```

[Federal Register Volume 77, Number 25 (Tuesday, February 7, 2012)]
[Rules and Regulations]
[Pages 6194-6309]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-1728]

[[Page 6193]]

Vol. 77

Tuesday,

No. 25

February 7, 2012

Part II

Bureau of Consumer Financial Protection

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12 CFR Part 1005

Electronic Fund Transfers (Regulation E); Final Rule and Proposed Rule

Federal Register / Vol. 77, No. 25 / Tuesday, February 7, 2012 / 
Rules and Regulations

[[Page 6194]]

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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1005

[Docket No. CFPB-2011-0009]
RIN 3170-AA15

Electronic Fund Transfers (Regulation E)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Final rule; official interpretation.

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SUMMARY: The Bureau of Consumer Financial Protection is amending 
Regulation E, which implements the Electronic Fund Transfer Act, and 
the official interpretation to the regulation, which interprets the 
requirements of Regulation E. The final rule provides new protections, 
including disclosures and error resolution and cancellation rights, to 
consumers who send remittance transfers to other consumers or 
businesses in a foreign country. The amendments implement statutory 
requirements set forth in the Dodd-Frank Wall Street Reform and 
Consumer Protection Act.

DATES: The rule is effective February 7, 2013.

FOR FURTHER INFORMATION CONTACT: Mandie Aubrey, Dana Miller, or Stephen 
Shin, Counsels, or Krista Ayoub or Vivian Wong, Senior Counsels, 
Division of Research, Markets, and Regulations, Bureau of Consumer 
Financial Protection, 1700 G Street NW., Washington, DC 20006, at (202) 
435-7000.

SUPPLEMENTARY INFORMATION:

I. Overview

    The Bureau of Consumer Financial Protection (Bureau) is publishing 
this final rule to implement section 1073 of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act (Dodd-Frank Act),\1\ which creates a 
comprehensive new system of consumer protections for remittance 
transfers sent by consumers in the United States to individuals and 
businesses in foreign countries. Consumers transfer tens of billions of 
dollars from the United States each year. However, these transactions 
were generally excluded from existing Federal consumer protection 
regulations in the United States until the Dodd-Frank Act expanded the 
scope of the Electronic Fund Transfer Act (EFTA) \2\ to provide for 
their regulation.
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    \1\ Public 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.
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    The new protections will significantly improve the predictability 
of remittance transfers and provide consumers with better information 
for comparison shopping. First, the statute requires consistent, 
reliable disclosures about the price of a transfer, the amount of 
currency to be delivered to the recipient, and the date of 
availability. Consumers must receive pricing information before they 
make payment, and under the final rule will generally have 30 minutes 
after making payment to cancel a transaction. Second, the new 
requirements also increase consumer protections where transfers go awry 
by requiring providers to investigate disputes and remedy errors. 
Because the statute defines ``remittance transfers'' broadly, most 
electronic transfers of funds sent by consumers in the United States to 
recipients in other countries will be subject to the new protections.
    Authority to implement the new Dodd-Frank Act provisions amending 
the EFTA transferred from the Board of Governors of the Federal Reserve 
System (Board) to the Bureau effective July 21, 2011. The Dodd-Frank 
Act requires that regulations to implement certain of these provisions 
be issued by January 21, 2012. To ensure compliance with this deadline, 
the Board issued a Notice of Proposed Rulemaking in May 2011 (May 2011 
Proposed Rule) with the expectation that the Bureau would complete the 
rulemaking process.\3\
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    \3\ 76 FR 29902 (May 23, 2011).
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    The Bureau is now issuing the final rule to define standards and 
provide initial guidance to industry. The final rule provides for a 
one-year implementation period. The Bureau is also publishing elsewhere 
in today's Federal Register a Notice of Proposed Rulemaking (January 
2012 Proposed Rule) to further refine application of the final rule to 
certain transactions and remittance transfer providers. The Bureau 
expects to complete any further rulemaking on matters raised in the 
January 2012 Proposed Rule on an expedited basis before the end of the 
one-year implementation period.
    The Bureau will work actively with consumers, industry, and other 
regulators in the coming months to follow up on the final rule. For 
instance, the Bureau has begun discussions with other Federal and state 
regulators concerning the fact that Congress's decision to regulate 
remittance transfers under the EFTA affects the application of certain 
State laws and Federal anti-money laundering regulations, as discussed 
further below. In coming months, the Bureau also expects to develop a 
small business compliance guide and engage in dialogue with industry 
regarding implementation issues. Finally, as the implementation date 
approaches, the Bureau expects to conduct a public awareness campaign 
to educate consumers about the new disclosures and their other rights 
under the Dodd-Frank Act.

II. Background

A. Scope and Regulation of Remittance Activities

    The term ``remittance transfer'' has been used in other contexts to 
describe consumer-to-consumer transfers of low monetary value, often 
made via non-depository companies known as ``money transmitters'' by 
migrants supporting friends and relatives in their home countries.\4\ 
But while this likely is the single largest category of electronic 
transfers of funds by consumers in the United States to recipients in 
foreign countries, it is not the only one. For instance, transfers can 
be sent abroad by any consumers in the United States, not just 
immigrants. In addition to using money transmitters, consumers can 
transfer funds to recipients in foreign countries through depository 
institutions or credit unions, for instance through wire transfers or 
automated clearing house (ACH) transactions. Furthermore, consumers in 
the United States may transfer funds to businesses as well as to 
individuals in foreign countries, for instance to pay bills, tuition, 
or other expenses. Although a number of studies of certain sets of 
consumers' international funds transfers have shown that transactions 
average several hundred dollars per transfer,\5\ average transfer sizes 
vary significantly among subsets of the market, e.g., among sets of 
consumer transfers sent to particular destination regions, or among 
consumer transfers

[[Page 6195]]

sent via particular methods or for particular purposes.\6\
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    \4\ See, e.g., Committee on Payment and Settlement Systems and 
the World Bank, General Principles for International Remittance 
Services 6 (Jan. 2007), available at: siteresources.worldbank.org/INTPAYMENTREMMITTANCE/Resources/New_Remittance_Report.pdf (``CPSS 
Principles'').
    \5\ See, e.g., Ole E. Andreassen, Remittance Service Providers 
in the United States: How Remittance Firms Operate and How They 
Perceive Their Business Environment 15-16 (June 2006), available at: 
siteresources.worldbank.org/INTPAYMENTREMMITTANCE/Resources/BusinessmodelsFSEseries.pdf) (``Andreassen''); Manuel Orozco, Inter-
American Dialogue, Migration and Remittances in Times of Recession: 
Effects on Latin American and Caribbean Economies 13-14 (Apr. 2009), 
available at: www.oecd.org/dataoecd/48/8/42753222.pdf; Bendixen & 
Amandi, Survey of Latin American Immigrants in the United States 23 
(Apr. 30, 2008), available at: idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=35063818. (``Bendixen Survey'')
    \6\ For example, one study found that 52% of total worldwide 
transfers to India from Indians living abroad were made in amounts 
of $1,100 and above, and of that category, 63% exceeded $2,200. 
Muzaffar Chishti, Migration Policy Institute, The Rise in 
Remittances to India: A Closer Look (February 2007), available at: 
http://www.migrationinformation.org/Feature/display.cfm?ID=577 
(citing to 2006 study by the Reserve Bank of India; study was not 
limited to transfers from the United States); see also Manuel 
Orozco, Inter-American Dialogue, Worker Remittances in an 
International Scope 10 (Feb. 28, 2003), available at: www.iadb.org/document.cfm?id=35076501.
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    As described further below, the Dodd-Frank Act defines ``remittance 
transfer'' broadly to include most electronic transfers of funds sent 
by consumers in the United States to recipients in other countries. 
There is no available data regarding the volume of remittance transfers 
using the statutory definition, but a number of studies regarding 
related financial flows indicate that consumers in the United States 
transfer tens of billions of dollars abroad annually. Globally, the 
World Bank estimates that the worldwide volume of certain cash, asset, 
and in-kind transfers made by migrants to developing countries reached 
$325 billion in 2010, and that the United States was the source of the 
greatest number of such transfers.\7\ The U.S. Bureau of Economic 
Analysis estimates that in 2010, $37.1 billion in cash and in-kind 
transfers were made from the United States to foreign households by 
foreign-born individuals who had spent one or more years here.\8\ 
Similarly, a private consulting firm estimates that in 2005, $42 
billion in international transfers were made by money transmitters in 
the United States.\9\ The U.S. Census Bureau, in contrast, estimates 
that monetary transfers from U.S. households to family and friends 
abroad totaled approximately $12 billion in 2008.\10\ The available 
data suggest that the majority of consumers' international transfers 
from the United States are sent to the Caribbean and Latin America, and 
primarily to Mexico. Significant sums are also sent to Asia, and to the 
Philippines in particular.\11\
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    \7\ World Bank, Migration and Remittances Factbook 2011 15, 17 
(2d ed. 2011). The World Bank estimates include cash and in-kind 
transfers by migrants to their native countries, earnings of 
temporary workers, and certain asset transfers.
    \8\ Bureau of Economic Analysis (BEA''), Personal Transfers, 
1992:I -2011:III (Dec. 15, 2011). For more on the BEA's methodology, 
see Mai-Chi Hoang and Erin M. Whitaker, BEA, ``Annual Revision of 
the U.S. International Transaction Accounts,'' Surv. of Current Bus, 
vol. 91, no. 7 (July 2011) at 47-61; Christopher L. Bach, BEA, 
``Annual Revision of the U.S. International Accounts, 1991-2004,'' 
Surv. of Current Bus. vol. 85, no. 7 (July 2005) at 64-66.
    \9\ KPMG LLP Economic and Valuation Services, 2005 Money 
Services Business Industry Survey Study for Financial Crimes 
Enforcement Network 5 (Sept. 26, 2005), available at: 
www.fincen.gov/news_room/rp/reports/pdf/FinCEN_MSB_2005_Survey.pdf (``KPMG Report'') (Volume estimates included fees 
charged, as well as principal transferred. It is unclear whether 
estimate includes inbound, as well as outbound, transfers).
    \10\ Elizabeth M. Grieco, Patricia de la Cruz et al., Who in the 
United States Sends and Receives Remittances? An Initial Analysis of 
the Monetary Transfer Data from the August 2008 CPS Migration 
Supplement, U.S. Census Bureau Working Paper No. 87 (Nov. 2010), 
available at http://www.census.gov/population/www/documentation/twps0087/twps0087.html. The report recognizes the substantial 
difference between its estimate and that of the BEA and offers 
several possible explanations, but does not reach a conclusion about 
the difference between the estimates.
    \11\ U.S. Gov't Accountability Office, GAO-06-204, International 
Remittances: Information on Products, Costs, and Consumer 
Disclosures 7 (November 2005) (``GAO Report''); see also Cong. 
Budget Office, Migrants' Remittances and Related Economic Flows 7 
(Feb. 2011).
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    In the United States, remittance transfers sent by non-bank ``money 
transmitters,'' depository institutions, and credit unions are 
generally subject to Federal anti-money laundering laws and 
restrictions on transfers to or from certain persons. Money 
transmitters are also subject to State licensing and (in some cases) 
State regulatory regimes. However, consumer protections for remittance 
and other funds transfers vary widely at the State level, and 
international money transfers fall largely outside the scope of 
existing Federal consumer protections. For instance, the EFTA was 
enacted in 1978 to provide a basic framework establishing the rights, 
liabilities, and responsibilities of participants in electronic fund 
transfer (EFT) systems. As implemented by Regulation E (12 CFR part 
1005),\12\ the EFTA governs transactions such as transfers initiated 
through automated teller machines, point-of-sale terminals, automated 
clearing house systems, telephone bill-payment plans, or remote banking 
services. However, prior to the new Dodd-Frank Amendments, Congress had 
specifically structured the EFTA to exclude wire transfers,\13\ and 
transfers sent by money transmitters also generally fall outside the 
scope of existing Regulation E. As described in more detail below, 
these categories of transfers are believed to compose the majority of 
the remittance transfer market.
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    \12\ In light of the transfer of the rulemaking authority for 
the EFTA (other than Section 920 of the EFTA) from the Board to the 
Bureau, the Bureau published for public comment an interim final 
rule establishing a new Regulation E at 12 CFR part 1005. See 76 FR 
81020 (Dec. 27, 2011). Consequently, provisions in the Board's 
Regulation E at 12 CFR part 205 were republished as the Bureau's 
Regulation E at 12 CFR part 1005.
    \13\ See EFTA section 903(7), which has been implemented in 12 
CFR 1005.3(c).
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B. Specific Methods of Consumer Remittance and Other Money Transfers

    Consumers can choose among several methods of transferring money to 
foreign countries, as detailed below. Information on the volume of 
certain methods, particularly consumer wire transfers, is very limited, 
but the Bureau believes that transactions by non-bank ``money 
transmitters'' and wire transfers by depository institutions and credit 
unions make up the majority of the remittance transfer market.
    The various methods of remittance transfer can generally be 
categorized as involving either closed network or open network systems, 
although new hybrids between open and closed networks are developing. 
In closed networks, a principal remittance transfer provider offers a 
service through a network of agents or other partners that help collect 
funds in the United States and disburse 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-to-end.
    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. A number of 
principal providers may access the system. National laws, individual 
contracts, and the rules of various messaging, settlement, or payment 
systems may constrain certain parts of transfers sent through an open 
network system. But any participant, such as a U.S. depository 
institution, may use the network to send transfers to unaffiliated 
institutions abroad with which it has no contractual relationship, and 
over which it has limited authority or ability to monitor or 
control.\14\
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    \14\ See generally CPSS Principles at 9-10.
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Remittance Transfers Through Money Transmitters
    Historically, many consumers have sent remittance transfers through 
non-depository institutions called ``money transmitters.''\15\ Money 
transmitters generally operate through closed networks, receiving and 
disbursing funds through their own outlets or through agents, such as 
grocery stores, neighborhood convenience stores, or depository 
institutions. Money

[[Page 6196]]

transmitters have traditionally dominated the market for transfers from 
consumers in the United States to relatives or other households 
abroad.\16\ These businesses, in turn, have tended to focus on modest-
sized transfers. Many cap the size of individual transfers,\17\ and 
some evidence suggests that for some destination markets, money 
transmitters' prices for transfers of several hundred dollars tend to 
be lower than depository institutions' prices.\18\
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    \15\ Federal law requires money transmitters to register with 
the Financial Crimes Enforcement Network of the U.S. Department of 
the Treasury. 31 U.S.C. 5330; 31 CFR 1022.380. Most states also 
require money transmitters to be licensed by the State.
    \16\ Bureau, Report on Remittance Transfers 6 (July 20, 2011), 
available at: http://www.consumerfinance.gov/wp-content/uploads/2011/07/Report_20110720_RemittanceTransfers.pdf (``Bureau 2011 
Report'').
    \17\ KPMG Report at 47.
    \18\ See, e.g., Remittance Prices Worldwide: Making Markets More 
Transparent, Sending Money FROM United States, at: http://remittanceprices.worldbank.org/Country-Corridors/from-United-States 
(tracking select providers' prices for sending $200 and $500 
transfers from the United States to select countries).
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    For a remittance transfer conducted through a money transmitter, a 
consumer typically provides basic identifying information about himself 
and the recipient, and pays cash sufficient to cover the transfer 
amount and any transfer fees charged by the money transmitter. The 
consumer is often provided a confirmation code, which the consumer 
relays to the recipient. The money transmitter sends an instruction to 
a specified payout location or locations in the recipient's country 
where the recipient may pick up the transferred funds in cash, often in 
local currency, on or after a specified date, upon presentation of the 
confirmation code and/or other identification. These transfers are 
generally referred to as cash-to-cash remittances.
    Although most money transmitters focus on cash-to-cash remittance 
transfers, many have also broadened their product offerings, with 
respect to both the methods for sending and the methods for receiving 
remittance transfers. For example, money transmitters may permit 
transfers to be initiated using credit cards, debit cards, or bank 
account debits, through Web sites, dedicated telephone lines at agent 
locations, at stand-alone kiosks, or by telephone. Abroad, money 
transmitters and their partners may allow funds to be deposited into 
recipients' bank accounts, or distributed directly onto prepaid cards. 
Funds can also be transferred among consumers' ``virtual wallets,'' 
through accounts identified by individuals' email addresses or mobile 
phone numbers. A recent survey of companies sending funds from the 
United States to Latin America showed that approximately 75% permit 
consumers to send transfers of funds that can be deposited directly 
into recipients' bank accounts, and about 15% offer internet-based 
transfers.\19\
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    \19\ Manuel Orozco, Elizabeth Burgess et al, Inter-American 
Dialogue, A Scorecard in the Market for Money Transfers: Trends in 
Competition in Latin American and the Caribbean 6 (June 18, 2010) 
(``Scorecard''). Like cash-to-cash remittances, many of these new 
offerings rely on closed networks, though others rely on open 
networks or reflect some characteristics of both open and closed 
network transactions. The primary means of open network transfers 
are wire transfers and international ACH transfers, discussed in 
more detail below.
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    The cost of a transfer sent through a money transmitter generally 
has two components, in addition to any governmental taxes. The first 
component is fees. In general, money transmitters charge up-front fees 
at the time that a transaction is sent. Though it is possible that 
agents that disburse funds may charge additional fees, the contractual 
relationships that money transmitters hold with their agents--or with 
intermediaries that manage such agents--may allow money transmitters, 
as a condition of network participation, to forbid such fees.
    The second component is the exchange rate applied to the transfer, 
which determines how much money a consumer will have to pay in order 
for a recipient to receive a certain amount of local currency. Money 
transmitters also often set the exchange rates that apply to the 
transfers they send, at or before the time that a consumer tenders 
payment. However, some money transmitters offer floating rate products 
where the exchange rate is not determined until the recipient picks up 
the funds. In either scenario, the exchange rate that applies to a 
transfer usually reflects a spread: a percentage difference between 
that exchange rate (the ``retail'' rate) and some ``wholesale'' 
exchange rate.\20\ Spreads can be used to generate revenue for the 
money transmitter or its partners. Spreads are also one of several 
mechanisms that money transmitters or their partners may use to manage 
exchange rate risk, which arises due to the frequent fluctuations in 
most wholesale currency markets and the time lags between when 
transfers are initiated, when destination market currency is bought, 
when transfers are picked up by recipients, and when the parties settle 
their transactions.
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    \20\ There are a variety of ways to measure the wholesale 
exchange rate. For example, researchers may rely on publicly 
available interbank exchange rates, which are the rates available to 
large financial institutions exchanging very large quantities of 
currency with each other. By contrast, in calculating their revenues 
due to spread, money transmitters generally rely on the rates at 
which they buy currency, which may be different from interbank 
rates.
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    Funds sent through a money transmitter are generally available in 
one to three business days, although same day delivery may be 
available, often for a higher fee. At the time of the transaction, 
transmitters generally set a date (and possibly time) when funds will 
be available. Based on the contractual relationships among network 
participants, money transmitters may require agents in the recipient 
country to make funds available to recipients before accounts are 
settled among the agent in the United States, the money transmitter, 
the agent abroad, and any other entities involved. But the processes 
and methods that agents in the United States, money transmitters, 
agents abroad, and other entities communicate with each other, transfer 
funds among each other, and settle accounts can vary widely.\21\
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    \21\ See generally Andreassen at 3-5; CPSS Principles at 41-42.
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    Because money transmitters generally work through closed networks, 
even those that do not operate their own retail outlets often have 
direct contractual relationships with agents in the United States 
through which consumers initiate transfers, as well as agents abroad, 
which make funds available to recipients. Alternatively, money 
transmitters may have direct relationships with intermediaries that, in 
turn, contract with and manage individual agents. In either scenario, 
money transmitters can use the terms of their contractual relationships 
to restrict the terms under which agents or other network partners can 
operate and to obtain information from the agents or other networks to 
monitor their compliance with contractual and legal requirements.
International Wire Transfers
    Depository institutions and credit unions have traditionally 
offered consumers remittance transfer services by way of wire 
transfers, which are certain electronically transmitted orders that 
direct receiving depository institutions to pay identified 
beneficiaries.\22\ Unlike closed network

[[Page 6197]]

transactions, which generally can only be sent to agents or other 
entities that have signed on to work with the specific provider in 
question, wire transfers are generally open network transactions that 
can reach virtually any bank worldwide through national payment systems 
that are connected through correspondent and other intermediary bank 
relationships.\23\ Historically, while money transmitters have focused 
on modest-sized transfers between persons who may not use depository 
institutions or credit unions, wire transfers have generally been used 
for large transactions sent by consumers with deposit accounts to 
recipients with deposit accounts. Wire transfers are generally not 
capped on the amount that can be sent, and individual transactions can 
involve thousands or millions of dollars. Because flat fees are common, 
the price of a wire transfer, as a percent of the transaction amount, 
often decreases as the size of the transfer increases. Information on 
the volume of consumer wire transfers is very limited.
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    \22\ Wire transfers can, in fact, be composed of a sequence of 
payment orders, each of which are settled using different payment 
systems. For instance, an international wire transfer may be 
composed, in part, by a domestic wire transaction between the 
sending institution in the United States and an intermediary also 
operating in the United States; a ``book transfer'' between two 
accounts held by the intermediary institution; and a transaction 
between that intermediary and the receiving institution (that may be 
conducted through the domestic wire system in the receiving 
country).
    \23\ A correspondent relationship is generally one in which a 
financial institution has a contractual arrangement to hold deposits 
and provide services to another financial institution, which has 
limited access to certain financial markets.
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    To initiate a wire transfer, a consumer typically provides the 
sending depository institution or credit union not only information 
about himself and the recipient of the transfer, but also technical 
information about the recipient's financial institution and the account 
into which money will be received. The fees charged by the sending 
institution and the principal amount to be transferred are deducted 
from the consumer's account. No access code or similar device is 
typically required because the funds will be deposited into the 
designated recipient's account in the foreign country.
    Like money transmitters, providers of wire transfers usually charge 
up-front fees at the time of the transaction. In some cases, 
intermediary institutions impose additional fees (sometimes referred to 
as ``lifting fees'') and recipient institutions may also charge fees 
for converting funds into local currency and/or depositing them into 
recipients' accounts. Often, intermediary and recipient institutions 
charge fees to the consumer by deducting them from the principal amount 
transferred, although sometimes fees are charged to the sending 
institution instead.
    For wire transfers that will be received in a foreign currency, the 
mechanics of the currency exchange may depend on the circumstances. A 
sending depository institution or credit union that participates in 
foreign exchange markets may exchange the currency at the time of 
transfer, using an exchange rate that the sending institution sets. In 
such cases, the principal amount will be then transferred in the 
foreign currency. Even if the funds are to be received in a foreign 
currency, however, the sending financial institution may not conduct 
the foreign exchange itself. Some financial institutions, particularly 
smaller institutions, may not participate in any foreign currency 
markets. In other cases, a depository institution or credit union may 
choose not to trade an illiquid currency or a consumer may request that 
the financial institution send the transfer in U.S. dollars. In these 
cases, the sending institution's correspondent institution, the first 
cross-border intermediary institution in the recipient's country, or 
the recipient's institution, may set the exchange rate that applies to 
the transfer. Like exchange rates applied to closed network transfers, 
exchange rates applied to wire transfers may reflect a spread between 
the retail rate and the wholesale rate; this spread can be used to 
generate revenue or to help manage exchange rate risk.
    Funds that are sent by wire transfers are usually not available on 
the same day that the transaction is initiated. Because of time zone 
differences, and because payment is often not made before funds are 
settled among the various parties, wire transfers generally take at 
least one day for delivery. They may take longer, depending on the 
number of institutions involved in the transmittal route, the payment 
systems used, and individual institutions' business practices.
    Communications within the open network can be complicated. Where a 
sending institution has no contractual, account, or other relationships 
with a recipient institution, it may communicate indirectly by sending 
funds and payment instructions to a correspondent institution, which 
will then transmit the instructions and funds to the recipient 
institution directly or indirectly through other intermediary 
institutions. In some cases the sending institutions may not know the 
identity of the intermediary institution prior to initiating the 
transfer because more than one transfer route may be possible. 
Institutions may learn about each other's practices through any direct 
contractual or other relationships that do exist, through experience in 
effectuating wire transfers over time, through reference materials, or 
through information provided by the consumer. However, as open networks 
operate today, there is no global practice of communications by 
intermediary and recipient institutions that do not have direct 
relationships with a sending institution regarding fees deducted from 
the principal amount or charged to the recipient, exchange rates that 
are set by the intermediary or recipient institution, or compliance 
practices. Furthermore, even among contractual partners, communication 
practices could vary.
International ACH
    More recently, some depository institutions and credit unions have 
begun to offer other methods for initiating remittance transfers, such 
as through the automated clearing house system (ACH), which provides 
for batched electronic fund transfers generally on a nightly basis. To 
reach a foreign recipient, transfers initiated through the ACH system 
must generally pass through a ``gateway operator'' in the United 
States, to an entity in the recipient country (such as a foreign 
financial institution) according to the terms of an agreement between 
the two; the transfers are then cleared and settled through a payment 
system in the recipient country. Individual financial institutions can 
serve as gateway operators, and through a set of branded services 
called FedGlobal ACH Payments, the Federal Reserve Banks also offer 
international ACH gateway services.\24\
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    \24\ Board, Report to the Congress on the Use of the Automated 
Clearinghouse System for Remittance Transfers to Foreign Countries 
4-6, 7, 9 (July 2011), available at: http://www.federalreserve.gov/boarddocs/rptcongress/ACH_report_201107.pdf (``Board ACH 
Report'').
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    Similar to the typical money transmitter services, the FedGlobal 
ACH Payments services have been designed for modest sized transfers. 
They have been marketed, at least in part, to serve migrants sending 
money to their countries of origin, and some of the FedGlobal services 
include transaction limits.\25\ Unlike some money transmitters, 
FedGlobal does not offer transfers that can be picked up on the same 
day on which they are sent.\26\
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    \25\ Board ACH Report at 4, 10; Fed. Reserve Bank Services, 
FedGlobal[reg] ACH Payments Service Origination Manual 23, 48, 
available at: http://www.frbservices.org/files/serviceofferings/pdf/fedach_global_service_orig_manual.pdf (``FedGlobal Originations 
Manual'').
    \26\ FedGlobal Originations Manual at 11, 49.
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    Development of the FedGlobal system has occurred in the last 
decade. In 2001, the Federal Reserve Banks began offering cross-border 
ACH services to Canada. In 2004, the Federal Reserve Banks launched an 
interbank mechanism in partnership with the central bank of Mexico, 
later branded

[[Page 6198]]

``Directo a M[eacute]xico,'' to carry out cross-border ACH transactions 
between the United States and Mexico. The Federal Reserve Banks now 
offer international ACH services to 35 countries in Europe, Canada, and 
Latin America through agreements with private-sector or government 
entities.\27\ In each case, the Federal Reserve and the entity or 
entities with which the Federal Reserve has an agreement receive, 
process, and distribute ACH payments to financial institutions or 
recipients within the respective domestic payment systems, and in 
accordance with the terms of the FedGlobal ACH service.\28\ Depending 
on the recipient country, institutions may offer customers account-to-
account transfers, or allow customers to send transfers that may be 
picked up in cash at a participating institution or other payout 
location abroad.\29\
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    \27\ Board ACH Report at 9, 14; Fed. Reserve Bank Services, 
FedGlobal ACH Payments, available at: http://www.frbservices.org/serviceofferings/fedach/fedach_international_ach_payments.html 
(``FedGlobal ACH Payments'').
    \28\ FedGlobal Originations Manual.
    \29\ FedGlobal ACH Payments, http://www.frbservices.org/serviceofferings/fedach/fedach_international_ach_payments.html.
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    The Federal Reserve provides U.S. financial institutions access to 
its FedGlobal ACH Payments Service for a fee. Financial institutions, 
in turn, offer the product to their customers for a fee.\30\ For the 
purposes of this discussion, international ACH transactions will be 
considered open network transactions. However, depending in part on the 
nature of the agreements between U.S. gateway operators and the foreign 
entities involved, international ACH transfers also share some 
characteristics of closed network transfers. For example, like wire 
transfers, international ACH transfers can involve payment systems in 
which a large number of sending and receiving institutions may 
participate, such that the sending institution and the receiving 
institution may have no direct relationship. Agreements formed by the 
gateway operator with foreign entities may, however, restrict some 
terms of the service and the participants in the system. For example, 
unlike institutions that receive wire transfers, institutions that 
receive FedGlobal ACH transfers are generally restricted, by the terms 
of the service, from deducting a fee from the principal amount (though 
the service may permit recipient institutions to charge certain other 
fees, such as fees for receiving a transfer).\31\
---------------------------------------------------------------------------

    \30\  See, e.g., Lenora Suki, Competition and Remittances in 
Latin America: Lower Prices and More Efficient Markets, Working 
Paper at 27 (Feb. 2007), available at: http://www.oecd.org/dataoecd/31/52/38821426.pdf (``Competition and Remittances'').
    \31\ FedGlobal Originations Manual at 13, 27, 37, 42, 51. For 
transfers to Europe, the terms of the service provide for 
reimbursement of any fees deducted from the principal.
---------------------------------------------------------------------------

    In some instances, the financial institution originating a 
FedGlobal ACH transfer can choose to conduct the foreign exchange, and 
send the transfer in the foreign currency. In other cases, however, 
transfers are sent in U.S. dollars and any applicable exchange rate is 
determined afterward, by the foreign ACH counterpart, either directly 
or through foreign depository institutions.\32\ For such transfers, the 
terms of the FedGlobal service can determine how and when the 
applicable rate is set. For instance, for FedGlobal transfers to 
Mexico, the exchange rate is based on rate published by the Bank of 
Mexico on the date the transfer is credited to the beneficiary's 
account, minus a fixed spread.\33\ Funds are deposited into the 
recipient's account or made available to be picked up, in accordance 
with a delivery schedule that is established by the rules applicable to 
each FedGlobal service, and the practice of receiving financial 
institutions.\34\
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    \32\ Board ACH Report at 10-11.
    \33\ See Foreign Exchange Rate, available at: http://directoamexico.com/en/tipodecam.html.
    \34\ Board ACH Report at 11; FedGlobal Originations Manual at 
11, 13.
---------------------------------------------------------------------------

    International ACH transfers sent through the FedGlobal service or 
other mechanisms likely account for a small share of the remittance 
transfers sent annually. In July 2011, the Board reported that about 
410 financial institutions had enrolled in the FedGlobal ACH Payments 
Service, and that only about one-third of those initiated transfers in 
a typical month. The Board further reported that some enrolled 
institutions do not offer the service for consumer-initiated transfers; 
a large portion of the transfers sent through the FedGlobal's Canadian 
and European services were commercial payments; and the volume of 
transfers through the FedGlobal's Latin America service was 
negligible.\35\
---------------------------------------------------------------------------

    \35\ Board ACH Report at 12 & n.53, 14-15.
---------------------------------------------------------------------------

    The FedGlobal ACH services account for only about 20 percent of 
cross-border transactions that are processed through the U.S. ACH 
networks.\36\ The Bureau believes that remittance transfers account for 
only a small portion of these additional transactions, which include 
not only outbound, consumer-initiated transfers, but also inbound 
transfers and transfers initiated by government and businesses.\37\ 
Section 1073 of the Dodd-Frank Act directs the Board to work with the 
Federal Reserve Banks and the Department of the Treasury to expand the 
use of the ACH system and other payment mechanisms for remittance 
transfers to foreign countries.
---------------------------------------------------------------------------

    \36\ Board ACH Report at 5 & n.20, 9.
    \37\ Board ACH Report at 6.
---------------------------------------------------------------------------

Other Transfer Methods
    Over the last decade, some depository institutions and credit 
unions have independently developed other remittance transfer products, 
or have directly partnered with or joined other networks of financial 
institutions or other payout locations. Often designed with a focus on 
modest-sized transfers, these products include account-to-account, 
account-to-cash, and cash-to-account products that may be offered 
through closed network systems and resemble those offered by money 
transmitters.\38\ Services may be offered to non-account holders, as 
well as accountholders.
---------------------------------------------------------------------------

    \38\ See, e.g., Scorecard at 7, 25-26.
---------------------------------------------------------------------------

    In addition, depository institutions, credit unions, money 
transmitters, and other entities, including brokerages, may directly, 
or in partnership with others, offer consumers other closed network, 
open network, and other models for sending money abroad. Some of these 
other models relying on prepaid and debit cards can be used to deliver 
funds to a person located abroad. For example, consumers may send funds 
to recipients abroad using prepaid cards. In one model, a consumer in 
the United States purchases a prepaid card, loads funds onto the card, 
and has it sent to a recipient in another country. The recipient may 
then use the prepaid card at an ATM or at a point of sale, at which 
time any currency exchange typically occurs. The consumer can reload 
the recipient's prepaid card through the provider's Web site.\39\
---------------------------------------------------------------------------

    \39\ Depending on the business model, a prepaid card could also 
be reloaded at in-person locations or through other reload 
mechanisms.
---------------------------------------------------------------------------

    A consumer may also add a recipient in another country as an 
authorized user on his or her checking or savings account based in the 
United States, which could be denominated in dollars or in a foreign 
currency. A debit card linked to the consumer's account is provided to 
the recipient, who can use it to withdraw funds at an ATM or at a point 
of sale.\40\
---------------------------------------------------------------------------

    \40\ Consumers may also use informal methods to send money 
abroad, such as sending funds through the mail or with a friend, 
relative, or courier traveling to the destination country. See, 
e.g., Bendixen Survey 24 (estimating about 12% of Latin American 
migrants' transfers from the United States to their families are 
sent through mail, courier, or friends traveling abroad).

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[[Page 6199]]

C. Consumer Choice, Pricing, and Disclosure

    Research suggests that consumers choose a particular remittance 
transfer provider or product over another for a number of reasons. 
Significant factors include price, trust in the provider, security, 
reliability (i.e., having specified funds available at the specified 
time), and convenience, particularly in markets with limited locations 
for recipients to pick up funds.\41\ The relative importance of these 
factors can vary. For instance, some studies indicate that consumers 
are willing to pay higher prices to ensure that recipients receive the 
entire amount promised at the promised delivery time, and that 
consumers also tend to continue using a service provider once it proves 
reliable.\42\ Though the available information is limited, similar 
factors may also affect some consumers' decisions about whether to send 
money at all, or how much money to send. For instance, one study showed 
that small decreases in fees charged led to significant increases in 
the number of transfers made by migrant consumers sending remittances 
to their home countries.\43\
---------------------------------------------------------------------------

    \41\ Marianne A. Hilgert, Jeanne M. Hogarth, et al. ``Banking on 
Remittances: Extending Financial Services to Immigrants.'' 15 
Partners No. 2 at 18 (2005); Competition and Remittances at 25; May 
2011 Proposed Rule, 76 FR 29905 (summarizing results of consumer 
research conducted by the Board in connection with development of 
the proposed rule).
    \42\ GAO Report at 8; May 2011 Proposed Rule, 76 FR 29905. See 
also Appleseed, The Fair Exchange: Improving the Market for 
International Remittances 7 (Apr. 2007).
    \43\ Dean Yang, ``Migrant Remittances,'' Journal of Economic 
Perspectives, Vol. 25, No. 3 (Summer 2011) at 129-152.
---------------------------------------------------------------------------

    In recent years, studies suggest that increasing competition and 
other factors have contributed to downward market pressure on prices in 
some remittance markets.\44\ One study shows that the average price for 
sending $200 transfers to Latin America dropped by nearly half between 
2001 and 2008, although prices have risen slightly since.\45\ 
Furthermore, a recent survey of Latin American immigrants in the United 
States indicated that a majority were satisfied with the ease of use, 
inexpensiveness, and exchange rate and fee transparency of the 
companies that they used to send money, though fewer than half were 
satisfied with those companies' overall value.\46\
---------------------------------------------------------------------------

    \44\  Manuel Orozco, Inter-American Dialogue, International Flow 
of Remittances: Cost, Competition and Financial Access in Latin 
America and the Caribbean--Toward an Industry Scorecard 4 (2006), 
available at: www.iadb.org/news/docs/internationalflows.pdf 
(Technology may also be a driving factor). See also, The World Bank, 
Global Economic Prospects: Economic Implications of Remittances and 
Migration 137-38 (2006), available at: http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2005/11/14/000112742_20051114174928/Rendered/PDF/343200GEP02006.pdf.
    \45\ Scorecard at 2, 13 (price includes upfront fee plus spread 
between exchange rate applied to the transfer and the wholesale 
exchange available at the time); see also Inter-American Development 
Bank, Multilateral Investment Fund, Ten Years of Innovation in 
Remittances: Lessons Learned and Models for the Future 8 (2010).
    \46\  Scorecard at 10.
---------------------------------------------------------------------------

    However, this information is limited, in both its scope and its 
applicability. For instance, not all remittance transfer markets are as 
competitive as the market for modest-sized transfers to Latin America. 
Furthermore, across markets, a number of concerns with regard to the 
clarity and reliability of information provided to consumers have been 
identified.\47\
---------------------------------------------------------------------------

    \47\ See generally S. Rep. 111-176, at 179-80 (2010); 
Remittances: Regulation and Disclosure in a New Economic 
Environment, Hearing Before House Subcomm. on Fin. Insts. and Cons. 
Credit, House Comm. on Fin. Servs., No. 111-39 (June 3, 2009) 
(``2009 House Hearing''); Remittances: Access, Transparency, and 
Market Efficiency--A Progress Report, Hearing Before House Subcomm. 
on Domestic and Int'l Monetary Policy, Trade, and Technology, House 
Comm. on Fin. Servs., No. 110-32 (May 17, 2007) (``2007 House 
Hearing'').
---------------------------------------------------------------------------

    First, pricing for remittance transfers is complex. The overall 
price of the transaction depends on three components (fees, taxes, and 
exchange rates). As a result, determining what amount of funds will 
actually be received and which provider offers the lowest price 
requires arithmetic that can be challenging for consumers.\48\
---------------------------------------------------------------------------

    \48\ See, e.g., Bureau 2011 Report at 17-20; Testimony of 
Annette LoVoi, Appleseed, 2009 House Hearing at 8-9, 13, 24; 
Testimony of Manuel Orozco, Inter-American Dialogue, 2009 House 
Hearing at 61-63; Testimony of Mark A. Thompson, The Western Union 
Company, 2009 House Hearing at 20; Testimony of Beatriz Ibarra, 
National Council of La Raza, 2007 House Hearing at 41.
---------------------------------------------------------------------------

    Second, pricing models can vary widely and change frequently, 
making it even more difficult for consumers to compare transfer 
options. Fees may be charged to senders up front or deducted from the 
principal amount. Because wholesale currency markets can fluctuate 
constantly over the course of the day, the exchange rates applied to 
individual remittance transfers may also change over the course of the 
day, depending on how frequently remittance transfer providers update 
their retail rates. Remittance transfer providers may also vary their 
exchange rates and fees charged based on a range of factors, such as 
the sending and receiving locations, and size and speed of the 
transfer.\49\ Taxes may vary depending on the type of remittance 
transfer provider, the type of recipient institution, and various other 
factors.\50\ These variations can also make it difficult for consumers 
to compare prices across providers or among remittance products.
---------------------------------------------------------------------------

    \49\ See, e.g., Bureau 2011 Report at 13-14, 17-20; Testimony of 
Tom Haider, MoneyGram International, 2007 House Hearing at 14.
    \50\ Okla. Stat. Sec.  63-2-503.1j; Letter from Bobi Shields-
Farrelly, United Nations Federal Credit Union, to Board of Governors 
of the Federal Reserve System, June 29, 2011.
---------------------------------------------------------------------------

    Third, disclosure practices have varied in the absence of a 
consistent Federal regime. In the last decade, the number of states 
that require provision of post-transaction receipts stating fees and/or 
exchange rates has increased, and several class action lawsuits against 
large money transmitters also resulted in settlement agreements 
requiring disclosure of certain pricing information. However, the legal 
requirements vary and coverage is limited. Moreover, many of the State 
requirements do not require pre-transaction disclosures or disclosure 
of the amount of foreign currency to be received.\51\
---------------------------------------------------------------------------

    \51\ Bureau 2011 Report at 14-16; see also Testimony of Annette 
LoVoi, Appleseed, 2007 House Hearing at 19; Testimony of Beatriz 
Ibarra, National Council of La Raza, 2007 House Hearing at 42.
---------------------------------------------------------------------------

    Finally, the reliance of many remittance senders on foreign 
languages can further complicate consumers' ability to obtain and 
understand transaction information from various remittance transfer 
providers.\52\
---------------------------------------------------------------------------

    \52\ See generally, Catalina Amuedo-Dorantes, Cynthia Bansak, 
and Susan Pozo, ``On the Remitting Patterns of Immigrants: Evidence 
from Mexican Survey Data,'' Economic Review (First Quarter 2005) 37-
58 at 41, CPSS Principles at 3.
---------------------------------------------------------------------------

    Congressional hearings prior to enactment of the Dodd-Frank Act 
focused on the need for standardized and reliable pre-payment 
disclosures, suggesting that disclosure of the amount of money to be 
received by the designated recipient is particularly critical.\53\ As 
discussed above, research suggests that consumers place a high value on 
reliability to ensure that the promised amount is made available to 
recipients.\54\ In addition, the amount to

[[Page 6200]]

be received can facilitate cost comparisons because it factors in both 
the exchange rate used and charges deducted from the principal amount 
to be transferred.\55\ Consumer advocates also argued that requiring 
error resolution mechanisms where funds are not received as expected is 
also important.\56\ Industry advocates emphasized the need for 
consistency, arguing that the current patchwork of regulatory 
approaches leads to unnecessary administrative costs that make 
remittances more expensive for consumers.\57\
---------------------------------------------------------------------------

    \53\ See, e.g., S. Rep. 111-176, at 179-80 (2010); Testimony of 
Annette LoVoi, Appleseed, 2009 House Hearing at 8-9, 13, 24; 
Testimony of Mark A. Thompson, The Western Union Company, 2009 House 
Hearing at 20; Testimony of Tom Haider, MoneyGram, 2007 House 
Hearing at 9; Testimony of Annette LoVoi, Appleseed, 2007 House 
Hearing at 3, 49; Testimony of James C. Orr, Microfinance 
International Corporation, 2007 House Hearing at 59.
    \54\ See also, e.g., Testimony of Annette LoVoi, Appleseed, 2009 
House Hearing at 8 (``[C]onsumers value, above all, understanding 
the amount of money that will be delivered to their family member 
upon pick-up.''); Testimony of Annette LoVoi, Appleseed, 2007 House 
Hearing at 3, 21 (``[P]redictability of transfer is of paramount 
importance. The senders want to know how much money will be received 
in a foreign country.''); Testimony of Tom Haider, MoneyGram, 2007 
House Hearing at 9 (describing the amount of local currency to be 
received as ``most important to the consumer'' among other items 
disclosed).
    \55\ Testimony of Mark A. Thompson, The Western Union Company, 
2009 House Hearing at 20; Testimony of James C. Orr, Microfinance 
International Corporation, 2007 House Hearing at 59.
    \56\ Testimony of Annette LoVoi, Appleseed, 2009 House Hearing 
at 9, 48, 49; Testimony of Annette LoVoi, Appleseed, 2007 House 
Hearing at 51; Testimony of Beatriz Ibarra, National Council of La 
Raza, 2007 House Hearing at 5, 43, 44; see also S. Rep. 111-176, at 
179-80 (2010).
    \57\ Testimony of Tom Haider, MoneyGram, 2007 House Hearing at 
8, 32-33; see also Testimony of Mark A. Thompson, The Western Union, 
2007 House Hearing at 11, 67 (arguing that legislation should not 
create an unlevel playing field between different types of 
providers).
---------------------------------------------------------------------------

III. Summary of Statute and Rulemaking Process

A. Overview of the Statute

    The Dodd-Frank Act creates a comprehensive system of consumer 
protections across various types of remittance transfers. The statute: 
(i) Mandates disclosure of the exchange rate and the amount to be 
received, among other things, by the remittance transfer provider, 
prior to and at the time of payment by the consumer for the transfer; 
(ii) provides for Federal rights regarding consumer cancellation and 
refund policies; (iii) requires remittance transfer providers to 
investigate disputes and remedy errors regarding remittance transfers; 
and (iv) establishes standards for the liability of remittance transfer 
providers for the acts of their agents and authorized delegates. The 
statute also contains other provisions to encourage provision and use 
of low-cost remittance transfers, including directing the Bureau and 
other agencies to assist in the execution of a national financial 
empowerment strategy, as it relates to remittances.
    The requirements apply broadly. Congress defined ``remittance 
transfer'' to include all electronic transfers of funds to designated 
recipients located in foreign countries that are ``initiated by a 
remittance transfer provider'' upon the request of consumers in the 
United States; only very small dollar transfers are excepted by the 
statute. The statute thus expands the scope of the EFTA, which has 
historically focused on electronic fund transfers involving 
``accounts'' held at financial institutions, which include depository 
institutions, credit unions, and other companies that directly or 
indirectly hold checking, savings, or other assets accounts. The 
remittance transfer provisions, in contrast, apply regardless of 
whether the consumer holds an account with the remittance transfer 
provider or whether the remittance transfer is also an ``electronic 
fund transfer'' as defined under the EFTA.
    Congress also provided a specific accommodation for depository 
institutions and credit unions, in apparent recognition of the fact 
they would need time to improve communications with foreign financial 
institutions that conduct currency exchanges or impose fees on certain 
open network transactions. The statute creates a temporary exception to 
permit insured depository institutions and credit unions to provide 
``reasonably accurate estimates'' of the amount to be received where 
the remittance transfer provider is ``unable to know [the amount], for 
reasons beyond its control'' at the time that the sender requests a 
transfer to be conducted through an account held with the provider. The 
exception sunsets five years from the date of enactment of the Dodd-
Frank Act (i.e., July 21, 2015), but the statute authorizes the Bureau 
to extend that date for no more than five years if it 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.
    Thus, once the temporary exception expires, the statute will 
generally require all remittance transfer providers to disclose the 
actual amounts to be received by designated recipients. The statute 
creates a permanent exception authorizing the Bureau to issue rules to 
permit use of reasonably accurate estimates where the Bureau determines 
that a recipient nations' laws or the methods by which transfers are 
made to a recipient nation do not permit remittance transfer providers 
to know the amount of currency to be received.
    The statute further mandates that all remittance transfer providers 
investigate and remedy errors that are reported by the sender within 
180 days of the promised date of delivery, specifically including 
situations in which the amount of currency designated in the 
disclosures was not in fact made available to the designated recipient 
in the foreign country. Under the statute, senders may designate 
whether funds should be refunded to them or made available to the 
designated recipient at no additional cost, or any other remedy 
determined by the Bureau. The statute also directs the Bureau to issue 
rules concerning appropriate cancellation and refund policies, as well 
as appropriate standards or conditions of liability for providers with 
regard to the acts of agents and authorized delegates.

B. Outreach and Consumer Testing

    Both the Board and the Bureau have conducted extensive outreach and 
research on remittances issues in preparation for the rulemaking 
process. Starting in fall 2010, Board staff conducted outreach with 
various parties regarding remittances and implementation of the 
statute. Board staff met with representatives from a variety of money 
transmitters, financial institutions, industry trade associations, 
consumer advocates, and other interested parties to discuss current 
remittance transfer business models, consumer disclosure and error 
resolution practices, operational issues, and specific provisions of 
the statute.\58\
---------------------------------------------------------------------------

    \58\ Summaries of these meetings are available on the Board's 
Web site at: http://www.federalreserve.gov/newsevents/reform_consumer.htm.
---------------------------------------------------------------------------

    In addition, the Board engaged a testing consultant, ICF Macro 
(Macro), to conduct focus groups and one-on-one interviews regarding 
remittance transfers. Participants were all consumers who had made at 
least one remittance transfer and represented a range of ages, 
education levels, amount of time lived in the United States, and 
country or region to which remittances were sent. In December 2010, 
Macro conducted a series of six focus groups with eight to ten 
participants each, to explore current remittance provider practices and 
attitudes about remittance disclosures. Three focus groups were held in 
the Washington, DC metro area (specifically Bethesda, Maryland), and 
three were held in Los Angeles, California. At each location, two of 
the three focus groups were conducted in English, and the third in 
Spanish. In early 2011, Macro conducted a series of one-on-one 
interviews in New York City, Atlanta, Georgia, and the Washington, DC 
metro area (Bethesda, Maryland), with nine to ten participants in each 
city. During the interviews, participants were given scenarios in which 
they completed hypothetical remittance transfers and received one or

[[Page 6201]]

more disclosure forms. For each scenario, participants were asked 
specific questions to test their understanding of the information 
presented in the disclosure forms.
    The Bureau has also conducted additional outreach and research on 
remittances issues. Section 1073 of the Dodd-Frank Act required the 
Bureau to provide a report regarding the feasibility of and impediments 
to the use of remittance history in the calculation of a consumer's 
credit score, and recommendations on the manner in which maximum 
transparency and disclosure to consumers of exchange rates for 
remittance transfers may be accomplished.\59\ The Bureau has also 
conducted further outreach on remittance transfers with representatives 
from industry and consumer groups after closing of the comment period 
on the Board proposal and transfer of the rulewriting authorities.\60\ 
The Bureau also held multiple meetings with appropriate Federal 
agencies to consult with them regarding the May 2011 Proposed Rule and 
the January 2012 Proposed Rule, as discussed further below.
---------------------------------------------------------------------------

    \59\ See Bureau 2011 Report. The Bureau is currently engaged in 
quantitative research to explore further the potential relationships 
between consumers' remittance histories and credit scores.
    \60\ Summaries of these meetings are available at: http://www.regulations.gov.
---------------------------------------------------------------------------

C. Summary of the Board's Proposal

    The Board published the May 2011 Proposed Rule to amend Regulation 
E and the official staff commentary to implement the Dodd-Frank Act 
remittance transfer provisions.\61\ Under the May 2011 Proposed Rule, a 
remittance transfer provider was generally required to provide a 
written pre-payment disclosure to a ``sender,'' as defined in the 
statute and the proposed regulation, containing information about the 
specific transfer, such as the exchange rate, applicable fees and 
taxes, and the amount to be received by the designated recipient. The 
remittance transfer provider was also generally required to provide a 
written receipt at the time the sender pays for the remittance 
transfer. The receipt would have included the information provided on 
the pre-payment disclosure, as well as the date of availability, the 
recipient's contact information, and information regarding the sender's 
error resolution and cancellation rights. Alternatively, the May 2011 
Proposed Rule permitted remittance transfer providers to provide 
senders a single written pre-payment disclosure containing all of the 
information required on the receipt. Consistent with the statute, the 
May 2011 Proposed Rule would have required that these disclosures 
generally be provided in English and in each of the foreign languages 
principally used by the remittance transfer provider to advertise, 
solicit, or market remittance transfer services at a particular 
office.\62\
---------------------------------------------------------------------------

    \61\ 76 FR 29902 (May 23, 2011).
    \62\ Pursuant to EFTA section 919(a)(6), the Board in the months 
prior to issuing the proposal studied whether requiring storefront 
and Internet notices would facilitate the ability of consumers to 
compare prices and understand the types and amounts of fees or costs 
imposed on remittance transfers. Based on the results of this 
analysis, the Board decided not to propose rules that would require 
posting of such notices.
---------------------------------------------------------------------------

    The May 2011 Proposed Rule also contained provisions to implement 
two statutory exceptions to permit disclosure of reasonably accurate 
estimates of the amount of currency to be received. The first proposed 
exception would have implemented the temporary exception for insured 
depository institutions and credit unions to estimate exchange rates or 
fees that are determined by persons with which the financial 
institution has no correspondent banking relationship. The proposed 
rule stated that the exception would expire on July 21, 2015, as 
specified in the statute. The second proposed exception defined the 
circumstances in which providers could use estimates because the amount 
of currency to be received could not be determined due to: (i) The laws 
of a recipient country; or (ii) the method by which transactions are 
made in the recipient country.
    Additionally, the May 2011 Proposed Rule included error resolution 
standards, including recordkeeping standards, similar to those that 
currently apply to a financial institution under Regulation E with 
respect to errors involving electronic fund transfers. The proposal 
also would have provided a one business day period for consumers to 
cancel their transactions and obtain a full refund. Finally, the May 
2011 Proposed Rule set forth two alternative approaches for 
implementing the standards of liability for remittance transfer 
providers that act through an agent. Under the first proposed 
alternative, a remittance transfer provider would have been liable for 
violations by an agent when such agent acts for the provider. Under the 
second proposed alternative, a remittance transfer provider would have 
been liable for violations by an agent acting for the provider, unless 
the provider established and maintained policies and procedures for 
agent compliance, including appropriate oversight measures, and the 
provider corrected any violation reported by a particular consumer, to 
the extent appropriate.

D. Overview of Public Comments

    The Board received more than 60 comment letters on the May 2011 
Proposed Rule. These comment letters were received by the Board and 
subsequently transferred to the Bureau. The majority of the comment 
letters were submitted by industry commenters, including banks, credit 
unions, money transmitters, and industry trade associations. In 
addition, letters were submitted by individual consumers and academics, 
consumer groups, State banking and money transmitter regulators, two 
Federal Reserve Banks, and two members of Congress.\63\
---------------------------------------------------------------------------

    \63\ While some commenters addressed their comments to the 
Board, the Bureau is assuming that all comments regarding this 
rulemaking are directed to the Bureau.
---------------------------------------------------------------------------

    Many industry commenters, particularly financial institution 
commenters, argued that the scope of the May 2011 Proposed Rule was 
overbroad and would have unintended consequences. Many commenters 
asserted that the regulation should not apply to transfers where the 
originating institution does not control the transfer from end to end, 
such as international wire transfers and international ACH transfers. 
Commenters stated that compliance with the disclosure requirements, 
particularly the disclosure of fees charged by intermediary 
institutions handling the transfer and taxes levied in the recipient 
country, would be difficult or impossible for open network transfers. 
Commenters suggested that subjecting open network transfers to these 
requirements would cause financial institutions to withdraw from the 
market or restrict where such transfers may be sent, which would either 
decrease consumer access or increase costs to consumers. Commenters 
asserted that the Bureau should extend the temporary exception allowing 
use of estimates to 2020 or that the Bureau had and should use 
exception authority to make the exemption provision permanent. Several 
commenters also asserted that remittances to businesses and large-value 
consumer transactions should be exempted from the rule.
    Consumer group commenters, on the other hand, supported the May 
2011 Proposed Rule as faithfully implementing the statutory mandates, 
asserting that Congress had specifically intended the disclosure regime 
to change business practices by depository

[[Page 6202]]

institutions and credit unions that allow undisclosed exchange rates 
and fees. The commenters urged the Bureau not to extend the sunset date 
for the temporary exception allowing depository institutions and credit 
unions to use estimates under certain circumstances, and to publish a 
list of countries in which the laws or transfer methods prevent 
remittance transfer providers from determining the amount to be 
provided in order to prevent the exception from being abused. 
Furthermore, consumer group commenters asserted that the required 
disclosures would provide information that consumers currently lack 
about the foreign exchange rate, fees, and the date of delivery 
associated with a transfer. However, the commenters criticized the 
proposed disclosures as providing inadequate information regarding 
error resolution rights and failing to make clear when pricing 
information was estimated. They also urged the Bureau to reject 
combined disclosure forms because they did not provide clear proof that 
a contract had been formed and payment rendered.
    Regarding the proposed foreign language disclosure requirements, 
industry commenters recommended that the rule provide limits on the 
number or type of languages in which disclosures must be provided. 
These commenters stated that the May 2011 Proposed Rule would provide a 
disincentive for remittance transfer providers to provide a wide range 
of foreign language services to customers. Consumer group commenters 
and a Congressional commenter believed that the proposed foreign 
language provisions were appropriate and that the final rule should 
ensure that non- and limited-English speaking consumers have access to 
meaningful remittance transaction disclosures.
    Industry commenters also generally objected to proposed error 
resolution provisions that place liability on remittance transfer 
providers for errors caused by parties other than the provider. These 
commenters believed that these provisions inappropriately shifted 
liability to remittance transfer providers that did not err or control 
the circumstances that caused the error. Some commenters suggested that 
remittance transfer providers may not have the ability to recover funds 
from third parties involved in the transfer and that the financial 
impact of losses experienced by the provider as a result of errors by 
another party could be significant enough for remittance transfer 
providers to exit the market. Furthermore, industry commenters 
generally did not agree with the proposed refund and cancellation 
provisions, arguing, among other things, that the proposed cancellation 
period was too long. Consumer group commenters generally supported the 
proposed error resolution and refund and cancellation provisions, 
though some consumer group commenters also suggested that the 
cancellation period could be shortened.
    Finally, with respect to agent liability, consumer group 
commenters, State regulator commenters, and a Federal Reserve Bank 
commenter supported proposed Alternative A under the May 2011 Proposed 
Rule. This alternative would make the remittance transfer provider 
liable for violations by an agent, when such agent acts for the 
provider. Industry commenters, on the other hand, supported proposed 
Alternative B. This alternative would impose liability on a remittance 
transfer provider for violations by an agent acting for the provider, 
unless the provider established and maintained policies and procedures 
for agent compliance, including appropriate oversight measures, and the 
provider corrected any violation, to the extent appropriate.

IV. Summary of Final Rule and Concurrent Proposal

A. Introduction

    As described in more detail below, the final rule implements the 
Dodd-Frank Act by largely adopting the proposal as published in May 
2011, with several amendments and clarifications based on commenters' 
suggestions and further analysis by the Bureau. In the concurrent 
proposal, the Bureau is seeking public comment and data that would 
permit the Bureau to develop clearer and more appropriately tailored 
standards for: (i) Setting a specific numeric threshold as a safe 
harbor for determining which providers of remittance services are 
excluded from compliance with the new requirements because they do not 
provide remittance transfers ``in the normal course of business''; and 
(ii) applying the disclosure and cancellation requirements where 
senders request one or more transfers several days in advance of the 
transfer date.
    The Bureau takes seriously concerns raised by commenters, 
particularly implementation challenges in the open network context.\64\ 
The Bureau believes that a number of providers likely do not currently 
possess or have easy access to the information needed to satisfy the 
new disclosure requirements for every transaction. For these providers, 
as well as their operating partners, compliance may require 
modification of current systems, protocols, and contracts. 
Nevertheless, the Bureau believes that it would be premature to make a 
determination about extending the temporary exception allowing 
depository institutions and credit unions to estimate disclosure 
information. The statute specifies a very narrow role for the Bureau by 
according it discretion only to extend the exception for a limited time 
period upon a specific finding regarding the ability of depository 
institutions and credit unions to send remittance transfers. 
Forecasting how the market will evolve in response to the final rule is 
difficult prior to the rule's release and more than three years in 
advance of the sunset date set by the statute. It is not clear how 
providers, and in particular small companies and companies that send 
remittance transfers only infrequently, may react to the new 
requirements and potential implementation costs. Nor is it clear what 
new models and systems may be developed to enable these and other 
companies to comply more easily with the statutory and regulatory 
requirements. The remittances market has already undergone significant 
evolution over the last two decades, in response to increasing 
transaction flows, new technology, new business models, and other 
factors. New products and partnerships have been developing, and may be 
further spurred by implementation of the Dodd-Frank Act requirements.
---------------------------------------------------------------------------

    \64\ The analyses below under section 1022 of the Dodd-Frank 
Act, the Regulatory Flexibility Act, and the Paperwork Reduction Act 
detail the Bureau's attempts to assess various categories of 
benefits, costs, and impacts upon various categories of 
stakeholders.
---------------------------------------------------------------------------

    The final rule therefore generally tracks the language and 
structure of the Dodd-Frank Act and the May 2011 Proposed Rule, with 
some additional tailoring to provide guidance on complying with the 
requirements in particular circumstances such as transactions conducted 
by mobile applications or text message and transactions in which a 
sender preauthorizes remittance transfers to recur at substantially 
regular intervals. Going forward, the Bureau expects to develop a small 
business compliance guide, engage in a dialogue with both industry and 
consumer groups to monitor implementation issues, and consider what 
data will be useful to monitor the effect of the new regime on consumer 
access and market competition over time.

[[Page 6203]]

B. Summary of the Final Rule

    The final rule incorporates the definitions of ``remittance 
transfer,'' ``sender,'' ``remittance transfer provider,'' and 
``designated recipient'' generally as set forth in the statute. As in 
the May 2011 Proposed Rule, remittance transfer is defined broadly to 
include international wire and ACH transfers, consistent with the 
statutory language. In response to commenters' comments, the final rule 
also provides guidance for assessing whether a company qualifies as a 
``remittance transfer provider'' under the statute by providing 
remittance transfers in the ``normal course of its business.'' Further 
guidance is also provided to describe the circumstances in which 
loading funds to a prepaid card may be considered a remittance 
transfer.
    Consistent with the statute and the May 2011 Proposed Rule, the 
final rule requires a remittance transfer provider to provide a written 
pre-payment disclosure to a sender containing information about the 
specific transfer, such as the exchange rate, applicable fees and 
taxes, and the amount to be received by the designated recipient. Under 
the final rule, the remittance transfer provider is also generally 
required to provide a written receipt when payment is made. The receipt 
must include the information provided on the pre-payment disclosure, as 
well as additional information, such as the date of availability, the 
recipient's contact information, and information regarding the sender's 
error resolution and cancellation rights. Alternatively, the final rule 
permits remittance transfer providers to give senders a single written 
disclosure prior to payment containing all of the information required 
on the receipt, so long as the provider also provides proof of payment 
such as a stamp on the earlier document.
