits and costs described above 

because they generally perform fewer 

remittance transfers than larger 

institutions. However, to the extent that 

the proposal would reduce any fixed 

costs of compliance, such as the costs of 

gathering information on taxes and fees 

if these institutions were to attempt to 

do that themselves, these institutions 

may experience more of the benefits 

described above, on a per-transfer basis. 

Additionally, the Bureau believes that 

the magnitude of the proposal’s impact 

on smaller depository institutions and 

credit unions would be affected by these 

institutions’ likely tendency to rely on 

correspondents or other service 

providers to obtain third party fee and 

foreign tax information, as well as 

provide standard disclosure forms. In 

some cases, this reliance would mitigate 

the impact on these providers of the 

proposal’s provisions regarding such 

information. 

E. Impact of the Proposal on Consumers 

in Rural Areas 

Senders in rural areas may experience 

different impacts from the proposal than 

other senders. The Bureau does not have 

data with which to analyze these 

impacts in detail. However, to the extent 

that the proposal leads to more 

remittance transfer providers to 

continue to provide remittance 

transfers, the proposal may 

disproportionately benefit senders 

living in rural areas. Senders in rural 

areas may have fewer options for 

sending remittance transfers, and 

therefore may benefit more than other 

senders from a change that keeps more 

providers in the market. 

F. Request for Information 

The Bureau will further consider the 

benefits, costs and impacts of the 

proposal before finalizing the proposal. 

The Bureau asks interested parties to 

provide comment or data on various 

aspects of the proposed rule, as detailed 

in the section-by-section analysis. This 

includes comment or data regarding the 

number and characteristics of affected 

entities and consumers; providers’ 

current practices, their plans to 

implement the Final Rule; how this 

proposal might change their current 

practices or their planned practices 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77207 

22For purposes of assessing the impacts of the 

proposed rule on small entities, ‘‘small entities’’ is 

defined in the RFA to include small businesses, 

small not-for-profit organizations, and small 

government jurisdictions. 5 U.S.C. 601(6). A ‘‘small 

business’’ is determined by application of Small 

Business Administration regulations and reference 

to the North American Industry Classification 

System (‘‘NAICS’’) classifications and size 

standards. 5 U.S.C. 601(3). A ‘‘small organization’’ 

is any ‘‘not-for-profit enterprise which is 

independently owned and operated and is not 

dominant in its field.’’ 5 U.S.C. 601(4). A ‘‘small 

governmental jurisdiction’’ is the government of a 

city, county, town, township, village, school 

district, or special district with a population of less 

than 50,000. 5 U.S.C. 601(5). 

23The definition of ‘‘remittance transfer 

provider’’ includes a safe harbor that means that if 

a person provided 100 or fewer remittance transfers 

in the previous calendar year and provides 100 or 

fewer such transfers in the current calendar year, 

it is deemed not to be provided remittance transfers 

for a consumer in the normal course of its business, 

and is thus not a remittance transfer provider. See 

§ 1005.30(f)(2). 

24Small Bus. Admin., Table of Small Business 

Size Standards Matched to North American 

Industry Classification System Codes, http:// 

www.sba.gov/sites/default/files/files/ 

Size_Standards_Table.pdf. Effective March 26, 

2012. 

25Many state-licensed money transmitters act 

through agents. However, the Final Rule applies to 

remittance transfer providers and explains, in 

official commentary, that a person is not deemed to 

be acting as a provider when it performs activities 

as an agent on behalf of a provider. Comment 30(f)– 

1. Furthermore, for the purpose of this analysis, the 

Bureau assumes that providers, and not their 

agents, will assume any costs associated with 

implementing the proposed modifications. 

under the Final Rule; and any other 

portions of this analysis. 

The Bureau requests commenters to 

submit data and to provide suggestions 

for additional data to assess the issues 

discussed above and other potential 

benefits, costs, and impacts of the 

proposed rule. Further, the Bureau seeks 

information or data on the proposed 

rule’s potential impact on consumers in 

rural areas as compared to consumers in 

urban areas. The Bureau also seeks 

information or data on the potential 

impact of the proposed rule on 

depository institutions and credit 

unions with total assets of $10 billion or 

less as described in Dodd-Frank Act 

section 1026 as compared to depository 

institutions and credit unions with 

assets that exceed this threshold and 

their affiliates. 

VI. Regulatory Flexibility Act 

A. Overview 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to conduct 

an initial regulatory flexibility analysis 

(IRFA) and a final regulatory flexibility 

analysis (FRFA) of any rule subject to 

notice-and-comment rulemaking 

requirements, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. The Bureau 

also is subject to certain additional 

procedures under the RFA involving the 

convening of a panel to consult with 

small business representatives prior to 

proposing a rule for which an IRFA is 

required. 5 U.S.C. 609. 

An IRFA is not required for this 

proposal because the proposal, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities. 

B. Affected Small Entities 

The analysis below evaluates the 

potential economic impact of the 

proposed rule on small entities as 

defined by the RFA.22 The proposal 

would apply to entities that satisfy the 

definition of ‘‘remittance transfer 

provider’’: Any person that provides 

remittance transfers for a consumer in 

the normal course of its business, 

regardless of whether the consumer 

holds an account with such person. See 

§ 1005.30(f).23 Potentially affected small 

entities include insured depository 

institutions and credit unions that have 

$175 million or less in assets and that 

provide remittance transfers in the 

normal course of their business, as well 

as non-depository institutions that have 

average annual receipts that do not 

exceed $7 million and that provide 

remittance transfers in the normal 

course of their business.24 These 

affected small non-depository entities 

may include state-licensed money 

transmitters, broker-dealers, and other 

money transmission companies.25

This analysis examines the benefits, 

costs, and impacts of the key provisions 

of the proposal relative to the baseline 

provided by the Final Rule. The Bureau 

has discretion in future rulemakings to 

choose the most appropriate baseline for 

that particular rulemaking. 

C. Recipient Institution Fees and 

Foreign Taxes 

The proposal would provide 

remittance transfer providers additional 

flexibility regarding the disclosure of 

certain recipient institution fees and 

foreign taxes. It would allow providers 

to rely on senders’ representations 

regarding such fees, and to estimate 

such fees and foreign taxes based on 

certain assumptions and information. 

The proposal would also limit a 

provider’s obligation to disclose foreign 

taxes to those imposed by a country’s 

central government. Under the proposal, 

if providers chose not to disclose 

subnational taxes, or to take advantage 

of the new estimation provisions, they 

would be required to describe the 

relevant disclosures using the term 

‘‘Estimated’’ or a substantially similar 

term. 

The proposed provisions would not 

require small entities to make any 

changes in practice. Remittance transfer 

providers would still be in compliance 

if they disclosed foreign taxes and 

recipient institution fees in accordance 

with the Final Rule. If small providers 

decided to take advantage of the 

proposed provisions, they might bear 

some cost to modify their systems to 

calculate disclosures using the new 

methods permitted by the proposal, or 

to describe certain disclosures using the 

term ‘‘Estimated’’ or a substantially 

similar term. However, the Bureau 

believes that any cost would generally 

be small. Any modification would be to 

existing forms and systems changes 

would be particularly minimal because 

the Final Rule already sets forth certain 

circumstances in which the term 

‘‘Estimated’’ (or a substantially similar 

term) must be used. Also, the Bureau 

expects that many small depository 

institutions and credit unions will rely 

on correspondent institutions or other 

service providers to provide recipient 

institution fees and foreign tax 

information, as well as standard 

disclosure forms; as a result, related 

costs would often be spread across 

multiple institutions. Furthermore, the 

Bureau expects that some providers may 

not have finished any systems 

modifications necessary to comply with 

the Final Rule, and thus may be able to 

incorporate any changes into previously 

planned work. 