    The final rule generally requires that these disclosures be 
provided in English and in each of the foreign languages principally 
used by the remittance transfer provider to advertise, solicit, or 
market remittance transfer services at a particular office. Language in 
the model disclosure forms has been modified slightly to clarify and 
provide additional detail that may be useful to consumers, as well as 
to reflect substantive changes in the final rule regarding the period 
to exercise cancellation rights. The final rule also contains 
additional guidance on how the required disclosures may be provided 
when the remittance transfer is made using text message or a mobile 
application. Moreover, in light of the timing and disclosure challenges 
for preauthorized remittance transfers, which are authorized in advance 
to recur at substantially regular intervals, the final rule sets forth 
alternative disclosure requirements for such transfers. In particular, 
while the disclosures requirements for the first transfer in a 
preauthorized remittance transfer are the same as for single remittance 
transfers, for subsequent transfers in a series of preauthorized 
remittance transfers, a provider must provide a pre-payment disclosure 
within a reasonable time prior to the scheduled date of the transfer. 
The receipt for each subsequent transfer generally must be provided no 
later than one business day after the date on which the transfer is 
made.
    The final rule also implements the two statutory exceptions that 
permit a remittance transfer provider to disclose an estimate of the 
amount of currency to be received, rather than the actual amount. As 
discussed above, the final rule provides that the first exception, 
which applies to insured depository institutions and insured credit 
unions that cannot determine certain disclosed amounts for reasons 
beyond their control, expires on July 21, 2015. The second exception 
applies when the provider cannot determine certain amounts to be 
disclosed because of: (i) The laws of a recipient country; or (ii) the 
method by which transactions are made in the recipient country. The 
Bureau expects to issue a safe harbor list of countries to which the 
second exception applies prior to the effective date of the final rule 
and to update it periodically thereafter to facilitate compliance and 
enforcement. The final rule also provides clarification on use of 
particular estimate methodologies.
    Consistent with the May 2011 Proposed Rule, the error resolution 
procedures for remittance transfers set forth in the final rule are 
similar to those that currently apply to financial institutions under 
Regulation E with respect to errors involving electronic fund 
transfers. The Bureau is adopting certain modifications to the proposed 
error resolution provisions in response to commenters' concerns, 
including defining additional circumstances that would not be 
considered errors. The final rule also provides senders specified 
cancellation and refund rights. In response to commenters' concerns, 
the Bureau is reducing the cancellation period from one business day to 
30 minutes. Furthermore, the Bureau is adopting a different 
cancellation and refund procedure for any remittance transfer scheduled 
by the sender at least three business days before the date of the 
transfer. For these transfers scheduled in advance, senders may 
generally cancel the transfer as long as the request to cancel is 
received by the provider at least three business days before the 
scheduled date of the remittance transfer. Finally, the Bureau is 
adopting a standard of liability under which a remittance transfer 
provider will be liable for violations by an agent, when such agent 
acts for the provider.

C. Summary of Concurrent Proposal

    The Bureau is also issuing a concurrent proposal (January 2012 
Proposed Rule), published elsewhere in today's Federal Register. This 
proposal has two parts. First, it seeks comment on the addition of a 
possible safe harbor to the definition of the term ``remittance 
transfer provider'' to make it easier to determine when certain 
companies are excluded from the statutory scheme because they do not 
provide remittance transfers in ``the normal course of business.'' 
Second, it seeks comment on a possible safe harbor and other 
refinements to disclosure and cancellation requirements for certain 
transfers scheduled in advance, including ``preauthorized'' remittance 
transfers that are scheduled in advance to recur at substantially 
regular intervals. The Bureau believes that further tailoring of the 
final rule may be warranted both to reduce compliance burden for 
providers and to increase the benefits of the disclosure and 
cancellation requirements to consumers. The Bureau believes that these 
issues would benefit from further public comment.
    Regarding the first part of the January 2012 Proposed Rule, the 
Bureau is soliciting comment on a safe harbor for determining whether a 
person is providing remittance transfers in the ``normal course of 
business,'' and thus is a ``remittance transfer provider.'' Under the 
proposed safe harbor, if a person makes no more than 25 remittance 
transfers in the previous calendar year, the person would not be deemed 
to be providing remittance transfers in the normal course of business 
for the current calendar year if it provides no more than 25 remittance 
transfers in the current calendar year. The Bureau is soliciting 
comment on whether the threshold number for the safe harbor should be 
higher or lower than 25 transfers, such as 10 or 50 transfers.
    Regarding the second part of the January 2012 Proposed Rule, the 
Bureau is also seeking comment on a possible safe harbor and other 
refinements to disclosure and cancellation requirements for certain 
transfers scheduled in advance, including

[[Page 6204]]

preauthorized remittance transfers. Specifically, the proposal solicits 
comment whether use of estimates should be permitted in the pre-payment 
disclosure and receipt given at the time the transfer is requested and 
authorized in the following two circumstances: (i) A consumer schedules 
a one-time transfer or the first in a series of preauthorized transfers 
to occur more than 10 days after the transfer is authorized; or (ii) a 
consumer enters into an agreement for preauthorized remittance 
transfers where the amount of the transfers can vary and the consumer 
does not know the exact amount of the first transfer at the time the 
disclosures for that transfer are given. The January 2012 Proposed Rule 
is also requesting comment on whether a provider that uses estimates in 
the pre-payment disclosure and receipt given at the time of the 
transfer is requested and authorized in the two situations described 
above should be required to provide a second receipt disclosure with 
accurate information within a reasonable time prior to the scheduled 
date of the transfer.
    The January 2012 Proposal Rule also solicits comment on possible 
refinements to the disclosure rules applicable to subsequent 
preauthorized remittance transfers. Specifically, the Bureau is 
soliciting comment on two alternative approaches to the disclosures 
rules for subsequent preauthorized remittance transfers: (i) Whether 
the Bureau should retain the requirement that a provider give a pre-
payment disclosure for each subsequent transfer, and should provide a 
safe harbor interpreting the ``within a reasonable time'' standard for 
providing this disclosure; or (ii) whether the Bureau instead should 
eliminate the requirement to provide a pre-payment disclosure for each 
subsequent transfer.
    The January 2012 Proposed Rule also seeks comment on possible 
changes to the cancellation requirements for certain remittance 
transfers that a sender schedules in advance, including preauthorized 
remittance transfers. The January 2012 Proposed Rule solicits comment 
on whether the three-business-day deadline to cancel such remittances 
transfers in the final rule should be changed to be earlier or later 
than three business days. Furthermore, the January 2012 Proposed Rule 
solicits comment on three issues related to the disclosure of the 
deadline to cancel as set forth in the final rule: (i) Whether the 
three-business-day deadline to cancel transfers scheduled in advance 
should be disclosed more clearly to consumers, such as requiring a 
provider to disclose in the receipt the specific date the deadline to 
cancel will expire; (ii) whether a provider should be allowed on a 
receipt to describe both the three-business-day and 30 minute deadline-
to-cancel time frames and either describe to which transfers each 
deadline to cancel is applicable, or alternatively, use a check box or 
other method to indicate which deadline is applicable to the transfer; 
and (iii) whether the disclosure of the deadline to cancel should be 
disclosed in the pre-payment disclosure for each subsequent transfer, 
rather than in the receipt given for each subsequent transfer.

V. Legal Authority

    Section 1073 of the Dodd-Frank Act creates 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 senders a written pre-
payment disclosure containing specified information applicable to the 
sender's remittance transfer. The remittance transfer provider must 
also provide a written receipt that includes the information provided 
on the pre-payment disclosure, as well as additional specified 
information. EFTA section 919(a).
    In addition, EFTA section 919 provides for specific error 
resolution procedures. The Act directs the Bureau to promulgate error 
resolution standards and rules regarding appropriate cancellation and 
refund policies. EFTA section 919(d). Finally, EFTA section 919 
requires the Bureau to establish standards of liability for remittance 
transfer providers, including those that act through agents. EFTA 
section 919(f). Except as described below, the remittance transfer rule 
is finalized under the authority provided to the Bureau in EFTA section 
919, and as more specifically described in this SUPPLEMENTARY 
INFORMATION.
    In addition to the statutory mandates set forth in the Dodd-Frank 
Act, 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 in the SUPPLEMENTARY INFORMATION, the 
following provisions are adopted in part or in whole pursuant to the 
Bureau's authority in EFTA sections 904(a) and 904(c) include: 
Sec. Sec.  1005.30(e)(2)(ii), 1005.31(a)(2), (a)(5), (b)(1)(i), 
(b)(1)(ii), (b)(1)(iii), (b)(1)(iv), (b)(1)(v), (b)(1)(vi), (b)(2)(i), 
(b)(3), (e)(2), (g)(1)(ii), (g)(2), 1005.32(a) and (b), 1005.33(c)(1), 
and 1005.36. \65\ The proposed Model Forms in Appendix A are also 
adopted pursuant to EFTA section 904(a).\66\
---------------------------------------------------------------------------

    \65\ Throughout the SUPPLEMENTARY INFORMATION, the Bureau is 
citing its authority under both EFTA section 904(a) and EFTA section 
904(c) for purposes of simplicity. The Bureau notes, however, that 
with respect to some of the provisions referenced in the text, use 
of only one of the authorities may be sufficient.
    \66\ The consultation and economic impact analysis requirement 
previously contained in EFTA sections 904(a)(1)-(4) were not amended 
to apply to the Bureau. Nevertheless, the Bureau consulted with the 
appropriate prudential regulators and other Federal agencies and 
considered the potential benefits, costs, and impacts of the rule to 
consumers and covered persons as required under section 1022 of the 
Dodd-Frank Act, and through these processes would have satisfied the 
requirements of these EFTA provisions if they had been applicable.
---------------------------------------------------------------------------

VI. Section-by-Section Analysis

Section 1005.1 Authority and Purpose

    Section 1005.1(b) addresses the purpose of Regulation E, which is 
to carry out the purpose of the EFTA. The Dodd-Frank Act revised EFTA 
section 902(b) to state in part that the purpose of the EFTA is to 
provide a basic framework establishing the rights, liabilities, and 
responsibilities of participants in electronic fund and remittance 
transfer systems. * * * '' (emphasis added). Accordingly, the final 
rule makes a technical amendment to Sec.  1005.1(b) to incorporate this 
revision. Furthermore, because remittance transfers can be offered by 
persons other than financial institutions, the final rule also makes a 
technical amendment to Sec.  1005.1(b) to include a reference to other 
persons.

Section 1005.2 Definitions

    Section 1005.2 generally sets forth the definitions that apply to 
Regulation E. One commenter suggested that the Bureau clarify the 
applicability of the definitions contained in Sec.  1005.2, which have 
been placed in a new subpart A, to the remittance provisions in subpart 
B. Section 1005.2 is prefaced with: ``For purposes of this part. * * 
*.'' ``This part'' refers to the entirety of part 1005, including all 
subparts. Therefore, except

[[Page 6205]]

as modified or limited by subpart B (which modifications or limitations 
apply only to subpart B), the definitions in Sec.  1005.2 apply to all 
of Regulation E, including subpart B. The final rule adopts comment 30-
1 to clarify the applicability of the definitions contained in Sec.  
1005.2 to subpart B. The final rule also amends Sec.  1005.2 to cross 
reference subpart B to make clear that the definitions in Sec.  1005.2 
apply to subpart B unless otherwise provided in subpart B.

Section 1005.3 Coverage

    Currently, Sec.  1005.3(a) states that Regulation E generally 
applies to financial institutions. Section 1005.3(a) is revised to 
state that the requirements of subpart B apply to remittance transfer 
providers. The revision reflects the fact that the scope of the Dodd-
Frank Act's remittance transfer provisions is not limited to financial 
institutions. Specifically, EFTA section 919(g)(3) defines a remittance 
transfer provider as ``any person that provides remittance transfers 
for a consumer in the normal course of its business, whether or not the 
consumer holds an account with such person'' (emphasis added). Thus, 
subpart B applies to non-financial institutions, such as non-bank money 
transmitters, that send remittance transfers. This revision is adopted 
as proposed.

Section 1005.30 Remittance Transfer Definitions

    EFTA section 919(g) sets forth several definitions applicable to 
the remittance transfer provisions in subpart B. As discussed in more 
detail below, many commenters requested clarification on specific 
definitions, and also urged the Bureau to consider a number of 
revisions and exemptions to limit the application of the rule to 
different types of transactions. Final Sec.  1005.30 incorporates the 
statutory definitions generally as proposed, with additional 
interpretations and clarifications in response to specific concerns 
raised by commenters. The final rule revises the definition of 
``business day'' in Sec.  1005.30(b) to more closely track the 
definition of ``business day'' in Sec.  1005.2(d) of Regulation E. In 
addition, the final rule adds a new definition of ``preauthorized 
remittance transfer.''

30(a) Agent

    Proposed Sec.  205.30(a) stated that an ``agent'' means an agent, 
authorized delegate, or person affiliated with a remittance transfer 
provider under State or other applicable law, when such agent, 
authorized delegate, or affiliate acts for that remittance transfer 
provider. The final rule adopts the definition as proposed in 
renumbered Sec.  1005.30(a).
    EFTA section 919 does not use consistent terminology concerning 
agents of remittance transfer providers. For example, EFTA section 
919(f)(1) uses the phrase ``agent, authorized delegate, or person 
affiliated with a remittance transfer provider,'' when that person 
``acts for that remittance transfer provider,'' while other provisions 
use the phrase ``agent or authorized delegate'' (EFTA section 
919(f)(2)) or simply ``agent'' (EFTA section 919(b)). The Bureau does 
not believe that these statutory wording differences are intended to 
establish different standards across the rule. Therefore, the rule 
generally refers to ``agents,'' as defined in Sec.  1005.30(a), to 
provide consistency across the rule.
    Commenters suggested that the Bureau provide further clarity on the 
definition of ``agent,'' including clarifying that financial 
institutions' relationships with intermediary and correspondent 
institutions are not agency relationships unless an agreement creates 
such a relationship as a matter of law. The final rule does not contain 
these suggested clarifications. The Bureau believes that because the 
concept of agency has historically been defined by common law, it is 
appropriate for the definition to defer to applicable law regarding 
agents, including with respect to what creates or constitutes an agency 
relationship.

30(b) Business Day

    Several provisions in the final rule use the term ``business day.'' 
See, e.g., Sec. Sec.  1005.31(e)(2) and 1005.33(c)(1). Because the 
definition of ``business day'' in Sec.  1005.2(d) of Regulation E 
applies only to financial institutions and includes inapt commentary, 
the Board proposed an alternative definition of ``business day'' 
applicable to remittance transfer providers. The proposed rule stated 
that ``business day'' means any day on which a remittance transfer 
provider accepts funds for sending remittance transfers.
    Commenters generally objected to the proposed definition. In 
particular, financial institution commenters expressed concern that the 
date on which an institution ``accepts funds'' is unclear, because it 
could be interpreted either as the date on which funds are deposited 
into an account, or when the institution accepts a sender's order to 
transfer funds. Other commenters suggested replacing the proposed 
definition with a definition closer to the definition of ``business 
day'' in Sec.  1005.2(d) Regulation E. Upon further review, and for 
greater consistency among definitions, the Bureau is adopting a revised 
``business day'' definition in renumbered Sec.  1005.30(b) as explained 
in related commentary that more closely tracks the general definition 
of ``business day'' in Sec.  1005.2(d), but that is tailored to the 
particular aspects of remittance transfers.
    Specifically, Sec.  1005.30(b) states that ``business day'' means 
any day on which the offices of a remittance transfer provider are open 
to the public for carrying on substantially all business functions. 
Similar to proposed comment 30(b)-1, final comment 30(b)-1 clarifies 
that with respect to subpart B, a business day includes the entire 24-
hour period ending at midnight, and a notice given under any section of 
subpart B is effective even if given outside of normal business hours. 
However, comment 30(b)-1 states that a remittance transfer provider is 
not required under subpart B to make telephone lines available on a 24-
hour basis.
    Comment 30(b)-2 explains that ``substantially all business 
functions'' include both the public and the back-office operations of 
the provider. For example, if the offices of a provider are open on 
Saturdays for customers to request remittance transfers, but not for 
performing internal functions (such as investigating errors), then 
Saturday is not a business day for that provider. In this case, 
Saturday does not count toward the business-day standard for subpart B 
for purposes of determining the number of days for resolving errors, 
processing refunds, etc.
    Comment 30(b)-3 clarifies that a provider may determine, at its 
election, whether an abbreviated day is a business day. For example, if 
a provider engages in substantially all business functions until noon 
on Saturdays instead of its usual 3 p.m. closing, it may consider 
Saturday a business day. Finally, comment 30(b)-4 states that if a 
provider makes a telephone line available on Sundays for cancelling the 
transfer, but performs no other business functions, Sunday is not a 
business day under the ``substantially all business functions'' 
standard.

30(c) Designated Recipient

    EFTA section 919(g)(1) provides that ``designated recipient'' means 
``any person located in a foreign country and identified by the sender 
as the authorized recipient of a remittance transfer to be made by a 
remittance transfer provider, except that a designated recipient shall 
not be deemed to be a consumer for purposes of [the EFTA].'' Proposed 
Sec.  205.30(c)

[[Page 6206]]

implemented EFTA section 919(g)(1), with several edits for clarity. 
First, the Board proposal noted that a remittance transfer provider 
will generally only know the location where funds are to be sent, 
rather than where a designated recipient is physically located. For 
instance, although the sender may indicate that funds are to be sent to 
the recipient in Mexico City, the recipient could actually be in the 
United States at the time of the transfer. Thus, the Board stated that 
the statutory reference to a ``person located in a foreign country'' 
should be read with a view to the location where funds are to be sent. 
Additionally, the statute references a remittance transfer ``to be made 
by a remittance transfer provider.'' As discussed below, the definition 
of ``remittance transfer'' requires that it be sent by a remittance 
transfer provider, so this language is unnecessary. Accordingly, 
proposed Sec.  205.30(c) stated that a designated recipient is any 
person specified by the sender as an authorized recipient of a 
remittance transfer to be received at a location in a foreign country. 
The final rule adopts the proposed rule as proposed in renumbered Sec.  
1005.30(c), but with additional explanatory commentary to address 
issues raised by commenters.
    Proposed comment 30(c)-1 stated that a designated recipient can be 
either a natural person or a business. Several commenters argued that 
transfers to entities other than natural persons should be excluded, so 
that the rule would cover only consumer-to-consumer transfers. However, 
the statute clearly anticipates covering consumer-to-business 
transfers, as it defines ``designated recipient'' to include transfers 
to ``persons,'' and does not limit its application to consumer 
recipients. See 15 U.S.C. 1693p(g)(1). The EFTA defines ``consumer'' to 
mean a natural person, but does not define the term ``person.'' 
Nonetheless, the EFTA uses the term ``person'' in many provisions, and 
the context of how the term ``person'' is used in those EFTA provisions 
indicates that it includes entities that are natural persons, as well 
as organizations. For example, the EFTA defines the term ``financial 
institution'' to mean ``a State or National bank, a State or Federal 
savings and loan association, a mutual savings bank, a State or Federal 
credit union, or any other person who, directly or indirectly, holds an 
account belonging to a consumer.'' (emphasis added). As a result, 
Regulation E has long defined ``person'' to mean a natural person or an 
organization. See Sec.  1005.2(j). The Bureau believes that the statute 
by using the term ``person'' intended to cover remittance transfers 
sent by consumers not just to family members, but also directly to 
businesses abroad to pay tuition, mortgage, medical, utilities, or 
other bills or to fulfill other obligations. Accordingly, the final 
rule does not generally exclude consumer-to-business transfers where a 
remittance transfer provider is acting as an electronic intermediary. 
Instead, the Bureau is adopting comment 30(c)-1 to state that a 
designated recipient can be either a natural person or an organization, 
such as a corporation.
    Proposed comment 30(c)-2 explained that a remittance transfer is 
received at a location in a foreign country if funds are to be received 
at a location physically outside of any State.\67\ One money 
transmitter commenter noted that it may know the country to which a 
transfer is being sent, but not the specific payout location. The 
comment was intended to address the receipt of funds at a foreign 
location in the general sense; that is, any location that is outside of 
a State. Thus, the final comment, adopted as renumbered comment 30(c)-
2.i., clarifies that a sender need not designate a specific pick-up 
location.
---------------------------------------------------------------------------

    \67\ The term ``State'' is defined in 12 CFR 1005.2(l).
---------------------------------------------------------------------------

    In addition, commenters requested further clarification for 
determining whether there is a designated recipient when a transfer is 
made to an account. For example, in a wire transfer transaction, 
commenters stated that the consumer requesting the transfer may only 
identify the recipient of funds by an account number or the location or 
routing number of the receiving institution. Other commenters argued 
that transfers to an account associated with an institution in a State 
should not be viewed as transfers to a designated recipient, even if a 
person in a foreign country has exclusive access to the account.
    New comment 30(c)-2.ii. provides further guidance to address these 
issues. For transfers to a designated recipient's account, comment 
30(c)-2.ii. states that whether funds are to be received at a location 
physically outside of any State depends on where the account is 
located. If the account is located in a State, the funds will not be 
received at a location in a foreign country.
    The Bureau concurs with the Board's statement that the statutory 
reference to a ``person located in a foreign country'' should be read 
with a view to the location where funds are to be sent, and believes 
that comment 30(c)-2.ii. is consistent with this approach. Thus, the 
Bureau agrees that transfers to domestic accounts should not be 
considered transfers to a location in a foreign country. The Bureau 
also agrees that providers may not always know where a recipient is 
physically located at the time a consumer requests a transfer to be 
sent, and believes that directing providers to look to the location of 
the account, rather than the location of the individual recipient, 
creates an appropriate bright line that will facilitate compliance with 
the final rule, ease compliance burden, and most effectively accomplish 
the purpose of the statute to apply the provisions to transfers to 
foreign countries.
    One commenter suggested revising the definition of ``designated 
recipient'' to exclude senders, such that transfers made by a sender to 
a sender's separate account abroad would be excluded. However, nothing 
in the statute indicates that the definition of ``designated 
recipient'' should exclude transfers to a foreign-based account of the 
sender. The Bureau believes that a sender would also benefit from 
disclosures indicating the ultimate amount to be received in a 
transfer, particularly where an exchange rate is applied. The final 
rule adopts comment 30(c)-3 to clarify that a sender may also be a 
designated recipient, such as where a sender requests that a provider 
send an electronic transfer of funds from the sender's checking account 
in a State to the sender's checking account located in a foreign 
country.
    The Board solicited comment on whether there could be instances 
where a remittance provider may receive a recipient's email address but 
no other information to determine the location where funds are to be 
received. Several commenters affirmed this could happen. For example, 
one commenter stated that consumers can provide a recipient's email 
address to use its transfer service; while recipients must register 
with the provider to access the transferred funds, it is possible that 
the provider would not know whether the transferred funds will be 
received at a location in a foreign country until the funds are 
claimed.
    Final comment 30(c)-2.iii. addresses this scenario. Where the 
sender does not specify information about a recipient's account, but 
instead just provides information about the recipient, a remittance 
transfer provider must determine whether the funds will be received at 
a location in a foreign country based on information that is provided 
by the sender, and other information the provider may have, at the time 
the transfer is requested. For example, if a consumer gives a provider

[[Page 6207]]

the recipient's email address, and the provider has no other 
information about whether the funds will be received by the recipient 
at a location in a foreign country, then the provider may determine 
that funds are not to be received at a location in a foreign country. 
However, if the provider has additional information at the time the 
transfer is requested indicating that funds are to be received in a 
foreign country, such as where the recipient's email address is 
registered with the provider and associated with a foreign account, 
then the provider has sufficient information to conclude that the 
remittance transfer is to be received at a location in a foreign 
country.
    Commenters also noted that, with regard to prepaid cards, the 
provider may not know at the time the prepaid card is purchased whether 
the funds will be received at a location physically outside of any 
State. These commenters stated that where general-purpose reloadable 
prepaid cards or payroll cards are issued to two persons--one person in 
a State and another person in a foreign country--and both cards access 
the same funds, the provider may not be able to ascertain at the time 
of the request for the cards that funds will be received at a location 
physically outside of any State. In this case, the issuer does not know 
at the time of the request the ultimate recipient of the funds.
    The Bureau notes that funds that can be accessed by a prepaid card 
are generally not considered to be an ``account'' as defined in Sec.  
1005.2(b) of Regulation E. Thus, where the funds that can be accessed 
by a prepaid card are held does not determine whether a prepaid card is 
being issued to a designated recipient. The Bureau believes when a 
participant in a prepaid card program, such as a prepaid card issuer or 
a prepaid card program manager, issues prepaid cards, the participant 
in the prepaid card program must look to where it or another 
participant in the prepaid card program sends the prepaid cards, to 
determine whether the prepaid card funds will be received in a foreign 
country. Likewise, when a participant in a prepaid card program adds 
additional funds at the sender's direct request to prepaid cards that 
it or any other participant previously issued, the participant in the 
prepaid card program must look to where it or another participant in 
the prepaid card program has sent the cards to determine whether the 
prepaid card funds will be received in a foreign country. The Bureau 
does not believe that it is appropriate for a participant in the 
prepaid card program to determine whether the funds will be received in 
a foreign country based on where the participants have decided to hold 
the funds the cards access. The Bureau believes that such a rule would 
allow participants in the prepaid card program to circumvent the 
remittance transfer rules by holding the funds in a State. Under such 
an approach, participants in the prepaid card program would not be 
required to comply with the remittance transfer rules if the funds are 
located in a State even where prepaid cards that access the funds are 
sent only to recipients located in a foreign country.
    In the case where two prepaid cards are issued to two persons--one 
person in a State and another person in a foreign country--and both 
cards access the same funds, the Bureau believes that the provider has 
sufficient information to determine that the funds will be received in 
a foreign country because it has sent one of the prepaid cards to a 
person in a foreign country. Proposed comment 30(d)-3 suggested that in 
this situation, the transfer would not be to a designated recipient 
because the sender retained the ability to draw down the funds on the 
prepaid card. Proposed comment 30(d)-3 is not adopted. The Bureau is 
concerned that if it adopted a rule that the transfer is not to a 
designated recipient in this case, a provider that sends prepaid cards 
abroad with the intent of providing a service where funds loaded in a 
State are intended to be accessed in a foreign country could circumvent 
the remittance transfer rules by always automatically providing a 
second prepaid card to the sender, even if the sender did not request a 
second card.
    Thus, final comment 30(c)-2.iii. clarifies that if a consumer in a 
State purchases a prepaid card, the provider has sufficient information 
to conclude that the funds are to be received in a foreign country if 
the remittance transfer provider sends a prepaid card to a specified 
recipient in a foreign country, even if a person located in a State, 
including the sender, retains the ability to access funds on the 
prepaid card. In this case, the prepaid issuer knows at the time of the 
request that a prepaid card has been sent to a recipient located in a 
foreign country. In contrast, if the provider provides the card 
directly to the consumer, the provider may conclude that funds are not 
to be received in a foreign country, because the provider does not know 
whether the consumer will subsequently send the prepaid card to a 
recipient in a foreign country.

30(d) Preauthorized Remittance Transfer

    In the May 2011 Proposed Rule, the Board requested comment on the 
treatment of preauthorized bill payments under the definition of 
``remittance transfer.'' This issue, and its resolution, are discussed 
in more detail below in the discussions of Sec.  1005.30(e) and new 
Sec.  1005.36.
    The term ``preauthorized electronic fund transfer'' is currently 
defined under 12 CFR 1005.2(k) to mean an ``electronic fund transfer 
authorized in advance to recur at substantially regular intervals.'' 
Because subpart B applies to more than just EFTs, the final rule 
includes a new definition of ``preauthorized remittance transfer'' in 
Sec.  1005.30(d). The definition tracks the definition in Sec.  
1005.2(k), but revises its applicability to ``remittance transfers 
authorized in advance to recur at substantially regular intervals.'' 
Similarly, the final rule adopts a new comment 30(d)-1 that tracks 
existing comment 2(k)-1, but with references to remittance transfers 
replacing references to EFTs.

30(e) Remittance Transfer

30(e)(1) General Definition
    EFTA section 919(g)(2)(A) defines a ``remittance transfer'' as an 
``electronic (as defined in section 106(2) of the Electronic Signatures 
in Global and National Commerce Act, 15 U.S.C. 7007 et seq. [(``E-Sign 
Act'')]) transfer of funds requested by a sender located in any State 
to a designated recipient that is initiated by a remittance transfer 
provider.'' The statute further specifies that such a transaction is a 
remittance transfer whether or not the sender holds an account with the 
remittance transfer provider and whether or not the remittance transfer 
is also an electronic fund transfer, as defined in EFTA section 903. 
The statute thus brings within the scope of the EFTA certain 
transactions that have traditionally been outside the scope of the 
EFTA, if those transactions meet the elements of the definition of 
``remittance transfer.'' Such transactions include cash-based 
remittance transfers sent through a money transmitter as well as 
consumer wire transfers and international ACH transactions. Proposed 
Sec.  205.30(d) incorporated the definition of ``remittance transfer'' 
in EFTA section 919(g)(2), with revisions for clarity. The Board also 
proposed commentary to provide further guidance on the definition, as 
well as examples of transactions that are and are not remittance 
transfers under the rule.

[[Page 6208]]

    Proposed Sec.  205.30(d)(1) set forth the general definition in 
EFTA section 919(g)(2)(A). Proposed Sec.  205.30(d)(1) stated that a 
remittance transfer means the electronic transfer of funds requested by 
a sender to a designated recipient that is sent by a remittance 
transfer provider. Proposed Sec.  205.30(d)(1) further stated that the 
term applies regardless of whether the sender holds an account with the 
remittance transfer provider and regardless of whether the transfer is 
also an electronic fund transfer, as defined in Regulation E. Section 
1005.30(e)(1) of the final rule incorporates the definition generally 
as proposed, with additional revisions to the commentary for clarity.
    Industry commenters, particularly financial institution commenters, 
opposed the definition of ``remittance transfer'' as overly broad. 
These commenters argued that the definition should not apply to open 
network transactions, such as international wire transfers and ACH 
transactions, or alternatively, that a separate rule tailored to these 
transactions should be adopted. Citing to legislative history, these 
commenters argued that the statute was intended only to address 
traditional cash-based, low-dollar-value remittances. Industry 
commenters argued that based on the difficulty with complying with the 
rule's disclosure requirements, as discussed below in connection with 
Sec.  1005.31, including open network transactions in the remittance 
transfer definition could have unintended consequences. These 
commenters maintained that providers would withdraw from the market or 
restrict where transfers may be sent if the final rule were applied to 
international wire transfers and ACH transactions, and that this would 
either decrease consumer access to remittance transfers or increase 
costs to consumers. Thus, these commenters argued that the Bureau 
should exercise its authority under EFTA section 904(c) to exempt these 
transactions from the definition of ``remittance transfer.'' Industry 
commenters also urged the Bureau to adopt other exclusions and 
limitations to the ``remittance transfer'' definition, which are 
addressed below in the discussion of Sec.  1005.30(e)(2). In contrast, 
consumer group commenters supported the proposed definition of 
``remittance transfer,'' including its inclusion of open network 
transactions. These commenters argued that the proposed definition is 
consistent with the language of the statute and the purpose of the 
statute's provisions.
    The Bureau acknowledges the compliance challenges raised by the 
inclusion of open network transactions. Nevertheless, the Bureau 
believes the unambiguous language of the statute requires coverage of 
these transactions, such as wire transfers. The statute is broad in 
scope, specifically covering transactions that are account-based and 
that are not electronic fund transfers. The Bureau finds no statutory 
language to support excluding open network transactions--indeed, quite 
the contrary: The statute includes a temporary exception for certain 
insured institutions permitting estimates to be used in providing 
disclosures under specified circumstances in EFTA section 919(a)(4)(A). 
There would be no need for such an exception if open network 
transactions were not covered by the statute. Congress specifically 
recognized that it would be difficult for financial institutions to 
meet certain disclosure requirement with regard to open network 
transactions and tailored a specific accommodation to allow use of 
reasonably accurate estimates for an interim period until financial 
institutions can develop methods to determine exact disclosures, such 
as fees and taxes charged by third parties. Therefore, the Bureau does 
not believe it should exercise its exception authority under EFTA 
section 904(c) to exclude open network transactions from the definition 
of ``remittance transfer.''
    Proposed comments 30(d)-1 through 30(d)-4 provided further guidance 
on each of the elements of the proposed definition of ``remittance 
transfer.'' Proposed comment 30(d)-1 provided that there must be an 
electronic transfer of funds. The term ``electronic'' has the meaning 
given in section 106(2) of the E-Sign Act. There may be an electronic 
transfer of funds if a provider makes an electronic book entry between 
different settlement accounts to effectuate the transfer. However, the 
proposed comment explained that where a sender mails funds directly to 
a recipient, or provides funds to a courier for delivery to a foreign 
country, there has not been an electronic transfer of funds, and thus 
no remittance transfer.
    Citing the electronic book entry comment, one commenter suggested 
that the Bureau should expressly exclude the sale or issuance of 
checks, money orders, or other paper instruments from the ``remittance 
transfer'' definition. The Bureau agrees that issuing a paper check, 
draft, money order, or other paper instrument to be mailed abroad 
generally does not constitute an electronic transfer of funds. For 
clarity, the final comment, adopted as comment 30(e)-1, notes that 
where a provider issues a check, draft, or other paper instrument to be 
mailed abroad, there is not an electronic transfer of funds, except as 
described below with respect to online bill payments.
    A few commenters suggested that with respect to online bill 
payments, a consumer does not request an electronic transfer of funds. 
Instead, commenters stated that the consumer requests only that an 
amount be paid out of an account, and the payment method is generally 
left up to the institution. Thus, these commenters argued, there is no 
specific sender request to send a remittance transfer. The final rule 
adopts an approach that is consistent with the treatment of online bill 
payment services as an EFT under Regulation E in Sec.  1005.3(b). 
Specifically, comment 3(b)(1)-1.vi. makes clear that an EFT includes 
``a payment made by a bill payer under a bill-payment service available 
to a consumer via computer or other electronic means, unless the terms 
of the bill-payment service explicitly state that all payments, or all 
payments to a particular payee or payees, will be solely by check, 
draft, or similar paper instrument drawn on the consumer's account, and 
the payee or payees that will be paid in this manner are identified to 
the consumer.''
    Accordingly, final comment 30(e)-1 provides that an electronic 
transfer of funds occurs for a payment made by a provider under a bill-
payment service available to a consumer via computer or other 
electronic means, unless the terms of the bill-payment service 
explicitly state that all payments, or all payments to a particular 
payee or payees, will be solely by check, draft, or similar paper 
instrument drawn on the consumer's account to be mailed abroad, and the 
payee or payees that will be paid in this manner are identified to the 
consumer. Thus, with respect to such a bill-payment service, if a 
provider provides a check, draft or similar paper instrument drawn on a 
consumer's account to be mailed abroad for a payee that is not 
identified to the consumer as described above, this payment by check, 
draft or similar payment instrument will be considered an electronic 
transfer of funds. In this case, the sender has requested the transfer 
using a bill-payment service available to a consumer via computer or 
other electronic means and would expect the transfer to be conducted 
electronically because the terms of the bill-payment service have not 
explicitly stated that payments to the particular payee will be solely 
by a check, draft, or similar paper instrument drawn on the consumer's 
account to be mailed abroad. In this case, the Bureau believes that it 
not appropriate to allow a provider to avoid providing the disclosures 
required by Sec.  1005.31 at the

[[Page 6209]]

time of the sender's request, simply because the payee may ultimately 
be paid by a check, draft or similar paper instrument drawn on the 
consumer's account mailed abroad.
    Proposed comment 30(d)-2 provided that the definition of 
``remittance transfer'' requires a specific sender to request a 
remittance transfer provider send a remittance transfer. The proposed 
comment explained that a deposit by a consumer into a checking or 
savings account does not itself constitute such a request, even if a 
person in a foreign country is an authorized user on that account, 
where the consumer retains the ability to withdraw funds in the 
account. This comment is not adopted in the final rule, as inconsistent 
with guidance adopted in comment 30(c)-2.ii. As discussed above under 
the section-by-section analysis to Sec.  1005.30(c), when a sender 
requests that a remittance transfer provider send an electronic 
transfer of funds to a recipient's account, the location of the account 
determines whether the transfer is made to a designated recipient and 
thus is a remittance transfer. If the recipient's account is located in 
a State, the transfer will not be a remittance transfer because the 
transfer will not be received at a location in a foreign country, and 
thus the recipient would not be a ``designated recipient.'' By 
contrast, if the recipient's account is located in a foreign country, 
the transfer will be a remittance transfer, even if the sender has the 
ability to withdraw funds in the account, because the transfer will be 
received at a location in a foreign country, and the recipient would be 
a ``designated recipient.'' See comment 30(c)-2.ii.
    Proposed comment 30(d)-3 provided that the definition of 
``remittance transfer'' also requires that the transfer be sent to a 
designated recipient. As noted above, the definition of ``designated 
recipient'' requires a person to be identified by the sender as the 
authorized recipient of a remittance transfer to be sent by a 
remittance transfer provider. Proposed comment 30(d)-3 explained that 
there is no designated recipient unless the sender specifically 
identifies the recipient of a transfer. Proposed comment 30(d)-3 
specified that there would be a designated recipient if, for example, 
the sender instructs a remittance transfer provider to send a prepaid 
card to a specified recipient in a foreign country, and the sender does 
not retain the ability to draw down funds on the prepaid card. In 
contrast, proposed comment 30(d)-3 specified that there would be no 
designated recipient where the sender retains the ability to withdraw 
funds, such as when a person in a foreign country is made an authorized 
user on the sender's checking account, because the remittance transfer 
provider cannot identify the ultimate recipient of the funds. As 
discussed in more detail in the section-by-section analysis to Sec.  
1005.30(c), both examples are not adopted, as inconsistent with 
guidance in comment 30(c)-2.ii. and iii.
    Proposed comment 30(d)-4 provided that the definition of 
``remittance transfer'' requires that the remittance transfer must be 
sent by a remittance transfer provider. The proposed comment explained 
that this means that there must be an intermediary actively involved in 
sending the electronic transfer of funds. Examples in the proposed 
comment included a person (other than the sender) sending an 
instruction to an agent in a foreign country to make funds available to 
a recipient; executing a payment order pursuant to a consumer's 
instructions; executing a consumer's online bill payment request; or 
otherwise engaging in the business of accepting or debiting funds for 
transmission to a recipient and transmitting those funds.
    However, the proposed comment explained that a payment card network 
or other third party payment service that is functionally similar to a 
payment card network does not send a remittance transfer when a 
consumer designates a debit or credit card as the payment method to 
purchase goods or services from a foreign merchant. For example, in 
such a case, the payment card network or third party payment service is 
not directly engaged with the sender to send a transfer of funds to a 
person in a foreign country; rather, the network or third party payment 
service is only providing contemporaneous third-party payment 
processing and settlement services on behalf of the merchant or the 
remittance transfer provider, rather than on behalf of the sender. 
Similarly, where a consumer provides a checking or other account number 
directly to a merchant as payment for goods or services, the merchant 
is not acting as a remittance transfer provider when it submits the 
payment information for processing.
    Commenters generally supported the proposed comment. One commenter 
suggested that the Bureau should revise the discussion about the use of 
a payment card network using a debit or credit card as a payment method 
to include the use of a payment card network using a prepaid card for 
consistency with other provisions of the rule.
    The final comment is adopted as comment 30(e)-2, and is revised. As 
with the proposed comment, the final comment provides that the 
definition of ``remittance transfer'' requires that the remittance 
transfer must be sent by a remittance transfer provider. The final 
comment explains that this means that there must be an intermediary 
that is directly engaged with the sender to send an electronic transfer 
of funds on behalf of the sender to a designated recipient. The final 
comment clarifies that a payment card network or other third party 
payment service that is functionally similar to a payment card network 
does not send a remittance transfer when a consumer provides a debit, 
credit, or prepaid card directly to a foreign merchant as the payment 
method to purchase goods or services. In such a case, the payment card 
network or third party payment service is not directly engaged with the 
sender to send a transfer of funds to a person in a foreign country; 
rather, the network or third party payment service is merely providing 
contemporaneous third-party payment processing and settlement services 
on behalf of the merchant or the card issuer, rather than on behalf of 
the sender. The final comment in 30(e)-2 also clarifies that in such a 
case, the card issuer also is not directly engaged with the sender to 
send an electronic transfer of funds to the foreign merchant when the 
card issuer provides payment to the merchant. Similarly, where a 
consumer provides a checking or other account number, or a debit, 
credit or prepaid card, directly to a foreign merchant as payment for 
goods or services, the final comment clarifies that the merchant is not 
acting as an intermediary that sends a transfer of funds on behalf of 
the sender when it submits the payment information for processing. The 
Bureau notes that this comment applies only for purposes of this rule. 
In other contexts, a person may act as a provider even when it is not 
directly engaged with the consumer to provide a consumer financial 
product or service.
    Finally, comment 30(e)-2 also discusses the situation where a card 
issuer or a payment card network is an intermediary that is directly 
engaged with the sender to obtain funds using the sender's debit, 
prepaid or credit card and to send those funds to a recipient's 
checking account located in a foreign country. In this case, the final 
comment clarifies that the card issuer or payment card network is an 
intermediary that is directly engaged with the sender to send an 
electronic transfer of funds on behalf of the sender, and this transfer 
of funds

[[Page 6210]]

is a remittance transfer because it is made to a designated recipient. 
See also comment 30(c)-2.ii.
    As noted in the proposal, some transactions that have not 
traditionally been considered remittance transfers will fall within the 
scope of the rule. In contrast, other transfer methods specifically 
marketed for use by a consumer to send money abroad, but that do not 
meet all elements of the definition of ``remittance transfer,'' may 
fall outside the scope of the rule (e.g., a prepaid card where the 
participants in the prepaid card program do not send a card to a 
designated recipient in a foreign country). While the Board stated that 
it believed the proposed definition of ``remittance transfer'' in Sec.  
205.30(d) implemented the broad statutory definition, the Board 
solicited comment on whether it should exempt online bill payments made 
through the sender's institution, including preauthorized bill 
payments, from the rule, as it could be challenging for institutions to 
provide timely disclosures.
    Most industry commenters urged the Bureau to exempt online bill 
payments from the rule, including preauthorized bill payments, given 
the challenges associated with providing disclosures for transfers that 
occur in the future. Commenters stated that the disclosures for such 
payments would be burdensome and would provide only marginal benefits 
to consumers, particularly given that Regulation E already addresses 
online bill payments. Commenters also noted that different coverage 
would apply to payments initiated through a financial institution, 
which would be covered, versus payments initiated directly with a 
billing party, which would not be covered. With respect to 
preauthorized bill payments, commenters stated that it would be 
impracticable to provide pre-payment disclosures when the request is 
made for transactions that could be scheduled months in advance.
    Overall, the Bureau believes the protections afforded by the 
statute favor the inclusion of online bill payments in the rule, as 
well as other types of transfers that a sender schedules in advance. 
subpart A of Regulation E applies to EFTs from an account at a 
financial institution and provides certain protections to consumers. 
However, the subpart A provisions do not require disclosures regarding 
the exchange rate to be applied at transfer or certain other items that 
must be disclosed under EFTA section 919 and this rule (although 
related up-front fees would be disclosed in or with the account 
agreement). In addition, the Bureau also understands that there are 
non-bank money transmitters not covered by existing provisions in 
Regulation E that offer international bill payment services.
    Moreover, some of the disclosure challenges raised by commenters 
are similar to those that have been raised in connection with other 
remittance transfer methods that are included in the rule, for example, 
where the exchange rate is not necessarily known at the time of 
transfer. The Bureau recognizes that the rule's coverage differs 
depending on whether a foreign payee is paid through a remittance 
transfer provider or paid directly by a consumer. However, this 
difference arises due to the EFTA's definition of ``remittance 
transfer.'' As discussed above, for a transfer to be considered a 
``remittance transfer,'' the transfer must involve an intermediary that 
is directly engaged with the sender to send an electronic transfer of 
funds on behalf of the sender to a designated recipient. A foreign 
merchant is not acting as an intermediary that sends a transfer of 
funds on behalf of the sender when it processes a payment paid to it 
directly by the sender. In addition, in this case, the financial 
institution is not directly engaged with the sender to send an 
electronic transfer of funds to the foreign merchant when the 
institution provides payment to the merchant. The Bureau believes this 
is different from the situation where an institution offers online 
international bill payment services to consumers. In this circumstance, 
the institution is directly engaged with the sender to send an 
electronic transfer of funds on behalf of the sender to a designated 
recipient. Thus, the final rule does not exclude online bill payments 
from the definition. As a result, under the final rule, providers will 
generally need to provide pre-payment disclosures and receipts for 
these types of transfers in accordance with Sec.  1005.31.
    However, in light of the timing challenges noted above, the final 
rule sets forth tailored disclosure and cancellation requirements with 
respect to certain remittance transfers that a sender schedules in 
advance, including preauthorized remittance transfers (defined and 
discussed above in Sec.  1005.30(d)), in a new Sec.  1005.36. In 
addition, the Bureau is issuing the January 2012 Proposed Rule, 
published elsewhere in today's Federal Register, soliciting comment on 
alternative disclosure and cancellation requirements with respect to 
these transfers. These are discussed in more detail below in the 
discussion of Sec.  1005.36.
    Proposed comment 30(d)-5 provided a non-exclusive list of examples 
of transactions that are, and are not, remittance transfers. The list 
addressed online bill payments in the examples in 30(d)-5.i.E. and 
30(d)-5.ii.C. However, electronic transfers of funds to be sent abroad 
can also be scheduled through other means, such as over the telephone, 
and such scheduled transfers may not necessarily relate specifically to 
the payment of bills. Thus, while the final comment, renumbered as 
comment 30(e)-3, does not contain an exhaustive list of examples, in 
order to clarify the rule's application, the online bill payment 
examples in the final comment have been revised to more generally 
address transfers that senders can schedule in advance, including 
preauthorized remittance transfers.
30(e)(2) Exceptions
    EFTA section 919(g)(2)(B) states that a remittance transfer does 
not include a transfer described in EFTA section 919(g)(2)(A) ``in an 
amount that is equal to or lesser than the amount of a small-value 
transaction determined, by rule, to be excluded from the requirements 
under section 906(a)'' of the EFTA. EFTA section 906(a) addresses the 
requirements for electronic terminal receipts. The Board previously 
determined by rule that financial institutions are not subject to the 
requirement to provide electronic terminal receipts for small-value 
transfers of $15 or less. See Sec.  1005.9(e). Proposed Sec.  
205.30(d)(2) incorporated this exception for small-value transfers by 
providing that remittance transfers do not include transfer amounts of 
$15 or less. The final rule adopts the small-value exception in Sec.  
1005.30(e)(2)(i). The $15 exception refers to the amount that will be 
transferred to the designated recipient in the currency in which the 
transfer will be funded, as described in Sec.  1005.31(b)(1)(i).
    Industry commenters urged the Bureau to adopt a variety of 
additional exceptions to the rule, in addition to exempting wire 
transfers and other open network transactions. Most industry commenters 
argued that the Bureau should exclude wire transfers and ACH 
transactions above a certain dollar amount, generally ranging from $500 
to $1,000. These commenters argued that the average value of consumer 
transfers from the United States is lower than the dollar thresholds 
that they advocated for, so these thresholds would capture most 
traditional remittances, while excluding higher-dollar transfers that 
they argued were not intended to be captured in the statute. Several 
commenters also presented data that

[[Page 6211]]

many wire transfers exceed the suggested dollar amount, and thus, such 
an exclusion would limit the costs and risks of the proposal, including 
fraud risks; would mitigate risks associated with the loss of UCC 
Article 4A coverage for wire transfers (as described in more detail 
below); and would more properly focus the final rule on traditional 
remittance transfers.
    The final rule does not contain an exclusion for remittance 
transfers above a specified dollar amount. The Bureau believes that 
consumers who choose to transfer funds less frequently but in higher 
dollar amounts or who send relatively large remittance transfers to pay 
tuition, medical, and other larger bills should receive the same 
protections as frequent, low-value senders. Indeed, given the amounts 
involved, such consumers may stand to benefit even more from the 
disclosures and error resolution rights afforded by the rule to ensure 
that the proper amount is received by the recipient. Accordingly, the 
Bureau believes that an exception based solely on a dollar amount would 
not be consistent with the purposes of the statute. Finally, the dollar 
amounts suggested by the commenters did not account for variations in 
average transfer amounts by destination region or type of transfer, 
some of which exceed the thresholds proposed by commenters.\68\
---------------------------------------------------------------------------

    \68\ Chishti, supra note 6.
---------------------------------------------------------------------------

    Similarly, the Bureau does not believe that the rule should exclude 
remittance transfers requested by high net-worth consumers, as urged by 
one commenter. Again, there is no indication that Congress intended 
such an exclusion. Further, a high net-worth consumer has an interest 
in knowing the amount that will be received by a recipient, and the 
applicable exchange rate, just as a consumer who does not have a high 
net worth. A high net-worth consumer also has a similar stake in the 
resolution of any errors.
    The final rule does contain one new exclusion. Several commenters 
argued that the final rule should exclude from the definition of 
``remittance transfer'' any transfers the primary purposes of which is 
the purchase or sale of securities or commodities as described in Sec.  
1005.3(c)(4). Section 1005.3(c)(4) exempts from the definition of 
``electronic fund transfer'' any transfer of funds the primary purposes 
of which is the purchase or sale of a security or commodity where the 
security or commodity is: (i) Regulated by the Securities and Exchange 
Commission or the Commodity Futures Trading Commission; (ii) purchased 
or sold through a broker-dealer regulated by the Securities and 
Exchange Commission or through a futures commission merchant regulated 
by the Commodity Futures Trading Commission; or (iii) held in book-
entry form by a Federal Reserve Bank or Federal agency. To effectuate 
the purposes of the EFTA and facilitate compliance, the Bureau believes 
it is necessary and proper to use its authority under EFTA sections 
904(a) and (c) to adopt a new Sec.  1005.30(e)(2)(ii) to exclude from 
the definition of ``remittance transfer'' any transfer that is excluded 
from the definition of ``electronic fund transfer'' under Sec.  
1005.3(c)(4). This exception is narrow in that it only exempts 
transfers of funds the primary purposes of which is the purchase or 
sale of certain securities or commodities, as discussed above. The 
Bureau believes that use of its authority under EFTA sections 904(a) 
and (c) in this circumstance is appropriate so as not to impact the 
purchase or sale of securities or commodities.
Application of the EFTA; Relationship to Uniform Commercial Code
    As described above, the statute applies to remittance transfers 
whether or not they are electronic fund transfers. This raises certain 
issues with respect to traditional cash-based remittance transfers sent 
through money transmitters, which have not previously been covered by 
the EFTA or Regulation E, as well as international wire transfers, 
which are not EFTs.
    The statute outlines the application of the EFTA to remittance 
transfers that are not electronic fund transfers. Specifically, EFTA 
section 919(e)(1) states that a remittance transfer that is not an 
electronic fund transfer is not subject to any of the provisions of 
EFTA sections 905 through 913. For example, a money transmitter sending 
a remittance transfer (that is not an EFT) is not subject to the 
requirement in EFTA section 906(b), as implemented in Sec.  1005.9(b), 
to provide periodic statements to consumers. The transmitter will, 
however, generally be subject to other provisions of the EFTA, 
including provisions on liability under EFTA sections 916 through 918. 
EFTA section 919(e)(2)(A) also clarifies that a transaction that will 
not otherwise be an electronic fund transfer under the EFTA, such as a 
wire transfer, does not become an electronic fund transfer because it 
is a remittance transfer under EFTA section 919.
    Until the Dodd-Frank Act provisions become effective, wire 
transfers are entirely exempt from the EFTA and Regulation E and 
instead are governed by State law through State enactment of Article 4A 
of the Uniform Commercial Code. UCC Article 4A primarily governs the 
rights and responsibilities among the commercial parties for wire 
transfers, including payment obligations among the parties and 
allocation of risk of loss for unauthorized or improperly executed 
payment orders.
    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'' (emphasis added). 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. As noted in the proposal, EFTA section 919(e)(1) explicitly 
applies the EFTA to remittance transfers that are not electronic fund 
transfers, except for certain enumerated provisions. Further, the 
disclosure and error resolution requirements for remittance transfers 
are set forth in the EFTA. As a result, by operation of UCC Article 4A-
108, the Bureau believes UCC Article 4A will no longer apply to such 
international consumer wire transfers.\69\
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    \69\ Commercial wire transfers are not affected because a 
``sender'' must be a consumer.
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    Many commenters, including the Office of the Comptroller of the 
Currency (OCC), argued that this outcome creates legal uncertainty that 
will disrupt the long-standing legal framework governing the allocation 
of risks among financial institutions of wire transfers. Industry 
commenters urged the Bureau to preempt any provision of State law that 
prevents a remittance transfer from being treated as a funds transfer 
under UCC Article 4A based solely upon the inclusion of the remittance 
transfer provisions in EFTA section 919. Specifically, commenters urged 
the Bureau to preempt UCC Article 4A-108. Under this suggested 
approach, the error resolution provisions of EFTA section 919(b)(1) 
would govern remittance transfers as between a sender and a remittance 
transfer provider, but the remaining provisions in UCC Article 4A would 
continue to govern the allocation of risk of loss as between the 
remittance transfer provider and another financial institution that 
carries out part of the transfer (to the extent not otherwise 
inconsistent with the rule).
    Under EFTA section 922 and Sec.  1005.12, the Bureau may determine 
whether a State law relating to, among other things, electronic fund 
transfers is preempted by the EFTA or Regulation E. However, the 
statutory preemption provisions states that a State law may be

[[Page 6212]]

preempted only if the State law is inconsistent with the EFTA or 
Regulation E and then only to the extent of the inconsistency. 15 
U.S.C. 1693s. Moreover, the statute and regulation provide that a State 
law is not inconsistent with any provision if it is more protective of 
consumers. The Bureau does not believe that UCC Article 4A-108 is 
inconsistent with the EFTA. No provision of the EFTA conflicts with UCC 
Article 4A-108, and UCC Article 4A-108 does not require or permit a 
practice prohibited by the EFTA. See, e.g., Sec.  1005.12(b)(2)(i). 
Rather, UCC Article 4A-108 provides when State law applies to fund 
transfers, including consumer wire transfers, and specifically states 
that UCC Article 4A does not apply if the EFTA ``governs'' the 
transaction. The amendments to the EFTA under the Dodd-Frank Act 
address consumer wire transfers, but do not address the application of 
State law to those transfers. Applying the EFTA preemption provisions 
to effectively require the application of more State laws than would 
apply in the absence of such action is simply not what the EFTA 
preemption standard provides.
    In the May 2011 Proposed Rule, the Board noted that Congress 
amended the EFTA's preemption provision to include a specific reference 
to State gift card laws when it enacted new EFTA protections for gift 
cards as part of the Credit Card Accountability Responsibility and 
Disclosure Act of 2009 (Credit Card Act).\70\ By contrast, Congress did 
not amend the EFTA's preemption provision with respect to State laws 
relating to remittance transfers, including those that are not 
electronic fund transfers, when it enacted the Dodd-Frank Act.\71\ In 
response, some commenters argued that Sections 1041(a) and (b) of the 
Dodd-Frank Act, which discusses the relationship between Title X of the 
Dodd-Frank Act and State law, separately permit the Bureau to preempt 
UCC Article 4A-108. These provisions may be invoked, however, only if 
the Bureau finds an inconsistency between Title X and State law. The 
Bureau does not believe that such an inconsistency exists. Moreover, 
Section 1041(b) of the Dodd-Frank Act specifically provides, with one 
exception not relevant here, that no provision of Title X ``shall be 
construed as modifying, limiting, or superseding the operation of any 
provision of an enumerated consumer law that relates to the application 
of a law in effect in any State with respect to such Federal law.''
---------------------------------------------------------------------------

    \70\ See Credit Card Act Sec.  402, Public Law 111-24, 123 Stat. 
1734 (2009). The preemption provision was amended to describe how 
certain State gift card laws may be preempted, to the extent that 
those laws are inconsistent with the EFTA, in the same manner as 
State EFT laws.
    \71\ Several commenters noted that EFTA section 920 is excluded 
from the list of ``enumerated consumer laws'' under section 
1002(12)(c) of the Dodd-Frank Act. Prior to the Dodd-Frank Act, EFTA 
section 920 addressed the EFTA's relation to State laws. Section 
1075 of the Dodd-Frank Act created a new EFTA section 920 relating 
to debit interchange fees, which is the provision excluded under 
Dodd-Frank section 1002(12)(c). The relation to State laws provision 
is now contained in EFTA section 922.
---------------------------------------------------------------------------

    Several commenters suggested that the Bureau incorporate UCC 
Article 4A, or a similar framework in place of UCC Article 4A, into 
Regulation E. The Bureau does not believe it is appropriate to 
incorporate UCC Article 4A into Regulation E. The EFTA and the UCC 
generally focus on different relationships. Under EFTA section 902(b), 
the primary purpose of the EFTA is the provision of individual consumer 
rights. In contrast, UCC Article 4A is primarily intended to govern the 
rights and responsibilities among the commercial parties to a funds 
transfer, that is, the financial institution that accepts a payment 
order for a funds transfer and any other financial institutions that 
may be involved in carrying out the transfer.
    Consumers currently receive some protections under UCC Article 4A 
in the event the wire transfer is not completed, or in the event of 
errors in execution of the transfer, or in connection with an 
unauthorized transfer. Nonetheless, although consumers who request wire 
transfers that are remittance transfers may no longer have the 
protections set forth in UCC Article 4A, these consumers will receive 
error resolution, refund and cancellation rights and other protections 
for these transfers as set forth in Sec. Sec.  1005.33 and 1005.34.
    In addition, the Bureau does not believe it is appropriate to 
incorporate UCC Article 4A into Regulation E because while UCC Article 
4A is a uniform code, it may be adopted differently in the various 
states. Incorporation of UCC Article 4A (presumably, without a similar 
provision as UCC Article 4A-108) on its own could have the unintended 
consequence of the Bureau choosing one State's version of the UCC over 
another. There could also be a lag between updates and revisions to the 
UCC among the states and the version incorporated into Regulation E, 
which could create confusion and potential operational conflicts for 
those institutions that use the same systems to send commercial and 
consumer wire transfers.
    The Bureau recognizes that one consequence of covering remittance 
transfers under the EFTA could be legal uncertainty under the UCC for 
certain remittance transfer providers. Specifically, to the extent that 
providers of international wire transfers were previously able to rely 
on UCC Article 4A's rules governing the rights and responsibilities 
among the parties to a wire transfer, they may no longer be able to do 
so. However, given the factors discussed above, the Bureau believes 
that the best mechanisms for resolving this uncertainty rests with the 
states, which can amend their respective versions of UCC Article 4A, 
with the purveyors of rules applicable to specific wire transfer 
systems, which can bind direct participants in the system, and with 
participants in wire transfers who can incorporate UCC Article 4A into 
their contracts. In addition, the Bureau recommends that Congress adopt 
legislation to help resolve the legal uncertainty under the UCC for 
remittance transfers, so parties engaged in remittance transfers will 
be able to continue to rely on UCC Article 4A, notwithstanding the 
implementation of these final rules.
    The final rule will be effective one year from the date of 
publication of the rule in the Federal Register. Thus, before the final 
rule becomes effective, states have the opportunity to amend UCC 
Article 4A to the extent needed or appropriate to address its 
application to consumer international wire transfers and wire transfer 
systems have the opportunity to amend their operating rules to 
incorporate UCC Article 4A, and participants in wire transfer 
transactions have the opportunity to enter into contracts incorporating 
UCC Article 4A. For example, the Board has recently issued a proposal 
to revise its Regulation J, 12 CFR part 210, to ensure the continued 
application of UCC Article 4A to remittance transfers carried out 
through Fedwire.\72\ In addition, Congress would have an opportunity to 
enact legislation to help resolve the legal uncertainty under the UCC 
for remittance transfers, so parties engaged in remittance transfers 
will be able to continue to rely on UCC Article 4-A, notwithstanding 
the implementation of these final rules. The Bureau will continue to 
monitor developments in this area to evaluate whether these issues are 
being effectively dealt with by the states, Congress or through private 
contractual arrangements.
---------------------------------------------------------------------------

    \72\ 76 FR 64259 (Oct. 18, 2011).

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[[Page 6213]]

Application of the EFTA; Relationship to Regulations Implementing the 
Bank Secrecy Act
    The Bureau also recognizes that regulations issued by the Financial 
Crimes Enforcement Network (FinCEN) to implement the Bank Secrecy Act 
also contain references to the EFTA. These regulations generally set 
certain requirements applicable to a ``funds transfer'' and 
``transmittal of funds.'' The definitions of ``funds transfer'' and 
``transmittal of funds'' in FinCEN's regulations exclude any funds 
transfers governed by the EFTA. See 31 CFR 1010.100(w) and (ddd), 
respectively. When EFTA section 919, as implemented by this rule, 
becomes effective, certain transactions that have traditionally been 
outside the scope of the EFTA will be governed by the EFTA, such as 
consumer-initiated wire transfers. The Bureau has had discussions with 
FinCEN about the importance of FinCEN amending its rules so that they 
continue to apply to remittance transfers after the effective date of 
this rule. The OCC also stated that it will be imperative that FinCEN 
act quickly to amend their rules. The Bureau does not believe, however, 
that it can fill the gap by incorporating FinCEN's regulations into 
Regulation E. The Bureau believes consolidating the requirements of the 
Bank Secrecy Act and the EFTA in Regulation E would be impracticable 
under the respective authorities of two agencies.

30(f) Remittance Transfer Provider

    Proposed Sec.  205.30(e) incorporated the definition of 
``remittance transfer provider'' from EFTA section 919(g)(3). Proposed 
Sec.  205.30(e) stated that a remittance transfer provider (or 
provider) means 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. To eliminate 
redundancy, the proposed rule revised statutory references to ``any 
person or financial institution'' to ``any person,'' because the term 
``person'' under Regulation E includes financial institutions. Proposed 
comment 30(e)-1 clarified that an agent is not deemed to be a 
remittance transfer provider by merely providing remittance transfer 
services on behalf of the remittance transfer provider. The proposed 
regulation is adopted generally as proposed in renumbered Sec.  
1005.30(f). Comment 30(f)-1 is revised for clarity to state 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. New comments 30(f)-2 and -3 are added as described 
below. The Bureau notes that this comment 30(f)-1 applies only for 
purposes of this rule. In other contexts, a person may act as a 
provider when it performs activities on behalf of a provider.
Normal Course of Business
    The Board solicited comment on whether guidance should be adopted 
interpreting the phrase ``normal course of business'' based on the 
number of remittance transfers in a given year. Many industry 
commenters argued that the final rule should provide for a de minimis 
exception based on the number of remittance transfers sent in a given 
time period, although one credit union commenter stated that it could 
be difficult to track numbers. Suggestions ranged from 1,200 or fewer 
transfers annually to 2,400 transfers annually, per method (i.e., 2,400 
wire transfers plus 2,400 international ACH transfers).
    The commenters did not provide any data on the overall distribution 
and frequency of remittance transfers across various providers to 
support treating such high numbers of transactions as being outside the 
normal course of business. Nor did they suggest other means of 
determining when remittance transfer providers are engaging in 
transfers merely as an accommodation to occasional consumer requests 
rather than part of a business of payment services. Absent significant 
additional information, the Bureau is skeptical that Congress intended 
to exclude companies averaging 100 or more remittance transfer 
providers per month from the statutory scheme. Based on the data 
presented by commenters, such a range would appear to exclude the 
majority of providers of open network transfers, such as international 
wire transfers and ACH transactions, from the rule. For example, one 
trade association commenter stated that most respondents to an 
information request said that they make fewer than 2,400 international 
transactions per year. As discussed above, the Bureau believes that the 
statute clearly covers open network transfers, such as wire transfers 
and ACH transactions. Providing an exception based on the ranges 
suggested by these commenters would allow many financial institutions 
that arguably regularly and in the normal course of business provide 
remittance transfers to not be subject to the regulation. The Bureau 
believes in general that the term ``normal course of business'' covers 
remittance transfer activities at a level significantly lower than the 
ranges suggested by these commenters.
    In other contexts, regulatory coverage is triggered by a relatively 
small number of transactions. For example, under Regulation Z, 12 CFR 
part 1026, a creditor is a person who regularly extends consumer credit 
under specified circumstances. A person regularly extends consumer 
credit when it extends consumer credit more than 25 times in the 
preceding calendar year or in the current year (and five times for 
transactions secured by a dwelling, or even one time for certain high-
cost mortgages).\73\ See 12 CFR 1026.2(a)(17). Under State law, a 
single money transmission may trigger a requirement to register as a 
money transmitter.
---------------------------------------------------------------------------

    \73\ The Bureau notes that it has issued a separate notice of 
request for information in which the Bureau requests comment on 
whether it should revise these threshold numbers in Regulation Z. 
See 76 FR 75825 (Dec. 5, 2011).
---------------------------------------------------------------------------

    The Bureau does not believe it has sufficient information on the 
frequency with which entities engage in remittance transfers to set a 
specific numerical threshold based on the current administrative 
record. Accordingly, the final rule adopts a new comment 30(f)-2 
addressing ``normal course of business.'' Comment 30(f)-2 states that 
whether a person provides remittance transfers in the normal course of 
business depends on the facts and circumstances, including the total 
number and frequency of remittance transfers sent by the provider. For 
example, if a financial institution generally does not make 
international consumer wire transfers available to customers, but sends 
a couple of international consumer wire transfers in a given year as an 
accommodation for a customer, the institution does not provide 
remittance transfers in the normal course of business. In contrast, if 
a financial institution makes international consumer wire transfers 
generally available to customers (whether described in the 
institution's deposit account agreement, or in practice) and makes 
transfers multiple times per month, the institution provides remittance 
transfers in the normal course of business.
    While the final comment does not include a numerical threshold for 
``normal course of business,'' the Bureau recognizes that a bright-line 
number may ease compliance. Thus, in the January 2012 Proposed Rule, 
published elsewhere in the Federal Register today, the Bureau is 
soliciting further comment on a potential safe harbor threshold.
Multiple Remittance Transfer Providers
    New comment 30(f)-3 provides guidance where more than one 
remittance transfer provider is involved

[[Page 6214]]

in providing a remittance transfer. The Bureau recognizes that in some 
situations more than one remittance transfer provider may be involved 
in providing a remittance transfer. For example, prepaid card programs 
may involve, among others: (i) A program sponsor that establishes the 
program relationships, identifies and procures the necessary parties 
and sets contractual terms and conditions; (ii) a program manager which 
functions as a day-to-day operations ``control center'' for the 
program; and (iii) an issuing bank whose contractual involvement is 
required to invoke the payment network and which also may serve as the 
holder of funds that have been prepaid and are awaiting instructions to 
be disbursed. Any and all of these entities may be a ``remittance 
transfer provider'' if they meet the definition as set forth in Sec.  
1005.30(f).
    Comment 30(f)-3 provides that if the remittance transfer involves 
more than one remittance transfer provider, only one set of disclosures 
must be given, and the remittance transfer providers must agree among 
themselves which provider must take the actions necessary to comply 
with the requirements that subpart B imposes on any or all of them. 
Even though the providers must designate one provider to take the 
actions necessary to comply with the requirements that subpart B 
imposes on any or all of them, all remittance transfer providers 
involved in the remittance transfer remain responsible for compliance 
with the applicable provisions of the EFTA and Regulation E.

30(g) Sender

    Proposed Sec.  205.30(f) incorporated the definition of ``sender'' 
from EFTA section 919(g)(4) with minor edits for clarity. Specifically, 
proposed Sec.  205.30(f) defined ``sender'' to mean ``a consumer in a 
state who requests a remittance transfer provider to send a remittance 
transfer to a designated recipient.'' The final rule adopts the 
definition largely as proposed in renumbered Sec.  1005.30(g), with 
additional clarifications and a new explanatory comment.
    Several commenters suggested that the Bureau limit remittance 
transfers to those sent for personal, family, or household purposes. 
Although Regulation E's applicability is generally limited to such 
consumer-purpose transactions, the limitation is contained in the 
definition of ``account'' in Sec.  1005.2(b). However, the remittance 
transfer rule applies to more than just account-based transfers. As a 
result, these commenters stated that an individual who requests a 
transfer for business purposes could arguably be a ``sender'' under the 
rule.
    To address these concerns, the Bureau is revising the definition of 
``sender'' in Sec.  1005.30(g) to clarify that a sender is a consumer 
in a State who primarily for personal, family, or household purposes 
requests a remittance transfer provider to send a remittance transfer 
to a designated recipient. This revision is consistent with Sec.  
1005.2(b) and clarifies that the final rule does not apply to business-
to-consumer or business-to-business transactions or to transactions 
that are not for personal, family or household purposes. For example, a 
transfer requested by a sole proprietor on behalf of his or her company 
would not be covered by the rule.
    As with the definition of ``designated recipient,'' some commenters 
requested guidance as to how they should determine whether a consumer 
is located in a State for account-based transfers. Commenters also 
requested clarification on how to determine where a consumer is located 
if the transfer request is made electronically or by telephone, and 
where the consumer's presence is not readily apparent. To address these 
questions, new comment 30(g)-1 clarifies that for transfers from an 
account, whether a consumer is located in a State depends on where the 
consumer's account is located. If the account is located in a State, 
the consumer will be located in a State for purposes of the definition 
of ``sender'' in Sec.  1005.30(g), notwithstanding comment 3(a)-3. 
Where a transfer is requested electronically or by telephone and the 
transfer is not from an account, the provider may make the 
determination of whether a consumer is located in a State on 
information that is provided by the consumer and on any records 
associated with the consumer that it might have, such as an address 
provided by the consumer.
    One commenter asked the Bureau to clarify the application of 
Regulation E's comment 3(a)-3 to subpart B. Comment 3(a)-3 addresses 
the foreign applicability of Regulation E with respect to EFTs. The 
proposed definition of ``sender'' and the proposed commentary did not 
address how comment 3(a)-3 would apply with respect to remittance 
transfers that are EFTs, such as international ACH transfers from an 
account. The statutory definition of ``sender,'' and thus the 
definition in Sec.  1005.30(g), does not turn on a consumer's 
residency; rather, the definition only requires that there be a 
consumer in a State requesting a remittance transfer. As with the 
definition of ``designated recipient,'' the Bureau believes that 
directing providers to look to the location of the account as a proxy 
for the location of the sender will create a bright line that will 
facilitate compliance with the final rule and ease compliance burden. 
Thus, as discussed above, under the final rule, for remittance 
transfers from an account, providers must look to the location of the 
account to determine whether there is a sender, and not the residency 
of the consumer requesting the transfer. Accordingly, final comment 
30(g)-1 clarifies that the provider should make its determination 
notwithstanding comment 3(a)-3.

Section 1005.31 Disclosures

    Section 1073 of the Dodd-Frank Act imposes several disclosure 
requirements relating to remittance transfers. Among these, EFTA 
sections 919(a)(2)(A) and (B) require a remittance transfer provider to 
provide two sets of disclosures to a sender in connection with a 
remittance transfer. A remittance transfer provider must generally 
provide a written pre-payment disclosure to a sender when a sender 
requests a transfer. This disclosure provides information about the 
sender's remittance transfer, such as the exchange rate, fees, and the 
amount to be received by the designated recipient. A remittance 
transfer provider must also provide a written receipt to the sender 
when payment is made. This disclosure includes the information provided 
on the pre-payment disclosure, as well as additional information, such 
as the promised date of delivery, contact information for the 
designated recipient, and information regarding the sender's error 
resolution rights.
    EFTA section 919(a)(5) provides the Bureau with certain exemption 
authority, including the authority to permit a remittance transfer 
provider to provide a single written disclosure to a sender, in lieu of 
providing both a pre-payment disclosure and receipt. This single 
disclosure must be provided to the sender prior to payment for the 
remittance transfer and must accurately disclose all of the information 
required on both the pre-payment disclosure and the receipt. See EFTA 
section 919(a)(5)(C). EFTA section 919(b) also provides that 
disclosures under EFTA section 919 must be made in English and in each 
foreign language principally used by the remittance transfer provider, 
or any of its agents, to advertise, solicit, or market, either orally 
or in writing, at that office. The Board proposed Sec.  205.31 to 
implement the content and formatting requirements for these 
disclosures, and the Bureau is

[[Page 6215]]

finalizing these requirements in Sec.  1005.31, as discussed below.
    Section 1005.31(a) sets forth the requirements for the general form 
of disclosures required under subpart B. Section 1005.31(b)(1) and (2) 
implement the pre-payment disclosure and receipt requirements of EFTA 
section 919(a)(2)(A) and (B). Section 1005.31(b)(3) sets forth the 
requirements for providing a combined disclosure, as permitted by EFTA 
section 919(a)(5)(C). Section 1005.31(b)(4) contains disclosure 
requirements relating to a sender's error resolution and cancellation 
rights. Section 1005.31(c) addresses specific format requirements for 
subpart B disclosures, including grouping, proximity, prominence and 
size, and segregation requirements. Section 1005.31(d) sets forth the 
disclosure requirements for providing estimates, to the extent they are 
permitted by Sec.  1005.32. Section 1005.31(e) generally implements the 
timing requirements of EFTA sections 919(a)(2) and 919(a)(5)(C). 
Section 1005.31(f) clarifies that, except as provided in Sec.  
1005.36(b), disclosures required by Sec.  1005.31 must be accurate when 
a sender makes payment for the remittance transfer, except to the 
extent permitted by Sec.  1005.32. Finally, Sec.  1005.31(g) contains 
the requirements for providing foreign language disclosures in certain 
circumstances.

31(a) General Form of Disclosures

31(a)(1) Clear and Conspicuous
    Proposed Sec.  205.31(a) set forth the requirements for the general 
form of disclosures required under proposed subpart B. Pursuant to EFTA 
sections 919(a)(3)(A) and (a)(5)(C),\74\ proposed Sec.  205.31(a)(1) 
provided that the disclosures required by subpart B must be clear and 
conspicuous. Proposed comment 31(a)(1)-1 clarified that disclosures are 
clear and conspicuous for purposes of subpart B if they are readily 
understandable and, in the case of written and electronic disclosures, 
the location and type size are readily noticeable to senders. The 
proposed comment stated that oral disclosures, to the extent permitted, 
are clear and conspicuous when they are given at a volume and speed 
sufficient for a sender to hear and comprehend them.
---------------------------------------------------------------------------

    \74\ EFTA section 919(a)(5)(C) incorporates the requirements of 
EFTA section 919(a)(3)(A) by reference, including the clear and 
conspicuous requirement.
---------------------------------------------------------------------------

    One industry trade association commenter supported the proposal, 
but suggested that the Bureau should also establish a reasonable person 
standard in determining whether a disclosure is clear and conspicuous. 
The Bureau believes the proposed comment, as well as the font and other 
formatting requirements provided in Sec.  1005.31(c), below, provide 
remittance transfer providers with the guidance necessary to determine 
if disclosures are clear and conspicuous. Therefore, the clear and 
conspicuous standard is adopted as proposed in Sec.  1005.31. Proposed 
comment 31(a)(1)-1 is also adopted substantially as proposed.
    Proposed Sec.  205.31(a)(1) also provided that disclosures required 
by subpart B may contain commonly accepted or readily understandable 
abbreviations or symbols. Proposed comment 31(a)(1)-2 clarified that 
using abbreviations or symbols such as ``USD'' to indicate currency in 
U.S. dollars or ``MXN'' to indicate currency in Mexican pesos would be 
permissible. The Bureau did not receive comment regarding the use of 
commonly accepted or readily understandable abbreviations or symbols. 
Therefore, this aspect of proposed Sec.  205.31(a)(1) is adopted as 
proposed in renumbered Sec.  1005.31(a)(1). Comment 31(a)(1)-2 is also 
adopted as proposed.
31(a)(2) Written and Electronic Disclosures
    Proposed Sec.  205.31(a)(2) set forth the requirements for written 
and electronic disclosures under subpart B. Proposed Sec.  205.31(a)(2) 
stated that disclosures required by subpart B generally must be 
provided to the sender in writing. However, the proposal permitted a 
pre-payment disclosure under proposed Sec.  205.31(b)(1) to be provided 
to the sender in electronic form, if the sender electronically requests 
the remittance transfer provider to send a remittance transfer. In such 
a case, proposed comment 31(a)(2)-1 explained that a pre-payment 
disclosure could be provided to the sender without complying with the 
consumer consent and other applicable provisions of the E-Sign Act. The 
proposed comment also clarified that if a sender electronically 
requests the remittance transfer provider to send a remittance 
transfer, the receipt required by proposed Sec.  205.31(b)(2) also 
could be provided to the sender in electronic form, but only if the 
provider complies with the consumer consent and other applicable 
provisions of the E-Sign Act.
    Consumer group commenters and one industry commenter supported the 
requirement that disclosures must be provided in writing and the 
exception for pre-payment disclosures to be provided electronically if 
a sender initiates the transaction electronically. Some industry 
commenters, however, argued that the pre-payment disclosures should be 
permitted to be provided on a computer screen or orally, if a 
transaction is conducted in person. One industry commenter suggested 
that pre-payment disclosures could be provided on a screen similar to 
those used at a point-of-sale to authorize payment card transactions. 
Industry commenters asked the Bureau to also permit the combined 
disclosures to be disclosed electronically without obtaining E-Sign 
consent.
    As discussed in the proposal, the statute generally requires 
disclosures under subpart B to be in writing, see EFTA sections 
919(a)(2), (a)(5)(C), and (d)(1)(B)(iv), and generally requires 
compliance with E-Sign in conjunction with electronic transactions, see 
EFTA section 919(a)(3)(B). Because EFTA section 919(a)(5)(D) 
specifically allows the Bureau to waive E-Sign requirements only with 
regard to pre-payment disclosures where the sender initiates the 
transaction electronically and the provider provides the pre-payment 
disclosure in an electronic form that the consumer may keep, the Bureau 
believes that provision of combined disclosures and receipts must be in 
compliance with E-Sign as specified in 919(a)(3)(B). Similarly, the 
Bureau believes that pre-payment disclosures provided when a sender 
conducts a transaction in person must be provided in writing. Thus, the 
Bureau believes it would not be consistent with the statute to permit 
the pre-payment disclosure or the combined disclosure to be provided 
orally or to be shown to a sender on a computer screen at the point-of-
sale prior to payment for point-of-sale transactions.
    One industry commenter argued that remittance transfer providers 
that are broker-dealers should be permitted to comply with guidance 
published by the Securities and Exchange Commission regarding 
electronic disclosures, rather than being required to obtain E-Sign 
consent. To the extent that transfers made in connection with 
securities transactions have been exempted from the rule, as discussed 
above in Sec.  1005.30(e)(2)(ii), the commenter's concerns should be 
mitigated.
    Therefore, the Bureau is adopting as proposed the provisions 
regarding written and electronic disclosures in Sec.  1005.31(a)(2) of 
the final rule. The Bureau is also adopting comment 31(a)(2)-1 in the 
final rule substantially as proposed.
    Proposed comment 31(a)(2)-2 clarified that written disclosures may 
be provided on any size paper, as long as the disclosures are clear and 
conspicuous. The proposed comment

[[Page 6216]]

stated that disclosures may be provided, for example, on a register 
receipt or on an 8.5 inch by 11 inch sheet of paper, consistent with 
current practices in the industry. The Bureau did not receive comment 
regarding proposed comment 31(a)(2)-2, and it is finalized as proposed.
    Proposed Sec.  205.31(a)(2) also provided that the written and 
electronic disclosures required by subpart B must be made in a 
retainable form. In the proposal, the Board requested comment on how 
the requirement to provide electronic disclosures in a retainable form 
could be applied to transactions conducted via mobile application or 
text message. Consumer group commenters stated that disclosures sent 
through text were not likely made in a form the sender can keep because 
mobile phone carriers regularly delete text message data or limit the 
size of texts. These commenters argued that the Bureau should not 
permit disclosures to be provided solely through mobile application or 
text message until technology allowed them to be retainable. These 
commenters stated that receipts should not be provided through mobile 
application or text message because they would not provide a sender 
with meaningful, consumer-friendly disclosures in a retainable form. 
Instead, consumer group commenters suggested that the Bureau should 
permit receipts for mobile telephone transactions to be provided 
through other electronic forms or written mailed receipts.
    Industry commenters, in contrast, argued that the final rule should 
provide sufficient flexibility to accommodate disclosures relating to 
remittance transfers sent via mobile application or text message. Some 
commenters stated that the Bureau should permit remittance transfer 
providers to provide disclosures through the provider's preferred 
method, including by mobile application or text message, so long as the 
sender is capable of receiving disclosures through that method. Another 
industry commenter argued that the retainability requirement should 
only apply to the receipt and not to the pre-payment disclosures for 
transactions conducted via mobile application or text message. One 
industry commenter stated that for a remittance transfer initiated by 
mobile telephone, the Bureau should allow disclosures to be provided on 
the telephone if accompanied by the delivery of a retainable version of 
the same disclosure through the Internet, since mobile telephones 
typically do not allow for printing.
    As discussed below regarding Sec.  1005.31(a)(5), the Bureau is 
permitting the pre-payment disclosures required by Sec.  1005.31(b)(1) 
to be disclosed orally or via mobile application or text message if the 
transaction is conducted entirely by telephone via mobile application 
or text message. The Bureau understands that given current technical 
limitations, in many cases, disclosures provided via mobile application 
or text message could not be provided in a retainable form or in a 
manner that satisfies formatting requirements. The Bureau notes, 
however, that the statute expressly permits the pre-payment disclosures 
to be provided orally for transfers conducted entirely by telephone. 
Thus, if a transaction is conducted entirely by telephone via mobile 
application or text message, a provider may give the pre-payment 
disclosure orally. Because oral disclosures are not retainable, the 
Bureau does not believe senders would be less protected by receiving 
pre-payment disclosures via mobile application or text message that are 
also not retainable. Moreover, in some cases, disclosures provided via 
mobile application or text message may be better than oral disclosures. 
For example, a disclosure provided by text message stored in a mobile 
telephone could be viewed by the sender for a period of time after the 
transaction is complete or forwarded to an email or other savable file. 
Therefore, Sec.  1005.31(a)(2) provides that written and electronic 
disclosures required by subpart B generally must be made in a 
retainable form. However, to effectuate the purposes of the EFTA and 
facilitate compliance, the Bureau believes it is necessary and proper 
to use its authority under ETFA sections 904(a) and (c) to provide in 
the final rule that for transfers conducted entirely by telephone via 
mobile application or text message, the pre-payment disclosures may be 
provided via mobile application or text message in accordance with 
Sec.  1005.31(a)(5) and need not be retainable. The Bureau is also 
adding a new comment 31(a)(2)-4 to clarify that disclosures provided 
electronically to a mobile telephone that are not provided via mobile 
application or text message must be retainable. For example, 
disclosures provided via email must be retainable, even if a sender 
accesses them by mobile telephone.
    Proposed comment 31(a)(2)-3 clarified that a remittance transfer 
provider may satisfy the requirement to provide electronic disclosures 
in a retainable form if it provides an online disclosure in a format 
that is capable of being printed. The proposed comment clarified that 
electronic disclosures cannot be provided through a hyperlink or in 
another manner by which the sender can bypass the disclosure. A 
provider is not required to confirm that the sender has read the 
electronic disclosures.
    Consumer group commenters generally supported these retainability 
requirements. Industry commenters suggested that the Bureau revise or 
clarify the rules regarding the provision of electronic disclosures. 
Industry commenters stated that the Bureau should permit a remittance 
transfer provider to provide disclosures by sending a hyperlink to the 
sender or to permit the provider to make a disclosure available on its 
Web site where disclosures can be viewed. One commenter suggested that 
the Bureau should clarify that disclosures are retainable as long as 
they may be saved or stored on a computer. This commenter stated that a 
disclosure would be retainable if, for example, a sender could save a 
screen shot or download a file that could be saved.
    The Bureau believes proposed comment 31(a)(2)-3 appropriately 
addressed how disclosures may be provided in a retainable format when 
disclosed electronically. The proposed comment sets forth general 
principles for providing electronic disclosures that can be applied to 
various scenarios in which electronic disclosures are provided. For 
example, a provider could determine that a screen shot or downloadable 
file complies with the retainability requirement if those formats are 
also capable of being printed. The proposed comment is also consistent 
with other of the Bureau's electronic disclosure provisions that ensure 
that senders are provided with disclosures, rather than permitting 
disclosures to simply be made available to them.\75\ Therefore, comment 
31(a)(2)-3 is adopted as proposed.
---------------------------------------------------------------------------

    \75\ See for example, Sec.  1005.20(c)(2) and Sec.  
1026.5a(a)(2).
---------------------------------------------------------------------------

31(a)(3) Oral Disclosures for Oral Telephone Transactions
    Relying upon authority in EFTA section 919(a)(5)(A), proposed Sec.  
205.31(a)(3) permitted the pre-payment disclosures to be provided 
orally if the transaction was conducted entirely by telephone and if 
the remittance transfer provider complied with the foreign language 
disclosure requirements of proposed Sec.  205.31(g)(2), discussed 
below. One industry commenter opposed the oral disclosure authorization 
for telephone transactions,

[[Page 6217]]

arguing that the length of time to process a transfer made by telephone 
would increase significantly due to the number of items that must be 
disclosed orally. Because the Bureau believes the statute intends for 
senders to receive pre-payment disclosures regardless of the format of 
the transaction, the Bureau is permitting oral pre-payment disclosures 
in certain circumstances in Sec.  1005.31(a)(3) of the final rule. 
Moreover, as discussed below, the Bureau is permitting in Sec.  
1005.31(a)(5) the pre-payment disclosures required by Sec.  
1005.31(b)(1) to be disclosed orally or via mobile application or text 
message for transactions conducted entirely by telephone via mobile 
application or text message. Therefore, the final rule is limiting the 
application of Sec.  1005.31(a)(3) to transactions conducted through 
oral conversations. Therefore, Sec.  1005.31(a)(3)(i) is amended to 
clarify that Sec.  1005.31(a)(3) only applies if the transaction is 
conducted orally and entirely by telephone. The final rule also adds 
comment 31(a)(3)-2 to clarify that Sec.  1005.31(a)(3) applies to 
transactions conducted orally and entirely by telephone, such as 
transactions conducted orally on a landline or mobile telephone.
    The final rule also adds another condition for providers to be 
permitted to disclose pre-payment disclosures orally, in addition to 
the requirements that the transaction be conducted entirely by 
telephone and that the provider comply with the foreign language 
disclosure requirements of Sec.  1005.31(g)(2). The Bureau believes 
that for oral telephone transactions, senders should be informed of 
their cancellation rights before the cancellation period has passed. 
Because a receipt may be mailed to a sender for telephone transactions, 
see Sec.  1005.31(e)(2), the sender would not receive the abbreviated 
statement about the sender's cancellation rights required by Sec.  
1005.31(b)(2)(iv) until after the cancellation period had passed. 
Therefore, the Bureau is requiring in Sec.  1005.31(a)(3) that a 
provider disclose orally a statement about the rights of the sender 
regarding cancellation required by Sec.  1005.31(b)(2)(iv) pursuant to 
the timing requirements in Sec.  1005.31(e)(1) in order to disclose the 
pre-payment disclosures orally for oral telephone transactions.
    Proposed comment 31(a)(3)-1 stated that, for transactions conducted 
partially by telephone, disclosures may not be provided orally. For 
example, a sender may begin a remittance transfer at a remittance 
transfer provider's dedicated phone in a retail store, and then provide 
payment in person to a store clerk to complete the transaction. In such 
cases, the proposed comment clarified that all disclosures must be 
provided in writing. Proposed comment 31(a)(3)-1 clarified that for 
such a transaction, a provider may comply with the disclosure 
requirements by providing the written pre-payment disclosure in person 
prior to the sender's payment for the transaction, and the written 
receipt when payment is made for the remittance transfer.
    Industry commenters argued that the Bureau should permit oral pre-
payment disclosures for these hybrid transactions. For example, one 
industry commenter stated that providing the information to senders at 
the time the sender is speaking with the remittance transfer provider 
would enable the sender to discuss the disclosed fees or currency 
delivery options. This commenter stated that it would be difficult to 
continue providing remittance transfers using a provider's dedicated 
telephone in a retail store if pre-payment disclosures could not be 
provided orally.
    The Bureau believes that by allowing oral disclosures only for 
transactions performed entirely by telephone, Congress did not intend 
to permit providers to satisfy the disclosure requirements orally for 
transactions conducted partially by telephone. See EFTA section 
919(a)(5)(A). Therefore, comment 31(a)(3)-1 is adopted substantially as 
proposed, with a revision to more precisely state that providing the 
information required by Sec.  1005.31(b)(1) to a sender orally does not 
fulfill the requirement to provide the disclosures required by Sec.  
1005.31(b)(1). The Bureau notes that nothing prohibits a provider from 
stating orally the information required to be disclosed by Sec.  
1005.31(b)(1) to a sender, even though this would not fulfill a 
provider's pre-payment disclosure requirements.
31(a)(4) Oral Disclosures for Certain Error Resolution Notices
    Proposed Sec.  205.31(a)(4) permitted a remittance transfer 
provider to provide an oral report of the results of an investigation 
of a notice of error, if the remittance transfer provider determined 
that an error occurred as described by the sender, and if the 
remittance transfer provider complied with the foreign language 
disclosure requirements of proposed Sec.  205.31(g)(2). The Bureau did 
not receive comment on proposed Sec.  205.31(a)(4), and it is adopted 
substantially as proposed as Sec.  1005.31(a)(4).
31(a)(5) Disclosures for Mobile Application or Text Message 
Transactions
    In the May 2011 Proposed Rule, the Board noted that retainability 
and formatting requirements could pose challenges for providing 
disclosures in transactions conducted via mobile application or text 
message. As discussed above, many industry commenters argued that the 
Bureau should change or provide for tailored retainability or 
formatting requirements for transactions conducted via mobile 
application or text message to ensure that senders would continue to 
have access to these services. Several industry commenters noted that 
they offered or were developing technology to permit senders to send a 
remittance transfer via a mobile telephone. The commenters believed 
that such services were evolving rapidly and urged the Bureau to 
provide flexibility in the final rule.
    As discussed above, because remittance transfers sent via mobile 
application or text message on a telephone are ``conducted entirely by 
telephone,'' the Bureau believes that EFTA section 919(a)(5)(A) permits 
the Bureau to allow oral pre-payment disclosures in connection with 
transfers sent via mobile application or text message if the transfer 
is conducted entirely by telephone. Because oral disclosures are not 
retainable, the Bureau does not believe senders would be less protected 
by receiving pre-payment disclosures via mobile application or text 
message that is also not retainable. Moreover, in some cases, senders 
receiving disclosures via mobile application or text message may be 
informed of the cost of their transaction in a manner that is better 
than oral disclosures. For example, a disclosure provided by text 
message stored in a mobile telephone could be viewed by the sender for 
a period of time after the transaction is complete or forwarded to an 
email or other savable file.
    Therefore, to effectuate the purposes of the EFTA and facilitate 
compliance, the Bureau believes it is necessary and proper to use its 
authority under EFTA sections 904(a) and (c) to add in the final rule 
Sec.  1005.31(a)(5), which states that the pre-payment disclosure may 
be provided orally or via mobile application or text message if: (i) 
The transaction is conducted entirely by telephone via mobile 
application or text message; (ii) the remittance transfer provider 
complies with the foreign language requirements of Sec.  1005.31(g)(2); 
and (iii) the provider discloses orally or via mobile

[[Page 6218]]

application or text message a statement about the rights of the sender 
regarding cancellation required by Sec.  1005.31(b)(2)(iv) pursuant to 
the timing requirements in Sec.  1005.31(e)(1). The final rule also 
adds comment 31(a)(5)-1 to illustrate how a provider could provide pre-
payment disclosures for mobile application and text message 
transactions. The comment states that, for example, if a sender 
conducts a transaction via text message on a mobile telephone, the 
remittance transfer provider may call the sender and orally provide the 
required pre-payment disclosures. Alternatively, the provider may 
provide the required pre-payment disclosures via text message. The 
comment also clarifies that Sec.  1005.31(a)(5) applies only to 
transactions conducted entirely by mobile telephone via mobile 
application or text message.

31(b) Disclosures

    Proposed section 205.31(b) set forth substantive disclosure 
requirements for remittance transfers. EFTA sections 919(a)(2)(A) and 
(B) require a remittance transfer provider to provide to a sender: (i) 
A written pre-payment disclosure with information applicable to the 
sender's remittance transfer--specifically, the exchange rate, the 
amount of transfer and other fees, and the amount that would be 
received by the designated recipient; and (ii) a written receipt that 
includes the information provided on the pre-payment disclosure, plus 
the promised date of delivery, contact information for the designated 
recipient, information regarding the sender's error resolution rights, 
and contact information for the remittance transfer provider and 
applicable regulatory agencies. EFTA section 919(a)(5)(C) also 
authorizes the Bureau to permit a remittance transfer provider to 
provide a single written disclosure to a sender, instead of a pre-
payment disclosure and receipt, that accurately discloses all of the 
information required on both the pre-payment disclosure and the 
receipt. Section 1005.31(b)(1) and (2) finalize these substantive 
disclosure requirements for pre-payment disclosures and receipts, 
respectively. The final rule also permits the use of a combined 
disclosure, in lieu of the pre-payment disclosure and receipt, subject 
to the requirements in Sec.  1005.31(b)(3).
    As discussed below, consumer group commenters opposed the combined 
disclosures, but otherwise generally supported the disclosures as 
proposed. These commenters stated that senders currently lack the 
information about exchange rate, fees, and timing that is required in 
the disclosures. Many industry commenters generally opposed the 
proposed disclosures. One industry commenter stated that the Board's 
consumer testing demonstrated that senders were satisfied with 
remittance transfer providers' existing disclosures, and that the new 
requirements would impose significant costs without commensurate 
benefits to senders.
    Many industry commenters further argued that compliance with the 
disclosure requirements was not possible for wire transfers and 
international ACH transactions. Specifically, industry commenters 
opposed the requirements to disclose the exchange rate, fees and taxes 
imposed by a person other than the provider, and the date of funds 
availability. One money transmitter commenter stated that these 
disclosure requirements could also be problematic for some money 
transmitters, where an international wire transfer is part of the 
transaction, such as when a sender conducts an account-to-account 
remittance transfer through a money transmitter.
    As discussed below, the Bureau understands the unique compliance 
challenges for institutions that send remittance transfers via wire 
transfer or ACH. However, as previously noted, the statute specifically 
applies the disclosure requirements in EFTA sections 919(a)(2)(A) and 
(B) to both open network and closed network transactions and provides a 
specific accommodation to address the compliance challenges faced for 
open network transactions. As such, the final rule requires all 
remittance transfer providers to provide either the pre-payment 
disclosure and a receipt, or a combined disclosure, except to the 
extent estimates are permitted by Sec.  1005.32.
    Pursuant to EFTA section 919(a)(2), information on a pre-payment 
disclosure and a receipt need only be provided to the extent applicable 
to the transaction. Similarly, the information required on a combined 
disclosure need only be provided as applicable because the combined 
disclosure is simply a consolidation of the pre-payment disclosure and 
the receipt. See EFTA section 919(a)(2)(A) and (B). Proposed comment 
31(b)-1 clarified that a remittance transfer provider could choose to 
omit an inapplicable item provided in proposed Sec.  205.31(b). 
Alternatively, a remittance transfer provider could disclose a term and 
state that an amount or item is ``not applicable,'' ``N/A,'' or 
``None.'' The proposed comment provided examples of when certain 
disclosures may not be applicable. For example, if fees or taxes are 
not imposed in connection with a particular transaction, the provider 
need not provide the disclosures about fees and taxes generally 
required by proposed Sec.  205.31(b)(1)(ii) and (vi). Similarly, a Web 
site need not be disclosed if the provider does not maintain a Web 
site. The proposed comment also included an example of instances in 
which exchange rate information was not required on the disclosures for 
transactions that are both funded and received in U.S. dollars.
    One industry trade association commenter argued that dollar-to-
dollar transactions should be completely excluded from the disclosure 
requirements. The Bureau believes, however, that fee and tax 
information should be disclosed to senders, even if there is no 
exchange rate applied to the transfer. The final rule does not exclude 
dollar-to-dollar transactions from the disclosure requirements, but 
clarifies that the exchange rate disclosure is not required for such 
transactions.
    Comment 31(b)-1 is adopted substantially as proposed, with 
clarifying revisions providing that an exchange rate is not required to 
be disclosed if an exchange rate is not applied to the transfer, even 
if it is not a dollar-to-dollar transaction. As such, the final comment 
states that a provider need not provide the exchange rate disclosure 
required by Sec.  1005.31(b)(1)(iv) if a recipient receives funds in 
the currency in which the remittance transfer is funded, or if funds 
are delivered into an account denominated in the currency in which the 
remittance transfer is funded. For example, if a sender in the United 
States transfers funds from an account denominated in Euros to an 
account in France denominated in Euros, no exchange rate would need to 
be provided. Similarly, if a sender funds a remittance transfer in U.S. 
dollars and requests that a remittance transfer be delivered to the 
recipient in U.S. dollars, a provider need not disclose an exchange 
rate.
    Proposed comment 31(b)-2 addressed the requirements in proposed 
Sec.  205.31(b) that certain disclosures be described either using the 
terms set forth in Sec.  205.31(b) or substantially similar terms. As 
discussed in the May 2011 Proposed Rule, the Board developed and 
selected the terms used in proposed Sec.  205.31(b) through consumer 
testing to ensure that senders could understand the information 
disclosed to them. However, the May 2011 Proposed Rule provided 
remittance transfer providers with flexibility in developing their

[[Page 6219]]

disclosures, both for disclosures in English and in each of the foreign 
languages principally used by the remittance transfer provider to 
advertise, solicit, or market remittance transfers, either orally or in 
writing, at that office. See Sec.  1005.31(g) below.
    The Bureau did not receive comment regarding proposed comment 
31(b)-2, and it is finalized substantially as proposed. In the final 
rule, comment 31(b)-2 states that terms may be more specific than the 
terms used in the final rule. For example, a remittance transfer 
provider sending funds to Colombia may describe a tax disclosed under 
Sec.  1005.31(b)(1)(vi) as a ``Colombian Tax'' in lieu of describing it 
as ``Other Taxes.'' Foreign language disclosures required under Sec.  
1005.31(g) must contain accurate translations of the terms, language, 
and notices required by Sec.  1005.31(b).
31(b)(1) Pre-Payment Disclosures
    Pursuant to EFTA section 919(a)(2)(A), proposed Sec.  205.31(b)(1) 
stated that a remittance transfer provider must make specified pre-
payment disclosures to a sender, as applicable. The disclosures are 
discussed below.
31(b)(1)(i) Transfer Amount
    Proposed Sec.  205.31(b)(1)(i) provided that the remittance 
transfer provider must disclose the amount that will be transferred to 
the designated recipient using the term ``Transfer Amount'' or a 
substantially similar term. Under the proposal, the transfer amount 
would have to be disclosed in the currency in which the funds will be 
transferred because the Board believed the disclosure of the transfer 
amount would help demonstrate to a sender how a provider calculates the 
total amount of the transaction, discussed below.
    Consumer group commenters agreed that the disclosure of the 
transfer amount as a separate line item would help senders understand 
the total amount to be paid in order to send the requested amount of 
currency to a recipient. Industry commenters asked the Bureau to 
clarify how to make a disclosure in the currency in which funds will be 
transferred. These commenters asked if this requirement only applied 
where a remittance transfer provider performed the conversion. These 
commenters suggested that the final rule should clarify that the 
disclosures should be provided in the denomination of the account used 
to fund the transfer or in the currency submitted by the sender for the 
transfer.
    The Bureau believes that the transfer amount should be disclosed as 
proposed in order to help demonstrate the cost of the transfer to a 
sender. Therefore, to effectuate the purposes of the EFTA, the Bureau 
deems is necessary and proper to use its authority under EFTA sections 
904(a) and (c) to finalize this requirement in Sec.  1005.31(b)(1)(i). 
For clarity, the final rule provides that the transfer amount must be 
disclosed in the currency in which the remittance transfer is funded, 
rather than the currency in which funds will be transferred. The Bureau 
believes that disclosing the transfer amount in the currency in which 
the remittance transfer is funded--whether the sender pays with cash, 
with currency in an account, or by other means--will, when combined 
with the other required disclosures, help senders calculate the effect 
of the exchange rate on the transaction, if there is a currency 
exchange. For example, if the funds will be exchanged from U.S. dollars 
to Mexican pesos, the transfer amount required by Sec.  
1005.31(b)(1)(i) must be disclosed in U.S. dollars. Therefore, Sec.  
1005.31(b)(1)(i) provides that the remittance transfer provider must 
disclose the amount that will be transferred to the designated 
recipient, in the currency in which the remittance transfer is funded, 
using the term ``Transfer Amount'' or a substantially similar term.
31(b)(1)(ii) Fees and Taxes Imposed by the Provider
    Proposed Sec.  205.31(b)(1)(ii) required that a remittance transfer 
provider disclose any fees and taxes that are imposed on the remittance 
transfer by the remittance transfer provider, in the currency in which 
the funds will be transferred. The proposal stated that the disclosure 
must be described using the term ``Transfer Fees,'' ``Transfer Taxes,'' 
or ``Transfer Fees and Taxes,'' or a substantially similar term. These 
disclosures were proposed pursuant to EFTA section 919(a)(2)(A)(ii), 
which requires a remittance transfer provider to disclose the amount of 
transfer fees and any other fees charged by the remittance transfer 
provider for the remittance transfer.
    Proposed comment 31(b)(1)-1.i. clarified that taxes imposed by the 
remittance transfer provider include taxes imposed on the remittance 
transfer by a State or other governmental body. The proposed comment 
also provided guidance applicable to the disclosure of both fees and 
taxes imposed on the remittance transfer by the provider, as well as 
fees and taxes imposed on the remittance transfer by a person other 
than the provider, which are discussed in detail below. See Sec.  
1005.31(b)(1)(vi), below. The proposed comment addressed the 
requirement that a remittance transfer provider only disclose fees or 
taxes as applicable. The proposed comment also stated that if both fees 
and taxes are imposed, the fees and taxes may be disclosed as one 
disclosure or as separate, itemized disclosures.
    Consumer group commenters and an industry commenter argued that the 
Bureau should require itemized fees and tax disclosures. They believed 
itemized disclosures would help senders understand what costs are 
fixed, such as taxes, and what costs may vary depending on the 
provider, such as fees. However, another industry commenter stated that 
disclosing fees and taxes together provided senders with adequate 
information on the total cost of the transaction.
    The Bureau agrees that separately listing the fees and taxes on 
disclosures provides better information to the sender about fixed and 
variable costs of the transaction, and the final rule provides that 
fees and taxes must be disclosed separately. Section 1005.31(b)(1)(ii) 
also clarifies that the fees and taxes must be disclosed in the 
currency in which the remittance transfer is funded. See Sec.  
1005.31(b)(1)(i), above. Therefore, Sec.  1005.31(b)(1)(ii) states that 
a remittance transfer provider must disclose any fees and taxes imposed 
on the remittance transfer by the provider, in the currency in which 
the remittance transfer is funded, using the terms ``Transfer Fees'' 
for fees and ``Transfer Taxes'' for taxes or substantially similar 
terms. Comment 31(b)(1)-1.i. in the final rule is changed from the 
proposal to state that if both fees and taxes are imposed, the fees and 
taxes must be disclosed as separate, itemized disclosures. For example, 
a provider would disclose all transfer fees using the term ``Transfer 
Fees'' or a substantially similar term and would separately disclose 
all transfer taxes as ``Transfer Taxes'' or a substantially similar 
term.
    One industry commenter argued that because a tax is imposed by the 
government, and not by the remittance transfer provider, EFTA section 
919(a)(2)(A)(ii) does not require taxes to be disclosed and, as such, 
the rule should not require disclosure of taxes. The Bureau believes 
the statute intended to require the disclosure of all charges imposed 
on the remittance transfer that would affect the cost of a remittance 
transfer to the sender. To the extent taxes imposed on the remittance 
transfer by a State or other governmental body are charged to the 
sender by the remittance transfer provider, the Bureau

[[Page 6220]]

believes they are required to be disclosed under EFTA section 
919(a)(2)(A)(ii), which requires a remittance transfer provider to 
disclose transfer fees and any other fees charged by the remittance 
transfer provider for the remittance transfer. Even if EFTA section 
919(a)(2)(A)(ii) did not require that such taxes be disclosed to 
senders, the Bureau believes that disclosing the taxes imposed on the 
remittance transfer will demonstrate to the sender the calculation of 
the total amount that the sender pays for the transfer and how this 
amount relates to amount that will be received by the designated 
recipient and is therefore necessary and proper to effectuate the 
purposes of the EFTA. As such, to the extent necessary, the Bureau is 
also requiring these taxes to be disclosed pursuant to its authority 
under EFTA sections 904(a) and (c). Therefore, as proposed, comment 
31(b)(1)-1.i. in the final rule clarifies that taxes imposed on the 
remittance transfer by the remittance transfer provider include taxes 
imposed on the remittance transfer by a State or other governmental 
body.
    Finally, as proposed, comment 31(b)(1)-1.i. addresses the 
disclosure of fees and taxes that are applicable to the transfer. The 
comment in the final rule states that a provider need only disclose 
fees or taxes imposed on the remittance transfer by the provider in 
Sec.  1005.31(b)(1)(ii) and imposed on the remittance transfer by a 
person other than the provider in Sec.  1005.31(b)(1)(vi), as 
applicable. For example, if no transfer taxes are imposed on a 
remittance transfer, a provider would only disclose applicable transfer 
fees.
    Proposed comment 31(b)(1)-1.ii. distinguished between the fees and 
taxes imposed on the remittance transfer by the provider and the fees 
and taxes imposed on the remittance transfer by a person other than the 
provider. This proposed comment is addressed in the discussion 
regarding fees and taxes imposed on the remittance transfer by a person 
other than the provider in Sec.  1005.31(b)(1)(vi), below.
31(b)(1)(iii) Total Amount of the Transaction
    Proposed Sec.  205.31(b)(1)(iii) required the disclosure of the 
total amount of the transaction. Although this total is not required by 
the statute, the Board proposed to require the disclosure of the total 
amount of the transaction to further the purposes of the EFTA by 
enabling a sender to understand the total amount to be paid out-of-
pocket for the transaction. The Bureau did not receive comment on the 
proposed provision. Therefore, to effectuate the purposes of the EFTA, 
the Bureau believes it is necessary and proper to use its authority 
under EFTA sections 904(a) and (c) to adopt Sec.  205.31(b)(1)(iii) as 
proposed in Sec.  1005.31(b)(1)(iii).The final rule requires a 
remittance transfer provider to disclose the total amount of the 
transaction, which is the sum of Sec.  1005.31(b)(1)(i) and (ii), in 
the currency in which the remittance transfer is funded, using the term 
``Total'' or a substantially similar term.
31(b)(1)(iv) Exchange Rate
    Proposed Sec.  205.31(b)(1)(iv) required the disclosure of any 
exchange rate used by the provider for the remittance transfer, rounded 
to the nearest 1/100th of a decimal point, consistent with EFTA section 
919(a)(2)(A)(iii). The proposed rule stated that the exchange rate must 
be described using the term ``Exchange Rate'' or a substantially 
similar term. The proposed rule did not permit floating rates, where 
the exchange rate is set when the designated recipient claims the 
funds.
    Consumer group commenters strongly supported the prohibition of 
unknown or floating exchange rates. Many industry commenters, however, 
urged that the final rule should accommodate floating rates and other 
circumstances in which an exchange rate may not be known at the time 
the sender requests the remittance transfer. A few industry commenters 
argued that the statute does not require the disclosure of an exchange 
rate set by institutions other than the remittance transfer provider. 
The commenters stated that by requiring the disclosure of the exchange 
rate to be used by the remittance transfer provider for the remittance 
transfer, EFTA section 919(a)(2)(A)(iii) only requires disclosure of an 
exchange rate that the remittance transfers provider itself set for the 
remittance transfer.
    For example, industry commenters stated that most credit unions 
offering international transfers do not perform currency conversions 
themselves, but instead rely on correspondent banks or other business 
partners to do so. Some industry commenters also stated that most 
credit unions offering international transfers work with currency 
providers in real time to contract for exchange rates. The commenters 
argued that this allows the credit unions to provide their members with 
the most competitive exchange rates. However, in such an arrangement 
the exchange rate that will be applied is only known at the time the 
contract is accepted, and would not be known at the time disclosures 
are provided to the senders. Similarly, other industry commenters 
stated that with their current processes and systems, they would know 
an exchange rate once a remittance transfer is processed, but not when 
the remittance transfer is requested.
    Some industry commenters also stated the exchange rate cannot be 
determined at the time of the request when a sender designates the 
receipt of a transaction in one currency, but the receiving account is 
denominated in another currency. In those cases, the receiving 
institution must convert the funds into another currency in order to 
complete the transfer. One industry commenter stated that its customers 
sometimes request remittance transfers to be sent to their foreign 
accounts in U.S. dollars. These senders, however, have arrangements 
with the recipient institutions holding their foreign accounts to 
convert the funds to the currencies of the accounts either at the spot 
rates available at the time the accounts are credited or at rates pre-
arranged by contracts between the senders and the recipient 
institutions. One industry commenter stated that, in some countries, a 
recipient may choose to be paid in one of multiple currencies. The 
commenter also stated that it permits consumers to change the 
designated country for pick up. In these cases, the currency in which 
funds will be received may change at the option of the recipient.
    A Federal Reserve Bank commenter, as well as industry commenters, 
argued that requiring a fixed exchange rate for purposes of providing 
an exchange rate disclosure would result in less favorable exchange 
rates for senders. These commenters stated that if providers are 
required to fix the exchange rate, they will increase the spread they 
use in order to minimize the risks associated with rate volatility, so 
the cost of sending remittance transfers would increase for senders. 
One money transmitter commenter argued that requiring a disclosure of a 
fixed rate could also lead remittance transfer providers to stop 
providing services to some locations in which they have historically 
used floating rates. This commenter noted that such a requirement would 
require it to renegotiate its contracts with approximately 100 foreign 
agents representing about 10,000 locations that currently offer only 
floating rates. This commenter stated that this change would affect 
about a half million customers annually.
    One industry commenter believed that a remittance transfer provider 
should instead be permitted to disclose that the exchange rate will be 
changed at the rate set by a daily central bank or other official rate 
plus or minus a fixed

[[Page 6221]]

offset, such as a commission. Other industry commenters suggested 
permitting disclosure of an estimated exchange rate, as long as the 
provider also discloses that the rate is subject to change. A Federal 
Reserve Bank commenter believed that floating exchange rate products 
should be exempted from the disclosure provisions in the rule.
    The Bureau interprets the statute to require a remittance transfer 
provider to disclose to the sender the exchange rate to be used for the 
remittance transfer to the sender, both at the time the sender requests 
the remittance transfer and when the sender pays for the transfer. This 
interpretation is based on several factors. First, the fact that the 
exchange rate may be set by another institution involved in the 
remittance transfer does not change the fact that it will be used by 
the remittance transfer provider in effectuating the sender's request. 
Second, the statute specifically requires disclosure of the amount to 
be received by the designated recipient, using the values of the 
currency into which the funds will be exchanged. This disclosure 
requires a provider to determine the exchange rate to be used to 
effectuate the transfer, whether that rate is set by the remittance 
transfer provider or a third party.
    The purpose of the statute supports the same conclusion. As 
discussed in the May 2011 Proposed Rule, the disclosure was intended to 
provide senders with certainty regarding the exchange rate and the 
amount of currency their designated recipients would receive. Senders 
would not be able to tell, for example, whether the funds they transmit 
are sufficient to pay household expenses and other bills where 
remittance products are based on floating rates.
    The Bureau understands, however, that there may be instances in 
which a sender will request funds to be delivered in a particular 
currency, but the funds are later converted into another currency due 
to facts that cannot be known to the provider. In these circumstances, 
the Bureau believes the remittance transfer provider complies with the 
requirement to disclose the exchange rate when it discloses information 
based on the request of the sender, even if the funds are ultimately 
received in a different currency. If the sender does not know the 
currency in which the funds will be received or requests funds to be 
received in the currency in which the remittance transfer is funded, 
the Bureau believes that the provider may assume that the currency in 
which funds will be received is the currency in which the remittance 
transfer is funded. See also comment 31(b)(1)(vi)-1, below.
    Section 1005.31(b)(iv) of the final rule requires disclosure of the 
exchange rate used by the provider for the remittance transfer, as 
proposed. Comment 31(b)(1)(iv)-1 clarifies that if the designated 
recipient will receive funds in a currency other than the currency in 
which the remittance transfer is funded, a remittance transfer provider 
must disclose the exchange rate to be used by the provider for the 
remittance transfer. An exchange rate that is estimated must be 
disclosed pursuant to the requirements of Sec.  1005.32, discussed 
below. A remittance transfer provider may not disclose, for example, 
that an exchange rate is ``unknown,'' ``floating,'' or ``to be 
determined.''
    Comment 31(b)(1)(iv)-1 further clarifies that if a provider does 
not have specific knowledge regarding the currency in which the funds 
will be received, the provider may rely on a sender's representation as 
to the currency in which funds will be received for purposes of 
determining whether an exchange rate is applied to the transfer. For 
example, if a sender requests that a remittance transfer be deposited 
into an account in U.S. dollars, the provider need not disclose an 
exchange rate, even if the account is actually denominated in Mexican 
pesos and the funds are converted prior to deposit into the account. If 
a sender does not know the currency in which funds will be received, 
the provider may assume that the currency in which funds will be 
received is the currency in which the remittance transfer is funded. 
The Bureau notes that if a provider does not independently have 
specific knowledge of the currency in which funds will be received, the 
provider may rely on the sender's representation as to the currency in 
which funds will be received. For example, the rule does not impose on 
providers a duty to inquire about this information with a third party.
    Some industry commenters also argued that the exchange rate should 
be permitted to include more than two decimal places, consistent with 
their current disclosure practices. One industry commenter stated that 
providing exchange rates that include more than two decimal places 
provides senders with more accurate and detailed exchange rate 
information.
    The Bureau agrees that it may be appropriate for some providers to 
disclose an exchange rate that includes more than two decimal places, 
because a provider may determine that the disclosure would provide a 
sender with a more accurate representation of the remittance transfer's 
cost, based on the particular type of transaction or type of currency 
being used. However, the Bureau also believes that some providers may 
determine that rounding to fewer digits may sufficiently inform senders 
of the cost of the exchange. The Bureau is also mindful that a 
disclosure that includes a long string of numbers could confuse some 
senders. The Bureau believes it is appropriate to permit a remittance 
transfer provider to disclose an exchange rate rounded to a number of 
decimal places that best reflects the cost to the sender, within a 
range that will not potentially confuse the sender.
    Therefore, to effectuate the purposes of the EFTA, the Bureau 
believes it is necessary and proper to exercise its EFTA sections 
904(a) and (c) authority in Sec.  1005.31(b)(1)(iv) to permit the 
exchange rate to be rounded consistently for each currency to no fewer 
than two decimal places and no more than four decimal places. The 
exchange rate must be disclosed using the term ``Exchange Rate'' or a 
substantially similar term. Comment 31(b)(1)(iv)-2 of the final rule is 
revised to reflect the more flexible rounding requirements. Comment 
31(b)(1)(iv)-2 clarifies that the exchange rate disclosed by the 
provider for the remittance transfer is required to be rounded. The 
provider may round to two, three, or four decimal places, at its 
option. For example, if one U.S. dollar exchanges for 11.9483779 
Mexican pesos, a provider may disclose that the U.S. dollar exchanges 
for 11.9484 Mexican pesos. The provider may alternatively disclose, for 
example, that the U.S. dollar exchanges for 11.948 pesos or 11.95 
pesos. On the other hand, if one U.S. dollar exchanges for exactly 11.9 
Mexican pesos, the provider may disclose that ``US$1=11.9 MXN'' in lieu 
of, for example, ``US$1=11.90 MXN.''
    Though the Bureau is permitting flexibility for rounding exchange 
rate disclosures, the Bureau believes that each provider should 
disclose its exchange rates in a consistent manner. The Bureau believes 
that if a provider were permitted to round exchange rates for a 
particular currency on a transaction-by-transaction basis, a provider 
could round exchange rates differently in order to make the exchange 
rate appear to be more favorable. For example, the Bureau does not 
believe a provider that typically rounds to four decimal places for a 
specific currency (e.g., the U.S. dollar exchanges for 0.7551 Euros) 
should be permitted to round to two decimal places for some of those 
currency transactions (e.g., the U.S. dollar

[[Page 6222]]

exchanges for 0.76 Euros). Comment 31(b)(1)(iv)-2 thus clarifies that 
the exchange rate disclosed for the remittance transfer must be rounded 
consistently for each currency. For example, a provider may not round 
to two decimal places for some transactions exchanged into Euros and 
round to four decimal places for other transactions exchanged into 
Euros.
    As discussed above, a provider may use an exchange rate that is not 
necessarily set by the provider itself. The final rule adds a new 
comment 31(b)(1)(iv)-3 to clarify that the exchange rate used by the 
provider and applied to the remittance transfer need not be set by that 
provider. For example, an exchange rate set by an intermediary 
institution and applied to the remittance transfer would be the 
exchange rate used for the remittance transfer and must be disclosed by 
the provider.
    Consumer group commenters and an industry trade association asked 
the Bureau to clarify how the exchange rate requirements would apply 
when a remittance transfer involves a prepaid card. These commenters 
asked how disclosures, such as the exchange rate, could be provided in 
accordance with the timing provisions in the May 2011 Proposed Rule 
when a provider would not know when the recipient would withdraw funds 
abroad or how much the recipient would withdraw. To the extent a 
prepaid card is covered by the rule, see Sec.  1005.30(e), the funds 
that will be received by the designated recipient are those that are 
loaded on to the prepaid card by the sender at the time of the 
transaction. Often a prepaid card is both funded and loaded in U.S. 
dollars, and funds remain on the card in U.S. dollars until a 
cardholder withdraws funds in a foreign country. In these instances, a 
provider need not provide the exchange rate disclosure required by 
Sec.  1005.31(b)(1)(iv), because a recipient will receive the currency 
in the currency in which the remittance transfer is funded. See comment 
31(b)-1.
    Finally, a Federal Reserve Bank commenter noted that the exchange 
rate cannot be determined when a sender initiates payment on a 
recurring basis. The Bureau recognizes the unique challenges relating 
to recurring payments, and the final rule provides alternative 
provisions for these circumstances in Sec.  1005.36, discussed below.
31(b)(1)(v) Transfer Amount
    Proposed Sec.  205.31(b)(1)(v) generally required providers to 
repeat the disclosure of the transfer amount in proposed Sec.  
205.31(b)(1)(i). Proposed Sec.  205.31(b)(1)(v), however, required the 
transfer amount to be disclosed in the currency in which the funds will 
be received by the designated recipient to demonstrate to the sender 
how third party fees or taxes imposed under proposed Sec.  
205.31(b)(1)(vi), which are also required to be disclosed in the 
currency in which the funds will be received, would reduce the amount 
received by the designated recipient. Proposed Sec.  205.31(b)(1)(v), 
however, only required this repeat disclosure if third party fees or 
taxes are imposed under proposed Sec.  205.31(b)(1)(vi), because it 
would not otherwise be necessary to demonstrate a reduction of the 
transfer amount by third party fees and taxes. The proposed disclosure 
was required to be described using the term ``Transfer Amount'' or a 
substantially similar term. Both the transfer amount required to be 
disclosed by proposed Sec.  205.31(b)(1)(i) and the transfer amount 
required to be disclosed by proposed Sec.  205.31(b)(1)(v) were 
proposed to effectuate the purposes of the EFTA.
    The Bureau did not receive comment on the requirement to disclose 
the transfer amount in proposed Sec.  205.31(b)(1)(v). Therefore, to 
effectuate the purposes of the EFTA, the Bureau believes it is 
necessary and proper to use its authority under EFTA sections 904(a) 
and (c) to finalize this requirement as proposed in Sec.  
1005.31(b)(1)(v). The Bureau received comments regarding concerns about 
making disclosures in the currency in which the funds will be received 
by the designated recipient. These comments, and a clarification 
regarding the currency in which the funds will be received by the 
designated recipient, are discussed below. See comment 31(b)(1)(vi)-1.
    Proposed comment 31(b)(1)-2 provided more guidance on the 
requirement to repeat the transfer amount disclosure in some 
circumstances, and it is adopted substantially as proposed. The comment 
reflects the clarification in the final rule that disclosure under 
Sec.  1005.31(b)(1)(i) must be disclosed in the currency in which the 
remittance transfer is funded. Comment 31(b)(1)-2 clarifies that two 
transfer amounts are required to be disclosed by Sec.  1005.31(b)(1)(i) 
and (v). First, a provider must disclose the transfer amount in the 
currency in which the remittance transfer is funded to show the 
calculation of the total amount of the transaction. Typically, the 
remittance transfer is funded in U.S. dollars, so the transfer amount 
would be expressed in U.S. dollars. However, if remittance transfer is 
funded, for example, from a Euro-denominated account, the transfer 
amount would be expressed in Euros.
    Second, a provider must disclose the transfer amount in the 
currency in which the funds will be made available to the designated 
recipient. For example, if the funds will be picked up by the 
designated recipient in Japanese yen, the transfer amount would be 
expressed in Japanese yen. However, the comment also clarifies that 
this second transfer amount need not be disclosed if fees and taxes are 
not imposed for the remittance transfer under Sec.  1005.31(b)(1)(vi). 
As discussed above, in such cases, there is no consumer benefit to the 
additional information if the transferred amount is not reduced by 
other fees and taxes.
    Section 1005.31(b)(1)(v) also requires a remittance transfer 
provider to use the term ``Transfer Amount'' or a substantially similar 
term to describe the disclosure required under this paragraph. Comment 
31(b)(1)-2 clarifies, as proposed, that the terms used to describe each 
transfer amount should be the same.
    Finally, the Bureau believes that the rounded exchange rate 
required to be disclosed under Sec.  1005.31(b)(1)(iv) is intended only 
to ensure that senders are not overwhelmed by a disclosure of an 
exchange rate with many numbers following the decimal point. The Bureau 
does not believe it is intended to constrain the number of decimal 
places involved in calculating other disclosures. Therefore, Sec.  
1005.31(b)(1)(v) adds the clarification that the exchange rate used to 
calculate the transfer amount in Sec.  1005.31(b)(1)(v) is the exchange 
rate in Sec.  1005.31(b)(1)(iv), including an estimated exchange rate 
to the extent permitted by Sec.  1005.32, prior to any rounding of the 
exchange rate. Comment 31(b)(1)-3 provides examples to demonstrate the 
exchange rate that must be used to calculate not only the transfer 
amount in Sec.  1005.31(b)(1)(v), but also the fees and taxes imposed 
on the remittance transfer by a person other than the provider in Sec.  