Any alternative disclosures could also 

impose cost on any providers that chose 

to take advantage of the flexibility 

permitted by the proposal. The relative 

magnitude would depend on the type of 

disclosure required. If no disclosure 

were required in instances in which 

foreign subnational taxes were not 

disclosed, the cost could be less for 

some entities. If some alternative form 

of disclosure were required for 

providers that chose to take advantage 

of the new flexibility that the proposal 

would permit, the cost might be higher. 

In either case, the proposed changes 

regarding the disclosure of recipient 

institution fees and foreign taxes may 

provide meaningful benefits to 

remittance transfer providers that 

decide to take advantage of them. The 

Bureau expects that small entities 

generally would choose to incur the 

costs associated with the proposed 

provisions only if they concluded that 

the benefits of doing so were greater 

than the costs. The potential benefits 

include a reduced cost to prepare 

required disclosures. Furthermore, 

industry has suggested that due in part 


srobinson on DSK4SPTVN1PROD with 
77208 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

26A similar analysis regarding benefits would 

likely apply if the Bureau expanded the proposed 

exception to apply in instances in which a failure 

to make funds available to the designated recipient 

by the disclosed date of availability resulted from 

a mistake by a sender other than providing an 

incorrect account number. Any optional costs might 

depend on the nature of any such extension. 27The Bureau expects that remittance transfer 

providers will generally experience low error rates. 

Prior to the February Final Rule, the Credit Union 

National Association reported a rate of less than 1% 

for international wire ‘‘exceptions.’’ The proposed 

changes would address only resends that occur 

under certain circumstances for certain types of 

errors. Specifically, the proposed change in the 

comment would apply in instances in which the 

error is a failure to make funds available to a 

designated recipient by the date of availability and 

such an error is due to incorrect or insufficient 

information provider by a sender. 

to the Final Rule’s third party fee and 

foreign tax disclosure requirements, 

some providers might eliminate or 

reduce their remittance transfer 

offerings, such as by not sending to 

countries where tax or fee information 

is particularly difficult to obtain, due to 

the lack of ongoing reliable and 

complete information sources. By 

reducing the amount of information 

needed to provide disclosures, the 

proposal could encourage more 

providers (including small entities) to 

retain their current services (and thus 

any associated profit, revenue and 

customers). 

The Bureau expects that the proposed 

provisions would mostly affect 

depository institutions, credit unions, 

and broker-dealers that are remittance 

transfer providers. These types of 

providers tend to send most or all of 

their remittances transfers to foreign 

accounts, for which recipient institution 

fees may be charged. Furthermore, due 

to the mechanisms they use to send 

money, they generally have the ability 

to send transfers to virtually any 

destination country (for which tax 

research might be required). By contrast, 

money transmitters that are providers 

are more likely to send remittance 

transfers to be received in cash, for 

which recipient institution fees would 

not be relevant. Furthermore, most 

money transmitters, and particularly 

small ones, generally send transfers to a 

limited number of countries and 

institutions. 

D. Incorrect or Insufficient Information 

The proposal includes two sets of 

proposed changes related to errors 

caused by the provision of incorrect or 

insufficient information. It would create 

a new exception to the definition of the 

error. It would also streamline the 

requirements for resending remittance 

transfers in certain situations in which 

funds may be resent to correct errors. 

The Bureau expects that a number of 

small remittance transfer providers 

would be unaffected by the proposed 

changes regarding the definition of 

error; they would only apply to 

remittance transfers that are received in 

accounts. Though some money 

transmitters send money to be deposited 

into bank accounts, the Bureau’s 

outreach suggests that, unlike most 

small depository institutions, credit 

unions, and broker-dealers, many small 

money transmitters only send money to 

be received in cash. 

With regard to small remittance 

transfer providers that do send money to 

accounts, the proposed new exception 

to the definition of error would not 

impose any mandatory costs. Under the 

proposal, certain account number 

mistakes would no longer generate 

‘‘errors’’ if the provider satisfied certain 

conditions enumerated in proposed 

§ 1005.33(h). Instead of satisfying these 

conditions, providers could continue 

under the Final Rule’s definition of 

error. 

If remittance transfer providers did 

choose to satisfy the conditions 

enumerated in proposed § 1005.33(h), 

they might incur some costs, such as 

changing the terms of their consumer 

contracts or other communications to 

provide senders the notice 

contemplated by proposed 

§ 1005.33(h)(2). However, the Bureau 

expects that the cost of doing so would 

be modest, particularly because the 

proposed rule does not mandate any 

particular notice wording, form, or 

format, and the Bureau expects that 

many providers would integrate any 

such notice into existing 

communications. 

The Bureau believes that satisfying 

the remainder of the conditions in 

proposed § 1005.33(h) would not 

impose new costs on providers because 

their existing practices generally would 

already satisfy those conditions. In 

particular, based on outreach, the 

Bureau believes that that keeping 

records or other documents that could 

demonstrate the conditions described in 

§ 1005.33(h) would generally match 

providers’ usual and customary 

practices to serve their customers, to 

manage their risk, and to satisfy the 

requirements under the Final Rule to 

retain records of the findings of 

investigations of alleged errors. See 

§ 1005.33(g)(2). 

In any case, the Bureau expects that 

remittance transfer providers would 

only develop their practices to comply 

with § 1005.33(h), and thus take 

advantage of the proposed new 

exception to the definition of error, if 

doing so would reduce the costs of 

losses due to account number mistakes 

by senders or account number fraud by 

more than the costs of implementing 

these practices. The Bureau believes 

that for most providers, including small 

ones, the proposed changes to the 

definition of error likely would provide 

benefits that outweigh implementation 

costs. If the new exception applied, 

providers would no longer bear the cost 

of funds that they could not recover. 

Providers would further benefit if the 

proposal reduced the potential for 

fraudulent account number mistakes 

made by unscrupulous senders, which 

providers have cited as a risk under the 

Final Rule. By reducing the remedies 

available in such cases, the proposal 

would reduce the direct costs of fraud 

and the indirect costs of fraud 

prevention and facilitate providers’ 

continued participation in the 

remittance transfer market, without (or 

with fewer) new limitations on service. 

Industry has indicated that, at least in 

part, due to the risk of such fraud under 

the Final Rule, providers might exit the 

market or limit the size or type of 

transfers sent.26

The proposed change regarding 

requests to resend for certain errors 

would also benefit small remittance 

transfer providers, though the Bureau 

expects that the benefits would be small 

because the circumstances covered by 

the proposed change will arise very 

infrequently.27 In instances in which it 

is applicable, the proposed changes 

would allow a provider to resend a 

transfer with less uncertainty about 

when and how to resend a transfer and 

possibly to do so using an estimated 

exchange rate. The proposed changes 

also could mean that in the narrow 

circumstances that they apply, 

providers would not need to provide as 

many written disclosures as under the 

Final Rule. Providers, including small 

entities, could also benefit from the 

alternative on which the Bureau is 

seeking comment, to adjust the Final 

Rule’s remedy provisions so that 

anytime a remittance transfer is resent 

to resolve an error, the exchange rate 

would remain the rate stated in the 

original disclosures. This alternative 

would eliminate any cost of additional 

disclosures related to the resend. Unlike 

the Final Rule, however, the alternative 

would not permit a provider to charge 

the sender again for third party fees 

incurred when the transfer was sent the 

first time. Furthermore, the alternative 

could expose providers to additional 

exchange rate risk. When funds are 

resent, a provider might either gain or 

lose money related to the change in 

market exchange rates between the time 

of the original transfer and the time of 

the resend. The Bureau expects that the 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77209 

28The decrease in respondents relative to the 

PRA analysis for the August Final Rule reflects a 

change in the number of insured depository 

institutions and credit unions supervised by the 

Bureau, a focus on the Bureau’s estimate of the 

number of insured depository institutions and 

credit unions that would qualify as remittance 

transfer providers, and a revision by the Bureau of 

the estimated number of state-licensed money 

transmitters that offer remittance services. The 

revised estimate of the number of state-licensed 

money transmitters that offer remittance services is 

based on subsequent analysis of publicly available 

state registration lists and other information about 

the business practices of licensed entities. The 

decrease in burden relative to what was previously 

reported for the Final Rule from this revision is not 

included in the change in burden reported here. 