1005.31(b)(1)(vi) and the amount received in Sec.  1005.31(b)(1)(vii). 
For example, if one U.S. dollar exchanges for 11.9483779 Mexican pesos, 
a provider must calculate these disclosures using this rate, even 
though the provider may disclose pursuant to Sec.  1005.31(b)(1)(iv) 
that the U.S. dollar exchanges for 11.9484 Mexican pesos. Similarly, if 
a provider estimates pursuant to Sec.  1005.32 that one U.S. dollar 
exchanges for 11.9483 Mexican pesos, a provider must calculate these 
disclosures using this rate, even though the provider may disclose 
pursuant to Sec.  1005.31(b)(1)(iv)

[[Page 6223]]

that the U.S. dollar exchanges for 11.95 Mexican pesos (Estimated). If 
an exchange rate need not be rounded, a provider must use that exchange 
rate to calculate these disclosures. For example, if one U.S. dollar 
exchanges for exactly 11.9 Mexican pesos, a provider must calculate 
these disclosures using this exchange rate.
31(b)(1)(vi) Fees and Taxes Imposed by a Person Other Than the Provider
    Proposed Sec.  205.31(b)(1)(vi) stated that a remittance transfer 
provider must disclose any 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. Such fees and 
taxes could include lifting fees charged in connection with an 
international wire transfer, a fee charged by a recipient institution 
or agent, or a tax imposed by a government in the designated 
recipient's country. Because such fees and taxes affect the amount 
ultimately received by the designated recipient, the Board proposed the 
disclosure of other fees and taxes to effectuate the purposes of the 
EFTA.
    Consumer group commenters supported the disclosure of third party 
fees and taxes to senders of remittance transfers, stating that such a 
disclosure would be consistent with the language and purpose of the 
statute, and would best inform the sender of the amount the recipient 
would ultimately receive. In contrast, industry commenters opposed the 
disclosure. Most industry commenters argued that compliance with the 
proposed disclosure requirement would be burdensome, if not impossible. 
Commenters stated that financial institutions sending wire transfers 
and international ACH transactions only have control over the delivery 
to the next institution, and in some cases do not have a relationship 
with all of the subsequent intermediary institutions involved in a 
transfer or with the recipient institution. The originating institution 
may, in some cases, know the routing, but in other cases have no legal 
or technological means to control routing of a transaction once the 
transfer has been initiated and, therefore, it cannot know what 
institutions might be imposing fees or taxes on the remittance 
transfer. One industry commenter suggested that providing the 
disclosures may be possible for repeat wire transfers, because fee and 
tax information is known from the previous transfers, but not for new 
wire transfers.
    Industry commenters and a Federal Reserve Bank commenter argued 
that third party fees and taxes may not be known at the time of the 
transaction, which could result in the remittance transfer provider 
providing misleading information to the sender. Industry commenters 
also argued that smaller institutions do not have the resources to 
obtain or monitor information about foreign tax laws or fees charged by 
unrelated financial institutions that may be involved in the transfer. 
Some commenters noted that intermediary financial institutions, both 
inside and outside of the United States, are not required to disclose 
their fees. Moreover, some industry commenters argued, the sharing of 
fee information among financial institutions could violate privacy and 
competition laws. Industry commenters stated that no comprehensive 
information is available regarding foreign tax laws. Because an 
institution may not have resources to track tax laws in every foreign 
country to which it sends a remittance transfer, the commenters argued 
that some providers would limit the locations to which they send 
remittance transfers.
    Further, some industry commenters noted that a recipient may enter 
into an agreement with a recipient institution that permits the 
institution to impose fees for an international payment received by the 
institution and applied to the recipient's account. The commenters 
stated that remittance transfer providers would not know whether the 
recipient has agreed to pay such fees or how much the recipient may 
have agreed to pay. The commenters argued that such fees charged to a 
recipient by a third party pursuant to an agreement between the 
recipient and a third party should not be required to be disclosed.
    Some industry commenters argued that the statute did not intend for 
third party fees and taxes to be included in the disclosure of the 
total amount that will be received by the designated recipient. For 
example, one industry commenter argued that the statute only intended 
to include in the calculation of the amount of currency to be received 
the elements specifically required to be disclosed under EFTA section 
919(a)(2)(A)(ii) and (iii) (i.e., the amount of transfer fees and any 
other fees charged by the remittance transfer provider, and any 
exchange rate to be used by the remittance transfer provider for the 
remittance transfer). Another industry commenter argued that State laws 
that require a remittance transfer provider to disclose to a sender the 
total amount to be received by the designated recipient do not require 
disclosure of third party fees and taxes that may be imposed on the 
remittance transfer. Instead, the commenters argued, State laws only 
require the remittance transfer provider to disclose the amount of 
currency to be received after application of the exchange rate. 
Therefore, the commenters stated that fees or taxes set by a party 
other than the remittance transfer provider are not required to be 
included in the disclosure of the total amount received and, therefore, 
should not be required to be disclosed separately.
    Overall, many industry commenters stated that the proposed 
disclosure requirements would cause financial institutions to withdraw 
from the market or restrict the locations to which wire transfers will 
be sent. The commenters also stated that the proposed requirements 
would increase costs to senders, and some argued that the proposed 
requirements would delay transactions while financial institutions 
determined the required information in order to make disclosures. Some 
industry commenters argued that the requirements put financial 
institutions at a competitive disadvantage compared to money 
transmitters, which, they argued, are typically able to know the 
required disclosures due to their closed network structure. Further, 
they argued that the proposed requirements could deter foreign 
financial institutions from agreeing to process U.S.-originated 
remittance transfers.
    Generally, industry commenters urged the Bureau to exempt financial 
institutions that provide remittance transfers through correspondent 
relationships from the requirement to disclose third party fees or 
require different disclosures for these types of transactions. Industry 
commenters and a Federal Reserve Bank commenter also suggested that the 
final rule should incorporate a good faith standard with respect to 
these fee and tax disclosures. Some industry commenters further argued 
that the Bureau should not require foreign taxes to be provided, 
regardless of whether a remittance transfer was sent through a 
correspondent relationship. Industry commenters alternatively suggested 
that the Bureau only require a disclosure that the amount received may 
be subject to foreign taxes. A Federal Reserve Bank commenter suggested 
that the Bureau should provide a safe harbor for the foreign tax 
disclosure for providers that disclosed current or historical 
information available to the provider through reasonable efforts.
    Commenters also suggested that the Bureau assist industry with 
determining unknown fees and taxes, particularly to help ease the 
disclosure burden on small providers. One industry commenter believed 
the Bureau should

[[Page 6224]]

require correspondent institutions to publish the fees and taxes that 
are charged. Industry and consumer group commenters suggested that the 
Bureau should maintain a resource that provides relevant foreign taxes.
    As discussed in the introduction above, the Bureau recognizes the 
challenges for remittance transfer providers to determining fees and 
taxes imposed by third parties. However, the plain language of the 
statute requires disclosure of the amount of currency that will be 
received by the designated recipient. The Bureau believes this requires 
remittance transfer providers to determine the costs specifically 
related to the remittance transfer that may reduce the amount received 
by the designated recipient. Congress specifically recognized that 
these determinations would be difficult with regard to open network 
transactions by financial institutions and tailored a specific 
accommodation to allow use of reasonably accurate estimates for an 
interim period until financial institutions can develop methods to 
determine exact disclosures, such as fees and taxes charged by third 
parties.
    This disclosure provides consumer benefits by making senders aware 
of the impact of these fees and taxes, which is essential to fulfill 
the purpose of the statute. Providing a total to recipient that 
reflects the impact of third party fees and taxes, and separately 
disclosing those fees and taxes, will provide senders with a greater 
transparency regarding the cost of a remittance transfer. For many 
senders and recipients, disclosure of the amount of third party fees 
and taxes that may be deducted could be crucial to knowing whether the 
amount transferred will be sufficient to pay important household 
expenses and other bills. Senders also need to know the amount of such 
fees and taxes to determine whether to use the same provider for any 
future transfers. Without such information, it would be difficult for a 
sender to determine the costs of the transfer that would enable the 
sender to choose the most cost-effective method of sending remittance 
transfers. Moreover, as discussed below, the cost of third party taxes 
may vary depending on the types of institutions involved in the 
transmittal route, and disclosure of these taxes will assist senders 
comparing costs between providers. While the Bureau understands that 
tax information may not be readily available to a provider, the 
provider is in the best position to obtain the information to comply 
with the disclosure requirements. Because a provider will be engaged in 
sending remittance transfers to certain countries and, in some cases, 
will have relationships with entities in those countries, the Bureau 
believes the provider itself is in the best position to determine 
foreign tax information.
    Therefore, to effectuate the purposes of the EFTA, the Bureau 
believes it is necessary and proper to use its authority under EFTA 
sections 904(a) and (c) to require in Sec.  1005.31(b)(vi) of the final 
rule the disclosure of any fees and taxes imposed on the remittance 
transfer by a person other than the provider, using the terms ``Other 
Fees'' for fees and ``Other Taxes'' for taxes, or substantially similar 
terms.\76\ As discussed above, fees and taxes must be disclosed 
separately from one another in order to show which costs are fixed and 
which costs are variable. See comment 31(b)(1)-1.i. As discussed above, 
the Bureau believes that the rounded exchange rate required to be 
disclosed under Sec.  1005.31(b)(1)(iv) is not intended to constrain 
the number of decimal places involved in calculating other disclosures. 
Therefore, Sec.  1005.31(b)(1)(vi) adds the clarification that the 
exchange rate used to calculate the fees and taxes in Sec.  
1005.31(b)(1)(vi) is the exchange rate in Sec.  1005.31(b)(1)(iv), 
including an estimated exchange rate to the extent permitted by Sec.  
1005.32, prior to any rounding of the exchange rate. As discussed 
above, comment 31(b)(1)-3 provides examples to demonstrate the exchange 
rate that must be used to calculate the fees and taxes imposed on the 
remittance transfer by a person other than the provider.
---------------------------------------------------------------------------

    \76\ Due to a scrivener's error, Sec.  205.31(b)(vi) in the 
proposed rule had stated that these fees and taxes must be disclosed 
using the term ``Other Transfer Fees,'' ``Other Transfer Taxes,'' or 
``Other Transfer Fees and Taxes,'' or a substantially similar term 
(emphasis added). The model forms as proposed, however, used the 
term ``Other Fees and Taxes.'' The terms set forth in Sec.  
1005.31(b)(vi) are adopted without the word ``transfer'' in order to 
more concisely describe the fees and taxes required to be disclosed 
in Sec.  1005.31(b)(vi). The terms used in the final rule conform to 
the language used in the model forms, which participants in consumer 
testing generally understood to mean fees and taxes charged by a 
person other than the provider.
---------------------------------------------------------------------------

    As noted above, proposed comment 31(b)(1)-1.ii. distinguished 
between the fees and taxes imposed by the provider, discussed above in 
Sec.  1005.31(b)(1)(ii), and the fees and taxes imposed by a person 
other than the provider. The proposed comment provided examples of each 
of these types of fees and taxes. Proposed comment 31(b)(1)-1.ii. also 
clarified that the terms used to describe each of these types of fees 
and taxes must differentiate between such fees and taxes and provided 
an example to illustrate this differentiation.
    Industry commenters requested clarification regarding the types of 
fees imposed on the remittance transfer by a person other than the 
provider. For example, an industry commenter and a Federal Reserve Bank 
commenter asked the Bureau to clarify that these fees and taxes do not 
include fees and taxes that banks and other parties charge one another 
for handling a remittance transfer, so long as the fees do not affect 
the amount of the transfer. Another industry commenter asked whether 
funds deducted from the amount received in a remittance transfer by a 
recipient institution exercising its rights of set-off would be 
required to be disclosed as a fee to a sender.
    Comment 31(b)(1)-1.ii. of the final rule clarifies that the fees 
and taxes required to be disclosed include only those that are charged 
to the sender or designated recipient and are specifically related to 
the remittance transfer. The Bureau does not believe that any fee or 
tax is required to be disclosed solely because it is charged at the 
same time that a remittance transfer is sent, because such fees and 
taxes are not necessarily ``imposed on the remittance transfer.'' For 
example, an overdraft fee charged by a bank at the same time that a 
remittance transfer is sent or received in an account is not imposed on 
the remittance transfer. In order to further clarify what charges 
should be disclosed to senders, the comment in the final rule provides 
examples of the types of fees that are not required to be disclosed 
under this provision, in addition to the examples of the types of fees 
that should be included that were included in the May 2011 Proposed 
Rule.
    Specifically, comment 31(b)(1)-1.ii. states that the fees and taxes 
required to be disclosed by Sec.  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 Sec.  1005.31(b)(1)(vi) include fees and 
taxes imposed on the remittance transfer by a person other than the 
provider. Fees and taxes imposed on the remittance transfer by a person 
other than the provider 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 receiving 
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

[[Page 6225]]

imposed on a remittance transfer by a foreign government.
    However, the comment states that 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. 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. The comment also 
clarifies that the terms used to describe the fees or taxes imposed on 
the remittance transfer by the provider in Sec.  1005.31(b)(1)(ii) and 
imposed on the remittance transfer by a person other than the provider 
in Sec.  1005.31(b)(1)(vi) must differentiate between such fees and 
taxes. For example, the terms used to describe fees disclosed under 
Sec.  1005.31(b)(1)(ii) and (vi) may not both be described solely as 
``Fees.''
    Proposed comment 31(b)(1)(vi)-1 clarified how a provider must 
disclose fees and taxes in the currency in which funds will be 
received. Industry commenters expressed concern that a remittance 
transfer provider may not know the currency in which the funds will be 
received. As discussed above in comment 31(b)(1)(iv)-1, if a provider 
does not have specific knowledge regarding the currency in which the 
funds will be received, the provider may rely on a sender's 
representations as to the currency in which funds will be received.
    Comment 31(b)(1)(vi)-1 is adopted substantially as proposed, with 
an added clarification regarding reliance on a sender's representation 
regarding the currency in which the funds will be received. The Bureau 
is also revising the comment to reflect the clarification that 
disclosures that require an exchange rate to be applied should use the 
exchange rate in Sec.  1005.31(b)(1)(iv), including an estimated 
exchange rate to the extent permitted by Sec.  1005.32, prior to any 
rounding of the exchange rate.
    Comment 31(b)(1)(vi)-1 states that Sec.  1005.31(b)(1)(vi) requires 
the disclosure of fees and taxes in the currency in which the funds 
will be received by the designated recipient. A fee or tax described in 
Sec.  1005.31(b)(1)(vi) may be imposed in one currency, but the funds 
may be received by the designated recipient in another currency. In 
such cases, the remittance transfer provider must calculate the fee or 
tax to be disclosed using the exchange rate in Sec.  1005.31(b)(1)(iv), 
including an estimated exchange rate to the extent permitted by Sec.  
1005.32, prior to any rounding of the exchange rate. For example, an 
intermediary institution in an international wire transfer may impose a 
fee in U.S. dollars, but funds are ultimately deposited in the 
recipient's account in Euros. In this case, the provider would disclose 
the fee to the sender expressed in Euros, calculated using the exchange 
rate used by the provider for the remittance transfer.
    The comment further states that for purposes of Sec.  
1005.31(b)(1)(v), (vi), and (vii), if a provider does not have specific 
knowledge regarding the currency in which the funds will be received, 
the provider may rely on a sender's representation as to the currency 
in which funds will be received. For example, if a sender requests that 
a remittance transfer be deposited into an account in U.S. dollars, the 
provider may provide the disclosures required in Sec.  
1005.31(b)(1)(v), (vi), and (vii) in U.S. dollars, even if the account 
is denominated in Mexican pesos and the funds are subsequently 
converted prior to deposit into the account. If a sender does not know 
the currency in which funds will be received, the provider may assume 
that the currency in which funds will be received is the currency in 
which the remittance transfer is funded.
    The final rule also adds a new comment 31(b)(1)(vi)-2 to address 
situations where the information needed to determine the foreign taxes 
that apply to a transaction is not known to the provider and not 
publically available. Some industry commenters stated that foreign 
taxes may depend on variables other than the country to which the 
remittance transfer is sent, such as by the specific tax status of the 
sender and receiver, account type, or type of financial institution. 
The commenters stated that a sender may not be aware of the information 
needed to determine the tax obligation that applies to the transaction.
    The Bureau believes that when these types of variables affect the 
foreign taxes that apply to the transaction, providers may have to rely 
on representations made by the sender. If the sender does not know the 
information, and the provider does not otherwise have specific 
knowledge of the information, the Bureau believes it is necessary to 
provide a reasonable mechanism by which the provider may disclose the 
foreign tax. The Bureau believes it is appropriate in these instances 
to disclose the highest tax that could be imposed with respect to a 
particular variable, so the sender is not surprised that the amount 
received is reduced by more taxes than what is disclosed.
    Comment 31(b)(1)(vi)-2 states that 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, pursuant to Sec.  1005.31(b)(1)(vi). 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 notes that if a provider does not independently have 
specific knowledge regarding variables that affect the amount of taxes 
imposed by a person other than the provider, the provider may rely on 
the sender's representations regarding these variables. For example, 
the rule does not impose on providers a duty to inquire about this 
information with a third party. The Bureau also notes that a provider 
may continue to rely on the sender's representations in any subsequent 
remittance transfers, unless the provider has specific knowledge that 
information relating to such variables has changed.
31(b)(1)(vii) Amount Received
    Proposed Sec.  205.31(b)(1)(vii) stated that a remittance transfer 
provider must disclose to the sender the amount that will be received 
by the designated recipient, in the currency in which the funds will be 
received. See EFTA section 919(a)(2)(A)(i). The proposed rule stated 
that the disclosures should be described using the term ``Total to 
Recipient'' or a substantially similar term. The proposed rule provided 
that the disclosure must reflect all charges that would affect the 
amount to be received.
    For the reasons discussed above, industry commenters objected to 
the

[[Page 6226]]

proposal because, they argued, costs that are required to be known to 
disclose the amount received, such as the exchange rate and third party 
fees and taxes, cannot be known at the time the pre-payment disclosure 
and receipt are required to be disclosed. As discussed above, an 
industry commenter argued that the statute only intended the amount of 
currency that will be received by the designated recipient to reflect 
the other elements that are required to be disclosed separately under 
EFTA section 919(a)(2)(A)(ii) and (iii). Other industry commenters 
argued that the disclosure should only reflect the exchange rate, fees, 
and taxes set by the remittance transfer provider itself, and not those 
set or charged by persons other than the provider. Some industry 
commenters believed the amount that will be received by the designated 
recipient should be subject to a good faith standard, should be 
permitted to be estimated, or should include a statement that the total 
amount is subject to change.
    EFTA section 919(a)(2)(A)(i) requires a remittance transfer 
provider to disclose the amount received by the designated recipient 
using the values of the currency into which the funds will be 
exchanged. The Bureau interprets the amount to be received by the 
designated recipient as the amount net of all fees and taxes that will 
be paid for the transfer. An exchange rate, if one is applied, is just 
one of the factors that could affect the actual amount received by the 
designated recipient. Providing a total amount to be received that does 
not take into account all cost elements would not be consistent with 
the statute's goal of providing disclosures of the total costs of a 
remittance transfer.
    The Bureau is not persuaded that the amount to be received by the 
designated recipient should only reflect those elements that are 
separately required to be disclosed under the statute. Under the plain 
language of EFTA section 919(a)(2)(A)(i), the amount of funds that will 
be received by the designated recipient must be disclosed to the 
sender. The Bureau believes this amount must reflect all fees and taxes 
specifically related to the remittance transfer, regardless of the 
entity that charges them. Moreover, the Bureau believes that the 
exchange rate to be used to calculate the total to recipient is the 
exchange rate that is used for the remittance transfer, whether or not 
the remittance transfer provider itself sets the exchange rate or 
merely applies an exchange rate set by another entity to the 
transaction. Absent this approach, providers could disclose different 
amounts received depending only on whether the provider itself or a 
different institution applies the exchange rate. The Bureau believes 
such a result would be inconsistent with the statutory goal of 
providing the sender with the actual amount that will be received by 
the designated recipient.
    Therefore, proposed Sec.  205.31(b)(1)(vii) is adopted 
substantially as proposed in renumbered Sec.  1005.31(b)(1)(vii), with 
an addition to clarify the appropriate exchange rate that must be used 
to calculate the amount received, discussed below. Comment 
31(b)(1)(vii)-1 is also adopted substantially as proposed to clarify 
the charges that must be reflected in the amount received. The comment 
is amended to clarify that the disclosed amount received must be 
reduced by the amount of any fee or tax, whether the fee or tax is 
imposed on the remittance transfer by the remittance transfer provider 
or by a person other than the remittance transfer provider. The comment 
clarifies that the fees and taxes that must be disclosed are those fees 
and taxes that are imposed on the remittance transfer. See comment 
31(b)(1)-1-ii. Specifically, comment 31(b)(1)(vii)-1 states that the 
disclosed amount to be received by the designated recipient must 
reflect all charges imposed on the remittance transfer that affect the 
amount received, including the exchange rate and all fees and taxes 
imposed on the remittance transfer by the remittance transfer provider, 
the receiving institution, or any other party in the transmittal route 
of a remittance transfer. The disclosed amount received must be reduced 
by the amount of any fee or tax that is imposed on the remittance 
transfer by any person, even if that amount is imposed or itemized 
separately from the transaction amount.
    Finally, Sec.  1005.31(b)(1)(vii) revises proposed Sec.  
205.31(b)(1)(vii) to clarify the exchange rate that should be used in 
calculating the amount received. One industry commenter stated that 
using a rounded exchange rate may add some de minimis value to the 
amount received. For some currencies, this may result in a transaction 
amount being disclosed in a foreign currency for which no coins are 
available to complete the transaction. The commenter recommended a de 
minimis exemption for error resolution triggered based on rounding. As 
discussed above, the Bureau believes that the rounded exchange rate 
required to be disclosed under Sec.  1005.31(b)(1)(iv) is not intended 
to constrain the number of decimal places involved in calculating other 
disclosures. Therefore, Sec.  1005.31(b)(1)(vii) adds the clarification 
that the exchange rate used to calculate the amount received in Sec.  
1005.31(b)(1)(vii) is the exchange rate in Sec.  1005.31(b)(1)(iv), 
including an estimated exchange rate to the extent permitted by Sec.  
1005.32, prior to any rounding of the exchange rate. As discussed 
above, comment 31(b)(1)-3 provides examples to demonstrate the exchange 
rate that must be used to calculate the amount received.
31(b)(2) Receipt
    Proposed Sec.  205.31(b)(2) provided that a remittance transfer 
provider must disclose a written receipt to a sender when payment is 
made for the remittance transfer. As with the proposed pre-payment 
disclosure, the disclosures required on the receipt could be omitted if 
not applicable. The required disclosures are discussed below.
31(b)(2)(i) Pre-Payment Disclosures on Receipt
    Proposed Sec.  205.31(b)(2)(i) provided that the same disclosures 
included in the pre-payment disclosure must be disclosed on the 
receipt, pursuant to EFTA section 919(a)(2)(B)(i)(I). As discussed 
above, the Bureau is requiring providers to disclose some information 
in the pre-payment disclosure, such as the transfer amount, that is not 
specifically required by EFTA section 919(a)(2)(A). The Bureau did not 
receive comment regarding the requirement to provide the same pre-
payment disclosures on the receipt. Therefore, to effectuate the 
purposes of the EFTA, the Bureau believes it is necessary and proper to 
use its authority under EFTA sections 904(a) and (c) to finalize that 
requirement in renumbered Sec.  1005.31(b)(2)(i), as proposed.
31(b)(2)(ii) Date Available
    Proposed Sec.  205.31(b)(2) also provided for the disclosure of 
additional elements on the receipt. EFTA section 919(a)(2)(B)(i)(II) 
requires the disclosure of the promised date of delivery to the 
designated recipient on a receipt. The Board stated its belief that the 
statute requires disclosure of the date the currency will be available 
to the designated recipient, not the date the funds are physically 
picked up by the designated recipient, because the recipient may not 
pick up the funds for some period of time after the funds are 
available. Thus, proposed Sec.  205.31(b)(2)(ii) stated that a 
remittance transfer provider must disclose the date of availability of 
funds to the designated recipient, using the term ``Date Available'' or 
a substantially similar term. Proposed comment 31(b)(2)-1

[[Page 6227]]

provided further guidance on this disclosure.
    In the proposal, the Board recognized that in some instances, it 
may be difficult to determine the exact date on which a remittance 
transfer will be available to a designated recipient. For example, an 
international wire transfer may pass through several intermediary 
institutions prior to becoming available at the institution of a 
designated recipient, and the time it takes to pass through these 
intermediaries may be difficult to determine. As a result, the Board 
recognized that remittance transfer providers would likely disclose the 
latest date on which the funds would be available, even if funds are 
often available sooner. Thus, proposed Sec.  205.31(b)(2)(ii) permitted 
a provider to include a statement that funds may be available to the 
designated recipient earlier than the date disclosed, using the term 
``may be available sooner'' or a substantially similar term. The Board 
had tested various terms in consumer testing for communicating the fact 
that funds may be available earlier than the date disclosed. 
Participants generally understood the meaning of the statement that 
funds ``may be available sooner'' better than other terms.
    Consumer group commenters supported the disclosure of the date 
funds will be available. Many industry commenters argued, however, that 
it would be difficult or impossible to determine when funds would be 
made available to a recipient in an open network system, such as where 
transfers are made to an account at a financial institution with which 
the provider does not have a correspondent relationship. Industry 
commenters argued that even if the date of receipt by a recipient 
financial institution is known, there could be a delay in depositing 
the funds into a recipient account due to delays at intermediary 
financial institutions or at the recipient institution. One industry 
trade association stated that infrastructure deficiencies in some 
countries may make it impossible to determine the actual date on which 
funds will be available.
    An industry commenter supported the flexibility provided by the 
term ``may be available sooner,'' but stated that dates still may be 
unpredictable for reasons beyond a provider's control. One industry 
trade association argued that in order to mitigate compliance risks, 
some remittance transfer providers will disclose a date well past a 
reasonable estimate of the date funds will be made available, which 
would render the disclosure meaningless.
    Due to these factors, some industry commenters urged the Bureau to 
permit an estimated date of availability, including an estimate of the 
date that funds may be available to a recipient institution, and not 
the recipient. One commenter suggested that the disclosure could state 
that a transfer may be delayed by intermediaries or other factors 
beyond the provider's control.
    As stated in the proposal, EFTA section 919(a)(2)(B)(i)(II) 
requires disclosure of a single, promised date of delivery of the 
funds. Neither EFTA section 919(a)(4) nor EFTA section 919(c) permit a 
remittance transfer provider to provide an estimate of this promised 
date, despite the fact that the statute permits estimates in other 
circumstances. Moreover, because the statute requires a remittance 
transfer provider to provide a disclosure of the promised date of 
delivery to the designated recipient, the Bureau believes that 
permitting a provider to disclose the date that funds will be made 
available to the recipient institution would not comply with the 
statute.
    The Bureau believes that by permitting the provider to disclose a 
date by which funds will certainly be delivered, but also stating that 
funds ``may be available sooner,'' a provider can comply with the 
disclosure requirement. The Bureau recognizes that providers may 
overestimate the disclosed date on which funds will be available to 
mitigate compliance risks. However, the Bureau believes that 
competitive pressures will give providers an incentive to provide as 
accurate a date as possible.
    Therefore, Sec.  1005.31(b)(2)(ii) is finalized substantially as 
proposed. Section 1005.31(b)(2)(ii), however, clarifies in the rule, 
rather than the commentary, as proposed, that a provider must disclose 
the date in the foreign country on which funds will be available to the 
designated recipient. This clarification is included to account for 
instances where time zone differences result in a date in the United 
States being different from the date in the country of the designated 
recipient.
    The final rule also adopts comment 31(b)(2)-1 substantially as 
proposed. The comment clarifies that a remittance transfer provider may 
not provide a range of dates that the remittance transfer may be 
available, nor an estimate of the date on which funds will be 
available. If a provider does not know the exact date on which funds 
will be available, the provider may disclose the latest date on which 
the funds will be available. For example, if funds may be available on 
January 3, but are not certain to be available until January 10, then a 
provider complies with Sec.  1005.31(b)(2)(ii) if it discloses January 
10 as the date funds will be available. However, a remittance transfer 
provider may also disclose that funds ``may be available sooner'' or 
use a substantially similar term to inform senders that funds may be 
available to the designated recipient on a date earlier that the date 
disclosed. For example, the provider may disclose ``January 10 (may be 
available sooner).''
31(b)(2)(iii) Recipient
    Proposed Sec.  205.31(b)(2)(iii) provided that a remittance 
transfer provider must disclose the name and, if provided by the 
sender, the telephone number and/or address of the designated 
recipient. The proposed rule stated that the remittance transfer 
provider must describe the disclosure using the term ``Recipient'' or a 
substantially similar term. The Bureau did not receive comment on 
proposed Sec.  205.31(b)(2)(iii), which is adopted as proposed in 
renumbered Sec.  1005.31(b)(2)(iii).
31(b)(2)(iv) Rights of Sender
    As discussed in more detail below regarding Sec. Sec.  1005.33 and 
1005.34, EFTA section 919(d) provides the sender with substantive error 
resolution and cancellation rights. EFTA section 919(a)(2)(B)(ii)(I) 
requires a remittance transfer provider to provide a statement 
containing information about the rights of the sender regarding the 
resolution of errors on the receipt or combined disclosure. EFTA 
section 919(d)(3) requires the Bureau to issue final rules regarding 
appropriate cancellation and refund policies for senders. The Board 
stated its belief that providing a lengthy disclosure to the sender 
each time the sender makes a remittance transfer could be ineffective 
at conveying the most important information that a sender would need to 
resolve an error or cancel a transaction. However, the Board also 
stated that a sender should have access to a complete description of 
the sender's error resolution and cancellation rights in order to 
effectively exercise those rights. As a result, the Board proposed 
Sec.  205.31(b)(2)(iv) in conjunction with a long form error resolution 
notice in proposed Sec.  205.31(b)(4). The two disclosures were 
intended to balance the interest in providing a sender a concise 
disclosure with the sender's ability to obtain a full explanation of 
those rights.
    Proposed Sec.  205.31(b)(2)(iv) stated that a remittance transfer 
provider must disclose to a sender an abbreviated statement about the 
sender's error

[[Page 6228]]

resolution and cancellation rights using language set forth in Model 
Form A-37 of Appendix A or substantially similar language. The proposed 
statement included a brief disclosure of the sender's error resolution 
and cancellation rights, as well as a notification that a sender may 
contact the remittance transfer provider for a written explanation of 
these rights.
    Consumer group commenters argued that the abbreviated disclosure in 
proposed Sec.  205.31(b)(2)(iv) should provide more comprehensive 
information to a sender. These commenters also suggested that the 
abbreviated disclosure would not comply with the statute. One of the 
consumer group commenters stated that all of the senders' rights should 
be disclosed on the receipt, instead of a shorter disclosure, because 
senders of remittance transfers may be less educated or less likely to 
have access to phone and internet compared to other consumers.
    The Bureau agrees that education of senders about the consumer 
protections created by EFTA section 919 is an important statutory and 
policy goal. However, the Bureau believes EFTA section 
919(a)(2)(B)(ii)(I) does not require a remittance transfer provider to 
enumerate a sender's error resolution rights. Rather, the statute 
requires the provider to disclose information about the rights of the 
sender under EFTA section 919 regarding the resolution of errors, and 
the Bureau believes the proposed language satisfies this requirement. 
Moreover, consumer testing participants understood and responded 
positively to the concise, abbreviated disclosure and favorably 
compared the statement against current error resolution disclosures 
with which they had experience and which they noted could be long and 
in ``fine print.'' Thus, the Bureau is finalizing the abbreviated 
disclosure requirement in renumbered Sec.  1005.31(b)(2)(iv). See also 
Sec.  1005.31(b)(4), below. The Bureau, however, is amending the 
language in the abbreviated statement about senders' error resolution 
rights on Model Form A-37 to include a more explicit statement 
informing senders that they have such rights. The Bureau is also adding 
a requirement in Sec.  1005.31(b)(2)(iv) to account for the alternative 
cancellation requirements in Sec.  1005.36(c) for remittance transfers 
scheduled by the sender at least three business days before the date of 
the transfer, as discussed below. Section 1005.31(b)(2)(iv), therefore, 
also provides that for any remittance transfer scheduled by the sender 
at least three business days before the date of the transfer, the 
statement about the rights of the sender regarding cancellation must 
instead reflect the requirements of Sec.  1005.36(c).
31(b)(2)(v) Contact Information of the Provider
    EFTA section 919(a)(2)(B)(ii)(II) generally requires that the 
remittance transfer provider disclose appropriate contact information 
for the remittance transfer provider, its State regulator, and the 
Bureau. The Board stated that appropriate contact information includes 
the name, telephone number, and Web site of these entities, so that 
senders would have multiple options for addressing any issues that may 
arise with respect to a remittance transfer provider. Proposed Sec.  
205.31(b)(2)(v) provided for the disclosure of the name, telephone 
number, and Web site of the remittance transfer provider. The Bureau 
did not receive comment on proposed Sec.  205.31(b)(2)(v), and the 
Bureau is finalizing it substantially as proposed in renumbered Sec.  
1005.31(b)(2)(v). The final rule adds language to allow providers to 
disclose more than one telephone number to account for circumstances, 
for example, where a provider maintains a separate TTY/TDD telephone 
number.
31(b)(2)(vi) Agency Contact Information
    Proposed Sec.  205.31(b)(2)(vi) provided for disclosure of a 
statement that the sender can contact the State agency that regulates 
the remittance transfer provider and the Bureau for questions or 
complaints about the remittance transfer provider, using language set 
forth in Model Form A-37 of Appendix A or substantially similar 
language. The proposed statement included contact information for these 
agencies, including the toll-free telephone number of the Bureau 
established under section 1013 of the Dodd-Frank Act.
    The Board requested comment on several aspects of proposed Sec.  
205.31(b)(2)(vi). First, the Board solicited comment on whether and how 
a remittance transfer provider should be required to disclose 
information regarding a State agency that regulates the provider for 
remittance transfers conducted through a toll-free telephone number or 
online and, if so, what would be the appropriate State agency to 
disclose to a sender. Some commenters believed the disclosure of Bureau 
contact information would be sufficient. Several industry commenters 
argued that the Bureau should not require a remittance transfer 
provider to disclose the State agency that regulates the remittance 
transfer. These commenters believed the requirement would create 
operational hurdles for providers that operate in multiple states and 
would provide negligible consumer protection benefit.
    One money transmitter commenter stated that it would be difficult 
to tailor State regulator disclosures to each individual agent, and 
that managing State-specific receipts and forms would be costly. This 
commenter stated that agents that provide services in multiple states 
often distribute forms to their locations as part of their chain of 
distribution. Requiring these agents to manage State-specific forms, 
the commenter argued, would be a significant change in distribution 
processes and could create liability risk for the remittance transfer 
provider. This commenter believed remittance transfer providers would 
thus create a multi-State disclosure form, which would provide senders 
with superfluous information.
    Another money transmitter commenter noted that many states already 
have guidance regarding the prominence and placement of contact 
information on a remittance transfer provider's Web site and in 
storefront locations. The commenter stated that many states prefer 
senders to contact the remittance transfer provider before contacting a 
State agency for questions and complaints. The commenter believed that 
the Bureau should instead require a statement that would refer to other 
sources, such as a Web site or toll-free number, to obtain contact 
information for the appropriate State agency, and that the Bureau 
should maintain contact information for State agencies, so that senders 
could contact the Bureau for appropriate State agency information.
    EFTA section 919(a)(2)(B)(ii)(II) requires a remittance transfer 
provider to provide appropriate contact information for the State 
agency that regulates the remittance transfer provider. The Bureau does 
not believe that providing contact information for an alternative 
source that maintains a list of State agencies would satisfy the 
statutory requirement. The Bureau recognizes that remittance transfer 
providers that have locations in multiple states, or that provide 
remittance transfers online or by telephone, will have to determine the 
appropriate State agency to disclose on a receipt. The Bureau believes 
that due to segregation and other formatting requirements, discussed 
below, a remittance transfer provider may not disclose contact 
information for agencies in other states. Therefore, the final rule 
maintains the requirement to disclose information regarding a State

[[Page 6229]]

agency that regulates the remittance transfer provider.
    However, several changes are made in the final rule to clarify 
which State agency should be disclosed, because a remittance transfer 
provider may be regulated by more than one agency in a particular 
State. The Bureau believes that the statute is meant to provide senders 
a resource for addressing problems regarding a particular remittance 
transfer and that the State agency that licenses or charters the 
remittance transfer provider is the appropriate State agency to provide 
such assistance to senders. Thus, in Sec.  1005.31(b)(2)(vi), the final 
rule adds the clarification that the disclosure must disclose the State 
agency that licenses or charters the remittance transfer provider with 
respect to the remittance transfer.
    Second, the Board requested comment on whether a remittance 
transfer provider should be required to disclose the contact 
information for the Bureau, including the toll-free telephone number, 
in cases where the Bureau is not the primary Federal regulator for 
consumer complaints against the remittance transfer provider. The Board 
also requested comment on whether it would be appropriate to instead 
require the contact information of the primary Federal regulator of the 
remittance transfer provider for consumer complaints.
    Consumer group commenters and an industry commenter stated that the 
Bureau's contact information should be included on the receipt. These 
commenters stated that listing the Bureau's contact information, rather 
than the primary Federal regulator, would ensure that consumer 
complaints about remittance transfer provider were centralized in one 
Federal agency. The commenter suggested that even if the Bureau does 
not directly regulate a remittance transfer provider, the Bureau could 
track complaints and launch an investigation if a pattern and practice 
of non-compliance emerges.
    The Bureau agrees that it is appropriate to provide the Bureau's 
contact information, even in instances where the Bureau is not the 
provider's primary Federal regulator, as required by EFTA section 
919(a)(2)(B)(ii)(II)(bb). The Bureau believes that providing a single 
Federal agency as the appropriate contact for senders will assist in 
tracking complaints. The Bureau is not requiring a separate disclosure 
of a primary Federal regulator in the final rule, because the 
disclosure of multiple Federal agencies could confuse senders. Instead, 
the Bureau believes consumers are better served by contacting the 
Bureau, which can direct senders to the appropriate Federal agency as 
necessary. Therefore, Sec.  1005.31(b)(2)(vi) in the final rule 
requires a remittance transfer provider to disclose the contact 
information for the Bureau, including the toll-free telephone number.
    Finally, the Board requested comment on whether financial 
institutions that are primarily regulated by Federal banking agencies, 
such as national banks, should be required to disclose State regulatory 
agency information. The Board requested comment regarding the 
circumstances in which it might be appropriate to disclose such a State 
regulatory agency.
    Some industry commenters stated that the rule should only require 
Federally-chartered depository institutions to provide contact 
information for their primary Federal regulator. One industry commenter 
argued that providing information regarding State regulators would be 
confusing and ineffective, since its primary Federal regulator already 
has an established procedure for addressing errors.
    The Bureau believes the final rule sufficiently accounts for 
circumstances in which an institution may not be licensed or chartered 
by a State agency. Under the final rule, the provider must disclose the 
State agency that licenses or charters the remittance transfer 
provider. However, disclosures must only be disclosed as applicable. 
Consequently, if no State agency licenses or charters a particular 
provider, then no State agency is required to be disclosed.
    The Bureau is also adding several other changes to Sec.  
1005.31(b)(2)(vi) in the final rule for clarity. The final rule adds 
language to allow providers to disclose more than one telephone number 
for the State agency that licenses or charters the provider and the 
Bureau to account for circumstances, for example, where these agencies 
maintain separate TTY/TDD telephone numbers. The provision also adds 
the requirement that a remittance transfer provider must disclose the 
name of both the State agency that licenses or charters the remittance 
transfer provider and the Bureau, in addition to the telephone 
number(s) and Web site of each agency.
    Section 1005.31(b)(2)(vi) of the final rule states that a 
remittance transfer must provide a statement that the sender can 
contact the State agency that licenses or charters the remittance 
transfer provider with respect to the remittance transfer and the 
Consumer Financial Protection Bureau for questions or complaints about 
the remittance transfer provider. The statement must use the language 
set forth in Model Form A-37 of Appendix A to this part or 
substantially similar language. The disclosure also must provide the 
name, telephone number(s), and Web site of the State agency that 
licenses or charters the remittance transfer provider with respect to 
the remittance transfer and the name, toll-free telephone number(s), 
and Web site of the Consumer Financial Protection Bureau.
    Comment 31(b)(2)-2 has been added to the final rule to clarify that 
a remittance transfer provider must only disclose information about a 
State agency that licenses or charters the remittance transfer provider 
with respect to the remittance transfer, as applicable. For example, if 
a financial institution is solely regulated by a Federal agency, and 
not licensed or chartered by a State agency, then the institution need 
not disclose information about a State agency and would solely disclose 
information about the Bureau, whether or not the Bureau is the 
provider's primary Federal regulator.
    The final rule also adds comment 31(b)(2)-3 to clarify that a 
remittance transfer provider must only disclose information about one 
State agency that licenses or charters the remittance transfer provider 
with respect to the remittance transfer, even if other State agencies 
also regulate the remittance transfer provider. For example, a provider 
may disclose information about the State agency which granted its 
license. If a provider is licensed in multiple states, and the State 
agency that licenses the provider with respect to the remittance 
transfer is determined by a sender's location, a provider may make the 
determination as to the State in which the sender is located based on 
information that is provided by the sender and on any records 
associated with the sender. For example, if the State agency that 
licenses the provider with respect to an online remittance transfer is 
determined by a sender's location, a provider could rely on the 
sender's statement regarding the State in which the sender is located 
and disclose the State agency that licenses the provider in that State. 
A State-chartered bank must disclose information about the State agency 
that granted its charter, regardless of the location of the sender.
31(b)(3) Combined Disclosure
    EFTA section 919(a)(5)(C) grants the Bureau authority to permit a 
remittance transfer provider to provide to a sender a single written 
disclosure instead of the pre-payment disclosure and receipt, if the 
information disclosed is accurate at the time at which payment is made. 
The combined disclosure must include the

[[Page 6230]]

content provided in the pre-payment disclosure and the receipt under 
EFTA sections 919(a)(2)(A) and (B). As discussed above, the Bureau is 
also requiring providers to disclose some information in the pre-
payment disclosure and receipt, such as the transfer amount, that is 
not specifically required by EFTA section 919(a)(2)(A) or (B). The 
Board determined through consumer testing that participants understood 
the information provided on the combined disclosure, and about half of 
the participants stated that they would prefer to receive the single, 
combined disclosure rather than a pre-payment disclosure and a separate 
receipt. Therefore, proposed Sec.  205.31(b)(3) generally permitted a 
remittance transfer provider to provide the disclosures described in 
proposed Sec.  205.31(b)(1) and (2) in a single disclosure prior to 
payment, as applicable, as an alternative to providing the two 
disclosures described in proposed Sec.  205.31(b)(1) and (2).
    Consumer group commenters urged the Bureau not to permit combined 
disclosures. One consumer group commenter stated that requiring both a 
pre-payment disclosure and a receipt would permit consumers to audit 
the transaction and ensure that providers do not impose hidden fees. 
This commenter noted that the combined disclosure would not likely 
reduce compliance burdens for providers because State laws may already 
mandate a post-transaction receipt. Another consumer group commenter 
argued that two disclosures were necessary to perform two different 
legal functions. This commenter stated that a pre-transaction 
disclosure serves as an offer that provides terms of written contract, 
and a receipt indicates that the contract has been agreed upon. This 
commenter believed a combined disclosure would be too confusing to 
senders and that the proposed rule did not address how the combined 
disclosure will ensure information is accurate. Some industry 
commenters argued that the Bureau should permit the combined 
disclosure, but maintained that it should be permitted to be provided 
after payment is made. See also Sec.  1005.31(e), discussed below.
    Some consumer testing participants stated that they would prefer to 
receive a pre-payment disclosure and a receipt because they were 
concerned that the combined disclosure would not provide proof of 
payment for the remittance transfer. Therefore, in the proposal, the 
Board solicited comment on whether proof of payment should also be 
required for remittance transfer providers using the combined 
disclosure and, if so, solicited comment on appropriate methods of 
demonstrating proof of payment for the combined disclosure. Consumer 
group commenters contended that methods for providing proof of payment 
could not be adequately set forth in the final rule. An industry 
commenter argued against requiring proof of payment for the combined 
disclosure, based on the challenges posed by the required timing of 
combined disclosures. Another industry commenter maintained that 
senders were satisfied with the existing proof of payment provided to 
them.
    The Bureau believes a combined disclosure has benefits. Based on 
the Board's consumer testing, the Bureau believes that senders will 
understand the combined disclosures provided to them and that some 
senders will prefer to receive disclosures in a combined format. As 
discussed with respect to Sec.  1005.31(f), below, the provider must 
ensure that the combined disclosure is accurate when payment is made. 
Moreover, the Bureau believes that the combined disclosure could reduce 
the compliance burden for some providers because the provider would 
only be required to provide one disclosure, rather than two, with 
mandated content in a specified format. Therefore, the Bureau believes 
it is appropriate to permit this alternative disclosure.
    However, the Bureau also believes that senders need to be able to 
confirm that they have completed the transaction. A proof of payment 
enables senders to demonstrate that the combined disclosure they 
received was part of a completed transaction. A proof of payment would 
also help remittance transfer providers determine which transfers have 
actually been completed, so that a sender cannot assert error 
resolution rights based on a combined disclosure, where a sender has 
not made payment for the transfer. Thus, the Bureau is adding a proof 
of payment requirement to the final rule.
    Accordingly, to effectuate the purposes of the EFTA, the Bureau 
believes it is necessary and proper to use its authority under EFTA 
sections 904(a) and (c) to finalize the combined disclosure 
requirement. Section 1005.31(b)(3) states that as an alternative to 
providing the disclosures described in Sec.  1005.31(b)(1) and (2), a 
remittance transfer provider may provide the disclosures described in 
Sec.  1005.31(b)(2), as applicable, in a single disclosure pursuant to 
the timing requirements of Sec.  1005.31(e)(1). If the remittance 
transfer provider provides the combined disclosure and the sender 
completes the transfer, the remittance transfer provider must provide 
the sender with proof of payment when payment is made for the 
remittance transfer. The proof of payment must be clear and 
conspicuous, provided in writing or electronically, and provided in a 
retainable form. The final rule also adds new comment 31(b)(3)-1, which 
clarifies that the combined disclosure must be provided to the sender 
when the sender requests the remittance transfer, but prior to payment 
for the transfer, pursuant to Sec.  1005.31(e)(1), and the proof of 
payment must be provided when payment is made for the remittance 
transfer. The comment also clarifies that the proof of payment for the 
transaction may be provided on the same piece of paper as the combined 
disclosure or on a separate piece of paper. For example, a provider may 
feed a combined disclosure through a computer printer when payment is 
made to add the date and time of the transaction, a confirmation code, 
and an indication that the transfer was paid in full. A provider may 
also provide this additional information to a sender on a separate 
piece of paper when payment is made.
    The Bureau notes that the use of the term ``proof of payment'' does 
not suggest or establish an evidentiary standard. The requirement to 
provide a sender with proof of payment is only intended to convey to a 
sender that payment has been received. To this end, new comment 
31(b)(3)-1 also clarifies that a remittance transfer provider does not 
comply with the requirements of Sec.  1005.31(b)(3) by providing a 
combined disclosure with no further indication that payment has been 
received.
31(b)(4) Long Form Error Resolution and Cancellation Notice
    Proposed Sec.  205.31(b)(4) stated that a remittance transfer 
provider must provide a notice to the sender describing the sender's 
error resolution and cancellation rights under proposed Sec. Sec.  
205.33 and 205.34 upon the sender's request. As discussed above, 
consumer group commenters argued that comprehensive error resolution 
and cancellation rights should be stated on the receipt or combined 
disclosure in lieu of an abbreviated disclosure, and not only upon 
request by a sender. The Bureau is retaining the abbreviated disclosure 
in the final rule. However, the Bureau also believes that a sender must 
have access to a complete description of the sender's error resolution 
and cancellation rights.
    The requirement to provide a long form error resolution and 
cancellation notice is adopted substantially as proposed in renumbered 
Sec.  1005.31(b)(4). The final rule adds the requirement that

[[Page 6231]]

the notice must be provided promptly to the sender. The Bureau believes 
that adding a timing requirement to the provision will ensure that 
providers do not delay in providing the notice to a sender, and the 
requirement to provide notices promptly is consistent with other 
provisions in Regulation E. See, e.g., Sec.  1005.11(d)(1). Therefore, 
Sec.  1005.31(b)(4) states that, upon the sender's request, a 
remittance transfer provider must promptly provide to the sender a 
notice describing the sender's error resolution and cancellation 
rights, using language set forth in Model Form A-36 of Appendix A to 
this part or substantially similar language. As discussed above with 
respect to Sec.  1005.31(b)(2)(iv), the Bureau is adding a requirement 
in Sec.  1005.31(b)(4) to account for the alternative cancellation 
requirements in Sec.  1005.36(c) for remittance transfers scheduled by 
the sender at least three business days before the date of the 
transfer, as discussed below. Therefore, Sec.  1005.31(b)(4) also 
provides that for any remittance transfer scheduled by the sender at 
least three business days before the date of the transfer, a 
description of the rights of the sender regarding cancellation must 
instead reflect the requirements of Sec.  1005.36(c).

31(c) Specific Format Requirements

    Proposed Sec.  205.31(c) set forth specific format requirements for 
the written and electronic disclosures required by this section. 
Proposed Sec.  205.31(c)(1) and (2) contained grouping and proximity 
requirements for certain disclosures required under proposed Sec.  
205.31. Proposed Sec.  205.31(c)(3) set forth prominence and size 
requirements for disclosures required by subpart B. Proposed Sec.  
205.31(c)(4) contained segregation requirements for disclosures 
provided under subpart B, with certain specified exceptions.
    In the proposal, the Board recognized that the specific formatting 
requirements set forth in proposed Sec.  205.31(c) were more 
prescriptive than other disclosures required under Regulation E. The 
Board requested comment on whether certain requirements in proposed 
Sec.  205.31(c) could be less prescriptive, while still ensuring that 
senders are provided with clear and conspicuous disclosures. The Board 
also solicited comment on how the formatting requirements in proposed 
Sec.  205.31 could be applied to transactions conducted via mobile 
application or text message.
    The Bureau received comments regarding each of the proposed format 
requirements, which are discussed in turn below. Additionally, one 
industry commenter suggested that the formatting requirements in the 
final rule should accommodate State law disclosures. The Bureau 
believes it is appropriate to establish formatting requirements 
tailored to the elements required to be disclosed under the statute. 
Providers can separately comply with each State's formatting 
requirements, to the extent that they meet or exceed the requirements 
set forth in the final rule. The Bureau believes that the proposed 
formatting requirements will ensure that disclosures are clear and 
conspicuous as required under EFTA section 919(a)(3)(A) and will 
thereby help senders understand the costs of remittance transactions. 
As discussed in the proposal, the formatting requirements demonstrate 
to senders the mathematical relationship between one line item and 
another, in part by presenting the required information in a logical 
sequence. Therefore, the Bureau is generally adopting the formatting 
requirements as proposed.
    Commenters also raised concerns regarding the proposed formatting 
requirements as applied to disclosures provided via mobile application 
or text message. Industry commenters argued that prescriptive 
formatting requirements conducive to paper disclosures may not easily 
apply to new methods of conducting remittance transfers, and that the 
proposed rule could make compliance difficult as new technologies 
arise. These commenters urged the Bureau to provide flexibility for 
formatting requirements for disclosures provided via mobile application 
or text message. These commenters noted that formatting may be 
constrained by data and character limits, and that a remittance 
transfer provider does not necessarily control formatting when 
disclosures are sent through these methods.
    Industry commenters also noted that senders using mobile 
applications or text messages could incur additional costs due to the 
formatting requirements. For example, additional data charges may apply 
for disclosures provided via mobile application or text message to 
accommodate formatting requirements. These charges could make senders 
reluctant to make transfers via mobile application or text message and, 
therefore, create a disincentive for providers to make remittance 
transfers available through these alternative methods. They argued that 
the provider should have the flexibility to provide disclosures using 
various methods--such as text message, mobile application, email, 
internet, or mail--as long as the sender is capable of receiving the 
disclosures.
    As discussed above in the supplementary information to Sec.  
1005.31(a)(5), remittance transfer providers can provide oral pre-
payment disclosures for transactions conducted by mobile application or 
text message. The Bureau does not believe senders would be less 
protected by receiving disclosures via mobile application or text 
message than if they received oral disclosures, even if the mobile 
applications and text messages are not subject to standard formatting 
requirements.
    Therefore, the Bureau is generally not requiring in the final rule 
that pre-payment disclosures provided via mobile application or text 
message comply with the grouping, proximity, font size, and segregation 
requirements of the final rule. Though these disclosures are not 
subject to these formatting requirements in the final rule, the Bureau 
expects that providers will provide mobile application or text message 
disclosures in a logical sequence to demonstrate to senders the 
mathematical relationship between one line item and another in order to 
disclose the information clearly and conspicuously. Moreover, pre-
payment disclosures provided via mobile application or text message 
must be provided in equal prominence to each other, as required in 
Sec.  1005.31(c)(3), discussed below.
31(c)(1) Grouping
    Proposed Sec.  205.31(c)(1) provided that the information about the 
transfer amount, fees and taxes imposed by the provider, and total 
amount of transaction must be grouped together. The purpose of this 
grouping requirement was to make clear to the sender that the total 
amount charged is comprised of the transfer amount plus any transfer 
fees and taxes. Proposed Sec.  205.31(c)(1) also provided that the 
information about the transfer amount in the currency to be made 
available to the designated recipient, fees and taxes imposed by a 
person other than the provider, and amount received by the designated 
recipient must be grouped together. The purpose of this grouping 
requirement was to make clear to the sender how the total amount to be 
transferred to the designated recipient, in the currency to be made 
available to the designated recipient, would be reduced by fees or 
taxes charged by a person other than the remittance transfer provider.
    The Bureau did not receive comments on the proposed grouping 
requirements beyond the general comments about the

[[Page 6232]]

proposed formatting requirements, discussed above. Thus, the Bureau is 
adopting the proposed requirement substantially as proposed in 
renumbered Sec.  1005.31(c)(1), with revisions to address the 
applicability of the grouping requirements to mobile applications and 
text messages. Section 1005.31(c)(1) states that the information 
required by Sec.  1005.31(b)(1)(i), (ii), and (iii) generally must be 
grouped together. The information required by Sec.  1005.31(b)(1)(v), 
(vi), and (vii) generally must be grouped together. Disclosures 
provided via mobile application or text message, to the extent 
permitted by Sec.  1005.31(a)(5), need not be grouped together.
    Comment 31(c)(1)-1 is also adopted substantially as proposed. The 
comment clarifies that information is grouped together for purposes of 
subpart B if multiple disclosures are in close proximity to one another 
and a sender can reasonably calculate the total amount of the 
transaction, and the amount that will be received by the designated 
recipient. Proposed Model Forms A-30 through A-35 in Appendix A, 
discussed in more detail below, illustrate how information may be 
grouped to comply with the rule. The proposed comment also clarifies 
that a remittance transfer provider may group the information in 
another manner. For example, a provider could provide the grouped 
information as a horizontal, rather than a vertical, calculation.
31(c)(2) Proximity
    Proposed Sec.  205.31(c)(2) provided that the exchange rate must be 
disclosed in close proximity to the other disclosures on the pre-
payment disclosure. The Board stated in the May 2011 Proposed Rule that 
disclosing the exchange rate in close proximity to both the 
calculations that demonstrate the total transaction amount, as well as 
the total amount the recipient would receive, would help a sender 
understand the effect of the exchange rate on the transaction. Proposed 
Sec.  205.31(c)(2) also provided that error resolution and cancellation 
disclosures must be disclosed in close proximity to the other 
disclosures on the receipt. The Board determined in consumer testing 
that providing a brief statement regarding error resolution and 
cancellation rights located near the other disclosures effectively 
communicated these rights to a sender. Therefore, the Board provided 
that the error resolution and cancellation disclosures should be 
closely proximate to the other disclosures on the receipt to prevent 
such disclosures from being overlooked by a sender.
    The Bureau did not receive comment on the proposed proximity 
requirements beyond the general comments addressing the proposed 
formatting requirements discussed above. Thus, the Bureau is adopting 
the proposed requirement substantially as proposed in renumbered Sec.  
1005.31(c)(2), with revisions to address the applicability of the 
proximity requirements to mobile applications and text messages. 
Section 1005.31(c)(2) states that the exchange rate disclosure required 
by Sec.  1005.31(b)(1)(iv) generally must be disclosed in close 
proximity to the other information required by Sec.  1005.31(b)(1). The 
abbreviated statement about the sender's error resolution and 
cancellation rights required by Sec.  1005.31(b)(2)(iv) generally must 
be disclosed in close proximity to the other information required by 
Sec.  1005.31(b)(2). Disclosures provided orally or via mobile 
application or text message, to the extent permitted by Sec.  
1005.31(a)(5), need not comply with the proximity requirements of Sec.  
1005.31(c)(2).
31(c)(3) Prominence and Size
    Proposed Sec.  205.31(c)(3) set forth the requirements regarding 
the prominence and size of the disclosures required under subpart B. 
The proposed rule provided that written and electronic disclosures 
required by subpart B must be made in a minimum eight-point font. The 
Board solicited comment on whether a minimum font size should be 
required and, if so, whether an eight-point font size is appropriate.
    One industry commenter supported the eight-point font requirement. 
However, other industry commenters urged the Bureau to eliminate the 
eight-point font requirement. These commenters argued that the font 
requirement would add unnecessary compliance costs that did not have a 
corresponding consumer benefit. Industry commenters argued that the 
font requirement may not create the desired consistency in disclosures, 
because, for example, fonts may display differently on different 
screens and printers. Rather, these commenters believed the Bureau 
should only require that the disclosures be subject to either a clear 
and conspicuous or clear and readily understandable standard.
    The Bureau believes that disclosures should be disclosed in at 
least an eight-point font, as proposed. As discussed in the proposal, 
the disclosures that the Board developed for consumer testing used 
eight-point font, consistent with the font size typically used in 
register receipts. Participants in the Board's consumer testing 
generally found that the disclosures were readable, and they were able 
to locate the different disclosure elements during testing. The Bureau 
agrees with the Board that disclosures provided in a smaller font could 
diminish the readability and noticeability of the disclosures. 
Therefore, the eight-point font requirement is generally retained in 
the final rule. However, given the particular concerns raised above 
with respect to mobile disclosures, the final rule does not apply the 
font requirement to disclosures made by mobile application or text 
message, to the extent permitted by Sec.  1005.31(a)(5).
    Proposed Sec.  205.31(c)(3) further provided that written 
disclosures required by subpart B must be on the front of the page on 
which the disclosure is printed. The proposed paragraph also provided 
that each of the written and electronic disclosures required under 
proposed Sec.  205.31(b) must be in equal prominence to each other. One 
industry commenter asked the Bureau to clarify how written and 
electronic disclosures should be disclosed in equal prominence to each 
other. As discussed in the proposal, disclosures that must be equally 
prominent to each other should be displayed in the same font and type 
size.
    The Bureau is adopting the prominence and size requirement 
substantially as proposed in renumbered Sec.  1005.31(c)(3), with 
revisions to address the applicability of the font size requirement to 
mobile applications and text messages and revisions to better clarify 
that only disclosures provided in writing or electronically must be 
provided in equal prominence to each other and in eight-point font. 
Section 1005.31(c)(3) states that written disclosures required by 
subpart B must be provided on the front of the page on which the 
disclosure is printed. Disclosures required by subpart B that are 
provided in writing or electronically must be in a minimum eight-point 
font, except for disclosures provided via mobile application or text 
message to the extent permitted by Sec.  1005.31(a)(5). Disclosures 
required by Sec.  1005.31(b) that are provided in writing or 
electronically must be in equal prominence to each other.
31(c)(4) Segregation
    Proposed Sec.  205.31(c)(4) provided that written and electronic 
disclosures required by subpart B must be segregated from everything 
else and contain only information that is directly related to the 
disclosures required under subpart B. Proposed comment 31(c)(4)-1 
clarified how a remittance transfer provider could segregate 
disclosures.

[[Page 6233]]

Proposed comment 31(c)(4)-2 identified information that would be 
considered directly related to the required disclosures, for purposes 
of determining what information must be segregated from the required 
disclosures.
    The Board proposed the segregation of required disclosures from 
other information to avoid overloading the sender with information that 
could distract from the required disclosures. In permitting directly 
related information to be included with the required disclosures, the 
Board recognized that certain information not required by the statute 
or regulation could be integral to the transaction. The Board stated 
that remittance transfer providers should be able to communicate this 
information, such as the confirmation code that a designated recipient 
must provide in order to receive the funds, to a sender. The Board 
requested comment on the proposed segregation requirement and whether 
additional information should be permitted to be included with the 
required segregated disclosures.
    Industry commenters requested further guidance on the segregation 
requirement, including clarification regarding how disclosures 
presented on a computer screen could be segregated, and whether 
disclosures would be considered segregated in a variety of mailing 
scenarios, including when disclosures are mailed on or with a periodic 
statement. The Bureau believes proposed comment 31(c)(4)-1 provides 
sufficient guidance to enable providers to determine whether the 
disclosures are segregated in a variety of scenarios. For example, the 
comment requires segregated disclosures to be set off from other 
information, such as disclosures required by states, but does not 
require the information to be displayed on a separate sheet of paper. 