However, the revised entity counts are used for the 

purpose of calculating other changes in burden that 

would arise from the proposal. 

29The Bureau’s estimate of non-depository 

respondents is based on an estimate of the number 

of state-licensed money transmitters that are 

remittance transfer providers. The Bureau notes that 

there may be other entities that are not insured 

depository institutions or credit unions and that 

serve as providers, such as broker-dealers or money 

transmission companies that are not state-licensed. 

However, the Bureau does not have an estimate of 

the number of any such entities. Furthermore, the 

Bureau notes that while its analysis in the February 

Final Rule attributed burden to the agents of statelicensed money transmitters, in this case, the 

Bureau expects that the changes in burden 

discussed in this PRA analysis would generally be 

borne only by money transmitters themselves, not 

their agents. In particular, the Bureau believes that 

money transmitters will generally gather and 

prepare recipient institution fee and foreign tax 

information centrally, rather than requiring their 

agents to do so. Similarly, the Bureau expects that 

money transmitters will generally investigate and 

respond to errors centrally, rather than asking their 

agents to take responsibility for such functions. 

Comment 30(f)–1 states that a person is not deemed 

to be acting as a remittance transfer provider when 

it performs activities as an agent on behalf of a 

remittance transfer provider. 

saved disclosure costs, as well as the 

costs of third party fees or related 

exchange rate risk, would be very small 

because the covered circumstances 

would arise infrequently. 

Either the proposed changes regarding 

certain instances in which remittance 

transfer providers resend transactions to 

correct errors, or the alternative on 

which the Bureau seeks comment, could 

impose a cost on providers to revise 

their procedures. Providers might also 

change their systems to generate the 

proposed streamlined disclosures, 

which could include the date of 

transfer, an element that is required on 

disclosures only for some remittance 

transfers. See §§ 1005.30(b)(2)(vii) and 

1005.36(d). However, the Bureau 

expects these costs to be modest, 

because modifications could be made 

based on an existing disclosure form. 

Also, given the small percentage of 

transactions to which the provisions 

would apply, the Bureau expects that 

many small providers might implement 

the relevant provisions in the Final Rule 

or the proposed modifications 

manually, rather than through softwarebased automations. Finally, the Bureau 

expects that many small providers (or 

their software vendors) would 

incorporate such modifications into the 

modifications they would carry out to 

comply with the Final Rule. 

E. Effective Date 

The proposal would temporarily 

delay the February 7, 2013 effective date 

of the Final Rule and extend it to 90 

days after this proposal is finalized. 

This change would generally benefit 

small remittance transfer providers, by 

delaying the start of any ongoing 

compliance costs. The additional time 

might also enable providers (and their 

vendors) to build solutions that cost less 

than those that might otherwise have 

been possible. 

F. Certification 

Accordingly, the undersigned hereby 

certifies that if promulgated, this rule 

would not have a significant economic 

impact on a substantial number of small 

entities. The Bureau requests comment 

on the analysis above and requests any 

relevant data. 

VII. Paperwork Reduction Act 

The Bureau’s collection of 

information requirements contained in 

this proposal, and identified as such, 

will be submitted to the Office of 

Management and Budget (OMB) for 

review under section 3507(d) of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501 et seq.) (PRA) on or before 

publication of this proposal in the 

Federal Register. Under the PRA, the 

Bureau may not conduct or sponsor, and 

a person is not required to respond to, 

an information collection unless the 

information collection displays a valid 

OMB control number. The proposed 

collections of information that are 

subject to the PRA in this proposal 

amend portions of 12 CFR Part 1005 

(‘‘Regulation E’’). Regulation E currently 

contains collections of information 

approved by OMB. The Bureau’s OMB 

control number for Regulation E is 

3170–0014. 

A. Overview 

The title of these information 

collections is Electronic Fund Transfer 

Act (Regulation E) 12 CFR 1005. The 

frequency of collection is on occasion. 

As described below, the proposed rule 

would amend portions of the collections 

of information currently in Regulation 

E. Some portions of these information 

collections are required to provide 

benefits for consumers and are 

mandatory. However, some portions are 

voluntary because certain information 

collections under this proposal would 

simply give remittance transfer 

providers optional methods of 

compliance. Because the Bureau does 

not collect any information under the 

proposed rule, no issue of 

confidentiality arises. The likely 

respondents are remittance transfer 

providers, including small businesses. 

Respondents are required to retain 

records for 24 months, but this proposed 

regulation does not specify the types of 

records that must be maintained. 

Under the proposed rule, the Bureau 

generally would account for the 

paperwork burden associated with 

Regulation E for the following 

respondents pursuant to its 

administrative enforcement authority: 

insured depository institutions and 

insured credit unions with more than 

$10 billion in total assets, and their 

depository institution and credit union 

affiliates (together, ‘‘the Bureau 

depository respondents’’), and certain 

non-depository remittance transfer 

providers, such as certain state-licensed 

money transmitters (‘‘the Bureau nondepository respondents’’). 

Using the Bureau’s burden estimation 

methodology, the Bureau estimates that 

the total one-time burden for the 

estimated 5,753 respondents potentially 

affected by the proposal would be 

approximately 420,000 hours.28 The 

Bureau estimates that the ongoing 

burden to comply with Regulation E 

would be reduced by approximately 

268,000 hours per year by the proposal. 

The aggregate estimates of total burdens 

presented in this analysis are based on 

estimated costs that are averages across 

respondents. The Bureau expects that 

the amount of time required to 

implement the proposed changes for a 

given remittance transfer provider may 

vary based on the size, complexity, and 

practices of the respondent. 

For the 153 Bureau depository 

respondents, the Bureau estimates for 

the purpose of this PRA analysis that 

the proposal would increase one-time 

burden by approximately 11,000 hours 

and reduce ongoing burden by 

approximately 7,300 hours per year. For 

the estimated 300 Bureau nondepository respondents, the Bureau 

estimates that the proposal would 

increase one-time burden by 21,900 

hours and reduce ongoing burden by 

6,300 hours per year.29 The Bureau and 

the Federal Trade Commission (FTC) 

generally both have enforcement 

authority over non-depository 

institutions under Regulation E, 

including state-licensed money 

transmitters. The Bureau has allocated 

to itself half of its estimated burden to 


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77210 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

30The Bureau seeks comment on whether the 

proposed provisions regarding account number 

mistakes should be expanded to apply to other 

sender mistakes. Any associated PRA burden might 

depend on the nature of any such extension. 

Bureau non-depository respondents, 

which is based on an estimate of the 

number of state-licensed money 

transmitters that are remittance transfer 

providers. The FTC is responsible for 

estimating and reporting to OMB its 

total paperwork burden for the 

institutions for which it has 

administrative enforcement authority. It 

may, but is not required to, use the 

Bureau’s burden estimation 

methodology. 