The comment also explains that disclosures may be set off from other 
information on a notice by outlining them in a box or series of boxes, 
with bold print dividing lines or a different color background, or by 
using other means. A provider could apply this guidance to develop, for 
example, segregated disclosures set off in a box on a periodic 
statement or set off with a different color background on a computer 
screen. Therefore, the Bureau is finalizing comment 31(c)(4)-1 
substantially as proposed, but adds another example for clarity.
    Industry commenters also suggested that certain additional 
information should be deemed ``directly related'' to the required 
disclosures, such that it would not have to be segregated from the 
required disclosures. Suggested additions included information 
regarding the retrieval of funds, such as the number of days the funds 
will be available to the recipient before the funds are returned to the 
sender, and a statement that a provider makes money from foreign 
currency exchange. The Bureau agrees that this information is directly 
related to the required disclosures and need not be segregated from 
them. Therefore, the Bureau is adding these to the list of ``directly 
related'' items in comment 31(c)(4)-2.
    The Bureau is adopting the segregation requirement substantially as 
proposed in renumbered Sec.  1005.31(c)(4), with revisions to address 
the applicability of the requirement to mobile applications and text 
messages and revisions to better clarify that only disclosures provided 
in writing or electronically must be segregated. Section 1005.31(c)(4) 
states that except for disclosures provided via mobile application or 
text message, to the extent permitted by Sec.  1005.31(a)(5), 
disclosures required by subpart B that are provided in writing or 
electronically must be segregated from everything else and must contain 
only information that is directly related to the disclosures required 
under subpart B. Comment 31(c)(4)-1 of the final rule clarifies that 
disclosures may be segregated from other information in a variety of 
ways. For example, the disclosures may appear on a separate sheet of 
paper or may be set off from other information on a notice by outlining 
them in a box or series of boxes, with bold print dividing lines or a 
different color background, or by using other means.
    Comment 31(c)(4)-2 in the final rule clarifies that, for purposes 
of Sec.  1005.31(c)(4), the following is directly related information: 
(i) The date and time of the transaction; (ii) the sender's name and 
contact information; (iii) the location at which the designated 
recipient may pick up the funds; (iv) the confirmation or other 
identification code; (v) a company name and logo; (vi) an indication 
that a disclosure is or is not a receipt or other indicia of proof of 
payment; (vii) a designated area for signatures or initials; (viii) a 
statement that funds may be available sooner, as permitted by Sec.  
1005.31(b)(2)(ii); (ix) instructions regarding the retrieval of funds, 
such as the number of days the funds will be available to the recipient 
before they are returned to the sender; and (x) a statement that the 
provider makes money from foreign currency exchange.

31(d) Estimates

    Proposed Sec.  205.31(d) provided that estimated disclosures may be 
provided to the extent permitted by proposed Sec.  205.32. See proposed 
Sec.  205.32, adopted as Sec.  1005.32, below. The proposed rule 
provided that such disclosures must be described as estimates, using 
the term ``Estimated,'' or a substantially similar term, in close 
proximity to the estimated term or terms described. As discussed in the 
proposal, consumer testing participants generally understood that where 
the term ``estimated'' was used in close proximity to the estimated 
term or terms, the actual amount could vary (for example, the amount of 
currency to be received could be higher or lower than the amount 
disclosed). Proposed comment 31(d)-1 provided examples of terms that 
may be used to indicate that a disclosed amount is estimated. For 
instance, a remittance transfer provider could describe an estimated 
disclosure as ``Estimated Transfer Amount,'' ``Other Estimated Fees and 
Taxes,'' or ``Total to Recipient (Est.).'' A Member of Congress and 
consumer group commenters agreed that the Bureau should require 
disclosures to be labeled as estimates when estimates are used. 
Therefore, proposed Sec.  205.31(d) and proposed comment 31(d)-1 are 
adopted substantially as proposed in renumbered Sec.  1005.31(d) and 
comment 31(d)-1.

31(e) Timing

    Proposed Sec.  205.31(e) set forth the timing requirements for the 
disclosures required by proposed Sec.  205.31.
31(e)(1) Timing of Pre-Payment and Combined Disclosures
    Proposed Sec.  205.31(e)(1) provided that a pre-payment disclosure 
required by Sec.  205.31(b)(1) or a combined disclosure provided under 
Sec.  205.31(b)(3) must be provided to the sender when the sender 
requests the remittance transfer, but prior to payment for the 
remittance transfer.
    Consumer group commenters strongly supported requiring these 
disclosures to be provided before payment, stating that providing pre-
payment disclosures was a centerpiece of the statute. One consumer 
group commenter stated that pre-payment disclosures were necessary to 
facilitate shopping.
    Several industry commenters, however, opposed the requirement to 
provide disclosures before payment. One industry trade association 
commenter argued that the disclosure would provide negligible benefits, 
citing the fact that some participants in the Board's consumer testing 
stated that they did not want a disclosure prior to payment. One 
industry commenter suggested that the pre-payment disclosures would 
confuse or irritate

[[Page 6234]]

customers who would not understand why disclosure was being provided at 
that time. Another industry commenter stated that the pre-payment 
disclosures created needless compliance costs, which would be passed on 
to senders. As discussed above, some industry commenters urged that if 
pre-payment disclosures were required, that they be permitted to be 
disclosed orally or on a screen, even when the transaction is conducted 
in person, to reduce compliance costs and delays for the sender.
    A few industry commenters argued that the combined disclosure 
should be permitted to be provided after payment is made. One industry 
commenter noted that EFTA section 919(a)(5)(C) only requires combined 
disclosure to be accurate at the time payment is made. This commenter 
stated that providing a document similar to a receipt prior to payment 
is not possible because such a disclosure could not provide accurate 
information regarding the date and time of the transaction, the amount 
paid, and the transaction number, which are elements that help 
establish proof of payment. Therefore, this commenter argued that the 
rule should permit the combined disclosure to be provided after 
payment, if a pre-payment disclosure is provided orally or on a screen 
at the point-of-sale. This commenter maintained that allowing oral or 
electronic disclosures would be appropriate in the context of EFTA 
section 919(a)(5) authority to permit combined disclosures and in light 
of the Bureau's duty to consider the final rule's costs and benefits. 
At minimum, this commenter believed the Bureau should permit this 
method of disclosure for senders who have used the provider's service 
in the past.
    Another industry commenter stated that it currently only had the 
capability of providing information to senders on a register receipt 
after payment. This commenter believed that requiring a combined 
disclosure to be provided prior to payment would require printing a 
pre-payment disclosure in the middle of a sales transaction.
    The Bureau recognizes the operational challenges associated with 
providing pre-payment and particularly combined disclosures to senders 
prior to payment. However, although current practice generally is to 
provide written disclosures after payment is made, the statute clearly 
requires certain disclosures to be provided prior to payment and other 
disclosures to be provided when payment is made for the remittance 
transfer. The Bureau also believes that the statute precludes combined 
disclosures from being provided to senders after payment or in a non-
written format. EFTA section 919(a)(5)(C) affirmatively requires that 
the combined disclosure be accurate at the time at which payment is 
made (emphasis added). Such a requirement would be superfluous if the 
combined disclosure could be provided after payment because a 
disclosure provided after payment must accurately reflect the terms of 
the completed transaction pursuant to EFTA section 919(a)(2)(B). 
Accordingly, the Bureau believes the statute requires both the pre-
payment disclosure and the combined disclosure be given prior to 
payment.
    As discussed below in Sec.  1005.36, special timing rules have been 
adopted for preauthorized remittance transfers to account for the 
particular challenges associated with providing disclosures for 
transfers that may occur far in the future. Therefore, proposed Sec.  
205.31(e)(1) is adopted substantially as proposed in renumbered Sec.  
1005.31(e)(1), with modifications to reference new Sec.  1005.36. 
Section 1005.31(e)(1) states that except as provided in Sec.  
1005.36(a), a pre-payment disclosure required by Sec.  1005.31(b)(1) or 
a combined disclosure required by Sec.  1005.31(b)(3) must be provided 
to the sender when the sender requests the remittance transfer, but 
prior to payment for the transfer.
    Proposed comment 31(e)-1 clarified when a sender has requested a 
remittance transfer, for purposes of determining when a pre-payment or 
combined disclosure must be provided. The proposed comment is adopted 
substantially as proposed, with a reference to the provisions for 
preauthorized remittance transfers in new Sec.  1005.36. Comment 31(e)-
1 states that, except as provided in Sec.  1005.36(a), pre-payment and 
combined disclosures are required to be provided to the sender when the 
sender requests the remittance transfer, but prior to payment for the 
transfer. The comment clarifies that whether a consumer has requested a 
remittance transfer depends on the facts and circumstances. A sender 
that asks a provider to send a remittance transfer, and that provides 
transaction-specific information to the provider in order to send funds 
to a designated recipient, has requested a remittance transfer. For 
example, a sender who asks the provider to send money to a recipient in 
Mexico and provides the sender and recipient information to the 
provider has requested the remittance transfer provider to send a 
remittance transfer. In contrast, a consumer who solely inquires about 
that day's rates and fees to send to Mexico has not requested the 
remittance transfer provider to send a remittance transfer.
31(e)(2) Timing of Receipts
    EFTA section 919(a)(2)(B) requires that a receipt be provided to a 
sender at the time the sender makes payment in connection with the 
remittance transfer. Proposed Sec.  205.31(e)(2) provided that a 
receipt must be provided to the sender when payment is made for the 
transaction. The Bureau did not receive comment on this proposed 
provision. Under the final rule, a receipt required to be provided by 
Sec.  1005.31(b)(2) generally must be provided to the sender when 
payment is made for the remittance transfer, except for preauthorized 
remittance transfers as provided in Sec.  1005.36(a). The Bureau notes 
that the final rule does not require the receipt to be provided at an 
exact moment when the sender, for example, hands cash or a credit card 
to an agent to pay for the transfer. Rather, the Bureau believes that 
payment for a remittance transfer is a process that may involve several 
steps. For example, payment for a transfer by credit card could involve 
a sender handing a credit card to an agent, the agent asking the sender 
for identification, the agent sending the credit card authorization 
request, the card authorization being approved, the agent requesting 
signature on a credit card receipt, and the sender signing the credit 
card receipt.
    Proposed comment 31(e)-2 provided examples of when a remittance 
transfer provider may provide the sender a receipt. The Bureau did not 
receive comment on the proposed comment, which is adopted substantially 
as proposed. Comment 31(e)-2 in the final rule, however, adds a 
reference to the special timing rules for preauthorized remittance 
transfers in Sec.  1005.36. The comment also adds a clarification 
regarding when a payment is made for purposes of the final rule, 
including an example stating that, for purposes of subpart B, payment 
is made when a sender authorizes a payment. The Bureau believes that, 
for purposes of subpart B, payment is made when a sender authorizes 
payment because a receipt will be most useful to a sender at that time. 
Otherwise, if payment is considered to be made when the funds actually 
leave the sender's account due to delays in processing a payment, a 
receipt may not be provided to a sender for a day or more. Furthermore, 
it is not clear how a sender's cancellation right would operate in this 
scenario. For example, because a sender does not know when funds leave 
an account, a sender would be unable to know when

[[Page 6235]]

the cancellation right would be triggered.
    Comment 31(e)-2 in the final rule states that except as provided in 
Sec.  1005.36(a), a receipt required by Sec.  1005.31(b)(2) must be 
provided to the sender when payment is made for the remittance 
transfer. For example, a remittance transfer provider could give the 
sender the disclosures after the sender pays for the remittance 
transfer in person, but before the sender leaves the counter. A 
provider could also give the sender the disclosures immediately before 
the sender pays for the transaction. For purposes of subpart B, payment 
is made, for example, when a sender provides cash to the remittance 
transfer provider or when payment is authorized.
    Proposed Sec.  205.31(e)(2) further stated that if a transaction is 
conducted entirely by telephone, a written receipt may be mailed or 
delivered to the sender no later than one business day after the date 
on which payment is made for the remittance transfer. If a transaction 
is conducted entirely by telephone and involves the transfer of funds 
from the sender's account held by the provider, the written receipt may 
be provided on or with the next regularly scheduled periodic statement. 
See EFTA section 919(a)(5)(B). In some circumstances, a provider 
conducting such a transfer from the sender's account held by the 
provider is not required to provide a periodic statement under other 
laws. The Board believed that in such circumstances, it would be 
appropriate to permit the provider to provide a written receipt within 
a similar period of time as a periodic statement. Therefore, pursuant 
to EFTA section 904(c), the Board also proposed in Sec.  205.31(e)(2) 
that the written receipt may be provided within 30 days after payment 
is made for the remittance transfer if a periodic statement is not 
required. Under the proposal, in order for the written receipt to be 
mailed or delivered to a sender conducting a transaction entirely by 
telephone at these later times, the remittance transfer provider was 
required to comply with the foreign language requirements of proposed 
Sec.  205.31(g)(3).
    One industry commenter argued that the Bureau should include a 
timing exception in circumstances where a receipt is required to be 
provided to a sender shortly before a periodic statement is produced. 
This commenter stated that a remittance transfer provider may not be 
able to provide the required disclosures to a sender for a remittance 
transfer that occurs at the end of a billing cycle in time to include 
in the statement. The commenter suggested that in such circumstances, 
the Bureau should permit the receipt to be provided by the later of the 
next periodic statement date or 30 days after payment. The Bureau 
believes the final rule gives providers sufficient time to provide a 
receipt to a sender after a remittance transfer is sent; thus, no 
accommodation for transfers made at the end of a billing cycle is 
included in Sec.  1005.31(e)(2). Because periodic statements must 
include certain information that occurs during a cycle, see Sec.  
1005.9(b), the Bureau expects that, for purposes unrelated to this 
rule, providers already delay sending a periodic statement for a short 
time after a cycle ends to ensure that all activity occurring within a 
cycle is included in the appropriate statement.
    Accordingly, to effectuate the purposes of the EFTA and to 
facilitate compliance, the Bureau believes it is necessary and proper 
to use its authority under EFTA section 904(a) and (c) to adopt the 
provisions regarding mailing a receipt in proposed Sec.  205.31(e)(2) 
as Sec.  1005.31(e)(2) with revisions. Section 1005.31(e)(2) in the 
final rule eliminates the requirement to comply with proposed Sec.  
205.31(g)(3), because the provision has been eliminated in the final 
rule, as discussed in further detail below. Section 1005.31(e)(2) is 
also revised to state that if a transaction is conducted entirely by 
telephone and involves the transfer of funds from the sender's account 
held by the provider, the receipt may be provided within 30 days after 
payment is made for the remittance transfer if a periodic statement is 
not provided, rather than if a periodic statement is not required. In 
some circumstances, a provider may provide a sender with a periodic 
statement even if one is not required to be provided. In these 
circumstances, the Bureau believes a provider should instead disclose 
the receipt on or with the periodic statement and that the provision 
allowing a provider to give a receipt 30 days after payment is made 
should not apply.
    Section 1005.31(e)(2) is further revised to account for 
circumstances in which a provider discloses the statement about the 
rights of the sender regarding cancellation required by Sec.  
1005.31(b)(2)(iv), in order to use the telephone exceptions pursuant to 
Sec.  1005.31(a)(3)(iii) or (a)(5)(iii). In those circumstances, the 
Bureau does not believe a provider should be required to repeat the 
statement about the rights of the sender regarding cancellation on a 
receipt when it has already been disclosed to the sender. Thus, 
pursuant to the Bureau's authority under EFTA section 919(d)(3), Sec.  
1005.31(e)(2) states that the statement about the rights of the sender 
regarding cancellation required by Sec.  1005.31(b)(2)(iv) may, but 
need not, be disclosed pursuant to the timing requirements of Sec.  
1005.31(e)(2) if a provider discloses this information pursuant to 
Sec.  1005.31(a)(3)(iii) or (a)(5)(iii). The Bureau also adds comment 
31(e)(2)-5 to clarify that even though the statement about the rights 
of the sender regarding cancellation need not be disclosed pursuant to 
the timing requirements of Sec.  1005.31(e)(2), the statement about the 
rights of the sender regarding error resolution required by Sec.  
1005.31(b)(2)(iv) must be disclosed pursuant to the timing requirements 
of Sec.  1005.31(e)(2).
    Proposed comment 31(e)-3 provided further clarification regarding 
circumstances where a sender transfers funds from his or her account, 
as defined by Sec.  205.2(b) (currently Sec.  1005.2(b)), that is held 
by the remittance transfer provider. The Bureau did not receive comment 
on proposed comment 31(e)-3, which is adopted substantially as 
proposed.
    The Bureau is providing further guidance in the final rule 
regarding the timing of receipts for remittance transfers made via 
mobile application or text message. As discussed above, because 
remittance transfers sent via mobile application or text message are 
conducted entirely by mobile telephone, the Bureau believes that EFTA 
section 919(a)(5)(A) permits pre-payment disclosures to be provided 
orally for such transfers. Similarly, the Bureau believes that that 
EFTA section 919(a)(5)(B) permits receipts for transfers sent entirely 
by telephone via mobile application or text message to be provided in 
accordance with the mailing rules provided for transactions conducted 
entirely by telephone in Sec.  1005.31(e)(2) or Sec.  1005.36(a). 
Therefore, the final rule adds a new comment 31(e)-4 to clarify that if 
a transaction is conducted entirely by telephone via mobile application 
or text message, a receipt required by Sec.  1005.31(b)(2) may be 
mailed or delivered to the sender pursuant to the timing requirements 
in Sec.  1005.31(e)(2) or Sec.  1005.36(a). For example, if a sender 
conducts a transfer entirely by telephone via mobile application, a 
remittance transfer provider may mail or deliver the disclosures to a 
sender pursuant to the timing requirements in Sec.  1005.31(e)(2) or 
Sec.  1005.36(a).
    Finally, several industry commenters requested that the Bureau 
specifically permit remittance transfer providers to provide receipts 
for transactions conducted via mobile application or text message by 
email or through a

[[Page 6236]]

provider's Web site. The Bureau notes that written receipts provided in 
accordance with Sec.  1005.31(e)(2) or Sec.  1005.36(a) may be provided 
electronically, subject to compliance with the consumer consent and 
other applicable provisions of the E-Sign Act. See comment 31(a)(2)-1.

31(f) Accurate When Payment Is Made

    Proposed Sec.  205.31(f) provided that the disclosures required by 
proposed Sec.  205.31(b) must be accurate when a sender pays for the 
remittance transfer, except when estimates are permitted by proposed 
Sec.  205.32. Proposed comment 31(f)-1 clarified that a remittance 
transfer provider did not have to guarantee the terms of the remittance 
transfer in the disclosures required by Sec.  205.31(b) for any 
specific period of time. However, if any of the disclosures required by 
proposed Sec.  205.31(b) are not accurate when a sender pays for the 
remittance transfer, a provider would be required to give new 
disclosures before receiving payment for the remittance transfer. For 
example, a sender at a retail store may be provided a pre-payment 
disclosure under proposed Sec.  205.31(b)(1) at a customer service 
desk, but the sender may decide to leave the desk to go shopping. Upon 
the sender's return to the customer service desk an hour later, the 
sender would have to be provided a new pre-payment disclosure if any of 
the information had changed. However, the sender would not need to be 
provided a new disclosure if the information had not changed.
    Consumer group commenters supported the requirement that 
disclosures must be accurate when payment is made. An industry trade 
association commenter asked the Bureau to permit remittance transfer 
providers to include a statement in the disclosures clarifying that 
changes to the disclosures may occur between the time of payment and 
the time a transaction clears. However, the Bureau notes that under the 
proposed rule, only disclosures provided before payment is made would 
not be guaranteed and thus subject to change. Disclosures provided on 
receipts generally would be guaranteed, and thus not subject to change, 
except where estimates are permitted.
    Proposed Sec.  205.31(f) is adopted substantially as proposed in 
renumbered Sec.  1005.31(f). The final rule, however, provides that the 
requirements of Sec.  1005.31(f) and comment 31(f)-1 do not apply to 
preauthorized remittance transfers, which are subject to separate 
accuracy requirements in Sec.  1005.36(a).

31(g) Foreign Language Disclosures

    EFTA section 919(b) provides that disclosures required under EFTA 
section 919 must be made in English and in each of the foreign 
languages principally used by the remittance transfer provider, or any 
of its agents, to advertise, solicit, or market, either orally or in 
writing, at that office. The Board proposed Sec.  205.31(g)(1) to 
implement EFTA section 919(b) for written or electronic disclosures 
generally, with some modifications as discussed in the May 2011 
Proposed Rule. In addition, the Board proposed Sec.  205.31(g)(2) and 
(3) to exempt from the general foreign language disclosure requirements 
oral disclosures and written receipts for telephone transactions. The 
Bureau is adopting Sec.  205.31(g) in renumbered Sec.  1005.31(g) 
generally as proposed with some changes in response to suggestions from 
commenters, as discussed in detail below.
31(g)(1) General
    Proposed Sec.  205.31(g)(1) provided that disclosures required 
under subpart B, other than oral disclosures and written receipts for 
telephone transactions, must be made in English and in each of the 
foreign languages principally used by the remittance transfer provider 
to advertise, solicit, or market remittance transfer services, either 
orally, in writing, or electronically, at that office. Alternatively, 
proposed Sec.  205.31(g)(1) provided that these disclosures may be made 
in English, and, if applicable, in the foreign language primarily used 
by the sender with the remittance transfer provider to conduct the 
transaction (or for written or electronic disclosures made pursuant to 
proposed Sec.  205.33, in the foreign language primarily used by the 
sender with the remittance transfer provider to assert the error), 
provided that such foreign language is principally used by the 
remittance transfer provider to advertise, solicit, or market 
remittance transfer services, either orally, in writing, or 
electronically, at that office.
    As discussed in the May 2011 Proposed Rule, proposed Sec.  
205.31(g)(1) contained certain exceptions and clarifications to the 
requirements of EFTA section 919(b). Specifically, the Board proposed: 
(i) To apply the provisions only to written or electronic disclosures 
and address oral disclosures separately in proposed Sec.  205.31(g)(2); 
(ii) to simplify the statutory language in EFTA section 919(b) by 
removing the term ``or its agents;'' (iii) to include electronic 
advertising, soliciting or marketing as a trigger to the foreign 
language disclosure requirements, in addition to oral and written 
advertisements, solicitations, or marketing; (iv) to limit the trigger 
to foreign language advertisements, solicitations, or marketing of 
remittance transfer services, and to exclude from the trigger foreign 
language advertisements, solicitations, or marketing of other products 
or services; and (v) to permit, under its EFTA section 904(c) 
authority, a remittance transfer provider to fulfill its obligations by 
providing the sender with disclosures in English and, if applicable, 
the one triggered foreign language primarily used by the sender with 
the remittance transfer provider to conduct the transaction or assert 
an error in lieu of providing disclosures in each of the triggered 
foreign languages.
    Commenters did not object to these specific proposed modifications. 
However, several industry commenters stated that the foreign language 
disclosure requirements generally would provide a disincentive for 
remittance transfer providers to provide a wide range of foreign 
language services to customers. Some of these commenters suggested that 
if remittance transfer providers were to offer fewer foreign language 
services, this would drive some customers to use illicit operators who 
provide the foreign-language services discontinued by legitimate 
remittance transfer providers. Another commenter suggested that the 
disclosures should only be provided in English because the foreign 
language requirement would impose costs that would be passed on to 
consumers who might not derive any benefit from such services.
    Consumer group commenters and a member of Congress, however, 
thought the rule should ensure that non- and limited-English speaking 
consumers have access to meaningful remittance transfer disclosures. 
The Congressional commenter also agreed with the Board's proposal to 
extend the advertising, soliciting, or marketing trigger to electronic 
advertisements, solicitations, and marketing.
    EFTA section 919(b) requires disclosures to be provided in certain 
foreign languages, and the Bureau believes the Board's proposed 
modifications to the statutory requirements alleviates burden on 
remittance transfer providers. The Bureau believes that proposed Sec.  
205.31(g)(1) reflects a proper balancing of interests in providing non- 
and limited-English speaking consumers with disclosures in a language 
with which they are familiar with the burden on remittance transfer 
providers of providing multilingual disclosures in

[[Page 6237]]

implementing EFTA section 919(b). The statute and the implementing 
regulation seek to ensure that if remittance transfer providers make a 
concerted effort to reach out to potential remittance transfer 
customers through advertisements, solicitations, and marketing in a 
foreign language in a particular office, then such providers should 
also be required to provide important disclosures in that language when 
such customers come to that office to purchase remittance transfer 
services from that provider or assert an error.
    Furthermore, the Bureau agrees with the Board's proposed 
modifications and clarifications to the statutory language for the 
reasons discussed in the May 2011 Proposed Rule, and commenters did not 
object to such modifications and clarifications. Therefore, to 
effectuate the purposes of the EFTA and facilitate compliance, the 
Bureau believes it is necessary and proper to use its authority under 
EFTA section 904(a) and (c) to adopt proposed Sec.  205.31(g)(1) in 
renumbered Sec.  1005.31(g)(1), with the removal of a reference to 
proposed Sec.  205.31(g)(3) regarding written receipts for telephone 
transactions, which is further discussed below, and other minor 
technical and clarifying amendments. Most notably, the Bureau is 
changing the references to ``that office'' in the proposed rule to 
``the office in which a sender conducts a transaction or asserts an 
error'' for clarity.
Principally Used
    Proposed comment 31(g)(1)-1 clarified when a foreign language is 
principally used. As the Board stated in the May 2011 Proposed Rule, 
the statute indicates that more than one foreign language may be 
principally used. Consequently, the Board's interpretation of the term 
``principally used'' was not limited to the one foreign language used 
most frequently by the remittance transfer provider. Instead, proposed 
comment 31(g)(1)-1 adopted a facts-and-circumstances approach to 
determining when a foreign language is principally used. Under proposed 
comment 31(g)(1)-1, factors contributing to whether a foreign language 
is principally used would include: (i) The frequency with which the 
remittance transfer provider advertises, solicits, or markets 
remittance transfers in a foreign language at a particular office; (ii) 
the prominence of such advertising, soliciting, or marketing in that 
language at that office; and (iii) the specific foreign language terms 
used to advertise, solicit, or market remittance transfer services at 
that office. Proposed comment 31(g)(1)-1 also included examples to 
illustrate when a foreign language is principally used and when there 
is incidental use of the language. As discussed in the May 2011 
Proposed Rule, the Board also considered an objective standard based on 
whether a foreign language meets a certain percentage threshold of a 
remittance transfer provider's advertisements at a particular office. 
However, the Board rejected such a standard based on the fact that the 
standard may be arbitrary, may be difficult to administer, and may 
inappropriately exclude instances where a foreign language is 
principally used to advertise, solicit or market remittance transfers, 
even if the number of advertisements in the foreign language is 
nominally low.
    Some industry commenters suggested that there be further 
clarification on the term ``principally used,'' but did not 
specifically state what kind of guidance would be helpful. A consumer 
group commenter agreed with the proposed facts-and-circumstances 
approach for determining foreign languages principally used in 
advertising, soliciting, or marketing remittance transfer services. A 
member of Congress agreed with the Board's interpretation that the 
statutory provision contemplated that more than one foreign language 
could be principally used.
    The Bureau agrees with the Board's reasoning in proposing comment 
31(g)(1)-1. Because the Bureau believes the particular facts and 
circumstances surrounding the use of a foreign language to advertise, 
solicit, or market remittance transfers will determine whether a 
foreign language is ``principally used'' to advertise, solicit, or 
market at a particular office, the Bureau does not believe further 
general statements would be helpful. However, the Bureau is amending 
one of the illustrative examples in comment 31(g)(1)-1 to provide a 
more clear example of when a remittance transfer provider would be 
considered to be principally using a foreign language to advertise, 
solicit, or market remittance transfers at an office.
Advertise, Solicit, or Market
    Neither the EFTA nor Regulation E defines ``advertising,'' 
``soliciting,'' or ``marketing.'' \77\ However, the general concept of 
advertising, soliciting, or marketing is explained in other regulations 
administered by the Bureau. See, e.g., Regulation Z, 12 CFR 
1026.2(a)(2) and associated commentary; Regulation DD, 12 CFR 1030.2(b) 
and 1030.11(b) and associated commentary.
---------------------------------------------------------------------------

    \77\ Regulation E contains some guidance on whether a card, 
code, or other device is ``marketed or labeled as a gift card or 
gift certificate'' or ``marketed to the general public'' for 
purposes of the requirements pertaining to gift cards. See comments 
20(b)(2)-2, 20(b)(2)-3, and 20(b)(4)-1. However, that guidance 
focuses on a narrow set of circumstances and does not address more 
broadly what actions generally constitute advertising, soliciting, 
or marketing.
---------------------------------------------------------------------------

    The Board proposed comment 31(g)(1)-2 to provide positive and 
negative examples of advertising, soliciting, or marketing in a foreign 
language. These examples were based on examples from the commentary to 
other regulations (specifically, renumbered Sec. Sec.  1026.2(a)(2) and 
1030.2(b)) regarding the definition of ``advertisement,'' as well as 
examples related to the promotion of overdrafts under Sec.  1030.11(b). 
Some industry commenters asked whether the terms ``market'' and 
``solicit'' mean something different than ``advertise'' and requested 
definitions for ``market'' or ``solicit'' if they are meant to have 
different meanings. The Bureau believes, that for purposes of subpart B 
of Regulation E, the terms ``advertise,'' ``solicit'' and ``market'' 
have the same general meaning, and comment 31(g)(1)-2 is adopted 
substantially as proposed.
At the Office
    Under EFTA section 919(b) and proposed Sec.  205.31(g)(1), foreign 
language disclosures would be required when the foreign language is 
principally used to advertise, solicit, or market ``at that office.'' 
As discussed above, the Bureau is changing the reference in Sec.  
1005.31(g)(1) from ``that office'' to ``the office in which a sender 
conducts a transaction or asserts an error'' for clarity in the final 
rule. The Board proposed comment 31(g)(1)-3 to clarify the meaning of 
``office.'' As discussed in the May 2011 Proposed Rule, proposed 
31(g)(1)-3 reflected the Board's belief that an office includes both 
physical and non-physical locations where remittance transfer services 
are offered to consumers, including any telephone number or Web site 
through which a consumer can complete a transaction or assert an error. 
The Board further noted that a telephone number or Web site that 
provides general information about the remittance transfer provider, 
but through which a consumer does not have the ability to complete a 
transaction or assert an error, is not an office. Proposed comment 
31(g)(1)-3 also clarified that a location need not exclusively offer 
remittance transfer services in order to be considered an

[[Page 6238]]

office for purposes of Sec.  1005.31(g)(1) (proposed as Sec.  
205.31(g)(1)), and included an example to illustrate this point.
    Some industry commenters requested clarification on whether a Web 
site targeted to consumers outside of the United States could be an 
``office'' for purposes of the foreign language disclosure 
requirements. In response, the Bureau is revising comment 31(g)(1)-3 to 
clarify that because a consumer must be located in a State to be 
considered a ``sender'' under Sec.  1005.30(g), a Web site is not an 
``office,'' even if the Web site can be accessed by consumers that are 
located in the United States, unless a sender may conduct a remittance 
transfer on the Web site or may assert an error for a remittance 
transfer on the Web site. Therefore, a Web site that is targeted to 
people outside of the United States will not be deemed to be an 
``office'' for purposes of Sec.  1005.31(g) so long as senders cannot 
conduct a remittance transfer on the Web site or assert an error for a 
remittance transfer on the Web site.
    The Board also proposed comment 31(g)(1)-4 to provide guidance on 
the phrase ``at that office.'' Proposed comment 31(g)(1)-4 stated that 
advertisements, solicitations, or marketing posted, provided, or made 
at a physical office, on a Web site of a remittance transfer provider, 
or during a telephone call with the remittance transfer provider would 
constitute advertising, soliciting, or marketing at an office of a 
remittance transfer provider. The proposed comment also clarified that 
for error resolution disclosures, the relevant office would be the 
office in which the sender first asserts the error and not the office 
where the remittance transfer was conducted.
    One industry commenter requested clarification on a number of 
situations where the remittance transfer provider may be engaging in 
general advertising, marketing, or soliciting that is not intended to 
be made at a particular office, but due to the nature of such 
advertising, marketing, or soliciting, it happens to occur at a 
particular office. The Bureau agrees that such a clarification is 
appropriate and has revised comment 31(g)(1)-4 to state that an 
advertisement, solicitation, or marketing that is considered to be made 
at an office does not include general advertisements, solicitations, or 
marketing that are not intended to be made at a particular office. The 
proposed comment includes an example to illustrate this concept. 
Specifically, if an advertisement for remittance transfers in Chinese 
appears in a Chinese newspaper that is being distributed at a grocery 
store in which the agent of a remittance transfer provider is located, 
such advertisement would not be considered to be made at that office.
    The Bureau is also amending comment 31(g)(1)-4 to provide that 
advertisements, soliciting, or marketing posted, provided, or made via 
mobile application or text message would also be considered 
advertising, soliciting, or marketing at an office of a remittance 
transfer provider. The amendment is consistent with the Bureau's other 
revisions in the final rule clarifying that transfers through mobile 
application or text message are considered to be transfers conducted by 
telephone. See Sec.  1005.31(a)(5). The Bureau is also making other 
minor amendments to comment 31(g)(1)-4 for additional clarity, 
including changing ``that office'' to ``the office in which a sender 
conducts a transaction or asserts an error'' to be consistent with the 
change the Bureau is adopting in Sec.  1005.31(g)(1). Based on this 
change, comment 31(g)(1)-4 also contains a clarification that for 
disclosures required under Sec.  1005.31, the relevant office would be 
the office in which the sender conducts the transaction.
31(g)(2) Oral, Mobile Application or Text Message Disclosures
    In the May 2011 Proposed Rule, the Board proposed to use its 
authority under EFTA section 904(c) to exempt oral disclosures from the 
foreign language requirement under EFTA section 919(b). In proposed 
Sec.  205.31(g)(2), the Board proposed to use its authority under EFTA 
section 919(a)(5)(A) to permit oral disclosures for transactions 
conducted entirety by telephone, subject to the requirement that they 
be made in the language primarily used by the sender with the 
remittance transfer provider to conduct the transaction. Proposed Sec.  
205.31(g)(2) also provided that disclosures permitted to be provided 
orally under proposed Sec.  205.31(a)(4) for error resolution purposes 
must be made in the language primarily used by the sender with the 
remittance transfer provider to assert the error.
    Some industry commenters thought that the rule should not require 
disclosures in any foreign language that is not principally used to 
advertise, solicit, or market remittance transfers. These commenters 
suggested that such a requirement could hurt consumers by reducing the 
number of languages that a remittance transfer provider would be 
willing to use to conduct a transaction.
    However, as the Board explained in the May 2011 Proposed Rule, if a 
foreign language must be principally used by the remittance transfer 
provider to advertise, solicit, or market remittance transfers in order 
to trigger the foreign language requirement for oral disclosures, a 
sender conducting a transaction or asserting an error in a foreign 
language on the telephone that did not meet the foreign language 
advertising trigger may only receive required oral disclosures in 
English. Consequently, if the remittance transfer provider conducted 
the actual transaction or communicated with the sender regarding the 
alleged error in a foreign language, a remittance transfer provider 
could then switch to English to orally disclose the required 
information under such a rule. The Bureau believes that senders would 
benefit from having the required oral disclosures provided in the same 
language primarily used by the sender with the remittance transfer 
provider to conduct the transaction or assert the error, regardless of 
whether the language meets the foreign language advertising trigger. 
Failure to include this modification from the general foreign language 
requirement for oral disclosures could lead to consumers not 
understanding the required disclosures, which would be contrary to the 
goals and purposes of the statute.
    Furthermore, the Bureau agrees with the Board's reasoning in the 
May 2011 Proposed Rule that disclosures provided orally under Sec.  
1005.31(a)(3) and (4) should be provided only in the language primarily 
used to conduct the transaction or assert the error. Otherwise, under 
EFTA section 919(b), a sender conducting a telephone transaction orally 
or receiving the results of an error investigation orally could be 
given disclosures in English and in every foreign language triggered by 
the regulation, which would likely lead to consumer confusion. While 
the Bureau recognizes that this rule might reduce the languages in 
which a remittance transfer provider would be willing to conduct a 
transaction, the Bureau believes that applying the general foreign 
language disclosure rule to oral disclosures would be harmful to 
consumers for the reasons set forth above.
    Moreover, as discussed above, the Bureau is adopting Sec.  
1005.31(a)(5) to permit disclosures to be provided orally or via mobile 
application or text message for transactions conducted entirely by 
telephone via mobile application or text message. Therefore, to 
effectuate the purposes of the EFTA and facilitate compliance, the 
Bureau believes it is necessary and proper to

[[Page 6239]]

use its authority under EFTA sections 904(a) and (c) to adopt proposed 
Sec.  205.31(g)(2) in renumbered Sec.  1005.31(g)(2) with amendments to 
include a reference to transactions conducted entirely by telephone via 
mobile application or text message and other minor, non-substantive 
amendments.
Written Receipt for Telephone Transactions
    The Board also proposed Sec.  205.31(g)(3), which provided that 
written receipts for transactions conducted entirely by telephone must 
be made in English and, if applicable, in the foreign language 
primarily used by the sender with the remittance transfer provider to 
conduct the transaction, regardless of whether such foreign language is 
primarily used by the remittance transfer provider to advertise, 
solicit, or market remittance transfers. The Board, however, requested 
comment on whether the general rule proposed in Sec.  205.31(g)(1) 
(adopted as Sec.  1005.31(g)(1) above) should apply to the written 
receipt provided for transactions conducted entirely by telephone. 
Adopting the general rule proposed in Sec.  205.31(g)(1) for written 
receipts provided for transactions conducted entirely by telephone 
would mean that a remittance transfer provider would not be obligated 
to provide the written receipt in a foreign language, even if such 
foreign language was used to conduct the telephone transaction, unless 
the foreign language was principally used to advertise, solicit, or 
market remittance transfers during the telephone call.
    As noted above, some industry commenters thought that the rule 
should not require disclosures in any foreign language that is not 
principally used to advertise, solicit, or market remittance transfers 
because this might cause remittance transfer providers to reduce the 
number of languages they would be willing to use to conduct a 
remittance transfer. Another industry commenter stated that in its 
experience, consumers can understand written English even though they 
may prefer to conduct a transaction orally in their native language for 
the fluency, ease, and speed at which the transaction may be conducted 
when speaking in one's native language.
    The Bureau believes that applying the general rule under Sec.  
1005.31(g)(1) to written receipts provided to senders after payment 
would not cause the same type of consumer confusion as it would for 
pre-payment disclosures provided orally in transactions conducted 
entirely by telephone. Although some senders may not have enough 
familiarity with English to feel comfortable speaking with the 
remittance transfer provider in English, the same pressure to 
comprehend and respond quickly does not exist with written disclosures. 
Unlike with oral disclosures, senders have sufficient time to review 
written disclosures and, if necessary, find resources to help 
understand the disclosure.
    Furthermore, the Bureau notes that in the Board's outreach with 
industry, remittance transfer providers generally stated that providing 
written disclosures in a foreign language can be more costly and 
burdensome than providing oral disclosures in a foreign language. The 
Bureau also notes that a remittance transfer provider may have 
employees or agents that happen to speak a certain foreign language for 
which the provider does not have written disclosures. The Bureau would 
not want providers to discourage such employees or agents from using 
their foreign language skills to help senders with their remittance 
transfer transactions in order to avoid having to provide written 
disclosures in the language spoken by the employee or agent. In order 
to minimize the potential unintended consequence of having remittance 
transfer providers reduce the number of foreign languages they may 
offer for telephone transactions, the Bureau is not adopting proposed 
Sec.  205.31(g)(3). Therefore, written receipts required to be provided 
to the sender after payment for transactions conducted entirely by 
telephone are subject to the general rule under Sec.  1005.31(g)(1).
General Clarifications
    The Board also proposed additional commentary in the May 2011 
Proposed Rule to provide general guidance on issues that affect each of 
the subsections of proposed Sec.  205.31(g) (adopted as Sec.  
1005.31(g)) discussed above. EFTA section 919(b) does not limit the 
number of languages that may be used on a single disclosure. However, 
proposed comment 31(g)-1 suggested that a single written or electronic 
document containing more than three languages is not likely to be 
helpful to a consumer. Since the proposed commentary was not a strict 
limit, the Board solicited comment on whether the regulation should 
strictly limit the number of languages that may be contained in a 
single written or electronic disclosure. The Board also sought comment 
on whether three languages is an appropriate suggested limit to the 
number of languages in a single written or electronic document.
    One industry commenter suggested that the rule cap the number of 
languages a remittance transfer provider would be required to disclose 
to three languages. The commenter also stated that requiring English, 
Spanish, and French would cover the vast majority of the languages used 
in transfers they send from the United States. This commenter also 
noted that other regulators that have required foreign language 
disclosures have typically limited the languages that must be disclosed 
to either English and Spanish, or a small subset of languages such as 
Spanish, Chinese, Tagalog, Vietnamese, and Korean. A consumer group 
commenter recommended that rather than adopting a ceiling on the number 
of languages that may appear on a disclosure, the Bureau should create 
guidelines that ensure disclosures with multiple foreign languages are 
easy to understand.
    The Bureau does not believe that limiting the foreign languages 
that may be used by a remittance transfer provider best effectuates the 
goals of the statute. In the Bureau's view, if a remittance transfer 
provider principally uses a foreign language to advertise, solicit, or 
market remittance transfers at an office, the remittance transfer 
provider is deliberately reaching out to consumers speaking that 
foreign language, and the required disclosures should be provided in 
that foreign language, regardless of whether it is a language that is 
commonly used for remittance transfers originating in the United 
States. Furthermore, while too many languages on a single written 
document may diminish a consumer's ability to read and understand the 
disclosures, the Bureau believes that remittance transfer providers may 
find ways to present the information in a number of foreign languages 
that are clear and conspicuous to senders, and that imposing a 
definitive limit on the number of languages that may appear on a single 
disclosure may be too inflexible. Moreover, the Bureau believes that 
the formatting requirements in Sec.  1005.31(c), as discussed above, 
may help to ensure that senders can find and understand the information 
that is most important to them with respect to the remittance transfer. 
The Bureau is amending comment 31(g)-1 to note that disclosures must be 
clear and conspicuous pursuant to Sec.  1005.31(a)(1) without 
suggesting a specific limit on the number of languages in a single 
disclosure.
    Proposed comment 31(g)-1 also clarified that the remittance 
transfer provider may provide disclosures in a

[[Page 6240]]

single document with both languages or in two separate documents with 
one document in English and the other document in the applicable 
foreign language. The Board also proposed several examples in comment 
31(g)-1 to illustrate the application of this concept.
    Some industry commenters thought that senders should be able to 
designate the language in which they prefer to receive disclosures, 
provided it is a language that is principally used by the remittance 
transfer provider to advertise, solicit, or market remittance 
transfers, instead of providing disclosures in both English and the 
applicable foreign language. The Bureau notes that EFTA section 919(b) 
requires disclosures to be provided in English and in each of the 
foreign languages principally used by the remittance transfer provider 
to advertise, solicit, or market at that office. This means that 
regardless of which office a sender chooses to conduct a remittance 
transfer, he or she will always obtain written or electronic 
disclosures in English, even if the disclosure in a foreign language is 
not consistent among different offices because such disclosure will 
depend on whether the foreign language meets the foreign language 
disclosure trigger at that office. The Bureau believes that always 
disclosing in English is important to allow senders to compare 
disclosures received at different provider locations and for different 
providers. Therefore, the final rule requires remittance transfer 
providers to provide disclosures in English in all cases. This is fully 
consistent with EFTA section 919(b). Comment 31(g)-1 is adopted as 
proposed with some technical and clarifying amendments, including to 
remove references to Sec.  205.31(g)(3), consistent with the Bureau's 
decision regarding written receipts for telephone transactions, as 
discussed above.
    The Board also proposed comment 31(g)-2 to clarify when a language 
is primarily used by the sender with the remittance transfer provider 
to conduct a transaction and assert an error. A remittance transfer 
provider must determine the language that is primarily used by the 
sender with the remittance transfer provider to conduct a transaction 
or assert an error if the provider chooses to provide written or 
electronic disclosures in English and the foreign language primarily 
used by the sender with the remittance transfer provider to conduct the 
transaction or to assert an error. Furthermore, under Sec.  
1005.31(g)(2), a remittance transfer provider is required to provide 
oral disclosures in the language that is primarily used by the sender 
with the remittance transfer provider to conduct the transaction or 
assert an error.
    Specifically, proposed comment 31(g)-2 clarified that the language 
primarily used by the sender with the remittance transfer provider to 
conduct the transaction is the primary language used to convey the 
information necessary to complete the transaction. Proposed comment 
31(g)-2 also stated that the language primarily used by the sender with 
the remittance transfer provider to assert an error is the primary 
language used by the sender with the remittance transfer provider to 
provide the information required by Sec.  1005.33(b) to assert an 
error. The proposed comment also provided examples to clarify this 
concept.
    One industry commenter suggested that the foreign language 
disclosure requirement should relate to the language used by the 
remittance transfer provider, rather than the language used by the 
sender. Some industry commenters recommended that the Bureau provide 
further clarification of the term ``primarily used'' without specifying 
what type of guidance would be helpful. The Bureau notes that proposed 
comment 31(g)-2 specifies that the relevant foreign language is the 
foreign language primarily used by the sender with the remittance 
transfer provider to conduct a transaction or assert an error, and the 
examples show that a foreign language must be used by both the sender 
and the remittance transfer provider to be primarily used by the sender 
with the remittance transfer provider to conduct a transaction or 
assert an error. The Bureau believes the proposed commentary is clear 
on this point. However, as additional clarification, the Bureau is 
including a new example in comment 31(g)-2 to illustrate when a sender 
primarily uses a foreign language with a remittance transfer provider 
in the internet context.

Storefront and Internet Disclosures

    EFTA section 919(a)(6)(A) states that the Bureau may prescribe 
rules to require a remittance transfer provider to prominently post, 
and timely update, a notice describing a model remittance transfer for 
one or more amounts. The provision states that such a notice shall show 
the amount of currency that will be received by the designated 
recipient, using the values of the currency into which the funds will 
be exchanged. EFTA section 919(a)(6)(A) also states that the Bureau may 
require the notice prescribed to be displayed in every physical 
storefront location owned or controlled by the remittance transfer 
provider. Further, EFTA section 919(a)(6)(A) states that the Bureau 
shall prescribe rules to require a remittance transfer provider that 
provides remittance transfers via the internet to provide a notice, 
comparable to the storefront notice described in the statute, located 
on the home page or landing page (with respect to such remittance 
transfer services) owned or controlled by the remittance transfer 
provider.
    EFTA section 919(a)(6)(B) states that, prior to proposing rules 
under EFTA section 919(a)(6)(A), appropriate studies and analyses must 
be performed to determine whether a storefront notice or internet 
notice facilitates the ability of a consumer to: (i) Compare prices for 
remittance transfers, and (ii) understand the types and amounts of any 
fees or costs imposed on remittance transfers. The studies and analyses 
must be consistent with EFTA section 904(a)(2), which requires an 
economic impact analysis that considers the costs and benefits of a 
regulation to financial institutions, consumers, and other users. These 
costs and benefits include the extent to which additional paperwork 
would be required, the effects upon competition in the provision of 
services among large and small financial institutions, and the 
availability of services to different classes of consumers, 
particularly low income consumers.\78\
---------------------------------------------------------------------------

    \78\ As discussed below, the Board performed an analysis in the 
proposed rule consistent with EFTA section 904(a)(2), as it existed 
prior to any amendments in the Dodd-Frank Act. Section 904(a)(2), 
however, did not apply and was not amended by the Dodd-Frank Act to 
apply to the Bureau. Regardless, the Board's analysis from the 
proposal is unchanged, and the Bureau concurs with the Board's 
analysis.
---------------------------------------------------------------------------

    Consistent with EFTA section 919(a)(6)(B), the Board reviewed and 
analyzed the statute and a variety of independent articles, studies, 
and Congressional testimony; conducted outreach with industry and 
consumer advocates; and held focus groups with consumers who send 
remittance transfers. Based on its findings, summarized below, the 
Board concluded in the May 2011 Proposed Rule that the statutory notice 
would not facilitate a consumer's ability to compare prices or to 
understand the fees and costs imposed on remittance transfers.\79\
---------------------------------------------------------------------------

    \79\ A complete discussion of the Board's findings is available 
at 76 FR at 29924-29927.
---------------------------------------------------------------------------

    The notice described by the statute illustrates only the exchange 
rate offered by that remittance transfer provider for the particular 
model transfer amount. In addition to the exchange rate, however, the 
total cost of a remittance transfer includes fees charged by the 
remittance transfer provider, any intermediary in

[[Page 6241]]

the transfer, and the receiving entity. The total cost also includes 
any taxes that may be charged in the sending and receiving 
jurisdictions. Thus, the Board determined the statutory storefront 
notice would not present a complete picture to the consumer of all 
potential fees and costs for a remittance transfer.
    In the proposal, the Board considered two alternatives to the type 
of notice described in the statute that could more effectively 
communicate costs to a sender. The Board considered requiring the 
posting of transfer fee information for model send amounts, but 
believed that this alternative notice would have many of the same 
limitations as the statutory notice. The Board also considered 
requiring a notice that would reflect all the costs of a transfer. A 
notice with this alternative content could help consumers to obtain a 
better understanding of the total cost of a remittance transfer, but 
the length and complexity of such notices could limit their utility.
    The analysis conducted by the Board identified other limitations 
with both the statutory and alternative storefront disclosures. First, 
most consumers would be unable to apply the information provided by the 
statutory notice to their own transfers. The fees, exchange rate, and 
taxes for a remittance transfer can vary based upon the amount sent, 
transfer corridor (i.e., the sending location to the receiving 
location), speed of transfer (e.g., the next day, the same day, or in 
one hour), method of delivery (e.g., an electronic deposit into a bank 
account or a cash disbursement), and type of receiving entity (e.g., a 
bank or a money transmitter's payout partner). For example, some 
remittance transfer providers offer a discount on their exchange rate 
spread for large send amounts. Therefore, even if the consumer's 
transfer were identical to the model transfer posted in the storefront 
notice except for the send amount, the consumer still may be unable to 
determine the exchange rate that would apply to the consumer's transfer 
based on the storefront notice.
    Moreover, a consumer could be overwhelmed by the amount of data 
appearing in a long, complex storefront notice posted by these 
providers and, therefore, might not use it. A storefront notice for 
sending a specified amount to a single country could contain multiple 
rows of information to account for differences in pricing based on the 
transfer method, timing option, receipt location, and cost permutations 
described above. Many providers offer remittance transfers to multiple 
countries, and several locations within each country, which would 
multiply the number of data points on the notice.
    Finally, frequent fluctuations in exchange rates could result in 
disclosures being inaccurate for a period of time. Remittance transfer 
providers would have to update the storefront notice for each send 
location several times a week, or as frequently as several times a day, 
to account for the fluctuations in exchange rates. These rates could 
also be different at a single provider's different send locations. 
Remittance transfer providers would need to distribute the updated 
notices to each send location, and each send location would need to 
replace the outdated notice just as frequently. Non-exclusive send 
locations that offer the services of two or more money transmitters 
would have to post and update the storefront notices for each 
remittance transfer provider. As a result, a storefront notice could be 
unhelpful and even misleading to consumers, while creating unnecessary 
legal risks for remittance transfer providers.
    The analysis also identified potential effects that the storefront 
notice requirement would have on competition and costs to the consumer. 
The work involved in posting and updating storefront notices could 
cause some agents to stop offering remittance transfers. Further, 
credit unions and small banks that infrequently conduct transfers could 
find the burden and cost of producing storefront notices prohibitive 
and discontinue the service. Given the costs and risks associated with 
posting and updating the storefront notices contemplated by the 
statute, some providers could decide to exit the market, which could 
reduce competition among providers and increase costs for consumers.
    Because the Board did not propose a rule mandating the posting of 
storefront notices, it did not propose a rule mandating the posting of 
internet notices. Since the proposal did not require a storefront 
notice, there could be no ``comparable'' internet notice. Moreover, the 
Board's study of model internet notices indicated that consumers using 
internet remittance transfer providers to request remittance transfers 
would be less likely to use a model transfer notice than those using 
providers at a physical location. Many internet providers currently 
disclose transaction-specific information prior to the consumer's 
payment for a transfer, and Sec.  1005.31(b)(1), discussed above, makes 
this practice a regulatory requirement.
    Industry commenters supported the findings that the storefront 
notice and internet notice would not be useful to consumers. One 
consumer group commenter believed that the Bureau should require any 
storefront advertising to be in a storefront disclosure format 
prescribed by the Bureau. The commenter argued that the storefront 
disclosure should include the amount a sender pays to a remittance 
transfer provider and the amount to be received by a recipient for at 
least two sample amounts. The commenter suggested that disclosures 
could be based on the cost at a certain time, such as the previous 
business day, to alleviate the concerns about disclosures needing to be 
updated more frequently.
    The Bureau agrees with the Board's analysis, and believes that the 
storefront and internet disclosures described in EFTA section 
919(a)(6)(A) would not accomplish the statutory goals of facilitating 
the ability of consumers to compare prices for remittance transfers and 
to understand the types and amounts of any fees or costs imposed on 
remittance transfers. The disclosures would not provide a complete 
disclosure of all of the costs of a remittance transfer. Even if all 
costs were provided in the disclosures, consumers would be unable to 
extrapolate from a storefront disclosure the cost of their particular 
transaction, because the cost could depend on other variables. The 
Bureau also recognizes the burden on remittance transfer providers 
could be significant and could lead some providers to no longer provide 
remittance services. The burden on providers would be substantial even 
if the disclosures were only required to be updated daily. Moreover, 
requiring less frequent updating would result in the disclosures being 
inaccurate for a period of time.
    Because the cost to providers could be substantial, and the benefit 
of the storefront and internet disclosures would be minimal, the final 
rule does not require the posting of model remittance transfer notices 
at a storefront or on the internet.

Section 1005.32 Estimates

    The statute provides two exceptions to the requirement to disclose 
the amount of currency that will be received by the designated 
recipient. The first exception is in EFTA section 919(a)(4). It 
provides that, subject to rules prescribed by the Bureau, disclosures 
by insured depository institutions or credit unions regarding the 
amount of currency that will be received by the designated recipient 
will be deemed to be accurate in certain circumstances so long as the 
disclosure provides a reasonably accurate estimate of the amount of 
currency to be received.

[[Page 6242]]

Under the statute, a remittance transfer provider may use this 
exception only if: (i) It is an insured depository institution or 
insured credit union (collectively, an ``insured institution'' as 
described in more detail below) conducting a transfer from an account 
that the sender holds with it; and (ii) the insured institution is 
unable to know, for reasons beyond its control, the amount of currency 
that will be made available to the designated recipient. See EFTA 
section 919(a)(4). This exception (the ``temporary exception'') expires 
five years after the enactment of the Dodd-Frank Act, on July 21, 2015. 
If the Bureau determines that expiration of the exception would 
negatively affect the ability of insured institutions to send 
remittances to foreign countries, the Bureau may extend the exception 
to not longer than ten years after enactment (i.e., to July 21, 2020). 
See EFTA section 919(a)(4)(B).
    The second exception is in EFTA section 919(c). It provides that if 
the Bureau determines that a recipient country does not legally allow, 
or the method by which transactions are made in the recipient country 
do not allow, a remittance transfer provider to know the amount of 
currency that will be received by the designated recipient, the Bureau 
may prescribe rules addressing the issue. EFTA section 919(c) further 
states that if rules are prescribed, they must include standards for 
the remittance transfer provider to provide: (i) A receipt that is 
consistent with EFTA sections 919(a) and (b); and (ii) a reasonably 
accurate estimate of the currency to be received. The second exception 
(the ``permanent exception'') does not have a sunset date.
    The Board proposed Sec.  205.32 to implement the two exceptions in 
EFTA sections 919(a)(4) and (c). Proposed Sec.  205.32 generally 
permitted a remittance transfer provider to disclose estimates if it 
cannot determine exact amounts for the reasons specified in the 
statute. The Bureau is adopting Sec.  205.32 generally as proposed in 
renumbered Sec.  1005.32, with clarifications and revisions in response 
to comments received, as discussed in detail below. In addition, the 
Bureau is adopting new comment 32-1 to provide additional guidance on 
the circumstances when estimates may be provided. Specifically, new 
comment 32-1 states that estimates as permitted in Sec.  1005.32(a) and 
(b) may be used in the pre-payment disclosure described in Sec.  
1005.31(b)(1), the receipt disclosure described in Sec.  1005.31(b)(2), 
the combined disclosure described in Sec.  1005.31(b)(3), and the pre-
payment disclosures and receipt disclosures for both first and 
subsequent preauthorized remittance transfers described in Sec.  
1005.36(a)(1) and (2).

32(a) Temporary Exception for Insured Institutions

    Proposed Sec.  205.32(a)(1) provided a temporary exception for 
remittance transfer providers, which permits them to disclose estimates 
of the exchange rate, the transfer amount, other fees and taxes, and 
total to recipient if: (i) A remittance transfer provider cannot 
determine exact amounts for reasons beyond its control; (ii) a 
remittance transfer provider is an insured institution; and (iii) the 
remittance transfer is sent from the sender's account with the insured 
institution.
    Most industry commenters generally supported permitting insured 
institutions to disclose estimates. For example, one commenter stated 
that restricting the use of estimates could discourage innovation and 
increase costs to offset risk. Consumer group commenters generally 
supported the proposed use of estimates but requested that the 
temporary exception not be extended. Some industry commenters, however, 
objected to permitting estimates to be disclosed because estimates 
could lead to inaccurate or misleading disclosures which would 
disservice consumers.
    The Bureau believes permitting estimates, as provided by the 
temporary exception, is consistent with the statutory language and 
purpose of EFTA section 919(a)(4). The statute specifically provides 
that, subject to the Bureau's rules, an insured institution may use a 
reasonably accurate estimate of the amount of currency received under 
certain circumstances. Section 1005.32(a)(1) implements the temporary 
exception generally as proposed, as discussed below.
    EFTA section 919(a)(4) only addresses estimates for the amount of 
currency that will be received by a designated recipient. Nonetheless, 
proposed Sec.  205.32(a)(1) also permitted disclosure of an estimate 
for the exchange rate, the transfer amount in the currency made 
available to the designated recipient, the fees imposed by 
intermediaries in the transmittal route, and taxes imposed in the 
recipient country that are a percentage of the amount transferred to 
the designated recipient to the extent those amounts are not known for 
reasons beyond the insured institution's control. In the May 2011 
Proposed Rule, the Board stated its belief that, by permitting an 
estimate of the amount that will be received, Congress must have 
intended to permit estimates of the components that determine that 
amount. The inability to determine the exact amount of one or more of 
these additional items is the reason why the amount of currency that 
will be received by the designated recipient must be estimated. 
Furthermore, the Board stated that permitting estimates of these 
additional items would help consumers to understand why the amount of 
currency to be received is displayed as an estimate. The Bureau did not 
receive any comments on this aspect of the proposal. The Bureau concurs 
with the Board's reasoning, and believes that to effectuate the 
purposes of the EFTA and facilitate compliance, it is necessary and 
proper to exercise its authority under EFTA sections 904(a) and (c) to 
allow an estimate of the exchange rate, transfer amount, and other fees 
and taxes disclosures in Sec.  1005.32(a)(1). To not exercise the 
Bureau's authority in this way would render the statutory exemption 
essentially meaningless, and the Bureau believes that result could not 
be intended by the statutory exemption for estimating the amount of 
currency received.
    In the proposed rule, the Board also stated that EFTA section 
919(a)(4) only addresses the use of an estimate of the amount of 
foreign currency that will be received by a designated recipient. 
However, the proposed rule permitted an estimate of the currency that 
will be received, whether it is in U.S. dollars or foreign currency. 
The Bureau understands that senders may send remittance transfers to be 
paid to the designated recipient in U.S. dollars. When an insured 
institution sends a remittance transfer via international wire 
transfer, fees are sometimes deducted by intermediary institutions in 
the transmittal route with which the sending institution has no 
correspondent relationship. Although the insured institution may not 
know the total amount of these fees in advance, it must disclose them 
to the sender under Sec.  1005.31(b)(1)(vi). The amount that will be 
received by the designated recipient, whether that currency is U.S. 
dollars or foreign currency, will be an estimate if fees imposed by 
intermediaries are disclosed as estimates. Therefore, to effectuate the 
purposes of EFTA and to facilitate compliance, the Bureau believes it 
is necessary and proper to exercise its authority under EFTA sections 
904(a) and (c) to allow an estimate of the amount of currency that will 
be received, even if that currency is in U.S. dollars.
    The proposed commentary to Sec.  205.32(a)(1) provided further 
guidance on the temporary exception. Specifically, proposed comment 
32(a)(1)-1 clarified that an insured

[[Page 6243]]

institution cannot determine exact amounts ``for reasons beyond its 
control'' when: (i) The exchange rate required to be disclosed under 
proposed Sec.  205.31(b)(1)(iv) is set by a person with which the 
insured institution has no correspondent relationship after the insured 
institution sends the remittance transfer; or (ii) fees required to be 
disclosed under proposed Sec.  205.31(b)(1)(vi) are imposed by 
intermediary institutions along the transmittal route and the insured 
institution has no correspondent relationship with those institutions.
    One industry commenter requested clarification regarding instances 
when an insured institution has a correspondent relationship but may 
not control or know what exchange rate the correspondent will use. For 
example, a remittance transfer provider may send a remittance transfer 
in U.S. dollars and a correspondent institution may be responsible for 
exchanging to the currency in which funds will be received. Similarly, 
other industry commenters noted that an insured institution may not 
know the taxes or fees imposed by a correspondent institution. Although 
the Bureau acknowledges that some insured institutions currently may 
not receive certain exchange rate, tax, or fee information from a 
correspondent institution, the Bureau believes that such information 
can be obtained through contractual arrangements in a correspondent 
relationship. The Bureau notes that the statutory exception is only 
available for circumstances beyond remittance transfer providers' 
control, and the Bureau believes that adjusting contractual 
arrangements with correspondent banks to provide for better information 
relay is within the control of remittance transfer providers. 
Accordingly, comment 32(a)(1)-1 is adopted substantially as proposed 
with clarifying revisions and an example.
    Proposed comment 32(a)(1)-2 provided examples of scenarios that 
qualify for the temporary exception. The Bureau did not receive 
significant comment on the examples provided in the proposed comment. 
Comment 32(a)(1)-2 is adopted substantially as proposed with clarifying 
revisions. Comment 32(a)(1)-2.i. clarifies that an insured institution 
cannot determine the exact exchange rate to disclose for an 
international wire transfer if the insured institution does not set the 
exchange rate, and the rate is set when the funds are deposited into 
the recipient's account by the designated recipient's institution with 
which the insured institution does not have a correspondent 
relationship. The insured institution will not know the exchange rate 
that the recipient institution will apply when the funds are deposited 
into the recipient's account. Comment 32(a)(1)-2.ii. provides that an 
insured institution cannot determine the exact fees to disclose under 
Sec.  1005.31(b)(1)(vi) if an intermediary institution or the 
designated recipient's institution, with which the insured institution 
does not have a correspondent relationship, imposes a transfer or 
conversion fee. Finally, comment 32(a)(1)-2.iii. states that an insured 
institution cannot determine the exact taxes to disclose under Sec.  
1005.31(b)(1)(vi) if the insured institution cannot determine the 
applicable exchange rate or other fees, as described in proposed 
comments 32(a)(1)-2.i. and 32(a)(1)-2.ii., and the recipient country 
imposes a tax that is a percentage of the amount transferred to the 
designated recipient, less any other fees.
    Proposed comment 32(a)(1)-3 provided several examples of when an 
insured institution would not qualify for the exception in proposed 
Sec.  205.32(a). In each case, the insured institution could determine 
the exact amount for the relevant disclosure. The proposed examples 
illustrated that if an insured institution can determine the exact 
exchange rate, fees, and taxes required to be disclosed under Sec.  
1005.31(b)(1)(iv) and (vi), it can determine the exact amounts to be 
derived from calculations involving them.
    The Bureau did not receive significant comment on the proposed 
provision, which is adopted substantially as proposed. Comment 
32(a)(1)-3.i. explains that an insured institution can determine the 
exact exchange rate required to be disclosed under Sec.  
1005.31(b)(1)(iv) if it converts the funds into the local currency to 
be received by the designated recipient using an exchange rate that it 
sets. Comment 32(a)(1)-3.ii. states that an insured institution can 
determine the exact fees required to be disclosed under Sec.  
1005.31(b)(1)(vi) if it has negotiated specific fees with a 
correspondent institution, and the correspondent institution is the 
only institution in the transmittal route to the designated recipient's 
institution, which itself does not impose fees. Finally, comment 
32(a)(1)-3.iii. clarifies that an insured institution can determine the 
exact taxes required to be disclosed under Sec.  1005.31(b)(1)(vi) if 
the recipient country imposes a tax that is a percentage of the amount 
transferred to the designated recipient, less any other fees, and the 
insured institution can determine the exact amount of the applicable 
exchange rate and other fees. Similarly, the insured institution can 
determine these taxes if the recipient country imposes a specific sum 
tax that is not tied to the amount transferred.
    Proposed Sec.  205.32(a)(2) provided that the temporary exception 
expires on July 20, 2015, consistent with the five-year term set forth 
in EFTA section 919(a)(4)(B). EFTA section 919(a)(4)(B) gives the 
Bureau authority to extend the application of the temporary exception 
to July 21, 2020, if it determines that termination of the exception 
would negatively affect the ability of insured institutions to send 
remittances to foreign countries. The Bureau understands that this 
exception was intended to avoid an immediate disruption of remittance 
transfer services by insured institutions using international wire 
transfers. The exception gives these institutions time to reach 
agreements and modify systems to provide accurate disclosures.
    Industry commenters argued that the temporary exception for insured 
institutions should be made permanent, or in the alternative, be 
extended to ten years after the date of enactment of the Dodd-Frank 
Act, which is July 21, 2020. The OCC also noted the ability of the 
Bureau to extend the temporary exception for insured institutions to 
ten years after the date of enactment of the Dodd-Frank Act and urged 
the Bureau to consider the impact of these standards on community 
banks. In contrast, consumer groups supported the five-year sunset of 
the temporary exception and requested that the Bureau indicate that the 
temporary exception will not be extended.
    The Bureau notes that the sunset of the temporary exception is 
statutory. In addition, the Bureau believes that there is no basis at 
this time to assess whether allowing the exception to expire in 
accordance with the statute would have negative effects where the final 
rule is just now being issued, initial implementation is expected to 
take a year, and the market has not yet had a chance to respond to the 
regulatory requirements. Therefore, the Bureau declines to extend the 
temporary exception at this time. Finally, the Bureau notes that in the 
May 2011 Proposed Rule, proposed Sec.  205.32(a)(2) stated July 20, 
2015 as the sunset date for the temporary exception provided in Sec.  
205.32(a)(1). The final rule includes a technical edit to clarify that 
the sunset date for the temporary exception is July 21, 2015 in order 
to avoid potential confusion and promote consistency among references 
to the date of enactment of the Dodd-Frank Act. Accordingly, proposed 
Sec.  205.32(a)(2) is adopted as proposed in renumbered

[[Page 6244]]

Sec.  1005.32(a)(2), with a technical edit to reflect the change in 
date to July 21, 2015.
    For purposes of the temporary exception, proposed Sec.  
205.32(a)(3) provided that the term ``insured institution'' included 
insured depository institutions as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) and insured credit unions as 
defined in section 101 of the Federal Credit Union Act (12 U.S.C. 
1752). Industry commenters generally requested clarification on the 
application of the temporary exception to uninsured institutions. In 
particular, these commenters requested that the temporary exception 
should also include uninsured depository institutions, such as certain 
U.S. branches and agencies of foreign banks. They also argued that 
uninsured U.S. branches of foreign banks also process retail 
international wire transfers in the same manner as insured 
institutions, and would face similar compliance challenges as other 
insured institutions.
    The Bureau believes that including uninsured U.S. branches of 
foreign banks in the term ``insured institution'' is consistent with 
the purposes of the statutory exception and will prevent disruption in 
remittance transfer services. The Bureau notes that section 3(c)(3) of 
the Federal Deposit Insurance Act provides that for certain purposes, 
the term ``insured depository institution'' includes any uninsured U.S. 
branch or agency of a foreign bank or a commercial lending company 
owned or controlled by a foreign bank. Therefore, the Bureau believes 
including uninsured U.S. branches and agencies of foreign banks in the 
term ``insured institution'' is consistent with the statutory exception 
and section 3 of the Federal Deposit Insurance Act. Accordingly, 
proposed Sec.  205.32(a)(3) is adopted with clarification in renumbered 
Sec.  1005.32(a)(3).
    Similarly, one commenter argued that registered broker-dealers 
should be covered by the temporary exception because they may process 
international wire transfers. However, as discussed above, the Bureau 
is clarifying that, for the purposes of this rule, fund transfers in 
connection with securities transactions are not remittance transfers. 
Therefore, the Bureau believes further clarification in the rule with 
respect to this comment is not necessary.

32(b) Permanent Exception for Transfers to Certain Countries

    Proposed Sec.  205.32(b) contained the permanent exception set 
forth in EFTA section 919(c). Under EFTA section 919(c), if the Bureau 
determines that a recipient nation does not legally allow, or the 
method by which transactions are made to the recipient country do not 
allow, a remittance transfer provider to know the amount of currency 
that will be received, the Bureau may issue rules to permit the 
remittance transfer provider to provide a reasonably accurate estimate. 
The Board's proposal specifically noted that there is at least one 
recipient country where a particular method of remittances do not allow 
remittance transfer providers to know the amount of currency that will 
be received.\80\
---------------------------------------------------------------------------

    \80\ See 76 FR 29923.
---------------------------------------------------------------------------

    In light of that determination, the proposed rule allowed estimates 
to be provided for amounts required to be disclosed under proposed 
Sec.  205.31(b)(1)(iv) through (vii) for transfers to certain 
countries. Like the temporary exception in EFTA section 919(a)(4), the 
permanent exception in EFTA section 919(c) only addresses estimates for 
the amount of currency that will be received by a designated recipient. 
For the reasons described above with respect to the temporary 
exception, proposed Sec.  205.32(b) also permitted disclosure of 
estimates for the exchange rate, the transfer amount in the currency 
made available to the designated recipient, and taxes imposed in the 
recipient country that are a percentage of the amount transferred to 
the designated recipient. The Bureau did not receive any comments on 
this aspect of the proposal. For the reasons set forth above with 
regard to the temporary exception and to effectuate the purposes of 
EFTA and facilitate compliance, the Bureau believes it is necessary and 
proper to exercise its authority under EFTA sections 904(a) and (c) to 
adopt this proposed permanent exception in Sec.  1005.32(b).
32(b)(1)(i) Laws of Recipient Country
    Proposed Sec.  205.32(b)(1) allowed estimates to be provided for 
the exchange rate, transfer amount, other fees and taxes, and total to 
recipient disclosures (adopted as Sec.  1005.31(b)(1)(iv) through (vii) 
above), if a remittance transfer provider cannot determine exact 
amounts because the laws of the recipient country do not permit such a 
determination.
    Industry commenters raised concerns about whether remittance 
transfer providers have the resources to determine whether this 
exception applies. Consumer group commenters argued that the statute 
requires the Bureau to determine which recipient countries qualify for 
the permanent exception, rather than leaving the determination to 
individual market participants. Both industry and consumer group 
commenters recommended that the Bureau maintain a list of countries or 
a database, updated annually, to which the permanent exception based on 
the laws of a recipient country would apply.
    The Bureau believes that it is appropriate for remittance transfer 
providers to identify and comply with a recipient country's currency 
laws. The Bureau also believes that remittance transfer providers and 
their correspondents generally are able to obtain this information 
because they are engaged in the business of remittance transfers to 
recipient countries and must comply with any applicable law that 
prevents the remittance transfer provider from determining exchange 
rates or exact amounts. Nonetheless, in response to comments received 
and upon further consideration, the Bureau is revising proposed Sec.  
205.32(b) to facilitate compliance by providing a safe harbor list of 
countries which qualify for the permanent exception.
    Accordingly, the Bureau is renumbering proposed Sec.  205.32(b) as 
Sec.  1005.32(b)(1) and adopting new Sec.  1005.32(b)(2) to provide a 
safe harbor. New Sec.  1005.32(b)(2) states that a remittance transfer 
provider may rely on the list of countries published by the Bureau to 
determine whether estimates may be provided under the permanent 
exception, unless the provider has information that a country's laws or 
the method by which transactions are conducted in that country permits 
a determination of the exact disclosure amount.
    In addition, the Bureau is adopting commentary on new Sec.  
1005.32(b)(2). New comment 32(b)-5 provides guidance on the safe harbor 
list published by the Bureau. New comment 32(b)-6 provides further 
guidance on reliance on the Bureau-provided list of countries that 
qualify for the permanent exception. New comment 32(b)-7 addresses 
circumstance where there is a change in laws of the recipient country.
    Proposed comment 32(b)(1)-1 clarified that the ``laws of the 
recipient country'' do not permit a remittance transfer provider to 
determine exact amounts when a law or regulation of the recipient 
country requires the person making funds directly available to the 
designated recipient to apply an exchange rate that is: (i) Set by the 
government of the recipient country after the remittance transfer 
provider sends the remittance transfer; or (ii) set when the designated 
recipient chooses to claim the funds. Comment 32(b)(1)-

[[Page 6245]]

1 is adopted substantially as proposed, but renumbered as comment 
32(b)-1 for organizational purposes.
    One commenter requested clarification about whether proposed 
comment 32(b)(1)-1 covered instances where the local currency is thinly 
traded and the laws of a recipient country require an authorized dealer 
to set the exchange rate when the remittance transfer is received. The 
Bureau believes that the proposed comment already covers such 
circumstances because the government of the recipient country, acting 
through an authorized dealer, sets the exchange rate after the 
remittance transfer has been sent. In addition, the transfer may also 
qualify for the permanent exception if the exchange rate is required by 
law to be set by the authorized dealer when the recipient claims the 
funds.
    Proposed comments 32(b)(1)-2.i. and 32(b)(1)-2.ii. provided 
examples illustrating the application of the exception. Proposed 
comment 32(b)(1)-2.i. explained that the laws of the recipient country 
do not permit a remittance transfer provider to determine the exact 
exchange rate required to be disclosed under proposed Sec.  
205.31(b)(1)(iv) (adopted as Sec.  1005.31(b)(1)(iv) above) when, for 
example, the government of the recipient country sets the exchange rate 
daily and the funds are made available to the designated recipient in 
the local currency the day after the remittance transfer provider sends 
the remittance transfer. Under such circumstances, an estimate for the 
exchange rate would be permitted because the remittance transfer 
provider cannot determine a rate that a foreign government has yet to 
set.
    In contrast, proposed comment 32(b)(1)-2.ii. explained that the 
laws of the recipient country permit a remittance transfer provider to 
determine the exact exchange rate required to be disclosed under 
proposed Sec.  205.31(b)(1)(iv) (adopted as Sec.  1005.31(b)(1)(iv) 
above) if, for example, the government of the recipient country ties 
the value of its currency to the U.S. dollar. The Bureau did not 
receive significant comment on comment 32(b)(1)-2. This comment is 
adopted substantially as proposed, but renumbered as comment 32(b)-2 
for organizational purposes.
32(b)(1)(ii) Method by Which Transactions are Made in the Recipient 
Country
    Proposed Sec.  205.32(b)(2) allowed estimates to be provided for 
the exchange rate, transfer amount, other fees and taxes, and total to 
recipient disclosures (adopted as Sec.  1005.31(b)(1)(iv) through (vii) 
above), if a remittance transfer provider cannot determine exact 
amounts because the method by which transactions are made in the 
recipient country does not permit such a determination.
    Based on the Board's outreach and interpretation of the statute, 
the Board stated its belief that the exception for methods by which 
transactions are made in the recipient country under proposed Sec.  
205.32(b)(2) was intended to permit estimates for certain international 
ACH transactions. Specifically, the Board interpreted the exception 
under Sec.  205.32(b)(2) to apply to remittances sent via international 
ACH on terms negotiated by the government of the United States and the 
government of a recipient country where the exchange rate is set after 
the transfer is sent. Accordingly, proposed comment 32(b)(2)-1 stated 
that the ``method by which transactions are made in the recipient 
country'' does not permit a remittance transfer provider to determine 
exact amounts when transactions are sent via international ACH on terms 
negotiated between the United States government and the recipient 
country's government, under which the exchange rate is set by the 
recipient country's central bank after the provider sends the 
remittance transfer.
    Industry commenters argued that the Bureau should adopt a broader 
reading of the statute, and that international wire transfers should be 
covered by the permanent exception. These commenters argued that 
international wire transfers are a method by which transactions are 
made in a recipient country that does not allow the remittance transfer 
provider to know the amount of currency that will be received by a 
designated recipient and should thus qualify for the permanent 
exception. One industry commenter stated that the permanent exception 
is helpful for certain international ACH transactions; however, the 
benefit is limited by the number of recipient countries that 
participate in the Federal Reserve System's FedGlobal ACH program. 
Other industry commenters requested that all international ACH 
transfers be covered by the permanent exception and that the exception 
should not be limited to those that are sent on terms negotiated 
between the United States government and the recipient country's 
government. These commenters noted that all cross-border ACH transfers, 
regardless of how the exchange rate is set, are subject to similar 
difficulties as certain international ACH transfers that qualify for 
the permanent exception. Consumer group commenters supported the 
proposal's application of the permanent exception based on the method 
to certain international ACH transfers.
    In each case, the Bureau agrees with the Board's interpretation. 
The Bureau believes that extending the permanent exception to 
international wire transfers and all international ACH transactions 
would be inconsistent with the statutory language and purpose of the 
provision, which specifically refers to methods of transfer in a 
recipient country (emphasis added). The Bureau must give meaning to 
this phrase, and does not believe that the interpretation urged by 
commenters is dependent on a method of transfer in a particular 
country.
    The Bureau does not believe that the permanent exception in EFTA 
section 919(c) applies to international wire transfers because wire 
transfers are not a method that is particular to a specific country or 
group of countries. Rather, compliance challenges may arise due to the 
international wire transfer business model, which is based on a chain 
of correspondents and two-party contractual relationships.
    In addition, the application of the permanent exception to 
international wire transfers and ACH transactions generally would make 
the temporary exception superfluous. As discussed above, the statute is 
broad in scope, specifically covering transactions that are account-
based and that are not electronic fund transfers, and therefore, covers 
open network transactions. Further, as described above with regard to 
the temporary exception, the statute specifically permits the use of 
estimates by depository institutions and credit unions for certain 
account-based transactions. If all open network transactions were 
included in the permanent exception, there would be no need for the 
temporary exception because nearly all, if not all, the types of 
transfers that qualify for the temporary exception would be covered by 
the permanent exception. The Bureau does not believe the temporary 
exception is superfluous. Therefore, it would not be appropriate to 
extend the permanent exception to these transactions.
    One commenter argued that the permanent exception for method of 
transfer should also include instances when the remittance transfer 
provider and the sender agree to have the exchange rate set at some 
point in the future (i.e., floating rate products). As with wire 
transfers, such an agreement is not a method by which a transaction is 
made that is particular to a specific country or group of countries. 
Therefore, the Bureau also believes that

[[Page 6246]]

this circumstance would not be eligible for the permanent exception. 
The Bureau notes, however, that the remittance transfer provider that 
is party to such an agreement may provide estimates of the exchange 
rate if the remittance transfer provider qualifies for the temporary 
exception in Sec.  1005.32(a). For the reasons discussed above, 
proposed Sec.  205.32(b)(2) is adopted as proposed in renumbered Sec.  
1005.32(b)(1)(ii). Proposed comment 32(b)(2)-1 is adopted substantially 
as proposed with clarifying revision, but renumbered as comment 32(b)-3 
for organizational purposes.
    Proposed comment 32(b)(2)-2 provided examples illustrating the 
application of the permanent exception. The comment is adopted 
substantially as proposed, but renumbered as comment 32(b)-4 for 
organizational purposes. Comment 32(b)-4.i. provides an example of when 
a remittance transfer would qualify for the exception. The Bureau notes 
that some comments received indicate that there may be confusion as to 
the application of the permanent exception provided in Sec.  
1005.32(b)(1)(ii) to any transfer sent via international ACH. However, 
comment 32(b)-4.i. explains that a transfer would only qualify for the 
exception when sent via international ACH on terms negotiated between 
the United States government and the recipient country's government, 
under which the exchange rate is a rate set by the recipient country's 
central bank or other governmental authority on the business day after 
the provider has sent the remittance transfer. Under such 
circumstances, the provider cannot determine the exact exchange rate 
required to be disclosed under Sec.  1005.31(b)(1)(iv). Thus, 
remittance transfers sent via Directo a M[eacute]xico currently would 
qualify for the permanent exception in Sec.  1005.32(b)(1)(ii). 
Accordingly, proposed comment 32(b)-4.i. is adopted substantially as 
proposed.
    Proposed comments 32(b)(2)-2.ii. and -2.iii. provided examples of 
when a remittance transfer would not qualify for the permanent 
exception in Sec.  1005.32(b)(1)(ii). The Bureau did not receive 
significant comment on the proposed comments, which are adopted 
substantially as proposed, with technical and clarifying edits, in 
renumbered comments 32(b)-4.ii. and 32(b)-4.iii. Comment 32(b)-4.ii. 
explains that a remittance transfer provider is not permitted to 
provide estimates under the permanent exception if it sends a 
remittance transfer via international ACH on terms negotiated between 
the United States government and a private-sector entity in the 
recipient country, under which the exchange rate is set by the 
institution acting as the entry point to the recipient country's 
payments system on the next business day. In this case, transactions 
are made using a method negotiated between the United States and a 
private entity. Nonetheless, remittance transfers sent using such a 
method may qualify for the temporary exception in Sec.  1005.32(a). 
Comment 32(b)-4.iii. explains that a remittance transfer provider does 
not qualify for the permanent exception if, for example, it sends 
transfers via international ACH on terms negotiated between the United 
States government and the recipient country's government, under which 
the exchange rate is set by the recipient country's central bank or 
other governmental authority before the sender requests a transfer. In 
such a case, the remittance transfer provider can determine the 
exchange rate required to be disclosed.

32(c) Bases for Estimates

    If a remittance transfer qualifies for either the temporary 
exception in EFTA section 919(a)(4) or the permanent exception in EFTA 
section 919(c), the statute permits the provider to disclose a 
reasonably accurate estimate to the sender. Proposed Sec.  205.32(c) 
stated that estimates provided pursuant to the exceptions in proposed 
Sec.  205.32(a) and (b) (adopted as Sec.  1005.32(a) and (b) above) 
must be based on an approach listed in the regulation for the required 
disclosure.
    Proposed Sec.  205.32(c) further stated that if a remittance 
transfer provider bases an estimate on an approach that is not listed, 
the provider complies with proposed Sec.  205.32(c) so long as the 
designated recipient receives the same, or greater, amount of currency 
that it would have received had the estimate been based on a listed 
approach. Thus, use of an approach other than one listed in the 
proposed rule is compliant with the regulation if the sender is not 
harmed by such use.
    Industry commenters generally requested greater flexibility in 
estimating exchange rates and fees. For example, commenters recommended 
less prescriptive approaches, such as permitting remittance transfer 
providers to base estimates on reasonably available information, 
adopting a reasonably accurate standard, or adopting a safe harbor for 
good faith estimates within a specified tolerance. The Bureau generally 
concurs with the Board's reasoning in the May 2011 Proposed Rule that 
providing a list of approaches for calculating estimates would be more 
helpful to remittance transfer providers and consumers than a less 
specific standard for calculating estimates. The Bureau believes that 
requiring estimates be provided based on an approach listed in the 
regulation will facilitate compliance with the final rule. However, in 
response to comments received, the Bureau is clarifying proposed Sec.  
205.32(c). The safe harbor in proposed Sec.  205.32(c) was intended to 
provide greater flexibility and to facilitate compliance for remittance 
transfer providers that may base an estimate on an approach that is not 
listed in the rule. However, the Bureau notes that under the proposal, 
the provider would have been required to compare any estimate based on 
its own approach with an estimate based on a listed approach in order 
to determine whether the sender would be harmed by such use. The Bureau 
believes that this comparison would unnecessarily increase the burden 
of using an unlisted approach and render the safe harbor meaningless. 
Therefore, the Bureau revises proposed Sec.  205.32(c) to state that if 
a provider bases an estimate on an approach not listed in the rule, the 
provider is deemed to be in compliance with the rule so long as the 
designated recipient receives the same, or greater, amount of funds 
than the remittance transfer provider disclosed as required under Sec.  
1005.31(b)(1)(vii). The Bureau believes that this clarification also 
ensures that the sender is not harmed because the amount of funds 
received by the designated recipient will be the same or greater than 
the estimated total amount received as required to be disclosed under 
Sec.  1005.32(b)(1)(vii). Accordingly, the Bureau is adopting proposed 
Sec.  205.32(c) as Sec.  1005.32(c) with amendment.
32(c)(1) Exchange Rate
    Proposed Sec.  205.32(c)(1) set forth the approaches that a 
remittance transfer provider may use as the basis of an estimate of the 
exchange rate required to be disclosed under Sec.  1005.31(b)(1)(iv). 
The final rule adopts the proposed rule as Sec.  1005.32(c)(1), with 
modifications and additional commentary to address issues raised in 
comments.
    The approach in proposed Sec.  205.32(c)(1)(i) stated that for 
remittance transfers qualifying for the Sec.  1005.32(b)(1)(ii) 
exception, the estimate must be based on the most recent exchange rate 
set by the recipient country's central bank and reported by a Federal 
Reserve Bank. Proposed comment 32(c)(1)(i)-1 clarified that if the 
exchange rate for a remittance transfer sent via international ACH that 
qualifies for the proposed Sec.  205.32(b)(2)

[[Page 6247]]

exception is set the following business day, the most recent exchange 
rate available for a transfer will be the exchange rate set for the day 
that the disclosure is provided, i.e., the current business day's 
exchange rate. Consumer group commenters generally supported proposed 
Sec.  205.32(c)(1)(i) and its commentary. Other commenters believed 
that the application of the proposed Sec.  205.32(b)(2) exception 
should be broadened generally, as discussed above. Accordingly, 
proposed Sec.  205.32(c)(1)(i) is adopted as proposed in renumbered 
Sec.  1005.32(c)(1)(i). Comment 32(c)(1)(i)-1 is adopted substantially 
as proposed, but renumbered as comment 32(c)(1)-1 for organizational 
purposes.
    The approach in proposed Sec.  205.32(c)(1)(ii) provided that, for 
other transfers, the estimate must be based on the most recent publicly 
available wholesale exchange rate. Industry commenters argued that the 
wholesale interbank exchange rate would not be the rate actually 
applied to a consumer's remittance transfer, so using the wholesale 
exchange rate as an estimate would be misleading to consumers. For 
instance, basing an estimate on only the wholesale rate could 
consistently overestimate the amount of currency received by a 
recipient because the wholesale rate does not account for any spread 
applied to the rate for a sender's remittance transfer to a particular 
country. One commenter noted that estimates of exchange rates may be 
based on information from foreign exchange dealers as well as rates 
available in the marketplace.
    Based on comments received and upon further analysis, the Bureau is 
adopting a revised basis for estimates in renumbered Sec.  
1005.32(c)(1)(ii) and its related commentary to address concerns 
regarding the proposed use of a wholesale exchange rate. Specifically, 
Sec.  1005.32(c)(1)(ii) provides that, in disclosing the exchange rate 
as required under Sec.  1005.31(b)(1)(iv), an estimate must be based on 
the most recent publicly available wholesale rate and, if applicable, 
the spread typically applied to such a rate by the remittance transfer 
provider or its correspondent to the wholesale rate for remittance 
transfers for a particular currency. The Bureau believes the revised 
subsection will result in an estimated exchange rate that better 
approximates the ``retail'' rate that will apply to a sender's 
remittance transfer.
    New comment 32(c)(1)-3 provides guidance on applying any spread to 
the estimate of an exchange rate based on the wholesale exchange rate. 
If a remittance transfer provider uses the most recent wholesale 
exchange rate as a basis for an estimate of an exchange rate, the 
exchange rate estimate must also reflect any spread that is typically 
applied to such a rate for remittance transfers for a particular 
currency. For example, assume a remittance transfer provider (or its 
correspondent) typically applies a spread, such as a fixed percentage, 
to a wholesale rate in order to determine the exchange rate offered to 
a sender for remittance transfers for a particular currency. If the 
provider must estimate an exchange rate for another remittance transfer 
for the same currency, the remittance transfer provider must estimate 
the exchange rate by applying the same spread (i.e., fixed percentage) 
to the most recent publicly available wholesale rate.
    Proposed comment 32(c)(1)(ii)-1 provided that publicly available 
sources of information containing the most recent wholesale exchange 
rate for a currency include, for example, U.S. news services, such as 
Bloomberg, the Wall Street Journal, and the New York Times; a recipient 
country's national news service; and a recipient country's central bank 
or other government agency. The Bureau did not receive any comments on 
this aspect of the proposal. One industry commenter, however, noted 
that for currency exchange rates not listed by a U.S. news service, 
remittance transfer providers could rely on the basis for estimates 
provided under proposed Sec.  205.32(c)(1)(iii). Accordingly, proposed 
comment 32(c)(1)(ii)-1 is adopted substantially as proposed, but 
renumbered as comment 32(c)(1)-2 for organizational purposes.
    Industry commenters, however, stated that it was unclear which most 
recent publicly available wholesale exchange rate should apply because 
rates may fluctuate throughout the day and may be published on a Web 
site in addition to the rate that may be available in a news service 
publication. Based on these comments, the Bureau is adopting new 
comment 32(c)(1)-4 to provide guidance when an exchange rate for a 
currency is published or provided multiple times within a day. 
Specifically, comment 32(c)(1)-4 clarifies that if the exchange rate 
for a currency is published or provided multiple times throughout the 
day because the exchange rate fluctuates throughout the day, a 
remittance transfer provider may use any exchange rate available on 
that day for the purposes of determining the ``most recent'' exchange 
rate.
    The approach in proposed Sec.  205.32(c)(1)(iii) permitted the use 
of the most recent exchange rate offered by the person making funds 
available directly to the designated recipient as the basis for 
providing an estimate. However, in some instances the exchange rate 
used for a transfer may be set by other institutions, such as a foreign 
ACH counterpart or an intermediary institution in a transmittal route 
that is not a correspondent institution. For example, the first 
intermediary institution in the transmittal route that is in the 
recipient country may set the exchange rate and conduct the currency 
exchange before transmitting the remittance transfer to the recipient 
institution, which then makes the funds available to the designated 
recipient. Therefore, upon further consideration, proposed Sec.  
205.32(c)(1)(iii), in renumbered Sec.  1005.32(c)(1)(iii), is revised 
to state that an estimate may be also based on the most recent exchange 
rate offered or used by the person in the transmittal route setting the 
exchange rate. The Bureau notes that Sec.  1005.32(c)(1)(iii), as 
revised, addresses circumstances in which the local currency is 
infrequently traded or when wholesale exchange rates would not have 
been publicly available.
32(c)(2) Transfer Amount in the Currency Made Available to the 
Designated Recipient
    Proposed Sec.  205.32(c)(2) stated that, in disclosing the transfer 
amount in the currency made available to the designated recipient, as 
required under Sec.  1005.31(b)(1)(v), an estimate must be based upon 
the estimated exchange rate provided in accordance with Sec.  
1005.32(c)(1). The Bureau did not receive comment on proposed Sec.  
205.32(c)(2), which is adopted with revision for consistency with Sec.  
1005.31(b)(1)(v) in renumbered Sec.  1005.32(c)(2).
32(c)(3) Other Fees
    Proposed Sec.  205.32(c)(3) provided that one of two approaches 
must be used to estimate the fees imposed by intermediary institutions 
in connection with an international wire transfer required to be 
disclosed under Sec.  1005.31(b)(1)(vi). Under the first approach, an 
estimate must be based on the remittance transfer provider's most 
recent transfer to an account at the designated recipient's 
institution. Under the second approach, an estimate must be based on 
the representations of the intermediary institutions along a 
representative route identified by the remittance transfer provider 
that the requested transfer could travel.
    Proposed comment 32(c)(3)(ii)-1 clarified that a remittance 
transfer from a sender's account at an insured

[[Page 6248]]

institution to the designated recipient's institution may take several 
routes, depending on the correspondent relationships each institution 
in the transmittal route has with other institutions. Proposed comment 
32(c)(3)(ii)-1 further clarified that, in providing an estimate of the 
fees required to be disclosed under proposed Sec.  205.31(b)(1)(vi) 
pursuant to the temporary exception, an insured institution may rely 
upon the representations of the institutions that act as intermediaries 
in any one of the potential transmittal routes that it reasonably 
believes a requested remittance transfer may travel.
    Industry commenters argued that insured institutions do not know 
what other fees an intermediary institution or the designated 
recipient's institution may charge. For example, a remittance transfer 
provider may not know the fees a receiving institution may charge its 
own customers for receiving a remittance transfer. Another commenter 
suggested that some small insured institutions may be unaware of the 
number of intermediary institutions involved in the transmittal route. 
Commenters also argued that it would be difficult to obtain sufficient 
information to be able to disclose any estimates, and that the 
requirement would impose operational burden on insured institutions, 
particularly on insured institutions that do not send international 
wire transfers frequently or are unable to obtain representations of 
intermediary institutions.
    As discussed above, the Bureau believes that, consistent with the 
statute, it is appropriate to require remittance transfer providers to 
disclose fees imposed by intermediary institutions or the designated 
recipient's institution in order to determine the amount of currency 
received by the recipient. The Bureau further believes that the rule 
provides sufficient flexibility to facilitate compliance and that 
representative transmittal routes are readily determinable. In 
addition, the Bureau notes that a remittance transfer provider may be 
required to estimate other fees as required by Sec.  1005.32(b)(1)(vi) 
in other circumstances. For example, if a remittance transfer provider 
estimates the exchange rate under the Sec.  1005.32(b) permanent 
exception, a provider may be required to estimate other fees that are 
imposed as a percentage of the amount transferred to the designated 
recipient. Therefore, the Bureau believes it is appropriate to provide 
additional clarification. Accordingly, the Bureau is adopting a new 
Sec.  1005.32(c)(3)(i) to provide that for other fees that are imposed 
as a percentage of the amount transferred to the designated recipient, 
an estimate must be based on the estimated exchange rate provided in 
accordance with Sec.  1005.32(c)(1), prior to any rounding of the 
estimated exchange rate. Furthermore, the Bureau is adopting proposed 
Sec.  205.32(c)(3) with a technical revision in renumbered Sec.  
1005.32(c)(3)(ii). Comment 32(c)(3)(ii)-1 is adopted substantially as 
proposed, but is renumbered as comment 32(c)(3)-1 for organizational 
purposes.
32(c)(4) Other Taxes Imposed in the Recipient Country
    Proposed Sec.  205.32(c)(4) stated that, in disclosing taxes 
imposed in the recipient country as required under Sec.  
1005.31(b)(1)(vi) that are a percentage of the amount transferred to 
the designated recipient, an estimate must be based on the estimated 
exchange rate provided in accordance with Sec.  1005.32(c)(1) and the 
estimated fees imposed by institutions that act as intermediaries in 
connection with an international wire transfer provided in accordance 
with Sec.  1005.32(c)(3). Proposed comment 32(c)(4)-1 clarified that 
proposed Sec.  205.32(c)(4) permits a provider to give an estimate only 
when the taxes imposed in a recipient country are a percentage of the 
amount transferred to the designated recipient. In other contexts where 
taxes may be imposed, a remittance transfer provider can determine the 
exact amount, such as in the case of a tax of a specific amount. The 
Bureau did not receive comments on this aspect of the proposal. 
Accordingly, proposed Sec.  205.32(c)(4) is adopted in renumbered Sec.  
1005.32(c)(4) with revisions for consistency with amended Sec. Sec.  
1005.31(b)(1)(vi) and 1005.32(c)(3). The Bureau is revising comment 
32(c)(4)-1 to clarify that a remittance transfer provider can determine 
the exact amount of other taxes that are a percentage of the amount 
transferred if the provider can determine the exchange rate and the 
exact amount of other fees imposed on the remittance transfer. 
Accordingly, comment 32(c)(4)-1 is adopted with clarification.
32(c)(5) Amount of Currency That Will be Received by the Designated 
Recipient
    Proposed Sec.  205.32(c)(5) stated that, in disclosing the amount 
of currency that will be received by the designated recipient as 
required under Sec.  1005.31(b)(1)(vii), an estimate must be based on 
the estimates provided in accordance with Sec.  1005.32(c)(1), (c)(3), 
and (c)(4), as applicable. The Bureau did not receive significant 
comment on proposed Sec.  205.32(c)(5); however, the Bureau clarifies 
that in disclosing an amount under Sec.  1005.31(b)(1)(vii), an 
estimate must be based on estimates provided in accordance with Sec.  
1005.32(c)(1) through (4). Accordingly, proposed Sec.  205.32(c)(5) is 
adopted in renumbered Sec.  1005.32(c)(5) with this clarification.

Section 1005.33 Procedures for Resolving Errors

    EFTA section 919(d) addresses procedures for resolving errors in 
connection with remittance transfers, and allows a sender to provide 
notice of an error within 180 days of the promised date of delivery of 
a remittance transfer. The sender's notice triggers a remittance 
transfer provider's duty to investigate the claim and correct any error 
within 90 days of receiving the notice. The statue generally does not 
define what types of transfers and inquiries constitute errors and 
gives the Bureau the authority to define ``error.'' The Board proposed 
Sec.  205.33 to implement the new error resolution requirements for 
remittance transfers that adapted many of the same error resolution 
procedures that currently apply to a financial institution under Sec.  
1005.11. The Bureau adopts proposed Sec.  205.33 as Sec.  1005.33 with 
several changes based on recommendations from commenters, as discussed 
in detail below.

33(a) Definition of Error

Definition of Error Generally
    Proposed Sec.  205.33(a)(1) defined the term ``error'' for purposes 
of the remittance transfer error resolution provisions. Proposed Sec.  
205.33(a)(2) listed types of transfers or inquiries that do not 
constitute errors. The proposed commentary provided additional guidance 
illustrating errors under the rule.
    Many industry commenters generally believed the proposed error 
definitions were overly broad because they would subject a remittance 
transfer provider to liability for errors caused by parties outside the 
control of the provider. Some of these commenters suggested that 
requiring providers to assume responsibility for errors when the 
provider has not erred nor controlled the circumstances that caused the 
error would undermine the safety and soundness of these transfer 
systems and could lead some financial institutions to eliminate 
remittance transfer services. Other industry commenters predicted that 
the financial impact of losses experienced as a result of errors caused

[[Page 6249]]

by another party could be significant enough for providers to exit the 
market.
    The Bureau is amending certain error definitions in response to 
these comments, as discussed below. In general, under a number of 
financial consumer protection laws, the regulated entity has the 
responsibility to investigate errors asserted by consumers and 
generally assumes much of the liability when an error has occurred even 
where neither the regulated entity nor the consumer are at fault. See, 
e.g., 15 U.S.C. 1693f and 1693g; 15 U.S.C. 1643; 12 CFR 1005.11; and 12 
CFR 1026.13. Thus, consistent with other error resolution procedures in 
Federal financial consumer protection laws, the Bureau believes that 
where neither a sender nor a remittance transfer provider are 
necessarily at fault, a provider generally is in a better position than 
a sender to identify, and possibly recover from, the party at fault.
    Furthermore, placing liability with the remittance transfer 
provider in these instances aligns the remittance transfer provider's 
incentives with those of the sender. Remittance transfer providers are 
likely better able to work with parties in the remittance transfer 
system or government entities to reduce errors to remittance transfers 
overall. Placing responsibility on providers increases the incentives 
of providers to develop such policies, procedures, and controls. As a 
result, the Bureau does not believe that whether a particular 
circumstance constitutes an error should necessarily depend on whether 
a provider is at fault. The Bureau further notes that this is similar 
to the approach taken in defining ``errors'' under Sec.  1005.11 for 
EFTs where something may be considered an ``error'' even if the 
financial institution did not cause the error.
33(a)(1) Types of Transfers or Inquiries Covered
    Proposed Sec.  205.33(a)(1) listed the types of transfers or 
inquiries that would constitute ``errors.'' Each type of transfer or 
inquiry that constitutes an ``error'' is discussed below.
33(a)(1)(i) Incorrect Amount Paid by Sender
    Proposed Sec.  205.33(a)(1)(i) defined ``error'' to include an 
incorrect amount paid by a sender in connection with a remittance 
transfer. This element of the definition is similar to the error 
described in Sec.  1005.11(a)(1)(ii) of an incorrect EFT to or from a 
consumer's account. The Board also proposed comment 33(a)-1 to clarify 
that proposed Sec.  205.33(a)(1)(i) was intended to cover circumstances 
in which the amount paid by the sender differs from the total amount of 
the transaction stated in the receipt or the combined disclosure. 
Proposed comment 33(a)-1 also stated that an error under Sec.  
205.33(a)(1)(i) covered incorrect amounts paid by a sender regardless 
of the form or method of payment tendered by the sender for the 
transfer, including when a debit, credit, or prepaid card is used to 
pay an amount in excess of the amount of the transfer requested by the 
sender plus applicable fees.
    Commenters did not specifically address proposed Sec.  
205.33(a)(1)(i) or proposed comment 33(a)-1. The Bureau adopts proposed 
Sec.  205.33(a)(1)(i) substantially as proposed in renumbered Sec.  
1005.33(a)(1)(i). The Bureau also adopts comment 33(a)-1 substantially 
as proposed.
33(a)(1)(ii) Computational or Bookkeeping Error
    Under proposed Sec.  205.33(a)(1)(ii), an ``error'' also included 
``a computational or bookkeeping error made by a remittance transfer 
provider relating to a remittance transfer.'' This provision is similar 
to an existing computational or bookkeeping error provision for EFTs in 
Sec.  1005.11(a)(iv). In implementing this provision of Regulation E, 
the Board noted that Sec.  1005.11(a)(iv) (formerly Sec.  
205.11(a)(iv)) is intended to include ``arithmetical errors, posting 
errors, errors in printing figures, and figures that were jumbled due 
to mechanical or electronic malfunction.'' See 44 FR 59480 (Oct. 15, 
1979). Proposed Sec.  205.33(a)(1)(ii) was meant to cover similar types 
of errors with respect to remittance transfers, such as circumstances 
in which a remittance transfer provider fails to reflect all fees that 
will be imposed in connection with the transfer or misapplies the 
applicable exchange rate in calculating the amount of currency that 
will be received by the designated recipient. As noted in the May 2011 
Proposed Rule, notwithstanding that the designated recipient may 
receive the amount of currency stated on the receipt or combined 
disclosure, an error could be asserted because the provider incorrectly 
calculated the amount that should have been received. The Bureau did 
not receive any comments on proposed Sec.  205.33(a)(1)(ii). The Bureau 
adopts this provision as proposed in renumbered Sec.  
1005.33(a)(1)(ii).
33(a)(1)(iii) Incorrect Amount Received by the Designated Recipient
    The Board proposed Sec.  205.33(a)(1)(iii) to provide that an 
``error'' generally included the failure by a remittance transfer 
provider to make available to a designated recipient the amount of 
currency identified in the receipt or combined disclosure given to the 
sender, unless the disclosure provided an estimate made in accordance 
with proposed Sec.  205.32 (adopted as Sec.  1005.32 above). The Board 
also proposed guidance in comment 33(a)-2 regarding the scope of the 
error under proposed Sec.  205.33(a)(1)(iii). Furthermore, proposed 
comment 33(a)-3 provided examples illustrating circumstances in which 
an incorrect amount of currency may be received by a designated 
recipient.
    One industry commenter recommended that the exclusion of estimated 
disclosures made pursuant to Sec.  1005.32 from the definition of 
``error'' under renumbered Sec.  1005.33(a)(1)(iii) should be applied 
to other errors listed in Sec.  1005.33(a)(1). The Bureau notes, 
however, that none of the other errors in Sec.  1005.33(a)(1) rely on 
the difference between what may be disclosed as an estimate and the 
actual amount. For example, suppose a remittance transfer is permitted 
to estimate disclosures under Sec.  1005.32. If the remittance transfer 
provider fails to deliver any funds to the designated recipient, the 
sender should be able to assert an error even though the provider 
disclosed an estimate. As a result, the Bureau declines to make the 
requested change, and the exclusion of estimated disclosures made 
pursuant to Sec.  1005.32 is adopted as renumbered Sec.  
1005.33(a)(1)(iii)(A).
    In addition, the Bureau has added language to clarify that the 
exception in Sec.  1005.33(a)(1)(iii)(A) from the definition of 
``error'' applies if the difference results from application of the 
actual exchange rate, fees, and taxes, rather than any estimated 
amounts. This clarification prevents a remittance transfer provider 
from relying on the exception for estimates if it makes available to 
the designated recipient an amount that is completely unrelated to the 
amount calculated using the actual exchange rate, fees, and taxes. For 
example, if the remittance transfer provider estimated the amount to be 
received pursuant to Sec.  1005.32 as 1,200 pesos in the receipt or 
combined disclosure, and the amount calculated using the applicable 
actual exchange rate, fees, and taxes is 1,150 pesos, the provider 
cannot use the Sec.  1005.33(a)(1)(iii)(A) exception to claim that 
there is no error if it made only 100 pesos available to the designated 
recipient.
    As discussed in more detail below, several industry commenters 
requested expansion of the exception to the error defined in Sec.  
1005.33(a)(1)(iv) for

[[Page 6250]]

extraordinary circumstances outside the remittance transfer provider's 
control that could not have been reasonably anticipated. The Bureau 
believes that it is appropriate to provide this exception for an error 
involving an incorrect amount received by the designated recipient. For 
example, suppose a foreign government in the country where a remittance 
transfer is to be delivered imposes an emergency tax on the transfer 
that was not in effect nor could have been reasonably anticipated at 
the time the provider was required to give the sender the receipt or 
combined disclosure. The failure to make available to the designated 
recipient the amount of currency identified in the receipt or combined 
disclosure given to the sender, which did not reflect the emergency 
tax, should not constitute an error if the designated recipient 
received the disclosed amount of currency less the emergency tax.
    As a result, new Sec.  1005.33(a)(1)(iii)(B) provides that the 
failure to make the amount of currency stated in the receipt or 
combined disclosure is not an error if the failure resulted from 
extraordinary circumstances outside the remittance transfer provider's 
control that could not have been reasonably anticipated. Furthermore, 
the Bureau adopts new comment 33(a)-4 to provide guidance on what types 
of extraordinary circumstances outside the remittance transfer 
provider's control that could not have been reasonably anticipated 
qualify for the exception. The comment is similar to the comment 
adopted as comment 33(a)-6 below, which describes extraordinary 
circumstances outside the remittance transfer provider's control that 
could not have been reasonably anticipated for purposes of the error 
for failure to make funds available by the disclosed date of 
availability in Sec.  1005.33(a)(1)(iv).
    Proposed comment 33(a)-2 is adopted with a change to clarify that 
if a provider rounds the exchange rate used to calculate the amount 
received consistent with Sec.  1005.31(b)(1)(iv) and comment 
31(b)(1)(iv)-2 for the disclosed rate, there is no error if the 
designated recipient receives an amount of currency that results from 
applying the exchange rate used, prior to any rounding of the exchange 
rate, to calculate fees, taxes, and the amount received rather than the 
disclosed rate. The change is intended to be consistent with the 
Bureau's general approach to rounding exchange rates as described above 
in the supplementary information to comment 31(b)(1)(iv)-2. Proposed 
comment 33(a)-3 is adopted substantially as proposed.
33(a)(1)(iv) Failure To Make Funds Available by Date of Availability
    Proposed Sec.  205.33(a)(1)(iv) generally defined an ``error'' to 
include a remittance transfer provider's failure to make funds in 
connection with a remittance transfer available to the designated 
recipient by the date of availability stated on the receipt or combined 
disclosure, subject to two specified exceptions, discussed below. The 
Board proposed comment 33(a)-4 to provide examples of the circumstances 
that would have been considered errors under proposed Sec.  
205.33(a)(1)(iv). These circumstances included: (i) The late delivery 
of a remittance transfer after the stated date of availability or non-
delivery of the transfer; (ii) the deposit of a remittance transfer to 
the wrong account; (iii) retention of the transferred funds by a 
recipient agent or institution after the stated date of availability, 
rather than making the funds available to the designated recipient; and 
(iv) the fraudulent pick-up of a remittance transfer in a foreign 
country by a person other than the person identified by the sender as 
the designated recipient of the transfer. Fraudulent pick-up, however, 
did not include circumstances in which a designated recipient picks up 
a remittance transfer from the provider's agent as authorized, but 
subsequently the funds are stolen from the recipient.
    Several industry commenters objected to the inclusion of fraudulent 
pick-up as an error. These commenters suggested that the remittance 
transfer provider should not be responsible for fraud that results in 
the pick-up of a remittance transfer by a person other than the 
designated recipient where the provider is unlikely to know or have 
control over all the intermediary institutions involved in the transfer 
or the final institution that will make the funds available to the 
designated recipient. Other commenters, including the OCC, suggested 
that this error might result in ``friendly fraud'' where a sender 
claims the amount was not an authorized pick-up when the pick-up was 
actually legitimate. The OCC was also concerned that the exposure to 
remittance transfer providers for this error may be aggravated in 
situations involving large dollar remittances and because of the long 
period of time that a sender could assert this error.
    One industry commenter noted that while there may be certain 
instances when fraudulent pick-up should be considered an error, there 
may be other circumstances when fraudulent pick-up should not be an 
error. In particular, this commenter suggested that where the name of 
the person picking up the funds does not match the name of the 
designated recipient set forth in the receipt, the sender should be 
able to assert an error. However, if an individual presents fake 
identification in the name of the designated recipient, this commenter 
stated that this fraudulent pick-up is outside of the remittance 
transfer provider's control and therefore, should not be considered an 
error. Industry commenters also believed that a remittance transfer 
provider should not be liable for a fraudulent pick-up when a provider 
and its agent has complied with fraud and risk management policies and 
procedures.
    As the Board noted in the May 2011 Proposed Rule, treating 
fraudulent pick-up of a remittance transfer as an error is consistent 
with the scope of unauthorized EFTs under Sec.  1005.2(m), which 
includes unauthorized EFTs initiated through fraudulent means. See 
comment 2(m)-3. Although identity theft can present a challenge to 
remittance transfer providers, financial institutions face similar 
challenges with respect to unauthorized EFTs and bear most of the risk. 
Moreover, similar to remittance transfers, the entity in the best 
position to verify the identity of the person initiating the EFT (for 
example, the merchant at a store who initiates an EFT using a debit 
card) may not be known or controlled by the financial institution, 
though such entities may have agreed to abide by system rules (e.g., 
payment card network rules, ACH system rules). However, under current 
laws governing EFTs, whether the financial institution knows or has 
control over that entity (e.g., a merchant) does not affect whether an 
EFT could be an unauthorized EFT. Similarly, the Bureau believes that 
whether a fraudulent pick-up should be considered an error should not 
be affected by the relationship between the remittance transfer 
provider and the entity distributing the remittance transfer to the 
designated recipient.
    Furthermore, the Bureau agrees with the Board's reasoning in the 
May 2011 Proposed Rule that it is appropriate to treat these 
circumstances as errors because the remittance transfer provider, 
rather than the sender, is in the best position to ensure that a 
remittance transfer is picked up only by the person designated by the 
sender. For example, in some models, remittance transfer providers 
could require or contract with the entity distributing the funds, if it 
is not the remittance transfer provider itself, to request and examine 
identification from the person picking up the funds. The Bureau 
believes that including fraudulent pick-up as an error

[[Page 6251]]

would better align the remittance transfer provider's incentives to 
prevent this occurrence with the interests of the sender.
    One industry commenter suggested that a sender be required to 
inform the remittance transfer provider if the confirmation number or 
receipt is lost or stolen. For some remittance transfer providers, a 
designated recipient is required to give the confirmation number, which 
is generally printed on the receipt, in order to obtain access to the 
funds in a remittance transfer. The commenter suggested that this 
approach would be similar to the approach taken with respect to a lost 
or stolen access device in Sec.  1005.6(b) with respect to unauthorized 
EFTs, where a consumer's liability for unauthorized EFTs is dependent 
on how quickly the consumer reports the lost or stolen access device to 
the account-holder financial institution.
    The Bureau notes, however, the risk for a lost or stolen 
confirmation number is not the same as for a lost or stolen access 
device for EFTs. A lost or stolen access device could potentially be 
used to initiate an EFT by a person who is not the account holder 
immediately without an accomplice and without identification matching 
the name associated with the access device. By contrast, where a 
confirmation number given to the sender is lost or stolen, an 
unauthorized person who gains access to the number would not be able to 
take advantage of it unless he or she were located or had an accomplice 
in the recipient country. Furthermore, because access to funds sent by 
a remittance transfer provider is often limited to those with 
identification matching the designated recipient on the receipt, an 
unauthorized person who gains access to a lost or stolen confirmation 
number may be deterred from taking advantage of it. Consequently, the 
Bureau does not believe that a sender's liability should depend on 
whether he or she reports a confirmation number or receipt as lost or 
stolen.
    Moreover, under Sec.  1005.6(b), a consumer's liability for 
unauthorized EFTs is dependent on how quickly the consumer reports the 
lost or stolen access device because the speed with which a consumer 
reports the lost or stolen access device may be critical to preventing 
further unauthorized EFTs and further losses, and the possibility of 
increased liability provides incentives for a consumer to report 
quickly. In contrast, a lost or stolen confirmation number would not 
result in losses other than the specific remittance transfer in 
question. Therefore, the Bureau also does not believe that a sender's 
liability should depend on how quickly a sender reports a lost or 
stolen confirmation number.
    The Bureau is adopting comment 33(a)-4, renumbered as comment 
33(a)-5, generally as proposed. Specifically, the Bureau is including a 
statement to clarify that if only a portion of the funds were made 
available by the disclosed date of availability, then Sec.  
1005.33(a)(1)(iv) does not apply, but Sec.  1005.33(a)(1)(iii) may 
apply instead.
Exceptions to the Failure To Make Funds Available by Date of 
Availability
    As noted above, the proposed rule provided two exceptions to the 
definition of ``error'' in proposed Sec.  205.33(a)(1)(iv). Under 
proposed Sec.  205.33(a)(1)(iv)(A), the failure to make funds from a 
remittance transfer available by the stated date of availability did 
not constitute an error if the failure resulted from circumstances 
outside the remittance transfer provider's control. Under proposed 
Sec.  205.33(a)(1)(iv)(B), the failure to make funds from a remittance 
transfer available on the stated date of availability did not 
constitute an error if it was caused by the sender providing incorrect 
information in connection with the remittance transfer to the provider, 
so long as the provider gives the sender the opportunity to correct the 
information and resend the transfer at no additional cost. The Bureau 
adopts one of these two exceptions with changes to respond to 
commenters' concerns, as discussed below. The other exception has been 
moved to the remedies section under Sec.  1005.33(c)(2) for the reasons 
discussed below. The Bureau is also adopting two additional exceptions 
to the definition of ``error'' in proposed Sec.  205.33(a)(1)(iv).
Exception for Extraordinary Circumstances Outside of the Remittance 
Transfer Provider's Control
    Proposed Sec.  205.33(a)(1)(iv)(A) provided that the failure to 
make funds from a remittance transfer available by the stated date of 
availability did not constitute an error if the failure resulted from 
circumstances outside the remittance transfer provider's control. 
Proposed comment 33(a)-5 clarified that the exception was limited to 
circumstances that are generally referred to under contract law as 
force majeure, or uncontrollable or extraordinary circumstances that 
cannot be reasonably anticipated by the remittance transfer provider 
and that prevent the provider from delivering a remittance transfer, 
such as war, civil unrest, or a natural disaster. The proposed comment 
also provided that the exception for circumstances beyond a provider's 
control covered government actions or other restrictions that occur 
after the transfer has been sent but that could not have been 
reasonably anticipated by the remittance transfer provider, such as the 
imposition of foreign currency controls or the garnishment or 
attachment of funds.
    Many industry commenters stated that the proposed comment limiting 
the circumstances beyond the provider's control to instances of force 
majeure or to other uncontrollable or extraordinary circumstances was 
too narrow. Several industry commenters recommended that the exception 
should be more broadly interpreted to exclude errors caused by acts of 
a third party beyond a remittance transfer provider's control. Consumer 
group commenters believed the approach in the proposed rule was a 
reasonable limitation and recommended that the commentary specifically 
state that mistakes by a recipient institution do not fall under the 
exception to the error to deliver funds by the date of delivery. Other 
consumer group commenters suggested that the final rule limit the 
circumstances even further to only include acts of war or terrorism or 
natural disaster.
    As discussed above, the Bureau does not believe that whether a 
particular circumstance constitutes an error or not should necessarily 
depend on whether a provider is at fault. Even if the error is caused 
by a third party beyond the remittance transfer provider's control, the 
Bureau believes that the remittance transfer provider is often in a 
better position to identify and recover the loss from the third party 
than a sender, especially when there are multiple intermediary 
institutions involved in a transfer. Accordingly, the Bureau believes 
that with respect to third-party errors, the circumstances in proposed 
Sec.  205.33(a)(1)(iv)(A) should include only a narrow category of 
third-party errors caused by uncontrollable or extraordinary 
circumstances that cannot be reasonably anticipated by the remittance 
transfer provider and that prevent the provider from delivering a 
remittance transfer.
    Furthermore, the Bureau believes the proposed comment is 
appropriately narrow in interpreting the limited set of circumstances 
for which the failure to make funds available by the disclosed date of 
delivery should not be an error. Therefore, proposed comment 33(a)-5 is 
adopted substantially as proposed in comment 33(a)-6. The Bureau is 
adopting proposed Sec.  205.33(a)(1)(iv)(A) generally as proposed in 
renumbered Sec.  1005.33(a)(1)(iv)(A). However, the Bureau is adding 
language to

[[Page 6252]]

Sec.  1005.33(a)(1)(iv)(A) to more accurately reflect the descriptions 
of the types of circumstances listed in comment 33(a)-6. Specifically, 
Sec.  1005.33(a)(1)(iv)(A) provides that a failure to make funds 
available by the disclosed date of delivery is not an error if the 
failure resulted from extraordinary circumstances outside the 
remittance transfer provider's control that could not have been 
reasonably anticipated.
Exception for Sender Providing Incorrect or Insufficient Information
    Proposed Sec.  205.33(a)(1)(iv)(B) provided that the failure to 
make funds from a remittance transfer available on the stated date of 
availability did not constitute an error if it was caused by the sender 
providing incorrect information in connection with the remittance 
transfer to the provider, so long as the provider gives the sender the 
opportunity to correct the information and resend the transfer at no 
additional cost. Proposed comment 33(a)-6 clarified that if the failure 
to make funds from a transfer available by the stated date of 
availability occurred due to the provider's miscommunication of 
information necessary for the designated recipient to pick up the 
transfer, such as providing the incorrect location where the transfer 
may be picked up or providing the wrong confirmation number or code for 
the transfer, such failure would have been treated as an error under 
proposed Sec.  205.33(a)(1)(iv).
    Many industry commenters objected to the requirement that the 
remittance transfer provider absorb the costs of amending and resending 
a transfer when the sender is at fault. These commenters noted that 
modifying transfers can be expensive and that the proposed rule would, 
in effect, require the remittance transfer provider and other senders, 
through higher fees, to bear the responsibility for a sender's mistake.
    The Bureau agrees with commenters that a sender's mistake should 
not obligate a remittance transfer provider to bear all the costs for 
resending the remittance transfer. However, the Bureau believes that 
while the remittance transfer provider should not bear all the costs in 
these circumstances, the failure should still be considered an error 
such that the error resolution procedures apply. Therefore, the Bureau 
is moving the concept in proposed Sec.  205.33(a)(1)(iv)(B) to a new 
Sec.  1005.33(c)(2)(ii)(A)(2), and proposed comment 33(a)-6 to 
renumbered comment 33(c)-2, as discussed further below.
Additional Exceptions
    In the final rule, the Bureau is adding two additional exceptions 
to the definition of ``error'' in Sec.  1005.33(a)(1)(iv) based on a 
consideration of comments received. New Sec.  1005.33(a)(1)(iv)(B) 
provides that delays in making funds available to a designated 
recipient that are related to a provider's fraud screening procedures 
or in accordance with the Bank Secrecy Act (BSA), 31 U.S.C. 5311 et 
seq., Office of Foreign Assets Control (OFAC) requirements, or similar 
laws or requirements would not constitute an error. Several industry 
commenters and the OCC noted that for fraud screening, BSA, or OFAC 
purposes, a remittance transfer provider may have further 
communications with the sender to ensure the legitimacy or the legality 
of a remittance transfer. This, in turn, may cause delays in making the 
funds available to a designated recipient. The Bureau believes it is 
appropriate to exclude these situations from the definition of 
``error'' in order to encourage remittance transfer providers to 
continue to engage in activities that benefit the safety of the 
transfer system as a whole. The Bureau understands that under current 
procedures, these types of delays are generally infrequent, relative to 
the number of remittance transfers typically conducted by remittance 
transfer providers.
    The Bureau is also adopting a new Sec.  1005.33(a)(1)(iv)(C) in 
response to industry commenters' and the OCC's concerns about 
``friendly fraud.'' Consequently, consistent with the definition of 
``unauthorized electronic fund transfer'' under Sec.  1005.2(m), and as 
suggested by the OCC to address its concerns regarding the error of 
fraudulent pick-up, Sec.  1005.33(a)(1)(iv)(C) provides an exception to 
the ``error'' definition for remittance transfers made with fraudulent 
intent by the sender or any person in concert with the sender. 
Therefore, if a sender is involved in a scheme to defraud the 
remittance transfer provider, for example, by fraudulently claiming 
that the designated recipient did not pick up funds that the designated 
recipient in fact did pick up, such action would not be considered an 
``error'' under Sec.  1005.33(a)(1)(iv)(C).
33(a)(1)(v) Sender's Request for Documentation
    Finally, under proposed Sec.  205.33(a)(1)(v), an error included a 
sender's request for documentation provided in connection with a 
remittance transfer or additional information or clarification 
concerning a remittance transfer. This provision is similar to an 
existing provision in Sec.  1005.11(a)(1)(vii) for EFTs. As the Board 
noted in the May 2011 Proposed Rule, an error under proposed Sec.  
205.33(a)(1)(v) would also cover a sender's request for information to 
determine whether an error exists. The Bureau did not receive any 
comments on proposed Sec.  205.33(a)(1)(v). The Bureau adopts proposed 
Sec.  205.33(a)(1)(v) substantially as proposed in renumbered Sec.  
1005.33(a)(1)(v).