B. Analysis of Potential Burden 

1. Recipient Institution Fees and 

Foreign Taxes 

As described in parts V and VI above, 

to take advantage of the new flexibility 

that would be provided by the proposal 

with regard to the disclosure of 

recipient institution fees and foreign 

taxes, remittance transfer providers 

might choose to bear some cost of 

modifying their systems to calculate 

disclosures using the new methods 

permitted by the proposal, or to describe 

certain disclosures using the term 

‘‘Estimated’’ or a substantially similar 

term. Though the proposal would not 

require such modification, for purposes 

of this analysis, the Bureau assumes that 

all remittance transfer providers would 

decide to take advantage of the new 

flexibility permitted due to the related 

benefits. The Bureau believes that in 

many instances providers would have 

already modified their systems to use 

the term ‘‘Estimated’’ or a substantially 

similar term in other cases, in order to 

comply with the Final Rule. The Bureau 

also expects that many depository 

institutions and credit unions will rely 

on correspondent institutions or other 

service providers to provide recipient 

institution fee and foreign tax 

information, as well as standard 

disclosure forms; as a result, any 

development cost associated with the 

proposal would be spread across 

multiple institutions. Furthermore, the 

Bureau expects that some providers may 

not have finished any systems 

modifications necessary to comply with 

the Final Rule, and thus may be able to 

incorporate any changes into previously 

accounted-for work. In the interest of 

providing a conservative estimate, 

however, the Bureau assumes that all 

providers would need to modify their 

systems to calculate disclosures and to 

add the term ‘‘Estimated’’ or a 

substantially similar term to a prepayment disclosure form and a receipt. 

The Bureau estimates that making 

revisions to systems to calculate 

disclosures would take 40 hours per 

provider. Because the forms to be 

modified are existing forms, the Bureau 

estimates that adding the term 

‘‘Estimated’’ or a substantially similar 

term would require eight hours per form 

per provider. 

On the other hand, the proposal 

would give remittance transfer 

providers options that may reduce the 

ongoing cost of obtaining and updating 

information on taxes and fees. By taking 

advantage of the new flexibility 

permitted by the proposal, the Bureau 

estimates that insured depository 

institutions and credit unions would 

save, on average, 48 hours per year and 

non-depository institutions would save, 

on average, 21 hours per year. 

The Bureau is particularly seeking 

comment on whether or not to adopt an 

alternative to the term ‘‘Estimated,’’ or 

to require no disclosure, in instances in 

which foreign subnational taxes were 

not disclosed. The relative cost of any 

such alternative would depend on the 

form of the requirement; if no disclosure 

were required, the above calculated 

burden could be less, but if some 

alternative form of disclosure were 

required for providers that chose to take 

advantage of the new flexibility that the 

proposal would permit, the cost might 

be higher. 

2. Incorrect or Insufficient Information 

As described in parts V and VI above, 

the Bureau expects that remittance 

transfer providers that send money to 

accounts, in order to benefit from the 

proposed changes to the definition of 

the term error, may choose to provide 

senders with notice that if they provide 

incorrect account numbers, they could 

lose the transfer amount, and providers 

may also choose to maintain sufficient 

records to satisfy, wherever possible, the 

conditions enumerated in proposed 

§ 1005.33(h) (though no such 

recordkeeping is required). These 

enumerated conditions regard being 

able to demonstrate facts regarding 

senders’ responsibility for any account 

number mistake; the above-referenced 

notice; the results of an incorrect 

account number; and the provider’s 

effort to recover funds. 

Because this will likely involve 

modifications to existing 

communications, the Bureau estimates 

that providing senders with the notice 

described above would require a onetime burden of eight hours per provider 

and would not generate any ongoing 

burden. With regard to demonstrating 

facts related to the conditions 

enumerated in proposed § 1005.33(h), 

the Bureau believes that any related 

record retention would be a usual and 

customary practice by providers under 

the Final Rule, and that therefore there 

would be no additional burden 

associated with these aspects of the 

proposal.30

In certain circumstances when a 

remittance transfer provider resends a 

remittance transfer to correct an error 

caused by incorrect or insufficient 

information provided by a sender, the 

proposal would require that the 

provider give the sender a single 

simplified set of disclosures rather than 

the pre-payment disclosures and receipt 

generally required by the Final Rule. In 

some cases, the proposal would permit 

providers to rely solely on information 

that is already required to be included 

on pre-payment disclosures and 

receipts; under other circumstances, the 

proposal would require the simplified 

disclosures to include one additional 

piece of information that is not required 

on existing disclosures: The date that 

the provider will make the remittance 

transfer. Though the Bureau expects that 

some providers may avoid these 

circumstances altogether or incorporate 

modifications into those they would 

carry out to comply with the Final Rule, 

in the interest of providing a 

conservative estimate, the Bureau 

estimates that the modified disclosure 

requirement would require a one-time 

change to an existing form that would 

take each provider eight hours to make. 

The Bureau also estimates that to 

reflect the proposed changes regarding 

certain errors, remittance transfer 

providers would spend, on average, one 

hour, to update written policies and 

procedures designed to ensure 

compliance with respect to the error 

resolution requirements applicable to 

providers, pursuant to § 1005.33(g). 

The Bureau expects that the proposed 

requirement for a simplified set of 

disclosures would also reduce 

providers’ ongoing burden, by 

eliminating the need to provide both a 

pre-payment disclosure and a receipt 

under covered circumstances. However, 

because the Bureau expects that the 

covered circumstances would arise very 

infrequently, the Bureau expects that 

this burden reduction would be 

minimal. 

Alternatively, the Bureau seeks 

comment on whether to change the error 

resolution procedures such that, among 

other things, no additional disclosures 

would be required when remittance 

transfers providers resend transfers in 

order to correct errors. Under that 

alternative scenario, the Bureau expects 

that a similar analysis would apply. 

Providers would need to make small 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77211 

systems changes to eliminate required 

disclosures, as well as update their error 

resolution procedures; the burden on 

providers would be reduced minimally, 

due to the need to send fewer 

disclosures in a very small number of 

circumstances. 

C. Comments Requested 

Comments on this analysis must be 

received by January 30, 2013. With 

regard to this PRA analysis, comments 

are specifically requested concerning: 

(i) Whether the proposed collections 

of information are necessary for the 

proper performance of the functions of 

the Bureau, including whether the 

information will have practical utility; 

(ii) The accuracy of the estimated 

burden associated with the proposed 

collections of information; 

(iii) How to enhance the quality, 

utility, and clarity of the information to 

be collected; and 

(iv) How to minimize the burden of 

complying with the proposed 

collections of information, including the 

application of automated collection 

techniques or other forms of information 

technology. 

All comments will become a matter of 

public record. 

Comments on the collection of 

information requirements should be 

sent to the Office of Management and 

Budget (OMB), Attention: Desk Officer 

for the Consumer Financial Protection 

Bureau, Office of Information and 

Regulatory Affairs, Washington, DC 

20503, or by the internet to 

oira_submission@omb.eop.gov, with 

copies to the Bureau at the Consumer 

Financial Protection Bureau (Attention: 

PRA Office), 1700 G Street NW., 

Washington, DC 20552, or by the 

internet to CFPB_Public_PRA@cfpb.gov. 

Text of Proposed Revisions 

Certain conventions have been used 

to highlight the proposed revisions. 

New language is shown inside bold 

arrows, and language that would be 

deleted is shown inside bold brackets. 

List of Subjects in 12 CFR Part 1005 

Banking, Banks, Consumer protection, 

Credit unions, Electronic fund transfers, 

National banks, Remittance transfers, 

Reporting and recordkeeping 

requirements, Savings associations. 

Authority and Issuance 

For the reasons stated in the 

preamble, the Bureau proposes to 

amend 12 CFR part 1005, as added 

February 7, 2012 (77 FR 6285), and 

amended August 20, 2012 (77 FR 5028) 

as set forth below: 

PART 1005—ELECTRONIC FUND 

TRANSFERS (REGULATION E) 

1. The authority citation for part 1005 

continues to read as follows: 

Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 

1693b. Subpart B is also issued under 12 

U.S.C. 5601. 

Subpart B—Requirements for 

Remittance Transfers 

2. Amend § 1005.31 to revise 

paragraphs (b)(1)(vi) and (d) to read as 

follows: 

§ 1005.31 Disclosures. 

* * * * * 

(b) Disclosure requirements. * * * 

(1) * * * 

(vi) flExcept as set forth in this 

paragraph, anyfiøAny¿ fees and taxes 

imposed on the remittance transfer by a 

person other than the provider, in the 

currency in which the funds will be 

received by the designated recipient, 

using the terms ‘‘Other Fees’’ for fees 

and ‘‘Other Taxes’’ for taxes, or 

substantially similar terms. flWith 

respect to tax disclosures, only taxes 

imposed on the remittance transfer by a 

foreign country’s central government 

need be disclosed. fiThe exchange rate 

used to calculate these fees and taxes is 

the exchange rate in paragraph (b)(1)(iv) 

of this section, including an estimated 

exchange rate to the extent permitted by 

§ 1005.32, prior to any rounding of the 

exchange rate; and 

* * * * * 

(d) Estimates. Estimated disclosures 

may be provided to the extent permitted 

by § 1005.32. Estimated disclosures 

must be described using the term 

‘‘Estimated’’ or a substantially similar 

term in close proximity to the estimated 

term or terms. flThe term ‘‘Estimated’’ 

also must be used if a provider is not 

disclosing regional, provincial, state, or 

other local foreign taxes, as permitted by 

paragraph (b)(1)(vi) of this section.fi 

* * * * * 

3. Amend § 1005.32 to add paragraphs 

(b)(3) and (b)(4) to read as follows: 

§ 1005.32 Estimates. 

* * * * * 

(b) Permanent Exceptions. * * * 

fl(3) Permanent exception where 

variables affect taxes imposed by a 

person other than the provider. For 

purposes of determining the taxes to be 

disclosed under § 1005.31(b)(1)(vi), if a 

remittance transfer provider does not 

have specific knowledge regarding 

variables that affect the amount of taxes 

imposed by a person other than the 

provider, the provider may disclose the 

highest possible tax that could be 

imposed on the remittance transfer with 

respect to any unknown variable. 

(4) Permanent exception where 

variables affect recipient institution 

fees. (i) For purposes of determining the 

fees to be disclosed under 

§ 1005.31(b)(1)(vi), if a remittance 

transfer provider does not have specific 

knowledge regarding variables that 

affect the amount of fees imposed by a 

designated recipient’s institution for 

receiving a transfer in an account, the 

provider may disclose the highest 

possible recipient institution fees that 

could be imposed on the remittance 

transfer with respect to any unknown 

variable, as determined based on either 

fee schedules made available by the 

recipient institution or information 

ascertained from prior transfers to the 

same recipient institution. 

(ii) If the provider cannot obtain such 

fee schedules or does not have such 

information, a provider may rely on 

other reasonable sources of information, 

if the provider discloses the highest fees 

identified through the relied-upon 

source.fi 

* * * * * 

4. Amend § 1005.33 to revise 

paragraphs (a)(2)(iv), (c)(2) introductory 

text, (c)(2)(ii)(A)(2) and to add 

paragraphs (a)(1)(iv)(D), (c)(3) and (h) to 

read as follows: 

§ 1005.33 Procedures for resolving errors. 

* * * * * 

(a) Definition of Error. (1) Types of 

transfers or inquiries covered. * * * 

(iv) * * * 

fl(D) The sender having given the 

remittance transfer provider an incorrect 

account number, provided that the 

remittance transfer provider meets the 

conditions set forth in paragraph (h) of 

this section; or fi 

* * * * * 

(2) Types of transfers or inquiries not 

covered. * * * 

(iv) A change in the amount or type 

of currency received by the designated 

recipient from the amount or type of 

currency stated in the disclosure 

provided to the sender under 

§ 1005.31(b)(2) or (3) flbecausefiøif¿ 

the remittance transfer provider fldid 

not disclose foreign taxes other than 

those imposed by a country’s central 

government, orfi relied on information 

provided by the sender as permitted 

under § 1005.31 in making such 

disclosure. 

* * * * * 

(c) * * * 

(2) Remedies. øIf¿ flExcept as 

provided in paragraph (c)(3) of this 

section, iffi * * * 

* * * * * 


srobinson on DSK4SPTVN1PROD with 
77212 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

(ii) * * * 

(A) * * * 

(2) Making available to the designated 

recipient the amount appropriate to 

resolve the error. Such amount must be 

made available to the designated 

recipient without additional cost to the 

sender or to the designated recipient 

unless the sender provided incorrect or 

insufficient information to the 

remittance transfer provider in 

connection with the remittance transfer, 

in which case, third party fees may be 

imposed for resending the øremittance 

transfer¿ flfundsfi with the corrected 

or additional information; and 

* * * * * 

fl(3) Disclosures where refund not 

previously chosen. If an error under 

paragraph (a)(1)(iv) of this section 

occurred because the sender provided 

incorrect or insufficient information, 

and if the sender has not previously 

designated a refund remedy pursuant to 

paragraph (c)(2)(ii)(A)(1) of this section, 

then: 

(i) If the remittance transfer provider 

does not make direct contact with the 

sender when providing the report 

required by paragraph (c)(1) of this 

section, the provider shall provide, 

orally or in writing, as applicable, the 

following disclosures: 

(A) The disclosures required by 

§ 1005.31(b)(2)(i) through (iii) for 

remittance transfers and the date the 

remittance transfer provider will 

complete the resend, using the term 

‘‘Transfer Date’’ or a substantially 

similar term. These disclosures must be 

accurate when the resend is made 

except that the disclosures may contain 

estimates to the extent permitted by 

§ 1005.32(a) or (b) for remittance 

transfers; and 

(B) If the transfer is scheduled three 

or more business days before the date of 

transfer, a statement about the rights of 

the sender regarding cancellation 

reflecting the requirements of 

§ 1005.36(c), the requirements of which 

shall apply to the resend; or 

(ii) If the remittance transfer provider 

makes direct contact with the sender at 

the same time or after providing the 

report required by paragraph (c)(1) of 

this section, the provider shall provide, 

orally or in writing, as applicable, the 

disclosures required by 

§ 1005.31(b)(2)(i) through (iii) for 

remittance transfers. These disclosures 

must be accurate when the resend is 

made except that the disclosures may 

contain estimates to the extent 

permitted by § 1005.32(a), (b)(1), (b)(3) 

or (b)(4) for remittance transfers.fi 

* * * * * 

fl(h) Incorrect account number 

provided by the sender. No error has 

occurred under paragraph (a)(1)(iv) of 

this section for failure to make funds 

available to a designated recipient by 

the date of availability stated in the 

disclosure provided pursuant to 

§ 1005.31(b)(2) or (3) if the remittance 

transfer provider can demonstrate that: 

(1) The sender provided an incorrect 

account number to the remittance 

transfer provider in connection with the 

remittance transfer; 

(2) The sender had notice that, in the 

event the sender provided an incorrect 

account number, that the sender could 

lose the transfer amount; 

(3) The incorrect account number 

resulted in the deposit of the remittance 

transfer into a customer’s account at the 

recipient institution other than the 

designated recipient’s account; and 

(4) The provider promptly used 

reasonable efforts to recover the amount 

that was to be received by the 

designated recipient.fi 

* * * * * 

5. Amend § 1005.36 to revise 

paragraph (b)(3) to read as follows: 

§ 1005.36 Transfers scheduled before the 

date of transfer. 