33(a)(2) Types of Inquiries and Transfers Not Covered
    Proposed Sec.  205.33(a)(2) listed circumstances that would not 
constitute errors. In particular, proposed Sec.  205.33(a)(2)(i) 
provided that an inquiry about a transfer of $15 or less does not 
constitute an error, since these small-value transfers do not fall 
within the scope of the definition of ``remittance transfer.'' See 
Sec.  1005.30(e)(2), discussed above. Under proposed Sec.  
205.33(a)(2)(ii), an inquiry about the status of a remittance 
transfer--for example, if the sender calls to ask whether the funds 
have been made available in the foreign country--would also not be an 
error (unless the funds have not been made available by the disclosed 
date of availability). Finally, similar to Sec.  1005.11(a)(2)(ii) for 
EFTs, a sender's request for information for tax or other recordkeeping 
purposes would not constitute an error under proposed Sec.  
205.33(a)(2)(iii).
    The Bureau notes that because transfers of $15 or less are not 
``remittance transfers'' under Sec.  1005.30(e)(2), such transfers are 
not covered under the remittance transfer provisions in subpart B. 
Therefore, the Bureau believes it is not necessary to state that an 
inquiry involving a transfer of $15 or less is not an error, and is not 
adopting proposed Sec.  205.33(a)(2)(i). A Federal Reserve Bank 
commenter noted that for certain assertions of error that exceed the 
$15 threshold, providers may still not have the ability to investigate 
the assertion because they are less than the minimum amount traceable 
in a foreign country. In order to ensure that senders are protected 
with respect to errors related to remittance transfers other than truly 
de minimis amounts, however, the Bureau is not inclined to create 
another threshold amount above the $15 coverage threshold for which an 
inquiry is not an error. The Bureau did not receive comments on 
proposed Sec.  205.33(a)(2)(ii) or (iii). These provisions are adopted 
as proposed in

[[Page 6253]]

renumbered Sec.  1005.33(a)(2)(i) and (ii), respectively.
    In the final rule, the Bureau is adopting provisions describing two 
other circumstances that do not constitute errors in response to 
comments received. Section 1005.33(a)(2)(iii) provides that a change 
requested by the designated recipient is not an error. Comment 33(a)-7 
clarifies new Sec.  1005.33(a)(2)(iii) by providing that the exception 
is available only if the change is made solely because the designated 
recipient requested the change. The comment also includes an 
illustrative example. The example explains that if a sender requests a 
remittance transfer provider to send US$100 to a designated recipient 
at a designated location, but the designated recipient requests the 
amount in a different currency (either at the sender-designated 
location or another location requested by the recipient) and the 
remittance transfer provider accommodates the recipient's request, the 
change does not constitute an error.
    The Bureau understands that as a service to the recipient, a 
remittance transfer provider may offer to provide the remittance 
transfer in a different currency or permit the transfer to be picked up 
at a location different than originally requested by the sender. In 
such cases, the Bureau believes that this type of customer service 
should be preserved. The Bureau, however, is concerned that remittance 
transfer providers may try to provide the remittance transfer to the 
designated recipient in a different currency simply because the 
provider or its agent do not have sufficient amounts of the sender-
requested currency on hand. Therefore, the Bureau believes that this 
exception should only be available if the change is made solely because 
the designated recipient requested the change.
    Section 1005.33(a)(2)(iv) is also new and 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 Sec.  1005.31(b)(2) or (3) 
if the remittance transfer provider relied on information provided by 
the sender as permitted by the commentary accompanying Sec.  1005.31 in 
making such disclosure. As discussed above, a remittance transfer 
provider may rely on the sender's representations in making certain 
disclosures. For example, a remittance transfer provider can rely on 
the representations of the sender regarding the currency that can be 
provided in the remittance transfer.
    New comment 33(a)-8 elaborates on the exclusion by providing two 
illustrative examples. Under one example, 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 account-holding 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 pursuant to Sec.  1005.33(a)(2)(iv). Similarly, if the 
remittance transfer 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 
pursuant to Sec.  1005.33(a)(2)(iv).
33(b) Notice of Error From Sender
    Proposed Sec.  205.33(b) set forth the timing and content 
requirements for a notice of error provided by a sender in connection 
with a remittance transfer. Consistent with EFTA section 919(d)(1)(A), 
proposed Sec.  205.33(b)(1)(i) stated that a sender must provide a 
notice of error orally or in writing to the remittance transfer 
provider no later than 180 days after the date of availability of the 
remittance transfer stated in the receipt or combined disclosure. Under 
proposed Sec.  205.33(b)(1)(ii), such notice of error must enable the 
remittance transfer provider to identify: the sender's name and 
telephone number or address; the recipient's name, and if known, the 
telephone number or address of the recipient; and the remittance 
transfer to which the notice of error applies. Proposed Sec.  
205.33(b)(1)(iii) stated that the notice must also indicate why the 
sender believes the error exists and include to the extent possible the 
type, date, and amount of the error, except in the case of requests for 
documentation, additional information, or clarification under proposed 
Sec.  205.33(a)(1)(v).
    Several industry commenters suggested that the time period for 
senders to assert an error is too long. Some industry commenters 
recommended that the time period be shortened to 60 days, similar to 
the time period that consumers have to assert errors for EFTs. See 
Sec.  1005.11(b)(3). Other industry commenters suggested 30 days. The 
Bureau notes that the 180-day time period for senders to assert an 
error is expressly stated in the statute. Given the international 
nature of remittance transfers, the additional time a sender may need 
to communicate with persons abroad, and the lack of information about 
problems associated with this time period, the Bureau does not believe 
that using its authority under EFTA sections 904(a) and (c) to change 
this time period is currently warranted.
    Industry commenters also requested that the sender be required to 
assert an error in writing at a centralized address. The Bureau 
believes that requiring senders to assert an error in writing would 
have a chilling effect on the error resolution process, especially 
given that some senders may not feel comfortable writing in English. 
Although in some cases, a sender may have the ability to assert the 
error in a foreign language and be assured a response in that language, 
that ability may depend on the foreign languages used at the office of 
the remittance transfer provider where the error is asserted to 
advertise, solicit, or market remittance transfers under Sec.  
1005.31(g), as discussed above. Moreover, the current error resolution 
process for EFTs does not require a consumer to assert an error in 
writing.\81\ Therefore, the Bureau declines to make the requested 
change, and proposed Sec.  205.33(b)(1) is adopted substantially as 
proposed in renumbered Sec.  1005.33(b)(1).
---------------------------------------------------------------------------

    \81\ See Sec.  1005.11(b). Although a financial institution may 
request that a consumer assert the error in writing, a consumer's 
failure to do so does not cancel the error resolution process, but 
gives the financial institution 45 days to investigate the error 
without having to provide provisional credit. See Sec.  
1005.11(b)(2) and (c)(2).
---------------------------------------------------------------------------

    Proposed Sec.  205.33(b)(2) provided that when a notice of error 
was based on documentation, additional information, or clarification 
that the sender had previously requested under Sec.  1005.33(a)(1)(v), 
the sender's notice of error would be timely if it were received by the 
provider no later than 60 days after the provider sends the requested 
documentation, information, or clarification. As the Board explained in 
the May 2011 Proposed Rule, the proposed 60-day time frame for the 
sender to provide a new notice of error following the sender's receipt 
of documentation, information, or clarification from the remittance 
transfer provider is consistent with the 60-day time frame established 
for similar circumstances under the general error resolution provisions 
in Regulation E, Sec.  1005.11(b)(3).
    The Bureau agrees with the Board's reasoning that under these 
circumstances, 60 days, rather than the 180-day error resolution time 
frame generally applicable to remittance

[[Page 6254]]

transfers, provides sufficient time for a sender to review the 
additional information provided by the remittance transfer provider and 
determine whether an error occurred in connection with a transfer. The 
Bureau did not receive any comments on this issue. However, the Bureau 
believes it is appropriate to clarify that a sender always has the 
original 180 days after the disclosed date of availability to assert an 
error. Consequently, the Bureau is amending proposed Sec.  
205.33(b)(2), renumbered as Sec.  1005.33(b)(2), to provide that when a 
notice of error is based on documentation, additional information, or 
clarification that the sender had previously requested under Sec.  
1005.33(a)(1)(v), the sender's notice of error is timely if received by 
the remittance transfer provider the later of 180 days after the 
disclosed date of availability of the remittance transfer or 60 days 
after the provider sent the documentation, information, or 
clarification requested.
    The Board proposed commentary to clarify proposed Sec.  205.33(b). 
Proposed comment 33(b)-1 clarified that the error resolution procedures 
for remittance transfers apply only when a notice of error is received 
from the sender of the transfer. Thus, a notice of error provided by 
the designated recipient would not trigger the remittance transfer 
provider's error resolution obligations. As the Board explained in the 
May 2011 Proposed Rule, this interpretation is consistent with EFTA 
section 919(d)(1)(A), which establishes error resolution obligations 
for a remittance transfer provider only when a notice is received from 
the sender.\82\ Proposed comment 33(b)-1 also clarified that the error 
resolution provisions do not apply when the remittance transfer 
provider itself discovers and corrects an error. The Bureau did not 
receive any comments on the proposed comment, which the Bureau adopts 
as proposed.
---------------------------------------------------------------------------

    \82\ See also EFTA section 919(g)(1) (providing that a 
designated recipient ``shall not be deemed to be a consumer for 
purposes of this Act'').
---------------------------------------------------------------------------

    The Board proposed comment 33(b)-2 to provide that a notice of 
error is effective so long as the remittance transfer provider is able 
to identify the remittance transfer in question. As explained in the 
May 2011 Proposed Rule, a sender could provide in the notice of error 
the confirmation number or code given to the sender for the pick-up of 
a remittance transfer to identify the particular transfer in their 
tracking systems and records, or any other identification number or 
code supplied by the provider in connection with the remittance 
transfer, if such number or code is sufficient to enable the provider 
to identify the transfer.
    One industry commenter requested that, for an account-based 
remittance transfer, the final rule require senders to include the 
account number in the notice of error. The Bureau notes that under 
comment 11(b)(1)-1 for EFTs, consumers are not required to provide 
their account numbers and need only provide sufficient information to 
enable the financial institution to identify the account. Similarly, 
the Bureau believes that a sender need not provide the account number, 
but must provide enough information such that the remittance transfer 
provider can identify the account and the transfer in question. The 
Bureau adopts comment 33(b)-2 with this clarification, and also makes 
other clarifying changes to comment 33(b)-2 to make the comment 
consistent with Sec.  1005.33(b)(1).
    Proposed comment 33(b)-3 provided that a remittance transfer 
provider may request, or the sender may provide, an email address of 
the sender or the designated recipient, as applicable, instead of a 
physical address if the email address would be sufficient to enable the 
provider to identify the remittance transfer to which the notice 
applies. Proposed comment 33(b)-4 provided that if the sender fails to 
provide a timely notice of error within 180 days from the stated date 
of delivery, the remittance transfer provider would not be required to 
comply with the error resolution requirements set forth in the rule. As 
the Board noted in the May 2011 Proposed Rule, proposed comment 33(b)-4 
is similar to comment 11(b)(1)-7 for EFTs. The Bureau did not receive 
any comments on these proposed comments. Therefore, the Bureau adopts 
comment 33(b)-3 substantially as proposed.
    However, given that a sender may provide a second notice of error 
based on documentation, additional information, or clarification that 
the sender requested pursuant to Sec.  1005.33(b)(2), as discussed 
above, the Bureau is revising comment 33(b)-4 to include the time 
periods relevant to Sec.  1005.33(b)(2). Consequently, comment 33(b)-4 
provides that, if applicable, a remittance transfer provider is not 
required to comply with the error resolution requirements for any 
notice of error from a sender that is received by the provider more 
than 60 days after a provider sent documentation, additional 
information, or clarification requested by the sender, provided such 
date is later than 180 days after the disclosed date of availability.
    The Board proposed comment 33(b)-5 to provide that a notice of 
error from a sender received by a remittance transfer provider's agent 
is deemed to be received by the provider for purposes of the 180-day 
time frame for reporting errors under Sec.  1005.33(b)(1)(i). Some 
industry commenters suggested that senders should only be permitted to 
assert an error at a centralized address or telephone number. These 
commenters noted that because remittance transfers are not the primary 
business for most or all of the agents of a remittance transfer 
provider, relying on an agent to properly forward disputes and relevant 
supporting documents to the remittance transfer provider would impose 
unnecessary costs on agents. Commenters also argued that introducing 
agents into the error resolution process would increase the likelihood 
that disputes would not be handled and resolved in a timely way.
    As the Board noted in the May 2011 Proposed Rule, a sender that has 
a problem or issue with a particular remittance transfer may contact 
the agent location that the sender used to send the transfer to resolve 
the problem or issue, rather than notifying the provider directly. The 
Bureau agrees with the Board that because in many cases, for transfers 
sent through money transmitters, it will be the agent with whom the 
sender has a direct relationship, and not the provider, it is 
appropriate to treat a notice of error given to the agent as notice to 
the provider. This approach also ensures that a sender does not lose 
his or her error resolution rights merely because the sender was 
unaware of a need to directly notify the provider. This is consistent 
with the approach the Bureau is taking with respect to a sender 
asserting his or her right to cancel, as discussed in further detail 
below in comment 34(a)-4. Moreover, the Bureau notes that the comment 
does not require the agent to perform the error resolution procedures. 
Remittance transfer providers may require their agents to pass on any 
error notice they receive to the remittance transfer providers, who can 
then fulfill the requirements of Sec.  1005.33. Therefore, the Bureau 
adopts proposed comment 33(b)-5 substantially as proposed.
    Finally, proposed comment 33(b)-6 cross-referenced the disclosure 
requirements in Sec.  205.31 to reiterate that a remittance transfer 
provider must include an abbreviated notice of the consumer's error 
resolution rights on the receipt under Sec.  205.31(b)(2) or combined 
disclosure under Sec.  205.31(b)(3), as applicable. In

[[Page 6255]]

addition, the proposed comment provided that the remittance transfer 
provider must make available to a sender upon request, a notice 
providing a full description of error resolution rights that is 
substantially similar to the model error resolution and cancellation 
notice set forth in Appendix A of this regulation (Model Form A-36). 
The Bureau did not receive any comments on the proposed comment. The 
Bureau adopts comment 33(b)-6 substantially as proposed.

33(c) Time Limits and Extent of Investigation

    The Board proposed Sec.  205.33(c) to implement the statutory time 
frame for investigating errors and set forth the procedures for 
resolving an error, including the applicable remedies. The Bureau is 
adopting proposed Sec.  205.33(c) in renumbered Sec.  1005.33(c) with 
the changes discussed below.
33(c)(1) Time Limits for Investigation and Report to Consumer of Error
    Consistent with EFTA section 919(d)(1)(B), proposed Sec.  
205.33(c)(1) provided that a remittance transfer provider must promptly 
investigate a notice of error to determine whether an error occurred 
within 90 days of receiving the sender's notice. Some industry 
commenters suggested that the time to investigate a notice of error 
should be extended. One industry trade association commenter stated 
that for one of its member banks, while international wire 
``exceptions'' (including non-timely delivery) averaged less than 1% of 
its international wire transfers, more than 15% of these exceptions 
took longer than 90 days to resolve.
    The Bureau notes that the 90-day time period is set by the statute. 
Furthermore, compared to the time period to resolve errors for EFTs 
(including those a consumer may have initiated abroad), which can be 
either 10 business days or 45 calendar days, 90 days is twice the 
length of the longest allowable time period. See Sec.  1005.11(c). 
Although a longer period than the one available for EFTs may be 
justified given the international nature of these transactions, the 
Bureau believes that senders should have errors resolved in a timely 
manner. Consequently, the Bureau does not believe use of its authority 
under EFTA sections 904(a) and (c) to extend the statutorily-imposed 
90-day period is warranted.
    To effectuate the purposes of the EFTA, the Board also proposed to 
include in proposed Sec.  205.33(c)(1) a requirement that the 
remittance transfer provider report the results to the sender within 
three business days after completing its investigation. As the Board 
explained in the May 2011 Proposed Rule, this timing is consistent with 
the time frame for reporting the results of an error investigation 
under Regulation E, Sec.  1005.11(c)(2)(iv). In addition, under 
proposed Sec.  205.33(c)(1), the report or notice of results would have 
to alert the sender of any remedies available for correcting any error 
that the provider determines has occurred.
    EFTA section 919(d)(1) does not expressly require a notice to be 
provided to the sender when the provider determines that an error has 
occurred. However, the Board proposed to require that a notice be given 
in these circumstances to alert the sender of the results of the 
investigation, as well as to inform the sender of available remedies. 
In proposing this requirement, the Board did not propose that the 
notice to a sender that an error occurred as asserted had to be in 
writing because such a requirement could unnecessarily delay a sender's 
ability to receive an appropriate remedy. Accordingly, the Board 
proposed comment 33(c)-1 to clarify that if the error occurred as 
described by the sender, the provider may inform the sender of its 
findings either orally or in writing. If the error did not occur as 
described, however, the remittance transfer provider would have to 
provide a written notice of its findings under Sec.  1005.33(d), as 
discussed below. The Bureau agrees with the Board's reasoning in 
proposing both Sec.  205.33(c)(1) and comment 33(c)-1. Accordingly, to 
effectuate the purposes of the EFTA, the Bureau believes it is 
necessary and proper to use its authority under EFTA sections 904(a) 
and (c) to adopt these provisions substantially as proposed in 
renumbered Sec.  1005.33(c)(1) and comment 33(c)-1, respectively.
    Consumer group commenters also requested that the Bureau specify 
that the burden of proof should be on the remittance transfer provider 
so that if a sender presents evidence that there has been an error, the 
burden should unequivocally shift to the remittance transfer provider 
to show that there was not an error. The Bureau notes that the EFTA 
establishes various burdens of proof. For example, under EFTA section 
909(b), in any action involving a consumer's liability for an 
unauthorized EFT, the burden of proof is upon the financial institution 
to show that the EFT was authorized. However, under EFTA section 
910(b), a financial institution is not liable for an incorrect or 
delayed EFT if it can show by a preponderance of the evidence that its 
action or failure to act resulted from an act of God or other 
circumstance beyond its control or a technical malfunction known to the 
consumer at the time the consumer attempted to initiate the EFT. 
Section 1073 of the Dodd-Frank Act did not amend the EFTA to adopt a 
specific burden of proof for errors related to remittance transfers 
that are not EFTs. Therefore, the Bureau does not believe it is 
appropriate to address this issue.
33(c)(2) Remedies
    The Board proposed Sec.  205.33(c)(2) to establish the procedures 
and remedies for correcting an error. Proposed Sec.  205.33(c)(2)(i) 
and (ii) included the two remedies that are specified in EFTA section 
919(d)(1)(B). Under proposed Sec.  205.33(c)(2), the sender may 
designate the preferred remedy in the event of an error, consistent 
with EFTA section 919(d)(1)(B). Thus, under proposed Sec.  
205.33(c)(2)(i), the sender could choose 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. 
Alternatively, under proposed Sec.  205.33(c)(2)(ii), the sender could 
choose to have the remittance transfer provider send to the designated 
recipient the amount appropriate to resolve the error, at no additional 
cost to the sender or the designated recipient. The Bureau did not 
receive any comments objecting to these remedies. Therefore, the 
statutory remedies set forth in proposed Sec.  205.33(c)(2)(i) and (ii) 
are adopted substantially as proposed in renumbered Sec.  
1005.33(c)(2)(i)(A) and (B), respectively, for errors under Sec.  
1005.33(a)(1)(i) through (a)(1)(iii), and Sec.  1005.33(c)(2)(ii)(A)(1) 
and (2), respectively, for an error under Sec.  1005.33(a)(1)(iv). 
Thus, the final rule clarifies that these remedies do not apply to a 
sender's request for documentation or for additional information or 
clarification under Sec.  1005.33(a)(1)(v), where the appropriate 
remedy is the requested documentation, information, or clarification. 
See Sec.  1005.33(c)(2)(iii) as discussed below.
    However, as discussed above with respect to proposed Sec.  
205.33(a)(1)(iv)(B), the Bureau believes that if the failure to make 
funds from a remittance transfer available on the disclosed date of 
availability is caused by the sender providing incorrect information in 
connection with the remittance transfer to the provider, the sender's 
mistake should not obligate a remittance transfer provider to bear all 
the costs for resending the remittance transfer. As noted above, many 
industry commenters objected to the requirement

[[Page 6256]]

that the remittance transfer provider absorb the costs of amending and 
resending a transfer when the sender is at fault because doing so would 
require the remittance transfer provider and other senders, through 
higher fees, to bear the responsibility for a sender's mistake.
    Therefore, Sec.  1005.33(c)(2)(ii)(A)(2) does not require that 
providers send to the designated recipient the amount appropriate to 
resolve the error at no additional cost to the sender or the designated 
recipient if the sender provided incorrect information in connection 
with the remittance transfer to the provider. Instead, Sec.  
1005.33(c)(2)(ii)(A)(2) provides that if the sender provided incorrect 
information to the remittance transfer provider in connection with the 
remittance transfer, third party fees may be imposed for resending the 
remittance transfer with the corrected information. Section 
1005.33(c)(2)(ii)(A)(2) permits third party fees and taxes that were 
actually incurred in the earlier transmission attempt to be imposed for 
the resend, but does not permit remittance transfer providers to charge 
senders a second time for the provider's own fees.
    The Bureau is making this distinction in order to apply the rule 
without requiring complicated individualized analyses and allocations 
of the expenses actually incurred in connection with a failed 
transaction. The Bureau believes this approach strikes a more 
appropriate balance between the interests of providers and senders than 
the proposed rule of not permitting any fees to be imposed for the 
resend, given that third party fees and taxes are not controlled by the 
provider and are simply being passed on from other actors. Furthermore, 
the Bureau believes that affiliates of remittance transfer providers, 
like providers themselves, should not assess fees for resending a 
remittance transfer with corrected information.
    The Bureau also believes that if a sender provides insufficient 
information to enable the remittance transfer provider to complete the 
transfer as requested, third party fees should be permitted to be 
imposed for resending the remittance transfer with the additional 
information. For example, a sender may only provide a partial name for 
the designated recipient such that the entity distributing the funds 
cannot determine whether the person picking up the funds or the name 
associated with the account is the intended designated recipient. 
Therefore, Sec.  1005.33(c)(2)(ii)(A)(2) provides that if the sender 
provided insufficient information to the remittance transfer provider 
in connection with the remittance transfer, third party fees may be 
imposed for resending the remittance transfer with the additional 
information.
    The Bureau is also adopting a new comment 33(c)-2 to clarify Sec.  
1005.33(c)(2)(ii)(A)(2). The comment generally incorporates proposed 
comment 33(a)-6 to clarify that if the failure to make funds from a 
transfer available by the disclosed date of availability occurred due 
to the provider's miscommunication of information necessary for the 
designated recipient to pick up the transfer, such as providing the 
incorrect location where the transfer may be picked up or providing the 
wrong confirmation number or code for the transfer, such failure would 
not be treated as a failure caused by the sender providing incorrect or 
insufficient information in connection with the remittance transfer to 
the provider. The comment also clarifies that while 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.
    Furthermore, if funds were not exchanged in the first unsuccessful 
attempt of the remittance transfer, the provider must use the exchange 
rate it is using for such transfers on the date of the resend. The 
Bureau recognizes that this approach is different from the approach 
adopted for other errors, where the provider must apply the exchange 
rate stated in the receipt or combined disclosure. See comment 33(c)-3, 
discussed below. For errors where the failure was not caused by the 
sender providing incorrect or insufficient information, the Bureau 
believes that it is appropriate for the remedy to reflect what was 
promised to the sender. In contrast, when the failure is caused by the 
sender providing incorrect or insufficient information, the Bureau 
believes it is appropriate to generally put the provider and the sender 
in the same position as if the first unsuccessful attempt of the 
remittance transfer had never occurred.
    For example, if a sender instructs a remittance transfer provider 
to send US$100 to a designated recipient in a foreign country in local 
currency, for which the remittance transfer provider charges a transfer 
fee of US$10, and the sender provided incorrect or insufficient 
information that resulted in non-delivery of the remittance transfer, 
the remittance transfer provider may not require the sender to provide 
another US$100 to the remittance transfer provider to send or charge 
the sender another US$10 transfer fee. If the funds were not exchanged 
in the first unsuccessful attempt of the remittance transfer, the 
provider must use the exchange rate it is using for such transfers on 
the date of the resend.
    Based on this rule, if a remittance transfer is deposited in an 
account that does not belong to the designated recipient named in the 
receipt because the sender provided the wrong account number for the 
designated recipient, the provider may charge the sender for resending 
the remittance transfer, but may not have the sender provide the 
principal transfer amount again in the event that the remittance 
transfer provider is unable to have the funds extracted from the wrong 
account. The Bureau believes that this approach will encourage 
providers and other parties involved in the remittance transfer to 
develop security procedures to limit the risk of funds being deposited 
in an account when the name of the designated recipient named in the 
receipt does not match the name associated with the account number. The 
Bureau notes that remittance transfer providers will be supplied with 
both the name, and if provided by the sender, the telephone number and/
or address of the designated recipient, which the provider must 
disclose on the receipt under Sec.  1005.31(b)(2)(iii).
    New comment 33(c)-2 clarifies that although third party fees may be 
imposed on the sender for resending the remittance transfer with the 
corrected or additional information, third party fees that were not 
incurred during the first unsuccessful remittance transfer attempt may 
not be imposed again for resending the remittance transfer. For 
example, suppose a sender instructed the remittance transfer provider 
to send US$100 to a designated recipient in a foreign country, for 
which a remittance transfer provider charges a transfer fee of US$10 
and an intermediary institution charges a lifting fee of US$5, such 
that the designated recipient is expected to receive only US$95, as 
indicated in the receipt. If the sender provided incorrect or 
insufficient information that resulted in non-delivery of the 
remittance transfer and the US$5 lifting fee was incurred in the first 
attempt, the sender may choose to provide an additional amount to 
offset the US$5 lifting fee deducted in the first unsuccessful 
remittance transfer attempt and ensure that the designated recipient 
receives US$95 or may choose to resend the US$95 amount with the 
understanding that another fee may be deducted by the intermediary 
institution, as indicated in the receipt.

[[Page 6257]]

Otherwise, if the US$5 lifting fee was not incurred in the first 
attempt, then the remittance transfer provider must send the original 
US$100 for the resend, and the sender may expect a US$5 lifting fee to 
be imposed by the intermediary institution, as indicated in the 
receipt. Comment 33(c)-2 also reminds providers that a request to 
resend a remittance transfer is a request to send a remittance 
transfer. Therefore, a provider must provide the disclosures required 
by Sec.  1005.31 for a resend of a remittance transfer.
    In addition, the Board proposed to add a separate, cumulative 
remedy that would apply if the transfer was not made available to the 
designated recipient by the disclosed date of availability under Sec.  
1005.33(a)(1)(iv). This additional remedy was proposed pursuant to the 
Board's authority under EFTA section 919(d)(1)(B) to provide ``such 
other remedy'' as the Board determines appropriate ``for the protection 
of senders.'' Under proposed Sec.  205.33(c)(2)(iii), if the remittance 
transfer was not sent or delivered to the designated recipient by the 
stated date of availability, the remittance transfer provider would be 
required to refund all fees charged or imposed in connection with the 
transfer, even if the consumer asks the provider to send the remittance 
transfer to the designated recipient as the preferred remedy. If the 
funds have already been delivered to the recipient, however, even if on 
an untimely basis, the sole remedy in such case would be the refund of 
fees.
    Several industry commenters objected to the remedy to refund all 
fees associated with the remittance transfer. As the Board explained in 
the May 2011 Proposed Rule, requiring the provider to refund all fees 
imposed in connection with the remittance transfer, including the 
transfer fee, is appropriate under such circumstances because the 
sender did not receive the contracted service, specifically the 
availability of funds in connection with the transfer by the disclosed 
date. Furthermore, the Board noted that in some cases, the sender may 
have paid an additional fee for expedited delivery of funds.
    Based on some industry comments, the Bureau believes there may be 
some confusion regarding when the proposed remedy of refunding fees 
associated with the remittance transfer may be available. As stated in 
proposed Sec.  205(c)(2)(iii), the remedy is only available in the case 
of an error asserted under proposed Sec.  205.33(a)(1)(iv) (adopted as 
Sec.  1005.33(a)(1)(iv) above). Accordingly, if the remittance transfer 
provider finds that the error that occurred is, for example, an 
incorrect amount paid by a sender in connection with a remittance 
transfer under proposed Sec.  205.33(a)(1)(i) (adopted as Sec.  
1005.33(a)(1)(i) above), the provider would be under no obligation to 
refund the fees associated with the remittance transfer to a sender. 
Instead, the only remedies required to be available to a sender would 
be a refund of the amount appropriate to resolve the error under 
proposed Sec.  205(c)(2)(i) (adopted as Sec.  1005(c)(2)(i)(A) above) 
or to have the amount appropriate to resolve the error sent to the 
designated recipient, at no additional cost to the sender or the 
designated recipient under proposed Sec.  205.33(c)(2)(ii) (adopted as 
Sec.  1005(c)(2)(i)(B) above).
    The Bureau agrees with the Board that the remedy of refunding all 
fees imposed for the remittance transfer is appropriate if the 
remittance transfer was not made available to the designated recipient 
by the disclosed date of availability.
    Furthermore, the Bureau believes that taxes should also be 
refunded. One industry commenter noted that for certain jurisdictions, 
the remittance transfer provider may be prohibited by law from 
refunding taxes. Therefore, the Bureau adopts proposed Sec.  
205.33(c)(2)(iii) in renumbered Sec.  1005.33(c)(2)(ii)(B) with the 
additional requirement to refund taxes to the extent not prohibited by 
law.
    Moreover, consistent with Sec.  1005.33(c)(2)(ii)(A)(2), which 
provides that third party fees may be imposed for resending the 
remittance transfer if the sender provided incorrect or insufficient 
information to the remittance transfer provider in connection with the 
remittance transfer, Sec.  1005.33(c)(2)(ii)(B) provides that the 
provider need not refund fees imposed for the remittance transfer if 
the sender provided incorrect or insufficient information to the 
remittance transfer provider in connection with the remittance 
transfer. The Bureau is also adopting new Sec.  1005.33(c)(2)(iii) to 
clarify that in the case of an error asserted under Sec.  
1005.33(a)(1)(v), which is a request for documentation, additional 
information or clarification concerning a remittance transfer, the 
appropriate remedy is providing the requested documentation, 
information, or clarification.
    Proposed Sec.  205.33(c)(2) also provided that the remittance 
transfer provider must correct the error within one business day of, or 
as soon as reasonably practicable after, receiving the sender's 
instructions regarding the appropriate remedy. The Board explained that 
the proposed rule would provide additional flexibility to address the 
limited circumstances where the particular method of sending a 
remittance transfer may present practical impediments to a provider's 
ability to correct an error within one business day. For example, it 
may not be practicable for a wire transfer that goes through several 
intermediary institutions before reaching the designated recipient to 
make the amount in error available to the recipient within one business 
day in accordance with a sender's request. The Bureau agrees with the 
Board's rationale in requiring the remittance transfer provider to 
correct the error within one business day of, or as soon as reasonably 
practicable after, receiving the sender's instructions regarding the 
appropriate remedy. The Bureau retains this aspect of proposed Sec.  
205.33(c)(2) in renumbered Sec.  1005.33(c)(2) and also includes other 
clarifying, non-substantive changes.
    Proposed comment 33(c)-2 clarified that the remittance transfer 
provider may request that the sender designate the preferred remedy at 
the time the sender provides notice of error. As the Board explained in 
the May 2011 Proposed Rule, permitting such requests may enable 
providers to process error claims more expeditiously without waiting 
for the sender's subsequent instructions after notifying the sender of 
the results of the investigation. If the sender does not indicate the 
desired remedy at the time of providing notice of error, the proposed 
comment provided that the remittance transfer provider must notify the 
sender of any available remedies in the report provided under proposed 
Sec.  205.33(c)(1) (adopted as Sec.  1005(c)(1) above) after 
determining an error occurred. Proposed comment 33(c)-2 is adopted as 
comment 33(c)-3.
    However, the Board recognized in the May 2011 Proposed Rule that by 
giving the sender the ability to choose the remedy, the statute, and 
thus the rule, may make it impossible for a remittance transfer 
provider to promptly correct an error if the consumer fails to 
designate an appropriate remedy either at the time of providing the 
notice of error or in response to the provider's notice informing the 
consumer of its error determination and available remedies. The Board 
therefore requested comment on whether remittance transfer providers 
should be permitted to select a default method of correcting errors.
    Both industry and consumer group commenters agreed that there 
should be a default method of correcting errors. Industry commenters 
suggested that the remittance transfer provider should be permitted to 
select the default remedy. Consumer group commenters, however, 
recommended that the Bureau should

[[Page 6258]]

set the default remedy of refunding to the sender the appropriate 
amount.
    Based on the comments received, the Bureau adopts a new comment 
33(c)-4 to permit a remittance transfer provider to select a default 
remedy that the provider will use if the sender does not designate a 
remedy within a reasonable time after the sender receives the report 
provided under Sec.  1005.33(c)(1). The Bureau believes that providing 
for a default remedy after a sender has had a reasonable opportunity to 
choose a remedy would balance the statute's aim to provide a sender the 
chance to choose his or her preferred remedy with the goal of promptly 
resolving the sender's outstanding error claim. Furthermore, allowing 
remittance transfer providers to select the default remedy reduces 
burden on providers without consumer harm because providers have the 
ability to provide a preferred remedy without compromising a sender's 
opportunity to choose.
    In addition, new comment 33(c)-4 provides a safe harbor for the 
amount of time that would be considered reasonable after the report 
under Sec.  1005.33(c)(1) is provided. Specifically, comment 33(c)-4 
states that a provider that permits a sender to designate a remedy 
within 10 days after the provider has sent the report provided under 
Sec.  1005.33(c)(1) before selecting the default remedy is deemed to 
have provided the sender with a reasonable time to designate a remedy. 
In selecting the 10-day time frame as a safe harbor, the Bureau notes 
the existence of a similar provision under Regulation Z. Under the 
commentary to 12 CFR 1026.5(b)(1)(i), a creditor that provides an 
account-opening disclosure in connection with a balance transfer may 
effectuate the balance transfer if the consumer has not withdrawn the 
balance transfer request within 10 days after the creditor has sent the 
account-opening disclosure. See comment 5(b)(1)(i)-5 under Regulation 
Z. New comment 33(c)-4 also clarifies that in the case a default remedy 
is provided, the remittance transfer provider must correct the error 
within one business day, or as soon as reasonably practicable, after 
the reasonable time for the sender to designate the remedy has passed.
    Consumer group commenters also suggested that the Bureau adopt 
guidance on how to handle cases where a sender cannot be contacted 
after an error is discovered by the provider, sender, or recipient. 
These commenters recommended that three phone calls or emails should 
constitute a good faith effort to contact the sender. The Bureau notes 
that the error resolution procedures only apply if the sender asserts 
an error. See comment 33(b)-1 adopted above. A notice of error from a 
sender must contain information to enable the provider to identify the 
sender's name and telephone number or address. See Sec.  
1005.33(b)(1)(ii)(A) adopted above. Therefore, the Bureau believes that 
remittance transfer providers will have valid contact information from 
the sender when the sender asserts the error and that remittance 
transfer providers will make a reasonable effort to contact senders to 
fulfill their error resolution requirements.
    Some industry commenters requested that the final rule clarify the 
meaning of ``amount appropriate to resolve the error.'' The Bureau 
agrees that clarification of this term would be helpful. New comment 
33(c)-5 provides that for the purposes of the remedies set forth in 
Sec.  1005.33(c)(2)(i)(A), (c)(2)(i)(B), (c)(2)(ii)(A)(1), and 
(c)(2)(ii)(A)(2), the amount appropriate to resolve the error is the 
specific amount of transferred funds that should have been received if 
the remittance transfer had been effected without error. New comment 
33(c)-5 further clarifies that the amount appropriate to resolve the 
error does not include consequential damages.
    Consumer group commenters requested further guidance on the form a 
refund may take. In particular, commenters were concerned that 
remittance transfer providers not be permitted to provide store credit 
in the refund amount. The Bureau agrees that the form of any refund 
provided under Sec.  1005.33(c)(2)(i)(A) should generally be the same 
as the form of payment for the remittance transfer. The Bureau also 
believes that a provider should also be permitted to provide a refund 
in cash. Therefore, the Bureau adopts new comment 33(c)-6 to clarify 
that a remittance transfer provider may, at its discretion, issue a 
refund either in cash or in the same form of payment that was initially 
provided by the sender for the remittance transfer. The comment is 
similar to comment 34(b)-1, discussed below, regarding the form of 
refund after a cancellation.
    The Bureau is, however, amending comment 34(b)-1 in one respect, 
which is also reflected in new comment 33(c)-6. Specifically, the 
Bureau recognizes that if a sender provided cash to the remittance 
transfer provider for the remittance transfer, there may be instances 
when a cash refund may not be possible or convenient to the sender. 
Generally, it is undesirable for a provider to mail cash, and agents 
may be prohibited from providing cash to consumers. Even if agents were 
permitted to provide cash refunds, it may be inconvenient to the sender 
to return to the remittance transfer provider or agent location to pick 
up the cash refund. Consequently, comments 33(c)-6 and 34(b)-1 state 
that a provider may issue a refund by check if a sender initially 
provided cash for the remittance transfer. For example, if the sender 
originally provided cash as payment for the transfer, the provider may 
mail a check to the sender in the amount of the payment.
    Consumer group commenters also suggested that the Bureau consider 
emphasizing that remittance transfer providers should comply with 
applicable State escheat laws if the sender cannot be contacted to 
receive a refund. The Bureau believes that such clarification is 
unnecessary. Furthermore, the Bureau is concerned that an explicit 
reference to State escheat laws in this instance may imply that other 
State laws (for example, State disclosure requirements for money 
transmitters) do not apply. Consequently, the Bureau declines to adopt 
this suggestion.
    Proposed comment 33(c)-3 provided additional guidance regarding the 
appropriate remedies where the sender has paid an excess amount to send 
a remittance transfer. Under that circumstance, the sender may request 
a refund of the amount paid in excess or may request that the 
remittance transfer provider make that excess amount available to the 
designated recipient at no additional cost. The Bureau did not receive 
any comments on the proposed comment. The Bureau adopts proposed 
comment 33(c)-3 substantially as proposed in comment 33(c)-7.
    Under proposed comment 33(c)-4, fees that must be refunded to a 
sender for a failure to make funds from a remittance transfer available 
by the stated date of availability under Sec.  1005.33(a)(1)(iv) 
include all fees imposed for the transfer, regardless of the party that 
imposed the fee, and are not limited to fees imposed by the provider. 
Some industry commenters objected to having to refund fees not imposed 
by the remittance transfer provider. As explained above, however, the 
Bureau believes that refunding all fees is appropriate if the 
remittance transfer service was not provided as contracted because the 
funds were not made available by the disclosed date of availability.
    The Bureau is revising proposed comment 33(c)-4, however, to 
respond to a request from a Federal Reserve Bank commenter to resolve 
ambiguities in the relationship between the remedies in Sec.  
1005.33(c)(2)(ii)(A)(1) and (2) and the

[[Page 6259]]

remedy in Sec.  1005.33(c)(2)(ii)(B). Specifically, the Bureau has 
revised proposed comment 33(c)-4, renumbered as comment 33(c)-8, to 
clarify that the remittance transfer provider must correct the error in 
accordance with Sec.  1005.33(c)(2)(ii)(A), as applicable. Therefore, 
if the remittance transfer was made available to the designated 
recipient, but on an untimely basis, the remedies under Sec.  
1005.33(c)(2)(ii)(A) would not be applicable. In that circumstance, the 
``amount appropriate to resolve the error'' would be zero since the 
entire transfer amount was made available to the designated recipient. 
The sender's only remedy in this case would be the refund of fees under 
Sec.  1005.33(c)(2)(ii)(B). If, however, the funds were never made 
available to the designated recipient, then the sender would have one 
of the remedies available under Sec.  1005.33(c)(2)(ii)(A)(1) or (2) in 
addition to the remedy of the fee refund under Sec.  
1005.33(c)(2)(ii)(B). The Bureau also believes the renumbering in Sec.  
1005.33(c)(2) should make this clear.
    Proposed comment 33(c)-5 clarified that if an error occurred, 
whether as alleged or in a different amount or manner, a remittance 
transfer provider may not impose any charges related to any aspect of 
the error resolution process, including any charges for documentation 
or investigation. As discussed in the May 2011 Proposed Rule, the Board 
expressed concern that such fees or charges might have a chilling 
effect on a sender's good faith assertion of errors and noted that the 
proposed comment is similar to comment 11(c)-3 for EFTs. Proposed 
33(c)-5, however, also stated that nothing would prohibit a remittance 
transfer provider from imposing a fee for making copies of 
documentation for non-error-resolution-related purposes, such as for 
tax documentation purposes under Sec.  1005.33(a)(2)(iii). The Bureau 
did not receive any comments on the proposed comment. Therefore, the 
Bureau adopts proposed comment 33(c)-5 as proposed in comment 33(c)-9.
    Finally, under proposed comment 33(c)-6, a remittance transfer 
provider may correct an error, without further investigation, in the 
amount or manner alleged by the sender to be in error. This is similar 
to comment 11(c)-4 for EFTs. As with comment 11(c)-4, the provider must 
otherwise comply with all other applicable requirements of the error 
resolution procedures, including providing notice of the resolution of 
the error. Commenters did not address this proposed comment. Therefore, 
the Bureau adopts proposed comment 33(c)-6 substantially as proposed in 
comment 33(c)-10.

33(d) Procedures if Remittance Transfer Provider Determines No Error or 
Different Error Occurred

    The Board proposed Sec.  205.33(d) to establish procedures in the 
event that a remittance transfer provider determines that no error or a 
different error occurred from that described by the sender. 
Specifically, proposed Sec.  205.33(d)(1) stated that the remittance 
transfer provider must provide a written explanation of the provider's 
finding that there was no error or that a different error occurred, 
consistent with EFTA section 919(d)(1)(B)(iv). Such explanation would 
have to respond to the sender's specific complaint and note the 
sender's right to request the documents that the provider relied on in 
making its determination. Furthermore, under proposed Sec.  
205.33(d)(2), the remittance transfer provider would be required to 
promptly provide copies of such documentation upon the sender's 
request.
    Under proposed comment 33(d)-1, if a remittance transfer provider 
determined that an error occurred in a manner or amount different from 
that described by the sender, the provider would be required to comply 
with applicable provisions of both Sec.  1005.33(c) and (d) (proposed 
as Sec.  205.33(c) and (d)). Similar to comment 11(d)-1 with respect to 
error investigations involving EFTs, the provider may choose to give 
the notice of correction of error under Sec.  1005.33(c)(1) (proposed 
as Sec.  205.33(c)(1)) and the explanation that a different error 
occurred under Sec.  1005.33(d) (proposed as Sec.  205.33(d)) 
separately or in a combined form. The Bureau did not receive any 
comments on the procedures set forth in proposed Sec.  205.33(d) or 
comment 33(d)-1. The Bureau adopts these provisions substantially as 
proposed in renumbered Sec.  1005.33(d) and comment 33(d)-1.

33(e) Reassertion of Error

    As discussed in the May 2011 Proposed Rule, under proposed Sec.  
205.33(e), a remittance transfer provider that has fully complied with 
the error resolution requirements with respect to a particular notice 
of error would have no further responsibilities in the event the sender 
later reasserts the same error, except in the case of an error asserted 
following the sender's receipt of information provided under Sec.  
1005.33(a)(1)(v). Furthermore, proposed comment 33(e)-1 explained that 
the remittance transfer provider would have no further error resolution 
responsibilities if the sender voluntarily withdraws the notice 
alleging an error. In such case, however, the sender would retain the 
right to reassert the allegation within the original 180-day period 
from the disclosed date of availability unless the remittance transfer 
provider had already complied with all of the error resolution 
requirements before the allegation was withdrawn. As noted in the May 
2011 Proposed Rule, the proposed provision and comment were modeled on 
similar provisions under Sec.  1005.11(e). The Board requested comment 
on whether additional guidance is necessary regarding the circumstances 
in which a sender has ``voluntarily withdrawn'' a notice of error.
    Commenters did not generally address proposed Sec.  205.33(e) or 
proposed comment 33(e)-1. However, one industry commenter suggested 
that the error resolution process under proposed Sec.  205.33 should be 
the exclusive remedy for the enumerated errors. EFTA section 916 
provides that there is no civil liability for an error resolved in 
accordance with the error resolution procedures set forth in EFTA 
section 908, which are the error resolution procedures implemented in 
Sec.  1005.11. The Bureau notes that EFTA section 916 was not amended 
to include the error resolution procedures for remittance transfers set 
forth in EFTA section 919(d). As such, under EFTA section 916, a court 
could find that there is civil liability even for an error that has 
been resolved in accordance with the error resolution procedures in 
Sec.  1005.33. Accordingly, the Bureau adopts proposed Sec.  205.33(e) 
as proposed in renumbered Sec.  1005.33(e) . The Bureau adopts comment 
33(e)-1 with one change to include the time period relevant to an error 
asserted pursuant to Sec.  1005.33(b)(2) after a sender receives 
requested documentation, additional information or clarification from 
the remittance transfer provider.

33(f) Relation to Other Laws

    As the Board noted in the May 2011 Proposed Rule, the error 
resolution rights for remittance transfers exist independently from 
other rights that a consumer may have under other existing Federal law. 
Proposed Sec.  205.33(f) contains guidance regarding the interplay 
between the error resolution provisions for remittance transfers and 
error resolution rights that may exist under other applicable consumer 
financial protection laws.
    The Board proposed Sec.  205.33(f)(1) to implement the provision in 
EFTA section 919(e)(1) regarding the

[[Page 6260]]

applicability of the remittance transfer error resolution provisions to 
EFTs. The proposed rule provided that if an alleged error in connection 
with a remittance transfer involved an incorrect EFT to a sender's 
account and the account was also held by the remittance transfer 
provider, then the requirements of proposed Sec.  205.33, and its 
applicable time frames and procedures, governed the error resolution 
process. If the notice of error was asserted with an account-holding 
institution that was not the same entity as the remittance transfer 
provider, however, proposed Sec.  205.33(f)(1) provided that the error 
resolution procedures under Sec.  205.11 (currently Sec.  1005.11), and 
not those under Sec.  205.33, would apply to the account-holding 
institution's investigation of the alleged error.
    An electronic fund transfer from a consumer's account may also be a 
remittance transfer. But, as the Board explained in the May 2011 
Proposed Rule, an account-holding institution would likely be unable to 
identify a particular EFT as a remittance transfer unless it was also 
the remittance transfer provider. In the absence of direct knowledge 
that a particular EFT was used to fund a remittance transfer, the 
account-holding institution would face significant compliance risk if 
the error resolution requirements under proposed Sec.  205.33 were 
deemed to apply to the error.
    The Bureau agrees with the Board that such an outcome would be 
undesirable. Accordingly, the Bureau is adopting proposed Sec.  
205.33(f)(1) in renumbered Sec.  1005.33(f)(1) to permit an account-
holding institution to comply with the error resolution requirements of 
Sec.  1005.11 when the institution is not also the remittance transfer 
provider for the transaction in question. In such a case, the sender 
will also have independent error resolution rights against the 
remittance transfer provider itself under Sec.  1005.33.
    Some industry commenters thought the proposed guidance was 
confusing and would apply more than one error resolution procedure to a 
remittance transfer provider. Although certain remittance transfer 
providers may have multiple error resolution obligations, these 
provisions are meant to resolve conflicts and provide greater certainty 
about which error resolution provisions apply in certain situations. 
Therefore, the Bureau is revising comment 33(f)-1 to provide such 
clarification.
    Revised comment 33(f)-1 provides that a financial institution that 
is also the remittance transfer provider may have error obligations 
under both Sec. Sec.  1005.11 and 1005.33. The comment provides 
examples to illustrate when certain error resolution procedures apply 
to a remittance transfer provider that is also the account-holding 
institution from which the transfer is funded. In the first example, a 
sender asserts an error under Sec.  1005.11 with a remittance transfer 
provider that holds the sender's account, and the error is not also an 
error under Sec.  1005.33, such as an omission of an EFT from a 
periodic statement. In this case, the error-resolution provisions of 
Sec.  1005.11 exclusively apply to the error. In the second example, a 
sender asserts an error under Sec.  1005.33 with a remittance transfer 
provider that holds the sender's account, and the error is also an 
error under Sec.  1005.11, such as when the amount the sender requested 
to be deducted from the sender's account and sent for the remittance 
transfer differs from the amount that was actually deducted from the 
account and sent. In this case, the error-resolution provisions of 
Sec.  1005.33 exclusively apply to the error.
    Proposed Sec.  205.33(f)(2) addressed the scenario where the 
consumer provides a notice of error to the creditor that issued the 
credit card with respect to an alleged error involving an incorrect 
extension of credit in connection with a remittance transfer, such as 
when a consumer provides a credit card to pay for a remittance 
transfer. Proposed Sec.  205.33(f)(2) provided that, in such a case, 
the error resolution provisions of Regulation Z, 12 CFR 1026.13, would 
apply to the creditor, rather than the requirements under proposed 
Sec.  205.33. Proposed Sec.  205.33(f)(2) also stated that if the 
sender instead provides a notice of error asserting an incorrect 
payment amount involving the use of a credit card to the remittance 
transfer provider, then the error resolution provisions of proposed 
Sec.  205.33 would apply to the remittance transfer provider.
    A creditor of a credit card or other credit account may also act as 
a remittance transfer provider in certain circumstances, such as when a 
cardholder sends funds from his or her credit card through a service 
offered by the creditor to a recipient in a foreign country. In this 
case, an error could potentially be asserted under either Regulation Z 
or the error resolution provisions applicable to remittance transfers 
in the case of an incorrect extension of credit in connection with the 
transfer. The Board proposed that under these circumstances, the error 
resolution provisions under Regulation Z Sec.  1026.13 would apply to 
the alleged error, but solicited comment on the proposed approach.
    One commenter suggested that if a remittance transfer provider is 
serving multiple roles, such as a creditor that is also a remittance 
transfer provider, the remittance transfer provider should have the 
ability to choose which error resolution procedure to follow. The 
Bureau does not believe that remittance transfer providers should be 
permitted to choose the error resolution procedure to apply because 
providers and senders would benefit from the application of consistent 
procedures in similar situations.
    The Bureau agrees with the Board that it is reasonable to apply the 
Regulation Z error resolution provisions under circumstances where the 
remittance transfer provider is also the creditor because Regulation Z, 
12 CFR 1026.13(d)(1) permits a consumer to withhold disputed amounts 
while an error is being investigated. However, the Bureau believes that 
the additional time afforded to a sender to assert an error under Sec.  
1005.33 may also be of value. Therefore, for a remittance transfer 
provider that is also the creditor, the Bureau is requiring that the 
time period to assert an error under Sec.  1005.33(b) should apply 
instead of the time period under 12 CFR 1026.13(b). This will also 
ensure that the error resolution notice required under Sec.  
1005.31(b)(2)(iv) is consistent. Otherwise, disclosing to a sender that 
the time period to assert an error may in some instances be 60 days 
from the periodic statement reflecting the error and in other instances 
may be 180 days from the disclosed date of availability on the 
remittance transfer receipt could be confusing.
    The Bureau also believes further clarification is warranted for 
errors other than incorrect extensions of credit in connection with the 
remittance transfer. For example, an error involving an incorrect 
amount of currency received under Sec.  1005.33(a)(1)(iii) or the 
failure to make funds available by the disclosed date of availability 
under Sec.  1005.33(a)(1)(iv) may be asserted as an error involving 
goods or services that have not been delivered as agreed under Sec.  
1026.13(a)(3). Accordingly, the Bureau is adding these references to 
the final rule to resolve any potential conflicts. The Bureau adopts 
Sec.  205.33(f)(2) in renumbered Sec.  1005.33(f)(2) with these 
revisions and amendments to clarify that the provision applies to all 
credit accounts rather than only credit card accounts.
    In addition, the Bureau notes that in certain circumstances, a 
credit cardholder has a right to assert claims or defenses against a 
card issuer concerning property or services purchased with a credit 
card under

[[Page 6261]]

Regulation Z, 12 CFR 1026.12(c)(1). These rights are independent of 
other billing error rights a cardholder may have. See comment 12(c)-1 
to 12 CFR 1026.12(c). Therefore, the Bureau is adopting a new comment 
33(f)-2 to clarify that to the extent a credit cardholder has a right 
to assert claims and defenses against a card issuer under 12 CFR 
1026.12(c)(1), nothing in Sec.  1005.33 limits a sender's right in this 
regard.
    The Board also proposed Sec.  205.33(f)(3) to provide guidance 
where an alleged error involves an unauthorized EFT or unauthorized use 
of a credit card to send a remittance transfer, such as when a stolen 
debit or credit card is used to send funds to a foreign country. 
Specifically, proposed Sec.  205.33(f)(3) clarified that the consumer 
would have rights under Regulation E Sec. Sec.  1005.6 and 1005.11 in 
the case of an unauthorized EFT or Regulation Z Sec. Sec.  1026.12(b) 
and 1026.13 in the case of an unauthorized use of a credit card. 
However, since the consumer holding the asset account or the credit 
card account is not the sender of the remittance transfer, proposed 
Sec.  205.33(f)(3) stated that the error resolution provisions for 
remittance transfers would not apply. See comment 33(b)-1. The Bureau 
agrees with the Board's proposal, and Sec.  205.33(f)(3) is adopted 
substantially as proposed in renumbered Sec.  1005.33(f)(3) with an 
amendment to clarify application of the provision to credit accounts 
generally as opposed to only credit card accounts.
    Some industry commenters suggested that the reasoning the Board 
used in applying Regulation E Sec. Sec.  1005.6 and 1005.11 in the case 
of an unauthorized EFT and Regulation Z Sec. Sec.  1026.12(b) and 
1026.13 in the case of an unauthorized use of a credit card, should be 
used in applying UCC Article 4A provisions to an unauthorized wire 
transfer. As discussed above in the supplementary information to Sec.  
1005.30(e), UCC Article 4A-108 provides that Article 4A does not apply 
``to a funds transfer, any part of which is governed by the [EFTA]'' 
(emphasis added). Furthermore, as discussed above, the Bureau may only 
preempt State law to the extent that there is an inconsistency. Since 
the Bureau does not believe there is an inconsistency between the EFTA 
and UCC Article 4A-108, UCC Article 4A does not apply to wire transfers 
that are remittance transfers under Sec.  1005.30(e). Therefore, the 
Bureau declines to implement commenters' suggestion with respect to 
unauthorized wire transfers.
    Finally, the Board noted that in certain cases a consumer may be 
able to assert error resolution rights in connection with a remittance 
transfer with both the remittance transfer provider as well as the 
account-holding institution or credit card issuer or creditor. Proposed 
comment 33(f)-2 addressed this situation by providing that if a sender 
receives credit to correct an error of an incorrect amount paid in 
connection with a remittance transfer from either the remittance 
transfer provider or the sender's account-holding institution or 
creditor, and then subsequently asserts the same error with the other 
party, the other party would have no further responsibilities to 
investigate the error. The proposed comment also clarified that an 
account-holding institution or creditor may reverse amounts it has 
previously credited to correct an error if the consumer receives more 
than one credit to correct the same error and provided an example to 
illustrate this concept.
    One industry commenter noted that the provisions in Sec.  
1005.33(f) could provide a consumer with potentially different error 
resolution procedures depending on who the consumer decides to contact. 
This may be the case if the remittance transfer provider is not also 
the account-holding institution or creditor. However, proposed comment 
33(f)-2 explains that the second party has no error resolution 
obligations if the sender already received credit to correct an error 
of an incorrect amount paid in connection with a remittance transfer. 
This comment makes clear that a consumer may not receive a windfall by 
successfully asserting an error with both the provider and the account-
holding institution and/or credit card issuer or creditor.
    Another industry commenter suggested that the remittance transfer 
provider should be permitted to delay providing a remedy until 
expiration of the card issuer's chargeback right under network rules to 
prevent duplicate recoveries when remittances are funded by a debit 
card or a credit card. The Bureau believes that the delay would be 
disadvantageous for senders in getting a speedy resolution to an error 
and that proposed comment 33(f)-2 is a better method for dealing with 
the possibility of duplicate recoveries. The Bureau adopts this 
comment, renumbered as comment 33(f)-3, substantially as proposed.
    Lastly, the Bureau received comment from an industry commenter 
questioning which error resolution provisions apply when a sender has 
multiple funding sources for the remittance transfer. For example, a 
sender could fund a remittance transfer partly by a balance in the 
sender's account held by the remittance transfer provider and partly by 
a credit card or an ACH transfer from the sender's checking account. In 
such cases, the Bureau notes that which error resolution procedure will 
apply depends on the error that is asserted. For example, if the error 
asserted is the incorrect extension of credit in connection with the 
remittance transfer, then Sec.  1005.33(f)(2) provides that Sec.  
1026.13 applies to the creditor while Sec.  1005.33 applies to the 
remittance transfer provider, but only with respect to the amount of 
the remittance transfer funded by the credit card. However, if the 
remittance transfer provider is also the creditor, only Sec.  1026.13 
applies to the remittance transfer provider with respect to the amount 
of the remittance transfer funded by the credit card.
    Similarly, if the error asserted is an incorrect EFT from a 
sender's account, then Sec.  1005.33(f)(1) provides that Sec.  1005.11 
applies to the account-holding institution while Sec.  1005.33 applies 
to the remittance transfer provider, but only with respect to the 
amount of the remittance transfer funded by the debit card or the ACH 
transfer from the sender's account. However, if the remittance transfer 
provider is also the account-holding institution, only Sec.  1005.33 
applies to the remittance transfer provider with respect to the amount 
of the remittance transfer funded by the debit card or the ACH transfer 
from the sender's account. The Bureau believes the regulation and 
commentary as adopted provide sufficient guidance in this regard, and 
additional clarification is not necessary.

33(g) Error Resolution Standards and Recordkeeping Requirements

    Pursuant to EFTA section 919(d)(2), the Bureau must establish clear 
and appropriate standards for remittance transfer providers with 
respect to error resolution relating to remittance transfers, to 
protect senders from such errors. EFTA section 919(d)(2) specifically 
provides that such standards must include appropriate standards 
regarding recordkeeping, including retention of certain error-
resolution related documentation. The Board proposed Sec.  205.33(g) to 
implement these error resolution standards and recordkeeping 
requirements.
    Specifically, proposed Sec.  205.33(g)(1) provided that a 
remittance transfer provider must develop and maintain written policies 
and procedures that are designed to ensure compliance with respect to 
the error resolution requirements applicable to remittance transfers. 
The proposed rule also stated that remittance transfer providers must

[[Page 6262]]

take steps to ensure that whenever a provider uses an agent to perform 
any of the provider's error resolution obligations, the agent conducts 
such activity in accordance with the provider's policies and 
procedures. As noted in the May 2011 Proposed Rule, this approach is 
similar to one taken by the Federal banking agencies in other contexts. 
See, e.g., 12 CFR 1022.90(e) (requiring that an identity theft red 
flags program exercise appropriate and effective oversight of service-
provider arrangements).
    One industry commenter suggested that the failure to maintain 
written policies and procedures should not be an independent cause of 
action. The Bureau believes that remittance transfer providers must 
develop written policies and procedures in order to demonstrate 
compliance to the appropriate regulator. Therefore, the Bureau does not 
believe the requirement to maintain written policies and procedures 
that the remittance transfer provider must follow imposes any 
additional burden.
    The Bureau is making one change to proposed Sec.  205.33(g)(1). 
Specifically, the Bureau is deleting the provision in proposed Sec.  
205.33(g)(1) that requires remittance transfer providers to take steps 
to ensure that when a provider uses an agent to perform any of the 
provider's error resolution obligations, the agent conducts such 
activity in accordance with the provider's policies and procedures. The 
Bureau believes that this provision is no longer necessary in light of 
the decision under Sec.  1005.35, discussed below, to provide that a 
remittance transfer provider is liable for any violation of subpart B 
by an agent when such agent acts for the provider. Proposed Sec.  
205.33(g)(1), as revised, is adopted in renumbered Sec.  1005.33(g)(1).
    Under proposed Sec.  205.33(g)(2) a remittance transfer provider's 
policies and procedures concerning error resolution would be required 
to include provisions regarding the retention of documentation related 
to an error investigation. Such provisions would be required to ensure, 
at a minimum, the retention of any notices of error submitted by a 
sender, documentation provided by the sender to the provider with 
respect to the alleged error, and the findings of the remittance 
transfer provider regarding the investigation of the alleged error, 
which is consistent with EFTA section 919(d)(2).
    Proposed comment 33(g)-1 clarified that remittance transfer 
providers are subject to the record retention requirements under Sec.  
1005.13, which apply to any person subject to the EFTA. Accordingly, 
remittance transfer providers would be required to retain 
documentation, including documentation related to error investigations, 
for a period of not less than two years from the date a notice of error 
was submitted to the provider or action was required to be taken by the 
provider. Similar to comment 13-1, proposed comment 33(g)-1 provided 
that the record retention requirements do not require a remittance 
transfer provider to maintain records of individual disclosures of 
remittance transfers that it has provided to each sender. Instead, a 
provider need only retain records to ensure that it can comply with a 
sender's request for documentation or other information relating to a 
particular remittance transfer, including a request for supporting 
documentation to enable the sender to determine whether an error exists 
with respect to that transfer. The Bureau did not receive any comments 
on proposed Sec.  205.33(g)(2) or proposed comment 33(g)-1. The Bureau 
adopts proposed Sec.  205.33(g)(2) substantially as proposed in 
renumbered Sec.  1005.33(g)(2), but with an amendment to make clear 
that remittance transfer providers are subject to the record retention 
requirements under Sec.  1005.13. The Bureau also adopts comment 33(g)-
1 with amendments to conform the comment to comment 13-1 and to the 
changes in Sec.  1005.33(g)(2).