* * * * * 

(b) * * * 

(3) Disclosures provided pursuant to 

paragraph (a)(1)(ii) or (a)(2)(ii) of this 

section must be accurate as of when the 

remittance transfer to which it pertains 

is made, except to the extent estimates 

are permitted by § 1005.32(a)ø or¿ fl,fi 

(b)(1)fl, (b)(3) or (b)(4)fi. 

6. In Supplement I to part 1005: 

a. Under Section 1005.31 Disclosures, 

i. Under subheading 31(b)(1) PrePayment Disclosures, revise paragraph 

1.ii and add paragraphs 1.iii through v. 

ii. Under subheading 31(b)(1)(vi) Fees 

and Taxes imposed by a Person Other 

than the Provider, revise paragraph 2 

and add paragraphs 3 and 4. 

iii. Under subheading 31(d) Estimates, 

revise paragraph 1. 

b. Under Section 1005.32 Estimates, 

i. Revise comment 32–1. 

ii. Under subheading 32(b) Permanent 

Exceptions, add new subheading 

32(b)(3) Permanent Exception Where 

Variables Affect Foreign Taxes and add 

new comment 32(b)(3)–1. 

iii. Under subheading 32(b) 

Permanent Exceptions, add new 

subheading 32(b)(4) Permanent 

Exception Where Variables Affect 

Recipient Institution Fees and add new 

comments 32(b)(4)–1 and 32 (b)(4)–2. 

iv. Under subheading 32(d) Bases for 

Estimates for Transfers Scheduled 

Before the Date of Transfer, revise the 

second sentence of comment 32(d)–1 

and add a new sentence immediately 

following it. 

c. Under Section 1005.33, Procedures 

for Resolving Errors, 

i. Under subheading 33(a) Definition 

of Error, revise the second sentence of 

comment 33(a)–3.ii and comment 33(a)– 

4, redesignate comments 33(a)–7 and 

33(a)–8 as comments 33(a)–8 and 33(a)– 

9 respectively, revise newly 

redesignated comment 33(a)–9, and add 

new comment 33(a)–7. 

ii. Under subheading 33(c) Time 

Limits and Extent of Investigation, 

revise comment 33(c)–2 and add new 

comment 33(c)–11. 

iii. Add new subheading 33(h) 

Incorrect Account Number Supplied 

and add paragraphs 1 and 2 under the 

subheading. 

d. Under Section 1005.36, under 

subheading 36(b) Accuracy, revise the 

second sentence of comment 36(b)–3. 

The additions and revisions read as 

follows: 

Supplement I to Part 1005—Official 

Interpretations 

* * * * * 

Section 1005.31—Disclosures 

* * * * * 

31(b) Disclosure Requirements 

* * * * * 

31(b)(1) Pre-Payment Disclosures. 

1. Fees and taxes. * * * 

ii. The fees and taxes required to be 

disclosed by § 1005.31(b)(1)(ii) include all 

fees and taxes imposed on the remittance 

transfer by the provider. For example, a 

provider must disclose a service fee and any 

State taxes imposed on the remittance 

transfer. In contrast, the fees and taxes 

required to be disclosed by § 1005.31(b)(1)(vi) 

include fees and taxes imposed on the 

remittance transfer by a person other than the 

provider. 

fliii.fi Fees and taxes imposed on the 

remittance transfer include only those fees 

and taxes that are charged to the sender or 

designated recipient and are specifically 

related to the remittance transfer. For 

example, a provider must disclose fees 

imposed on a remittance transfer by the 

øreceiving¿ flrecipient’sfi institution or 

agent at pick-up for receiving the transfer, 

fees imposed on a remittance transfer by 

intermediary institutions in connection with 

an international wire transfer, and taxes 

imposed on a remittance transfer by a foreign 

flcountry’s centralfi government. However, 

a provider need not disclose, for example, 

overdraft fees that are imposed by a 

recipient’s bank or funds that are garnished 

from the proceeds of a remittance transfer to 

satisfy an unrelated debt, because these 

charges are not specifically related to the 

remittance transfer. flAccount fees are also 

not specifically related to a remittance 

transfer if such fees are merely assessed 

based on general account activity and not for 

receiving transfers. Where an incoming 

remittance transfer results in a balance 

increase that triggers a monthly maintenance 


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Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77213 

fee, that fee is not specifically related to a 

remittance transfer.fi Similarly, fees that 

banks charge one another for handling a 

remittance transfer or other fees that do not 

affect the total amount of the transaction or 

the amount that will be received by the 

designated recipient are not charged to the 

sender or designated recipient. For example, 

an interchange fee that is charged to a 

provider when a sender uses a credit or debit 

card to pay for a remittance transfer need not 

be disclosed. 

fliv. A fee that specifically relates to a 

remittance transfer may be structured on a 

flat per-transaction basis, or may be 

conditioned on other factors (such as account 

status or the quantity of remittance transfers 

received) in addition to the remittance 

transfer itself. For example, where an 

institution charges an incoming wire fee on 

most customers’ accounts, but not on 

preferred accounts, such a fee is nonetheless 

specifically related to a remittance transfer. 

Similarly, if the institution assesses a fee for 

every transfer beyond the fifth received each 

month, such a fee would be specifically 

related to the remittance transfer regardless 

of how many remittance transfers preceded it 

that month. In either case, the fee is subject 

to disclosure under § 1005.31(b)(1)(vi); see 

comment 31(b)(1)(vi)–4 regarding how to 

make such disclosures. 

v.fi The terms used to describe the fees 

and taxes imposed on the remittance transfer 

by the provider in § 1005.31(b)(1)(ii) and 

imposed on the remittance transfer by a 

person other than the provider in 

§ 1005.31(b)(1)(vi) must differentiate between 

such fees and taxes. For example, the terms 

used to describe fees disclosed under 

§ 1005.31(b)(1)(ii) and (vi) may not both be 

described solely as ‘‘Fees.’’ 

* * * * * 

31(b)(1)(vi) Fees and Taxes Imposed by a 

Person Other than the Provider. 

* * * * * 

2. Determining taxes. The amount of taxes 

imposed by a person other than the provider 

may depend on the tax status of the sender 

or recipient, the type of accounts or financial 

institutions involved in the transfer, or other 

variables. For example, the amount of tax 

may depend on whether the receiver is a 

resident of the country in which the funds 

are received or the type of account to which 

the funds are delivered. If a provider does not 

have specific knowledge regarding variables 

that affect the amount of taxes imposed by a 

person other than the provider for purposes 

of determining these taxes, the provider may 

rely on a sender’s representations regarding 

these variables. øIf a sender does not know 

the information relating to the variables that 

affect the amount of fees or taxes imposed by 

a person other than the provider, the 

provider may disclose the highest possible 

tax that could be imposed for the remittance 

transfer with respect to any unknown 

variable.¿ 

fl3. Taxes imposed by a country’s central 

government. A provider need only disclose 

foreign taxes assessed on the transfer by a 

country’s central government. Regional, 

provincial, state, or other local foreign taxes 

need not be disclosed, although a provider 

may choose to disclose them. 

4. Determining recipient institution fees. In 

some cases, where a remittance transfer is 

sent to a designated recipient’s account at a 

financial institution, the institution imposes 

a fee on the remittance transfer pursuant to 

an agreement with the recipient. The amount 

of the fee imposed by the institution may 

vary based on whether the designated 

recipient holds a preferred status account 

with a financial institution, the quantity of 

transfers received, or other variables. If a 

remittance transfer provider does not have 

specific knowledge regarding variables that 

affect the amount of fees imposed by the 

recipient’s institution for receiving a transfer 

in an account, the provider may rely on a 

sender’s representations regarding these 

variables. fi 

* * * * * 

31(d) Estimates 

1. Terms. A remittance transfer provider 

may provide estimates of the amounts 

required by § 1005.31(b), to the extent 

permitted by § 1005.32. flA provider also 

may choose not to disclose regional, 

provincial, state, or other local foreign taxes 

under § 1005.31(b)(1)(vi). This may also 

result in disclosures that do not match the 

amount actually received by the designated 

recipient. In both cases, the relevant 

disclosuresfi øAn estimate¿ must be 

described using the term ‘‘Estimated’’ or a 

substantially similar term in close proximity 

to the term or terms described. For example, 

a remittance transfer provider could describe 

an estimated disclosure as ‘‘Estimated 

Transfer Amount,’’ ‘‘Other Estimated Fees 

and Taxes,’’ or ‘‘Total to Recipient (Est.).’’ fl 

However, if the provider is relying on the 

sender’s representations or has specific 

knowledge regarding variables that affect the 

amount of fees disclosed under 

§ 1005.31(b)(1)(vi), and is not otherwise 

providing estimated disclosures, § 1005.31(d) 

does not apply. Section 1005.31(d) also does 

not apply to foreign tax disclosures if the 

provider discloses all applicable taxes 

(including applicable regional, provincial, 

state, or other local foreign taxes), if the 

provider is relying on the sender’s 

representations or has specific knowledge 

regarding variables that affect the amount of 

foreign taxes imposed by a country’s central 

government, and if the provider is not 

otherwise providing estimated disclosures.fi 

* * * * * 

Section 1005.32—Estimates 

1. Disclosures where estimates can be used. 

Section 1005.32(a)[ and]fl,fi (b)(1)fl, (b)(3) 

and (b)(4)fi permit estimates to be used in 

certain circumstances for disclosures 

described in §§ 1005.31(b)(1) through (b)(3) 

and 1005.36(a)(1) and (2). To the extent 

permitted in § 1005.32(a)[ and]fl,fi (b)(1)fl, 

(b)(3) and (b)(4)fi, * * * 

* * * * * 

32(b) Permanent Exceptions 

* * * * * 

fl32(b)(3) Permanent Exception Where 

Variables Affect Taxes Imposed by a Person 

Other Than the Provider 

1. Application of exception. The amount of 

taxes imposed by a person other than the 

provider may depend on certain variables. 

See comment 32(b)(1)(vi)–2. Under 

§ 1005.32(b)(3), a provider may disclose the 

highest possible tax that could be imposed on 

the remittance transfer with respect to any 

unknown variable. For example, if a tax may 

vary based upon whether a recipient’s 

institution is grandfathered under existing 

law, or whether the recipient has reached a 

transaction threshold above which taxes are 

assessed, the provider may simply assume 

that a tax applies without having to ask the 

sender first. In such a case, the provider 

should disclose the highest possible tax that 

could be imposed. If the provider expects 

that variations may result from differing 

interpretations of law or regulation by the 

paying agent or recipient institution, the 

provider may assume that the highest 

possible tax that could be imposed applies. 

32(b)(4) Permanent Exception Where 

Variables Affect Recipient Institution Fees 

1. Application of exception. The amount of 

fees imposed by a designated recipient’s 

institution for receiving a transfer in an 

account a person other than the provider may 

depend on certain variables. See comment 

32(b)(1)(vi)–4. Under § 1005.32(b)(4)(i), a 

provider may disclose the highest possible 

fees that could be imposed on the remittance 

transfer with respect to any unknown 

variable based on, among other things, fee 

schedules made available by the recipient 

institution. For example, if a provider relies 

on an institution’s fee schedules, and the 

institution offers three accounts with 

different incoming wire fees, the provider 

should take the highest fee and use that as 

the basis for disclosure. 

2. Reasonable sources of information. 

Reasonable sources of information include: 

fee schedules published by competitor 

institutions; surveys of financial institution 

fees; or information provided by the recipient 

institution’s regulator or central bank.fi 

* * * * * 

32(d) Bases for Estimates for Transfers 

Scheduled Before the Date of Transfer 

1. In general. * * *. If, for the same-day 

remittance transfer, the provider could utilize 

either of the [other two] exceptions 

permitting the provision of estimates in 

§ 1005.32(a) or (b)(1), the provider may 

provide estimates based on a methodology 

permitted under § 1005.32(c).fl The provider 

could also provide estimates in accordance 

with § 1005.32(b)(3) or (b)(4). fi * * * 

Section 1005.33—Procedures for Resolving 

Errors 

33(a) Definition of Error 

* * * * * 

3. Incorrect amount of currency received— 

examples. * * * 

* * * * * 

ii. * * *. The remittance transfer provider 

provides the sender a receipt stating an 

amount of currency that will be received by 


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77214 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 

the designated recipient, which does not 

reflect additional foreign taxes that will be 

imposed [in]flbyfi Colombiafl’s central 

governmentfi on the transfer. * * * 

* * * * * 

4. Incorrect amount of currency received– 

extraordinary circumstances. Under 

fl§ 1005.33(a)(1)(iii)(B), a remittance transfer 

provider’s failure to make available to a 

designated recipient the amount of currency 

stated in the disclosure provided pursuant to 

§ 1005.31(b)(2) or (3) for the remittance 

transferfi ø§ 1005.33(a)(1)(iv)(B), a 

remittance transfer provider’s failure to 

deliver or transmit a remittance transfer by 

the disclosed date of availability¿ is not an 

error if such failure was caused by 

extraordinary circumstances outside the 

remittance transfer provider’s control that 

could not have been reasonably anticipated. 

Examples of extraordinary circumstances 

outside the remittance transfer provider’s 

control that could not have been reasonably 

anticipated under fl§ 1005.33(a)(1)(iii)(B)fi 

ø§ 1005.33(a)(1)(iv)(B)¿ include 

circumstances such as war or civil unrest, 

natural disaster, garnishment or attachment 

of some of the funds after the transfer is sent, 

and government actions or restrictions that 

could not have been reasonably anticipated 

by the remittance transfer provider, such as 

the imposition of foreign currency controls or 

foreign taxes unknown at the time the receipt 

or combined disclosure is provided under 

§ 1005.31(b)(2) or (3). 

* * * * * 

7. flSender Account Number Error. The 

exception in § 1005.33(a)(1)(iv)(D) applies 

where a sender gives the remittance transfer 

provider an incorrect account number that 

results in the deposit of the remittance 

transfer into a customer’s account at the 

recipient institution other than the 

designated recipient’s account. This 

exception does not apply where the failure to 

make funds available is the result of a 

mistake by a provider or a third party or due 

to incorrect or insufficient information other 

than an incorrect account number.fi 

fl8.fi ø7¿Recipient-requested changes. 

* * * 

fl9.fi ø8¿Change from disclosure made in 

reliance on sender information flor because 

only foreign taxes imposed by a country’s 

central government disclosedfi. Under 

fl§ 1005.31(b)(1)(vi), providers need not 

disclose regional, provincial, state, or other 

local foreign taxes. Further, underfi the 

commentary accompanying § 1005.31, the 

remittance transfer provider may rely on the 

sender’s representations in making certain 

disclosures. See, e.g. comments 31(b)(1)(iv)– 

1 ø,¿ flandfi 31(b)(1)(vi)–1 ø, and 

31(b)(1)(vi)–2¿ fl through 31(b)(1)(vi)–4. 

Any discrepancy between the amount 

disclosed and the actual amount received 

resulting from the provider’s reliance upon 

these provisions does not constitute an error 

under § 1005.33(a)(2)(iv).fi For example, 

suppose a sender requests U.S. dollars to be 

deposited into an account of the designated 

recipient and represents that the account is 

U.S. dollar-denominated. If the designated 

recipient’s account is actually denominated 

in local currency and the recipient’s accountholding institution must convert the 

remittance transfer into local currency in 

order to deposit the funds and complete the 

transfer, the change in currency does not 

constitute an error øpursuant to¿ flas set 

forth infi § 1005.33(a)(2)(iv). Similarly, if the 

remittance transfer provider relies on the 

sender’s representations regarding variables 

that affect the amount of flrecipient 

institution fees orfi taxes imposed by a 

person other than the provider for purposes 

of determining flfees orfi øthese¿ taxesfl 

required to be disclosed under 

§ 1005.31(b)(1)(vi), or does not disclose 

regional, provincial, state, or other local 

foreign taxes, as permitted by 

§ 1005.31(b)(1)(vi), fithe change in the 

amount of currency the designated recipient 

actually receives due to the flrecipient 

institution fees or foreignfi taxes actually 

imposed does not constitute an error, 

øpursuant to¿ flas set forth infi 

§ 1005.33(a)(2)(iv). 

* * * * * 

33(c) Time Limits and Extent of Investigation 

* * * * * 

2. Incorrect or insufficient information 

provided for transfer. Under 

§ 1005.33(c)(2)(ii)(A)(2), if a remittance 

transfer provider’s failure to make funds in 

connection with a remittance transfer 

available to a designated recipient by the 

disclosed date of availability occurred 

because the sender provided incorrect or 

insufficient information in connection with 

the transfer, such as by erroneously 

identifying the designated recipientfl’s 

addressfi øor the recipient’s account 

number¿ or by providing insufficient 

information to enable the entity distributing 

the funds to identify the correct designated 

recipient, the sender may choose to have the 

provider make funds available to the 

designated recipient and third party fees may 

be imposed for resending the remittance 

transfer with the corrected or additional 

information. The remittance transfer provider 

may not require the sender to provide the 

principal transfer amount again. flWhen 

resending funds, the entire transfer amount is 

to be sent again except that 

§ 1005.33(c)(2)(ii)(A)(2) permits a provider to 

deduct those third party fees that were 

actually incurred as part of the first 

unsuccessful remittance transfer attempt. 

While a request to resend is not a request for 

a remittance transfer, § 1005.33(c)(3) requires 

providers to provide certain disclosuresfi. 

øThird parties fees that were not incurred 

during the first unsuccessful remittance 

transfer attempt may not be imposed again 

for resending the remittance transfer. A 

request to resend is a request for a remittance 

transfer. Therefore, a provider must provide 

the disclosures required by § 1005.31 for a 

resend of a remittance transfer, and¿ flTo 

the extent currency must be exchanged when 

resending funds, fi the provider must use 

the exchange rate it is using for such transfers 

on the date of the resend øif funds were not 

already exchanged in the first unsuccessful 

remittance transfer attempt¿. A sender 

providing incorrect or insufficient 

information does not include a provider’s 

miscommunication of information necessary 

for the designated recipient to pick-up the 

transfer flnor does it include a sender 

providing an incorrect account number when 

the provider has satisfied the requirements of 

§ 1005.33(h). See § 1005.33(a)(1)(iv)(D)fi. For 

example, a sender is not considered to have 

provided incorrect or insufficient 

information if the provider discloses the 

incorrect location where the transfer may be 

picked up or gives the wrong confirmation 

number/code for the transfer. The following 

examples illustrate these concepts. 

* * * * * 

fl11. Procedure for resending a remittance 

transfer. The disclosures in § 1005.33(c)(3) 

need not be provided either if the sender has 

elected a refund remedy or if the remittance 

transfer provider’s default remedy is a refund 

and the sender has not selected a remedy 

prior to when the provider is providing the 

§ 1005.33(c)(1) report. To the extent that the 

resend is not properly transmitted, the initial 

error has not been resolved and the 

provider’s duty to resolve it is not fully 

satisfied. 

i. For purposes of determining the date of 

transfer for disclosures made in accordance 

with § 1005.33(c)(3)(i), if the remittance 

transfer provider is unable to speak to or 

otherwise make direct contact with the 

sender, the provider may use the same date 

on which it would provide a default remedy 

(i.e. one business day after 10 days after the 

provider has sent the report provided under 

§ 1005.33(c)(1)). See comment 33(c)-4. 

ii. If the remittance transfer provider makes 

direct contact with the sender at the same 

time or after providing the report required by 

§ 1005.33(c)(1), and if the time to cancel a 

resend disclosed pursuant to 

§ 1005.33(c)(3)(i)(B) has not passed, 

§ 1005.33(c)(2) requires the provider to 

resend the funds the next business day or as 

soon as reasonably practicable thereafter if 

the sender elects a resend remedy. For such 

a resend, the provider must provide the 

disclosures required by § 1005.33(c)(3)(ii) to 

use the exchange rate it is using for such 

transfers on the date of resend to the extent 

that currency must be exchanged when 

resending funds. When providing disclosures 

pursuant to § 1005.33(c)(3)(ii), the provider 

need not allow the sender to cancel the 

resend.fi 

* * * * * 

fl33(h) Incorrect Account Number Supplied. 

1. Reasonable efforts. Section 1005.33(h)(4) 

requires a remittance transfer provider to use 

reasonable efforts to recover the amount that 

was to be received by the designated 

recipient. Whether a provider has used 

reasonable efforts does not depend on 

whether the provider is ultimately successful 

in recovering the amount that was to be 

received by the designated recipient. The 

following are examples of how a provider 

might use reasonable efforts: 

i. The remittance transfer provider 

promptly calls or otherwise contacts the 

recipient’s institution, either directly or 

indirectly through any correspondent(s) or 

other intermediaries or service providers 

used for the particular transfer, to request 

that the amount that was to be received by 

the designated recipient be returned, and if 

required by law or contract, by requesting 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Proposed Rules 77215 

that the recipient institution obtain a debit 

authorization from the holder of the 

incorrectly credited accountholder. 

ii. The remittance transfer provider 

promptly uses a messaging service through a 

funds transfer system to contact the 

recipient’s institution, either directly or 

indirectly through any correspondent(s) or 

other intermediaries or service providers 

used for the particular transfer, to request 

that the amount that was to be received by 

the designated recipient be returned, in 

accordance with the messaging service’s 

rules and protocol, and if required by law or 

contract, by requesting that the recipient 

institution obtain a debit authorization from 

the holder of the incorrectly credited 

account. 

iii. In addition to using the methods 

outlined above, to the extent that a 

correspondent institution, other service 

providers to the recipient institution, or the 

recipient institution requests documentation 

or other supporting information, the 

remittance transfer provider promptly 

provides such documentation or other 

supporting information to the extent 

available. 

2. Promptness of Reasonable Efforts. 

Section 1005.33(h)(4) requires that a 

remittance transfer provider act promptly in 

using reasonable efforts to recover the 

amount that was to be received by the 

designated recipient. While promptness may 

depend on the circumstances, generally a 

remittance transfer provider acts promptly 

when it does not delay in seeking recovery 

of the mis-deposited funds. For example, if 

the sender informs the provider of the error 

before the date of availability disclosed 

pursuant to § 1005.31(b)(2)(ii), the provider 

should act to contact the recipient’s 

institution before the date of availability, as 

doing so may prevent the funds from being 

mis-deposited.fi 

* * * * * 

36(b) Accuracy 

* * * * * 

3. Receipts. * * *. However, the remittance 

transfer provider may continue to disclose 

estimates to the extent permitted by 

§ 1005.32(a)[ or]fl,fi (b)(1)fl, (b)(3) or 

(b)(4)fi. * * * 

* * * * * 

Dated: December 21, 2012. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2012–31170 Filed 12–27–12; 11:15 am] 

BILLING CODE 4810–AM–P 


srobinson on DSK4SPTVN1PROD with