Section 1005.34 Procedures for Cancellation and Refund of Remittance 
Transfers

    EFTA section 919(d)(3) directs the Bureau to issue final rules 
regarding appropriate remittance transfer cancellation and refund 
policies for senders within 18 months of the date of enactment of the 
Dodd-Frank Act. Proposed Sec.  205.34 set forth new cancellation and 
refund rights for senders of remittance transfers, and they are 
finalized in renumbered Sec.  1005.34 with changes to the proposed 
rule, discussed below.

34(a) Sender Right of Cancellation and Refund

    Proposed Sec.  205.34(a) stated that a remittance transfer provider 
must comply with a sender's oral or written request to cancel a 
remittance transfer received no later than one business day from when 
the sender makes payment in connection with the remittance transfer 
provider. In the proposal, the Board recognized that remittance 
transfers sent by ACH or wire transfer generally cannot be cancelled 
once the payment order has been accepted by the sending institution. 
See, e.g., UCC Article 4A-211 (providing that a payment order cannot be 
cancelled or amended once it has been accepted unless the receiving 
bank agrees or a funds-transfer system rule allows cancellation or 
amendment without agreement of the bank). The Board stated that it 
believed that under such circumstances, a bank or credit union making 
transfers by ACH or wire transfer would likely wait to execute the 
payment order until the cancellation period had passed, which could 
delay the receipt of the funds in the foreign country. The Board stated 
that one business day would provide a reasonable time frame for a 
sender to evaluate whether to cancel a remittance transfer after 
providing payment for the transfer, but requested comment regarding 
whether the proposed minimum time period should be longer or shorter 
than proposed.
    Many industry commenters objected to the proposed cancellation 
right. One industry commenter believed a cancellation right was 
unnecessary for remittance transfers because fees incurred by the 
sender for a remittance transfer were minimal. A Federal Reserve Bank 
commenter argued that a cancellation right would give senders less 
incentive to provide accurate information. One industry commenter 
believed senders could use the cancellation right to take advantage of 
more favorable exchange rates. The industry commenter believed 
remittance transfer providers would increase exchange rates to 
compensate for the risk of loss.
    Industry and trade group commenters agreed with the Board that the 
proposed cancellation period would delay processing routine remittance 
transfers because remittance transfers sent by ACH or wire transfer 
would likely be held until the cancellation period passed. Some 
industry commenters believed that the delay in processing would make it 
more difficult to determine an exchange rate. A member of Congress 
urged the Bureau to take into consideration senders' expectation for 
timely execution of remittance transfers in determining the appropriate 
cancellation period. A Federal Reserve Bank commenter believed a sender 
would want to remit funds as quickly as possible, and that the proposed 
cancellation right could cause senders to make payments using 
remittance mechanisms that are not subject to Regulation E.
    Consumer group commenters believed that the Bureau should require a 
one business day cancellation period, but suggested that the Bureau 
study when cancellations typically occur. These commenters suggested 
that a study

[[Page 6263]]

could help the Bureau determine that decreasing the cancellation period 
could adequately protect senders. Many industry commenters believed 
that if the Bureau required a cancellation period, the period should be 
shorter than one business day. The commenters suggested a variety of 
shorter cancellation periods that could be more appropriate. Some 
industry commenters believed the cancellation period should be 
shortened to the same day or an hour. Several industry commenters 
believed the right to cancel should end when the remittance transfer 
provider executes the payment instruction. Several industry commenters 
believed the cancellation period should be shortened to 30 minutes, 
noting that this time period would be consistent with Texas law.
    Some industry commenters suggested that institutions sending 
remittance transfers through ACH or wire transfer should be exempt from 
the cancellation rules. Other industry commenters suggested that a 
sender should have the right to opt out of the cancellation right to 
have the transfer sent immediately. Another industry commenter 
suggested that the provider should only be required to cancel if the 
provider has a reasonable opportunity to act upon the request. One 
industry commenter believed a right to refund remittance transfers that 
are unclaimed was a more appropriate cancellation policy. An industry 
commenter believed the provider should not be required to honor 
cancellation requests that are made for fraudulent purposes.
    Other industry commenters believed the cancellation rules should be 
disclosure-based. One industry commenter believed that instead of a 
cancellation right, the provider should disclose that once a sender 
signs the remittance transaction agreement, it cannot be cancelled and 
that a failure to carry out a sender's cancellation request once a 
remittance agreement has been signed is not an error. Another industry 
commenter believed that if a provider had a cancellation policy, that 
the Bureau should require that it be properly disclosed.
    The Bureau believes that a cancellation right could be helpful to 
senders of remittance transfers. The Bureau also believes, however, 
that providers sending remittance transfers through ACH or wire 
transfer likely will delay transactions for the length of the 
cancellation period because such transfers are often difficult to 
retract once they are sent. A cancellation period of one business day 
thus could prevent a sender from sending a remittance transfer quickly. 
In addition, a long cancellation period could create an unfair 
competitive advantage for closed network money transmitters, who are 
less likely to delay sending a remittance transfer until the end of the 
cancellation period. Therefore, the Bureau believes a cancellation 
period shorter than one business day is appropriate.
    The final rule requires a 30-minute cancellation period.\83\ A 30-
minute cancellation period provides the sender the opportunity to 
review both the pre-payment disclosure and the receipt to ensure that 
the transfer was sent as the sender intended. However, the 30-minute 
cancellation period should not substantially delay transactions for 
senders who want to send funds quickly. The Bureau notes that 30 
minutes is the minimum time that a provider must allow senders to 
cancel transactions, but providers may choose to permit senders to 
cancel transactions after the 30 minute period has passed. Moreover, 
even after the cancellation period has passed, senders may still assert 
their rights under Sec.  1005.33 and obtain a refund or other remedy 
for transactions where an error occurred.
---------------------------------------------------------------------------

    \83\ The 30-minute cancellation period is the same time period 
as the remittance transfer cancellation period under Texas law. See 
TX Admin. Code Sec.  278.052, which provides that a consumer may 
cancel a transfer for any reason within 30 minutes of initiating the 
transfer provided the customer has not left the premises. Unlike the 
Texas law, under Sec.  1005.34(a), a sender may cancel within 30 
minutes, regardless of whether the sender has left the premises.
---------------------------------------------------------------------------

    As discussed above, the final rule sets forth new cancellation 
requirements in a new Sec.  1005.36 with respect to certain remittance 
transfers that a sender schedules in advance, including preauthorized 
remittance transfers. As discussed below, the Bureau believes that when 
a sender schedules a remittance transfer more than three days in 
advance of when the remittance transfer is made, a cancellation period 
tied to when the transfer is made, rather than when the transfer is 
authorized, is more beneficial to a sender. In those circumstances, the 
Bureau believes a sender should have the flexibility to cancel the 
transfer more than 30 minutes after scheduling the transfer to be made, 
given the potentially significant delay between when the sender 
authorizes the remittance transfer and when the sender schedules the 
remittance transfer to be made. Circumstances could change in the 
intervening period that would negate the purpose of the transfer. At 
the same time, allowing the sender to cancel certain remittance 
transfers that a sender schedules in advance for up to 30 minutes after 
the transfer is made could be burdensome to both senders and providers. 
A sender may not know the precise time of day that the transfer is 
scheduled, and such a rule would extend the period of uncertainty for 
providers, who may delay a transfer until the cancellation period has 
expired. Consequently, the 30-minute cancellation period described in 
Sec.  1005.34(a) does not apply to remittance transfers scheduled at 
least three business days before the date of the transfer, and a 
remittance transfer provider must instead comply with the cancellation 
requirements in Sec.  1005.36(c).
    Section 1005.34(a) of the final rule provides that, except as 
provided in Sec.  1005.36(c), a remittance transfer provider shall 
comply with the requirements of Sec.  1005.34 with respect to any oral 
or written request to cancel a remittance transfer from the sender that 
is received by the provider no later than 30 minutes after the sender 
makes payment in connection with the remittance transfer, if the 
following two conditions are met.
    First, under proposed Sec.  205.34(a)(1), a valid request to cancel 
a remittance transfer must enable the provider to identify the sender's 
name and address or telephone number and the particular transfer to be 
cancelled. Proposed comment 34(a)-1 clarified that the request to 
cancel a remittance transfer is valid so long as the remittance 
transfer provider is able to identify the remittance transfer in 
question. For example, the sender could provide the confirmation number 
or code that would be used by the designated recipient to pick up the 
transfer, or other identification number or code supplied by the 
provider in connection with the transfer. The proposed comment also 
permitted the provider to request, or the sender to provide, the 
sender's email address instead of a physical address, so long as the 
provider can identify the transfer to which the cancellation request 
applies.
    Second, proposed Sec.  205.34(a)(2) provided that a sender's timely 
request to cancel a remittance transfer is effective so long as the 
transferred funds have not been picked up by the designated recipient 
or deposited into an account held by the recipient.\84\

[[Page 6264]]

Proposed comment 34(a)-2 reiterated that a remittance transfer provider 
must include an abbreviated notice of the sender's right to cancel a 
remittance transfer in the receipt or combined notice, as applicable. 
In addition, the proposed comment clarified that the remittance 
transfer provider must make available to a sender upon request, a 
notice providing a full description of the right to cancel a remittance 
transfer.
---------------------------------------------------------------------------

    \84\ As discussed in the proposal, such accounts need not be 
accounts held by a financial institution so long as the recipient 
may access the transferred funds without any restrictions regarding 
the use of such funds. For example, some Internet-based providers 
may track consumer funds in a virtual account or wallet and permit 
the holder of the account or wallet to make purchases or withdraw 
funds once funds are credited to the account or wallet.
---------------------------------------------------------------------------

    The Bureau did not receive comment on the two conditions on the 
right to cancel. The final rule adopts the two conditions as proposed 
in renumbered Sec.  1005.34(a)(1) and (a)(2). In addition, the Bureau 
adopts comments 34(a)-1 and 34(a)-2 substantially as proposed.
    The Bureau is also adding comment 34(a)-3 to explain how a 
remittance transfer provider could comply with the cancellation and 
refund requirements of Sec.  1005.34 if the cancellation request is 
received by the provider no later than 30 minutes after the sender 
makes payment. The comment states that a provider may, at its option, 
provide a longer time period for cancellation. The comment clarifies 
that a provider must provide the 30-minute cancellation right 
regardless of the provider's normal business hours. For example, if an 
agent closes less than 30 minutes after the sender makes payment, the 
provider could opt to take cancellation requests through the telephone 
number disclosed on the receipt. The provider could also set a cutoff 
time after which the provider will not accept requests to send a 
remittance transfer. For example, a financial institution that closes 
at 5:00 p.m. could stop accepting payment for remittance transfers 
after 4:30 p.m.
    One industry commenter believed that the Bureau should require a 
sender to contact the remittance transfer provider directly in order to 
cancel a transaction. The commenter believed that agents should not be 
required to handle cancellation requests, noting that under certain 
State laws, the agent does not have a right to the funds paid for a 
remittance transfer and therefore could not make a refund.
    The Bureau believes that a sender's cancellation request should be 
valid if the sender contacts the agent. Many participants in consumer 
testing indicated that they would contact an agent first if they 
encountered a problem with their remittance transfer. The Bureau also 
believes that requiring a sender to contact a remittance transfer 
provider by, for example, calling the telephone number listed on the 
receipt could frustrate the sender's ability to cancel within the 30-
minute cancellation period. Consequently, the Bureau clarifies in 
comment 34(a)-4 that a cancellation request provided by a sender to an 
agent of the remittance transfer provider is deemed to be received by 
the provider under Sec.  1005.34(a) when received by the agent. The 
Bureau understands, however, that an agent may not be able to provide a 
sender with the refund for legal or operational reasons, and, as 
discussed below, the final rule does not require an agent to provide a 
refund if the agent is unable to do so.
    Finally, the Bureau is adding a comment to clarify when a sender 
makes a payment for a remittance transfer, for purposes of determining 
when the 30-minute cancellation period has passed. Comment 34(a)-5 
clarifies that, for purposes of subpart B, payment is made, for 
example, when a sender provides cash to the remittance transfer 
provider or when payment is authorized.

34(b) Time Limits and Refund Requirements

    Proposed Sec.  205.34(b) established the time frames and refund 
requirements applicable to remittance transfer cancellation requests. 
The proposed rule stated that a remittance transfer provider must 
refund, at no additional cost to the sender, the total amount of funds 
tendered by the sender in connection with the remittance transfer, 
including any fees imposed in connection with the requested transfer, 
within three business days of receiving the sender's valid cancellation 
request.
    Many industry commenters objected to the requirement in the May 
2011 Proposed Rule to refund the total amount of funds to the sender. 
Industry commenters believed that requiring a refund of the total 
amount of funds raised significant safety and soundness concerns for 
institutions sending wire transfers because some remittance transfer 
providers would be unable to recover the funds from subsequent 
institutions in a transfer chain. One money transmitter commenter 
stated that once a transfer is booked at an agent location, the 
provider is obligated to pay the agent its portion of the transfer fees 
for the transaction. If a sender cancels the transaction after 
settlement, the provider would be required to negotiate the return of 
the fee from the agent or bear the total loss of the fee. Similarly, 
the commenter noted that it acted as an agent of international billers 
and is obligated to the billers for the funds when it sends data to the 
biller. Several industry commenters believed requiring a remittance 
transfer provider to refund all fees could increase costs for senders, 
since providers may increase fees to account for losses due to refund. 
A money transmitter commenter also argued that refunding a third party 
fee or tax could be impermissible under local law.
    Industry commenters suggested that the Bureau permit a remittance 
transfer provider to charge reasonable fees, even if the sender cancels 
the transaction. Some of the commenters noted that this was consistent 
with a bank's ability to charge fees in connection with a stop payment 
order on a check to cover the bank's costs. An industry trade 
association believed providers should be permitted to charge a $45 fee 
to stop the transaction. Another industry commenter suggested that if 
the exchange rate changes between the time the order is placed and the 
refund is requested such that the amount of local currency originally 
promised would be equivalent to less U.S. dollars, the refund of the 
principal should be at the new exchange rate.
    Some commenters believed a remittance transfer provider should not 
be required to provide a refund in certain circumstances. One industry 
commenter believed a provider should not be required to refund fees 
charged by intermediaries. Another industry commenter suggested that a 
provider should not have to refund the portion of any fees that are not 
attributable to costs incurred by them prior to receiving a 
cancellation request. A trade association believed a provider should 
not be required to refund fees when the provider has not made any 
errors.
    The Bureau believes it is appropriate to require a provider to 
refund the total amount of funds provided by the sender in connection 
with the remittance transfer. The Bureau believes senders could be 
discouraged from exercising their cancellation rights if they could not 
recover the cost of the remittance transfer. Although the Bureau 
recognizes that a provider may not be able to recover some fees or 
taxes charged for a transfer, the Bureau believes that the shorter 
cancellation period adopted in the final rule helps address these 
concerns. Under the final rule, a provider can mitigate some of the 
risk of losing fees or taxes charged for a transfer by sending a 
transfer after the 30-minute cancellation period ends. Therefore, the 
Bureau is requiring the total amount of funds provided by the sender to 
be refunded in the final rule in Sec.  1005.34(b) with the additional 
clarification that refunding the total amount of funds provided by the 
sender in connection with a remittance transfer requires a provider to 
refund taxes on the remittance transfer. However, as noted by one 
industry commenter, for certain jurisdictions, the remittance

[[Page 6265]]

transfer provider may be prohibited by law from refunding taxes. 
Consequently, the requirement in Sec.  1005.34(b) to refund taxes is 
only to the extent such refund is not prohibited by law. In the final 
rule, Sec.  1005.34(b) provides that a remittance transfer provider 
shall refund, at no additional cost to the sender, the total amount of 
funds provided by the sender in connection with a remittance transfer, 
including any fees and, to the extent not prohibited by law, taxes 
imposed in connection with the remittance transfer, within three 
business days of receiving a sender's request to cancel the remittance 
transfer.
    Proposed comment 34(b)-1 addressed the permissible ways in which a 
provider could provide a refund. The proposed comment clarified that a 
remittance transfer provider may, at the provider's discretion, issue a 
refund in cash or in the same form of payment that was initially 
tendered by the sender for the remittance transfer. For example, if the 
sender originally provided a credit card as payment for the transfer, 
the remittance transfer provider may issue a credit to the sender's 
credit card account in the amount of the payment.
    The Bureau did not receive comment on proposed comment 34(b)-1. 
However, as discussed above regarding comment 33(c)-6, the Bureau is 
amending comment 34(b)-1 with respect to refunds if a sender initially 
provided cash for the remittance transfer. Specifically, comment 34(b)-
1 states that a provider may issue a refund by check if a sender 
initially provided cash for the remittance transfer. For example, if 
the sender originally provided cash as payment for the transfer, the 
provider may mail a check to the sender in the amount of the payment.
    The Bureau is also finalizing comment 34(b)-2, which addresses 
costs that must be refunded upon a sender's timely request to cancel a 
remittance transfer. The comment is adopted substantially as proposed, 
with amendments clarifying that all funds provided by the sender in 
connection with the remittance transfer would include taxes that are 
assessed by a State or other governmental body, to the extent not 
prohibited by law. Therefore, the final comment states that if a sender 
provides a timely request to cancel a remittance transfer, a remittance 
transfer provider must refund all funds provided by the sender in 
connection with the remittance transfer, including any fees and, to the 
extent not prohibited by law, taxes that have been imposed for the 
transfer, whether the fee or tax was assessed by the provider or a 
third party, such as an intermediary institution, the agent or bank in 
the recipient country, or a State or other governmental body.
    Finally, industry commenters suggested amendments to the 
requirement in the proposal to provide a refund within three business 
days of receiving a sender's request to cancel the remittance transfer. 
One industry commenter believed the refund rule should not require the 
refund to be delivered to the sender within three business days. The 
commenter cited examples of when it could be difficult to deliver the 
funds to the sender in three days, such as when the provider mails a 
refund check and the check takes several days to be delivered to the 
sender; when the refund is available at an agent location, but the 
sender takes several days to pick-up the refund; and when the provider 
issues a chargeback to the sender's credit or debit card account, but 
the credit takes several days to appear due to card processing systems. 
The Bureau notes that the requirement to refund funds to a sender does 
not require a provider to ensure that a refund is delivered to a sender 
within three business days after receiving the sender's request to 
cancel the remittance transfer.

Section 1005.35 Acts of Agents

    In most cases, remittance transfers are sent through an agent of 
the remittance transfer provider, such as a convenience store that has 
contracted with the provider to offer remittance transfer services at 
that location. EFTA section 919(f)(1) generally makes remittance 
transfer providers liable for any violation of EFTA section 919 by an 
agent, authorized delegate, or person affiliated with such provider, 
when such agent, authorized delegate, or affiliate acts for that 
remittance transfer provider. EFTA section 919(f)(2) requires the 
Bureau to prescribe rules to implement appropriate standards or 
conditions of liability of a remittance transfer provider, including 
one that acts through its agent or authorized delegate.\85\
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    \85\ See also Sec.  1005.30(a), which defines the term ``agent'' 
for purposes of the rule.
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    The Board proposed two alternatives to implement EFTA section 
919(f) with respect to acts of agents. Under the first alternative 
(proposed Alternative A), a remittance transfer provider would be 
strictly liable for violations of subpart B by an agent when such agent 
acts for the provider. Under the second alternative (proposed 
Alternative B), a remittance transfer provider would be liable under 
the EFTA for violations by an agent acting for the provider, unless the 
provider establishes and maintains policies and procedures for agent 
compliance, including appropriate oversight measures, and the provider 
corrects any violation, to the extent appropriate.
    Consumer groups, State regulators, and a Federal Reserve Bank 
supported proposed Alternative A. These commenters stated that 
Alternative A would provide the greatest incentives for remittance 
transfer providers to avoid errors and to oversee and audit their 
agents. Some argued that proposed Alternative A would be consistent 
with many State laws, and that adopting proposed Alternative B could 
disrupt efforts to hold providers to stricter liability standards under 
State law.
    In contrast, industry commenters supported the liability standard 
set forth in proposed Alternative B. These commenters argued that 
proposed Alternative B would more appropriately address the unique 
position of agents in the market, while providing protection for 
consumers by making them whole for the cost of the remittance transfer. 
These commenters also stated that proposed Alternative B would create 
an incentive for providers to take an active role in developing 
compliance policies and procedures and engaging in agent oversight. 
These commenters also expressed concern about the liability risks 
associated with proposed Alternative A for the misconduct or a single 
agent or isolated violations, and that proposed Alternative A could 
discourage the use of agents.
    Based on comments received and the Bureau's further analysis, the 
final rule adopts proposed Alternative A in renumbered Sec.  1005.35. 
The Bureau believes that the approach taken in proposed Alternative A 
is more consistent with the approach generally taken in other Bureau 
regulations, including Regulation E. For example, under Regulation E's 
payroll card rules, a financial institution is required to provide 
initial payroll card disclosures to a payroll account holder. If, by 
contractual agreement with the institution, a third-party service 
provider or the employer agrees to deliver these disclosures on the 
institution's behalf and fails to do so, the issuing financial 
institution is nonetheless liable for the violation.\86\ Similarly, if 
an agent at a retail establishment fails to provide the disclosures 
required by Sec.  1005.31, the remittance transfer provider would be 
liable. The Bureau also believes that proposed Alternative A provides a

[[Page 6266]]

greater incentive for providers to monitor their agents' activities and 
to exercise appropriate supervision and oversight than proposed 
Alternative B.
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    \86\ 12 CFR 1005.18.
---------------------------------------------------------------------------

    One commenter suggested that proposed Alternative A could exculpate 
an agent from responsibility from its own conduct. However, nothing in 
the rule shields agents from liability, nor does it prevent providers 
from requiring specific agent conduct in their contracts or negotiating 
other contractual liability or indemnification clauses.
    With respect to commenters' concerns about liability risk, EFTA 
section 919(f)(2) states that enforcement agencies may consider, in any 
action or other proceeding against a remittance transfer provider, the 
extent to which the provider had established and maintained policies or 
procedures for compliance, including policies, procedures, or other 
appropriate oversight measures designed to assure compliance by an 
agent or authorized delegate acting for such provider. Thus, 
enforcement agencies are permitted to tailor any remedies in light of 
single agent non-compliance or isolated violations.
    Several commenters requested further guidance on what it means for 
an agent to act for a provider. As discussed in the proposal, some 
agents have a non-exclusive arrangement with several remittance 
transfer providers, so that a sender may choose from among the 
remittance transfer providers at that agent location. If a sender 
chooses to use Provider A to send funds at the agent location, then 
Provider B would not be liable for the agent's actions in connection 
with that transaction, because the agent would be acting for Provider 
A. As noted above regarding the definition of ``agent'' under Sec.  
1005.30(a), the Bureau believes that it is appropriate to defer to 
State or other applicable law with respect to the relationship between 
an agent and Provider A.
    The final rule also adopts proposed Alternative A's comment 35-1 
substantially as proposed. Comment 35-1 explains that remittance 
transfer providers remain fully responsible for complying with the 
requirements of this subpart, including, but not limited to, providing 
the disclosures set forth in Sec.  1005.31 and remedying any errors as 
set forth in Sec.  1005.33. This is the case even if a remittance 
transfer provider performs its functions through an agent, and 
regardless of whether the provider has an agreement with a third party 
that transfers or otherwise makes funds available to a designated 
recipient.

Section 1005.36 Transfers Scheduled in Advance

    As discussed above in connection with the Sec.  1005.30(e) 
definition of ``remittance transfer,'' the Board requested comment on 
whether the rule should exclude from coverage online bill payments, 
including preauthorized transfers. As noted above, most industry 
commenters argued that these transfers should be excluded from the 
final rule. These commenters argued that the provider would not be in a 
position to know, at the time disclosures are required, the applicable 
exchange rate for transfers that are scheduled to be sent at a later 
date.
    For the reasons discussed above in the supplementary information to 
Sec.  1005.30(e), the final rule does not exclude online bill payments 
from the definition of ``remittance transfer,'' nor does it exclude 
certain other remittance transfers that a sender schedules in advance, 
including preauthorized remittance transfers. Thus, the final rule 
generally requires that disclosures be provided in accordance with the 
timing and accuracy rules set forth in Sec.  1005.31, both with respect 
to the required pre-payment disclosure and the required receipt. 
Estimates may be disclosed, to the extent permitted by Sec.  1005.32.
    However, the Bureau believes that preauthorized remittance 
transfers, whether for bill payments or for other reasons, raise issues 
relating to the practical aspects of compliance, and potential consumer 
confusion issues. As discussed above, Sec.  1005.31(e) links the timing 
requirements for providing pre-payment disclosures and receipts to 
senders to the time when the transfer is requested and payment is made 
by the sender. Similarly, the disclosure accuracy rule in Sec.  
1005.31(f) relates to when the sender's payment is made. For purposes 
of subpart B, payment is made when payment is authorized. See comments 
31(e)-2 and 34(a)-5. Accordingly, if all preauthorized remittance 
transfers were subject to Sec.  1005.31, providers would have to 
provide both pre-payment disclosures and receipts at the time the 
preauthorized remittance transfers are requested and authorized by the 
sender. Moreover, these disclosures would need to be accurate for the 
first and all subsequent transfers scheduled in the future (except to 
the extent estimates are permitted by Sec.  1005.32).
    The Bureau believes that in some circumstances, it is impracticable 
for providers to provide accurate disclosures for subsequent transfers 
at the time preauthorized remittance transfers are authorized. For 
example, while a provider may be able to know or to hedge for a 
specified exchange rate with respect to the first transfer, the 
provider or the institution involved in the remittance transfer that 
sets the exchange rate may be reluctant to set a specified exchange 
rate applicable to all subsequent transfers that are scheduled to be 
made into the future. This reluctance could arise due to the risk 
associated with participating in foreign exchange markets, and the 
manners in which providers and their partners manage such risk. Many 
wholesale exchange rates are set largely through currency markets in 
which rates can fluctuate frequently.\87\ As a result, whenever there 
are time lags in between the time when the retail rate applied to a 
transfer is set, the time when the relevant foreign currency is 
purchased, and the time when funds are delivered, a provider (and/or 
its business partner) may face losses due to unexpected changes in the 
value of the relevant foreign currency.
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    \87\ Some foreign exchange rates are set by monetary 
authorities. There are a variety of business models that providers 
use to fund transfers that are received in foreign currency. The 
timing of when foreign currency is purchased, the role of the 
provider in such a purchase, and the role of other intermediaries, 
partners, agents, and other parties can vary.
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    Providers and/or their partners generally use a variety of pricing, 
business processes, or hedging techniques to manage or minimize this 
exchange rate risk. For some, and perhaps many providers (or their 
partners), the task of managing or minimizing exchange risk may become 
more complicated or more costly if the amount of time between when the 
rate is set for a customer and when the transfer is sent increases. 
Setting the retail rate that applies to a transfer far in advance of 
when that transfer is sent may require the provider or other parties 
involved in processing the remittance transfer to use additional or 
more sophisticated risk management tools.
    Some preauthorized remittance transfers may be set up to vary in 
amount (for example, based on the amount of a utilities bill). In such 
cases, while the remittance transfer provider may know the amount to be 
transferred in the first payment, the provider may not know, at the 
time the sender authorizes the preauthorized remittance transfer, the 
amounts that will be transferred in subsequent months. Moreover, even 
if the scheduled amounts to be transferred were fixed, and a provider 
were permitted to disclose an estimated exchange rate for

[[Page 6267]]

future payments, providing estimated exchange rates at the time of the 
initial request for transfers beyond the first transfer may not be 
useful to senders--and could even be misleading--because currency 
fluctuations over several months could cause the actual rate applied to 
particular transfers to vary substantially. The Bureau recognizes that 
the market for preauthorized remittance transfers is still developing. 
Consequently, the Bureau is concerned that if providers were required 
to provide accurate disclosures for subsequent preauthorized remittance 
transfers at the time those transfers are authorized, in many cases 
providers would not be able to offer preauthorized remittance transfer 
products, which could limit consumer access to a potentially valuable 
product.
    The Bureau also believes that the right to cancel a remittance 
transfer no later than 30 minutes after the sender makes payment as 
provided in Sec.  1005.34(a) is not appropriate when applied to certain 
remittance transfers that a sender schedules in advance, including 
preauthorized remittance transfers. When a sender schedules a 
remittance transfer many days--or even months--in advance of when the 
transfer is to be made, a sender should have the flexibility to cancel 
the transfer more than 30 minutes after requesting the transfer, given 
the delay between when the sender authorizes the remittance transfer 
and when the sender schedules the remittance transfer to be made. In 
such circumstances, the Bureau believes that remittance transfer 
providers can accommodate a longer cancellation period without the risk 
that a sender's cancellation would delay the remittance transfer. Thus, 
the Bureau believes that a cancellation period tied to when the 
transfer is made, rather than when the transfer is authorized, is more 
beneficial to senders.
    Therefore, to effectuate the purposes of the EFTA and to facilitate 
compliance, the Bureau believes it is necessary and proper to exercise 
its authority under EFTA sections 904(a) and (c) to adopt a new Sec.  
1005.36, which sets forth disclosure requirements specifically 
applicable to preauthorized remittance transfers, as well as specific 
cancellation requirements for any remittance transfer scheduled by the 
sender at least three business days before the date of the transfer. 
Section 1005.36(a) and (b) address specific requirements for the timing 
and accuracy of disclosures for preauthorized remittance transfers. 
Section 1005.36(c) addresses the cancellation requirements applicable 
to any remittance transfer scheduled by the sender at least three 
business days before the date of the transfer, including preauthorized 
remittance transfers. Because Sec.  1005.36 only addresses timing, 
accuracy, and cancellation requirements, the other requirements of 
subpart B, such as content and formatting requirements and the foreign 
language requirements, continue to apply to remittance transfers 
subject to Sec.  1005.36. See comment 36-1.
    In addition, the Bureau's January 2012 Proposed Rule, published 
elsewhere in the Federal Register today, solicits comment on 
alternative disclosure and cancellation requirements with respect to 
remittance transfers subject to Sec.  1005.36.

36(a) Timing

    Section 1005.36(a) sets forth the disclosure timing requirements 
for disclosures relating to preauthorized remittance transfers. Under 
Sec.  1005.36(a)(1), for the first scheduled transfer, the provider is 
required to provide both the pre-payment disclosure described in Sec.  
1005.31(b)(1) and the receipt described in Sec.  1005.31(b)(2) in 
accordance with the timing rules set forth in Sec.  1005.31(e) that 
generally apply to remittance transfers. In effect, under the final 
rule, the first scheduled transfer of a preauthorized remittance 
transfer is treated the same as other individual transfer requests by a 
sender.
    However, under Sec.  1005.36(a)(2), different timing requirements 
apply to disclosures relating to subsequent scheduled transfers. Under 
Sec.  1005.36(a)(2)(i), the provider must mail or deliver a pre-payment 
disclosure, as described in Sec.  1005.31(b)(1), within a reasonable 
time prior to the scheduled date of each subsequent transfer. If the 
general timing rule in Sec.  1005.31(e) applied, the provider would be 
required to provide a pre-payment disclosure at the time the scheduled 
payments are authorized. By requiring a pre-payment disclosure at this 
alternative time for each subsequent transfer, senders will receive 
information about their transfers in closer proximity to the scheduled 
transfer date, and the provider should be in a better position to make 
the required disclosures. This approach also reminds senders about the 
pending transfer, which will enable them to confirm that sufficient 
funds are available for the transfer. In the January 2012 Proposed Rule 
published elsewhere in today's Federal Register, the Bureau is also 
soliciting comment on a safe harbor with respect to the reasonable time 
requirement.
    In addition, under Sec.  1005.36(a)(2)(ii), the provider must 
provide the receipt described in Sec.  1005.31(b)(2) for each 
subsequent transfer. As with pre-payment disclosures, the Bureau does 
not believe a receipt given at the time payment for the transfer is 
authorized would be as useful to senders as a receipt received closer 
in time to the actual transfer that contains more relevant information 
about the particular scheduled transfer. The final rule requires the 
receipt to be mailed or delivered to the sender no later than one 
business day after the date on which the transfer is made. However, if 
the transfer involves the transfer of funds from the sender's account 
held by the provider, the receipt may be provided on or with the next 
regularly scheduled periodic statement for that account or within 30 
days after payment is made for the remittance transfer if a periodic 
statement is not provided. Section 1005.36(a)(2)(ii) closely tracks the 
receipt timing rule for receipts in transactions conducted entirely by 
telephone under Sec.  1005.31(e)(2).
    The Bureau believes that these special timing rules for pre-payment 
disclosures and receipts for subsequent preauthorized remittance 
transfers will result in more meaningful disclosures to senders than if 
providers were required to provide these disclosures at the time the 
transfers were authorized.

36(b) Accuracy

    Section 1005.36(b) sets forth requirements for the accuracy of 
disclosures for preauthorized remittance transfers. For the first 
scheduled transfer, the disclosure requirements follow the accuracy 
rule set forth in Sec.  1005.31(f) that generally applies to remittance 
transfers. See Sec.  1005.36(b)(1). Thus, except as permitted by Sec.  
1005.32, the pre-payment disclosure and receipt provided for the first 
scheduled transfer must be accurate when payment is made; that is, at 
the time the transfer is authorized.
    However, for subsequent scheduled transfers, the disclosures 
described in Sec.  1005.36(a)(2) must be accurate when the transfer is 
made. See Sec.  1005.36(b)(2). Thus, for subsequent preauthorized 
remittance transfers, the final rule provides that senders must receive 
an accurate pre-payment disclosure shortly before the transfer is made, 
and then an accurate receipt shortly after the transfer is made. 
Providers may continue to disclose estimates to the extent permitted by 
Sec.  1005.32.
    As discussed above, the Bureau believes that it would be 
problematic to apply the general rule about accuracy in Sec.  
1005.31(f) to subsequent preauthorized

[[Page 6268]]

remittance transfers. For example, some preauthorized remittance 
transfers are set up to vary in amount, so the provider cannot predict, 
at the time such transfers are authorized, the amount to be transferred 
in subsequent months. Therefore, the provider could not provide an 
accurate pre-payment disclosure and receipt at the time the 
preauthorized remittance transfers, and payment for the transfers, are 
authorized. The accuracy requirement in Sec.  1005.31(f) also would 
present a challenge to determining an applicable exchange rate for 
subsequent transfers, in that the provider may not know the exchange 
rate that will apply to subsequent transfers at the time of 
authorization. Accordingly, to effectuate the purposes of the Act and 
to facilitate compliance, the Bureau believes it is necessary and 
proper to exercise its authority under EFTA sections 904(a) and (c) to 
adopt special requirements for accurate disclosures about subsequent 
scheduled transfers in Sec.  1005.36(b). In the January 2012 Proposed 
Rule published elsewhere in today's Federal Register, the Bureau is 
also soliciting comment on the use of estimates for certain disclosures 
with respect to the first scheduled transfer.

36(c) Cancellation

    Under Sec.  1005.34(a), senders are permitted to cancel a 
remittance transfer if the request to cancel the remittance transfer is 
received by the provider no later than 30 minutes after the sender 
makes payment in connection with the remittance transfer, if certain 
conditions are met. As noted above, for purposes of subpart B, payment 
is made when payment is authorized. The Bureau believes that requiring 
a sender to cancel a transaction no later than 30 minutes after payment 
is authorized would not be appropriate for certain remittance transfers 
that a sender schedules in advance, including preauthorized remittance 
transfers. Such a rule would permit cancellation only for a short time 
after the transfers are authorized, even though the remittance transfer 
may not occur for many days, weeks, or months. For example, if on March 
1 a sender scheduled a remittance transfer for March 23, under the 
general cancellation rule, the sender would be required to cancel 30 
minutes after the transfer was authorized on March 1, despite the fact 
that the transfer is not being made until March 23. The Bureau believes 
it is appropriate to adopt a different cancellation period in these 
circumstances because payment is authorized well before the transfer is 
to be made.
    Consequently, the Bureau is adopting a special cancellation rule in 
Sec.  1005.36(c) that it believes is more appropriate for these types 
of transfers. Section 1005.36(c) states that, for any remittance 
transfer scheduled by the sender at least three business days before 
the date of the transfer, a remittance transfer provider shall comply 
with any oral or written request to cancel the remittance transfer from 
the sender if the request to cancel: (i) Enables the provider to 
identify the sender's name and address or telephone number and the 
particular transfer to be cancelled; and (ii) is received by the 
provider at least three business days before the scheduled date of the 
remittance transfer.
    The Bureau believes that this time period is more beneficial to 
senders because it generally provides them more time to decide whether 
to go through with a scheduled transfer. Senders will have the 
opportunity to change their minds about sending a transfer if, for 
example, circumstances change between when the transfer is authorized 
and when the transfer is to be made. At the same time, the Bureau 
believes that requiring a sender to cancel at least three days before a 
transfer is made gives providers sufficient time to process any 
cancellation requests before a transfer is made. Many financial 
institutions that permit senders to schedule remittance transfers at 
least three business days before the date of the transfer are already 
subject to the stop payment provisions in Regulation E for 
preauthorized transfers that are EFTs, which require consumers to 
notify the institution at least three business days before the 
scheduled date of a preauthorized EFT. See Sec.  1005.10(c).
    The cancellation provisions in both Sec. Sec.  1005.34(a) and 
1005.36(c) permit a sender to cancel a remittance transfer after the 
transfer has been authorized. Under both provisions, a cancellation 
period may expire before the transfer itself is made. As noted above, 
the Bureau expects financial institutions making transfers by ACH or 
wire transfer may decide to wait to execute the payment order until the 
cancellation period has passed because these types of remittance 
transfers generally cannot easily be cancelled once the payment order 
has been accepted by the sending institution. For the same reason, the 
Bureau believes it is appropriate to require a sender to cancel before 
a transfer is made in Sec.  1005.36(c).
    Under Sec.  1005.36(c), a transfer must be cancelled only if the 
request to cancel is received by the provider at least three business 
days before the scheduled date of the remittance transfer, so that a 
provider has sufficient time to prevent the transfer from taking place 
on the scheduled date. Therefore, under the final rule, only transfers 
scheduled by the sender at least three business days before the date of 
the transfer are subject to the cancellation requirements in Sec.  
1005.36(c). Remittance transfers that are scheduled less than three 
business days before the date of the transfer are subject to the 
cancellation requirements in Sec.  1005.34(a). For example, if a sender 
on March 1 requests a remittance transfer provider to send a wire 
transfer to pay a bill in a foreign country on March 3, the sender may 
cancel up to 30 minutes after scheduling the payment on March 1. Thus, 
in every case, a sender has an opportunity to cancel a remittance 
transfer.
    The Bureau is adopting commentary to provide further guidance on 
the application of Sec.  1005.36(c). Comment 36(c)-1 clarifies that a 
remittance transfer is scheduled if it will require no further action 
by the sender to send the transfer after the sender requests the 
transfer. For example, a remittance transfer is scheduled at least 
three business days before the date of the transfer, and Sec.  
1005.36(c) applies, where a sender on March 1 requests a remittance 
transfer provider to send a wire transfer to pay a bill in a foreign 
country on March 15, if it will require no further action by the sender 
to send the transfer after the sender requests the transfer.
    Comment 36(c)-1 also clarifies three circumstances where the 
provisions of Sec.  1005.36(c) do not apply, such that a provider 
should instead comply with the 30-minute cancellation rule in Sec.  
1005.34. For example, Sec.  1005.36(c) does not apply when a sender on 
March 1 requests a remittance transfer provider to send a wire transfer 
to pay a bill in a foreign country on March 3. In this instance, Sec.  
1005.36(c) does not apply because the transfer is scheduled less than 
three business days before the date of the transfer. Section 1005.36(c) 
also does not apply when a sender on March 1 requests that a remittance 
transfer provider send a remittance transfer on March 15, but the 
provider requires the sender to confirm the request on March 14 in 
order to send the transfer. In this example, Sec.  1005.36(c) does not 
apply because the transfer requires further action by the sender to 
send the transfer after the sender requests the transfer.
    The other example in comment 36(c)-1 demonstrates situations where 
Sec.  1005.36(c) does not apply because a transfer occurs more than 
three days after the date the sender requests the transfer solely due 
to the provider's

[[Page 6269]]

processing time and not because a sender schedules the transfer at 
least three business days before the date of the transfer. For example, 
Sec.  1005.36(c) does not apply when a sender on March 1 requests that 
a remittance transfer provider send an ACH transfer, and that transfer 
is sent on March 2, but due to the time required for processing, funds 
are not deducted from the sender's account until March 5.
    Comment 36(c)-2 clarifies how a remittance transfer provider should 
treat requests to cancel preauthorized remittance transfers in a manner 
consistent with the stop payment provisions of Regulation E. See Sec.  
1005.10(c) and comment 10(c)-2. The comment clarifies that for 
preauthorized remittance transfers, the provider must assume the 
request to cancel applies to all future preauthorized remittance 
transfers, unless the sender specifically indicates that it should 
apply only to the next scheduled remittance transfer.
    Finally, comment 36(c)-3 clarifies that a financial institution 
that is also a remittance transfer provider may have both stop payment 
obligations under Sec.  1005.10 and cancellation obligations under 
Sec.  1005.36. If a sender cancels a remittance transfer under Sec.  
1005.36 with a remittance transfer provider that holds the sender's 
account, and the transfer is a preauthorized transfer under Sec.  
1005.10, then the cancellation provisions of Sec.  1005.36 exclusively 
apply. The Bureau notes that in these circumstances, a provider would 
not be permitted to require the sender to give written confirmation of 
a cancellation within 14 days of an oral notification, as is permitted 
for stop payment orders in Sec.  1005.10(c)(2). The Bureau believes 
that a sender should be able to orally cancel any remittance transfer, 
including a remittance transfer that is scheduled at least three 
business days before the date of the transfer, without the additional 
burden of providing written confirmation of the cancellation.
    In the January 2012 Proposed Rule published elsewhere in today's 
Federal Register, the Bureau is also soliciting comment on the 
cancellation period for a remittance transfer scheduled by the sender 
at least three business days before the date of the transfer.

Appendix A--Model Disclosure Clauses and Forms

    The Board proposed in Appendix A twelve model forms that a 
remittance transfer provider could use in connection with remittance 
transfers. The disclosures were proposed as model forms pursuant to 
EFTA section 904(a), rather than model clauses pursuant to EFTA section 
904(b), in order to clearly demonstrate the general form and specific 
format requirements of proposed Sec.  205.31(a) and (c). Proposed Model 
Forms A-30 through A-32 were developed in consumer testing and reflect 
a format in which the flow and organization of information effectively 
communicates the remittance disclosures to most consumers. Proposed 
Model Forms A-30 through A-41 were intended to demonstrate several 
formats a remittance transfer provider may use to comply with the 
disclosure requirements of proposed Sec.  205.31.\88\
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    \88\ Proposed Model Forms A-33 through A-35 and proposed Model 
Form A-37 were variations of the forms that were developed in 
consumer testing. Proposed Model Forms A-38 through A-40 were 
Spanish translations of proposed Model Forms A-30 through A-32. The 
language in the long form error resolution and cancellation notice 
in proposed Model Form A-36, and its Spanish translation in Model 
Form A-41, were based on the model form for error resolution in 
Regulation E. See 12 CFR part 1005, Appendix A to part 1005, Form A-
3.
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    The Board proposed to amend instruction 2 to Appendix A regarding 
the use of model forms and added instruction 4 to Appendix A to 
describe how a remittance transfer provider may properly use and alter 
the model forms. Specifically, the Board proposed to amend instruction 
2 to Appendix A to include references to remittance transfer providers 
and remittance transfers and updated the numbering of the liability 
provisions of the EFTA as sections 916 and 917. The proposed 
instruction therefore clarified that the use of the proposed model 
forms in making disclosures would protect a remittance transfer 
provider from liability under sections 916 and 917 of the EFTA if they 
accurately reflected the provider's remittance transfer services. The 
Bureau did not receive comments on proposed instruction 2, and it is 
adopted substantially as proposed, with an addition to reference Sec.  
1005.36 that was added in the final rule.
    The Bureau also did not receive any comments on proposed 
instruction 4 to Appendix A, and it is adopted substantially as 
proposed. The instruction includes one change to address the Bureau's 
role in reviewing and approving disclosure forms. The instruction also 
contains modifications to address the addition of Sec.  1005.36 in the 
final rule. Accordingly, instruction 4 to Appendix A states that the 
Bureau will not review or approve disclosure forms for remittance 
transfer providers, but that the appendix contains 12 model forms for 
use in connection with remittance transfers. The instruction explains 
that Model Forms A-30 through A-32 demonstrate how a provider can 
provide the required disclosures for a remittance transfer exchanged 
into local currency. Model Forms A-33 through A-35 demonstrate how a 
provider can provide the required disclosures for U.S. dollar-to-U.S. 
dollar remittance transfers. These forms also demonstrate disclosure of 
the required content, in accordance with the grouping and proximity 
requirements of Sec.  1005.31(c)(1) and (2), in both a register receipt 
format and an 8.5 inch by 11 inch format. Model Form A-36 provides long 
form model error resolution and cancellation disclosures required by 
Sec.  1005.31(b)(4), and Model Form A-37 provides short form model 
error resolution and cancellation disclosures required by Sec.  
1005.31(b)(2)(iv) and (vi).
    Instruction 4 to Appendix A also explains that a remittance 
transfer provider may use the language and formatting provided in Forms 
A-38 through A-41 for disclosures that are required to be provided in 
Spanish, pursuant to the requirements of Sec.  1005.31(g). It also 
clarifies that the model forms may contain certain information that is 
not required by subpart B, such as a confirmation code and the sender's 
name and contact information. This information is included on the model 
forms to demonstrate one way of displaying this information in 
compliance with Sec.  1005.31(c)(4). Any additional information must be 
presented consistent with a remittance transfer provider's obligation 
to provide required disclosures in a clear and conspicuous manner.
    Instruction 4 to Appendix A further clarifies that use of the model 
forms is optional. A remittance transfer provider may change the forms 
by rearranging the format or by making modifications to the language of 
the forms, without modifying the substance of the disclosures. The 
instruction clarifies that rearrangement or modification of the format 
of the model forms is permissible, as long as it is consistent with the 
form, grouping, proximity, and other requirements of Sec.  1005.31(a) 
and (c). Providers making revisions that do not comply with this 
section will lose the benefit of the safe harbor for appropriate use of 
Model Forms A-30 to A-41.
    Instruction 4 to Appendix A also provides examples of permissible 
changes a remittance transfer provider may make to the language and 
format of the model forms without losing the benefit of the safe 
harbor. For example, a remittance transfer provider may substitute the 
information contained in the model forms that is intended to 
demonstrate how to complete the information in the model forms--such

[[Page 6270]]

as names, addresses, and Web sites; dates; numbers; and State-specific 
contact information--with information applicable to the remittance 
transfer. A remittance transfer provider may also eliminate disclosures 
that are not applicable to the transfer, as permitted under Sec.  
1005.31(b), or provide the required disclosures on a paper size that is 
different from a register receipt and 8.5 inch by 11 inch formats. A 
remittance transfer provider may correct or update telephone numbers, 
mailing addresses, or Web site addresses that may change over time. 
This example applies to all telephone numbers and addresses on a model 
form, including the contact information of the provider, the State 
agency, and the Consumer Financial Protection Bureau. The instruction 
clarifies that adding the term ``Estimated'' or a substantially similar 
term and in close proximity to the estimated term or terms, as required 
under Sec.  1005.31(d), is a permissible change to the model forms. A 
provider may provide the required disclosures in a foreign language, or 
multiple foreign languages, subject to the requirements of Sec.  
1005.31(g), without losing the benefit of the safe harbor.
    Instruction 4 to Appendix A includes an additional example of a 
permissible change a remittance transfer provider may make to the 
language and format of the model forms without losing the benefit of 
the safe harbor to reflect the addition of Sec.  1005.36 in the final 
rule. The instruction clarifies that a remittance transfer provider may 
substitute cancellation language to reflect the right to a cancellation 
made pursuant to the requirements of Sec.  1005.36(c). For example, for 
disclosures provided for a preauthorized remittance transfer, a 
provider could replace the statement that a sender can cancel the 
remittance transfer within 30 minutes with a statement that a sender 
may cancel up to three business days before the date of each transfer. 
Finally, instruction 4 to Appendix A also clarifies that adding 
language to a form that is not segregated from the required disclosures 
is impermissible, other than as permitted by Sec.  1005.31(c)(4).
    Although the Bureau did not receive comments on the instructions to 
Model Forms A-30 through A-41, the Bureau did receive suggested changes 
to the terminology used in and the formatting of the model forms. For 
example, consumer group commenters believed that the amount of the cost 
of the transaction expressed as ``Total'' in the proposal should be 
labeled in bold as ``Total cost to you of this transfer'' and that 
``Total to recipient'' should be labeled in bold as ``Total amount 
recipient should receive.'' The commenters also believed the term 
``Total Amount'' was too generic and instead should be ``Amount 
Transferred.'' An industry commenter believed that fees and taxes 
charged by entities other than the remittance transfer provided should 
be labeled as ``Receive'' or ``Payout'' fees and taxes, rather than 
``Other'' fees and taxes.
    The Bureau believes that the proposed terms sufficiently describe 
the amounts disclosed on the model forms. The proposed terms were used 
in consumer testing, and nearly all participants understood the amounts 
that were disclosed. Moreover, the Bureau believes that requiring 
bolding or similar font requirements could pose compliance difficulties 
for remittance transfer providers that print the disclosures on a 
register or other printing device that does not permit such font 
changes, and participants in consumer testing did not have difficulty 
finding this information on the forms. Thus, the Bureau is adopting the 
terms and format as proposed.
    Consumer group commenters asserted that the content of the long 
form error resolution and cancellation notice in Model Form A-36 was 
misleading and not consumer friendly. The commenters provided edits to 
the disclosure that the commenter believed would be more helpful to a 
sender. The long form error resolution and cancellation disclosure is 
based on the model form for error resolution in Regulation E. See 31 
CFR part 1005, Appendix A to part 1005, Form A-3. The Bureau believes 
that any changes to this model form should be made in conjunction with 
the corresponding changes to existing Regulation E model forms and that 
such changes should be subject to consumer testing. Therefore, the 
Bureau is adopting the content of Model Form A-36 as proposed.
    Other commenters suggested substantive changes that, if adopted, 
would result in changes to the model forms. For example, some industry 
commenters suggested that the Bureau eliminate the requirement to 
disclose fees and taxes charged by a person other than the remittance 
transfer provider and that the model forms should instead indicate 
generally that other fees and charges may apply. Similarly, industry 
commenters suggested the exchange rate and funds availability date 
should be permitted to be estimated and, therefore, the model forms 
should state that these disclosures are subject to change. As discussed 
above, the Bureau is not adopting these substantive changes in the 
final rule. Consequently, the Bureau is not adopting the corresponding 
changes to the model forms.
    Finally, a consumer advocate suggested that a fraud warning should 
be added to the model forms. Such a warning is not required in the 
statute, and the Bureau believes that the disclosures should be limited 
to information relating to cost, error resolution, and cancellation. 
Adding more information and warnings to forms could overwhelm a sender 
and result in the sender not reading any of the information on the 
form. Therefore, the Bureau is not adding such a fraud warning to the 
model disclosures.
    The Bureau is, however, making two changes to the model forms that 
reflect changes from the proposal to the final rule, as discussed 
above. First, the Bureau is requiring that fees and taxes must be 
disclosed separately. See comment 31(b)(1)-1. As such, the model forms 
have been amended to demonstrate how a remittance transfer provider 
would disclose fees separately from taxes. Second, the final rule 
provides that a sender may cancel a transaction within thirty minutes 
of making payment, rather than within one business day, as proposed, 
and the model forms have been amended to reflect this change.\89\
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    \89\ As noted above, this cancellation language may be amended 
to the extent Sec.  1005.36(c) applies.
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    The Bureau is making additional changes to Model Form A-37 in the 
final rule. The Bureau is removing sample phone number, Web site, and 
remittance transfer company name that was included in the proposed 
form. Unlike the model pre-payment disclosures, receipts, and combined 
disclosures, sample information is not necessary to demonstrate how the 
short form error resolution and cancellation disclosures should be 
completed. Thus, in the final rule, Model Form A-37 includes brackets 
indicating where this information should be entered by a provider. The 
forward slash used in the proposal to indicate that funds may be picked 
up or deposited is also replaced with the word ``or.'' The Bureau is 
also amending the abbreviated statement about senders' error resolution 
rights on Model Form A-37 to include a more explicit statement 
informing senders that they have such rights.\90\
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    \90\ These changes were also made to Model Forms A-31, A-32, A-
34, and A-35 where the language in Model Form A-37 is used. The 
changes are also reflected in the Spanish language disclosures.
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    The Bureau is also making minor technical changes in some of the 
model forms in the final rule for clarity. Plus signs are added to some 
forms to indicate where fees and taxes will be added to a transfer 
amount to better

[[Page 6271]]

demonstrate the calculation of the total amount paid by the sender.\91\ 
The internet address for the sample State regulatory agency is also 
amended on some forms with the suffix ``.gov'' rather than ``.com.'' 
\92\ The toll-free telephone numbers for the Bureau have also been 
added to some forms.\93\
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    \91\ See, Model Forms A-30 through A-35 and A-38 through A-40.
    \92\ See, Model Forms A-31, A-32, A-34, A-35, A-39, and A-40.
    \93\ See, Model Forms A-31, A-32, A-34, A-35, A-39, and A-40.
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    As discussed above, Model Forms A-38 through A-41 may be used when 
disclosures are required to be disclosed in Spanish, pursuant to the 
requirements in Sec.  1005.31(g). The Board proposed model disclosures 
in Spanish to facilitate compliance with this foreign language 
requirement and requested comment on the disclosures. One commenter 
submitted spelling, grammar and verb tense revisions to the Spanish 
language disclosures. The commenter believed the Spanish language 
disclosures, as proposed, did not adequately communicate the intent of 
the language used in the English disclosures.
    Certain commenter-suggested revisions have been made in Model Forms 
A-38 through A-41 to correct inaccuracies in the proposed Spanish 
language disclosures. However, in other instances, the suggested 
revisions have not been made. Although the proposed language and the 
commenter-suggested revisions reflected stylistic variations, both 
contained accurate translations of the English language model forms. 
Therefore, the technical corrections are included in Model Forms A-38 
through A-41 in the final rule. The Bureau also made stylistic changes 
to the Spanish language model forms that it believes better tracks the 
language in the English language disclosures.\94\
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    \94\ One of the stylistic changes made to the Spanish language 
model forms was to change the format for the dates to eliminate 
possible consumer confusion as to the day, the month, and the year. 
Similar changes have been made to the English language model forms 
for consistency.
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Effective Date

    The Dodd-Frank Act requires the Bureau to issue final rules on 
certain provisions of EFTA section 919 within 18 months from the date 
of enactment. However, the statute does not specify an effective date 
for these provisions. The Board solicited comment in the May 2011 
Proposed Rule on whether an effective date of one year from the date 
the final rule is published, or an alternative effective date would be 
appropriate.
    One industry commenter agreed that 12 months would be an 
appropriate time period to implement the remittance transfer 
provisions. However, several other industry commenters recommended that 
the effective date of the final rule be set 18 to 24 months from the 
date that the final rule is issued. In suggesting this time period, 
money transmitter commenters stated that they would need time to change 
hardware printers and software. Agents of remittance transfer providers 
would also need time to integrate software from the remittance transfer 
provider with their point of sale systems. Industry commenters also 
requested time to deplete their existing form stock, develop and 
implement proper training programs, and amend contracts with agent 
locations worldwide.
    Financial institution commenters cited the need for messaging, 
settlement, and payment systems, such as the ACH network and SWIFT, to 
evaluate and possibly amend operating rules, message formats, 
contracts, and participant agreements. These commenters also stated 
they would need time to: Complete processing system modifications; 
develop disclosures, operating procedures, marketing and employee 
training materials; and make modifications to agreements with 
correspondents and other intermediaries. They further requested that 
the Bureau take into account other regulatory requirement set forth in 
the Dodd-Frank Act that financial institutions must implement in 
addition to the remittance transfer provisions.
    Given the time period set for compliance with other consumer 
financial protection regulations, the Bureau believes it is appropriate 
to set an effective date one year from the date of publication of the 
final rule in the Federal Register. In setting this effective date, the 
Bureau believes that this time frame best balances the significant 
consumer protection interests addressed by this rule against industry's 
need to make systems changes to comply with the final rule. Therefore, 
the disclosure requirements in Sec.  1005.31 will apply to remittance 
transfers that are requested by a sender on or after the effective 
date. Only remittance transfers for which a sender made payment on or 
after the effective date will be eligible for the error resolution and 
refund and cancellation requirements of Sec. Sec.  1005.33 and 1005.34. 
For preauthorized remittance transfers, the disclosure requirements in 
Sec.  1005.36(a) and (b) will apply to preauthorized remittance 
transfers authorized by a sender on or after the effective date. For 
transactions subject to Sec.  1005.36(c), the error resolution and 
refund requirements of Sec. Sec.  1005.33 and 1005.34 and the 
cancellation requirements of Sec.  1005.36(c) will apply to transfers 
authorized by a sender on or after the effective date.

VII. Section 1022 Analysis

A. Overview

    Section 1022(b)(2)(A) of the Dodd-Frank Act calls for the Bureau to 
consider the potential costs, benefits, and impacts of its regulations. 
Specifically, the Bureau is to consider the potential benefits and 
costs of regulation to consumers and covered persons, including the 
potential reduction of access by consumers to consumer financial 
products and services; the impact of proposed rules on insured 
depository institutions and insured credit unions with less than $10 
billion in total assets as described in section 1026 of the Dodd-Frank 
Act; and the impact on consumers in rural areas.
    The final rule implements section 1073 of the Dodd-Frank Act, which 
creates a comprehensive system of consumer protections for consumers 
who electronically transfer funds to recipients in foreign countries. 
Specifically, as discussed above, the statute: (i) Mandates disclosure 
of the exchange rate and the amount to be received by the remittance 
recipient, prior to and at the time of payment by the consumer for the 
transfer; (ii) provides for Federal rights on consumer cancellation and 
refund policies; (iii) requires remittance transfer providers to 
investigate disputes and remedy errors regarding remittance transfers; 
and (iv) establishes standards for the liability of remittance transfer 
providers for acts of their agents and authorized delegates.
    Prior to the Dodd-Frank Act amendments, international money 
transfers fell largely outside the scope of Federal consumer 
protections. In the absence of a consistent Federal regime, legal 
requirements and practices regarding disclosure have varied. 
Congressional hearings prior to enactment of the Dodd-Frank Act focused 
on the need for standardized and reliable pre-payment disclosures, 
suggesting that disclosure of the amount of money to be received by the 
designated recipient is particularly critical.
    The analysis below considers the benefits, costs, and impacts of 
the key provisions of the final rule: the provisions regarding 
disclosures and estimates, error resolution, cancellation and refund, 
and agent liability. With respect to each provision, the analysis

[[Page 6272]]

considers the benefits to consumers and the costs to providers, as well 
as possible implications of these costs for consumers.\95\ The analysis 
also considers certain alternative provisions that were considered by 
the Bureau in the development of the rule.
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    \95\ Costs incurred by providers may, in practice, be shared 
among providers' business partners, such as agents or foreign 
exchange providers. To the extent that any of these business 
partners are covered persons, the rule may impose some cost on them 
as well.
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    The analysis examines the benefits, costs, and impacts of the key 
provisions of the final rule against a pre-statutory baseline (i.e., 
the benefits, costs, and impacts of the statute and the regulation 
combined). The Bureau has discretion in future rulemakings to choose 
the most appropriate baseline for that particular rulemaking.
    The Bureau notes at the outset that there is a limited amount of 
data that is publicly available and representative of the full universe 
or population of remittance transfers with which to quantify the 
potential benefits, costs, and impacts of the rule. Specifically, 
though some surveys have measured the characteristics of certain types 
of remittance consumers or certain types of remittance transfers, there 
is little publicly available data that represents the entire remittance 
transfer market and that links the characteristics of consumers who 
send remittance transfers to the frequency, size and cost of the 
transfers and the specific services and channels used. There is also 
limited data on remittance consumer shopping, error resolution, and 
purchase behavior from which to estimate how new protections might 
change consumer behavior and the amount consumers pay for remittance 
transfers. This data would be essential for quantifying the benefits to 
consumers of the provisions of the rule.
    Regarding costs to providers of complying with the rule, there is 
no representative and publicly available data on the current provision, 
accuracy, and completeness of pre-payment disclosures and receipts 
across the remittance transfer market, the frequency and treatment of 
cancellations and errors, or the frequency of practices by agents for 
which providers would become liable under the regulation. Additionally, 
industry commenters did not provide precise or comprehensive 
information from which to estimate such figures. Such data would 
provide the starting point for quantifying the cost to providers of 
complying with the rule. To measure such costs fully would also require 
quantifying the cost of closing the gap between current practices and 
those provided for by the rule, including the costs of providing 
disclosures or addressing errors. Industry commenters did not provide 
the Bureau with any quantitative data regarding such costs.
    In light of the lack of data, this analysis generally provides a 
qualitative discussion of the benefits, costs, and impacts of the final 
rule. General economic principles, together with the limited data that 
is available, provides considerable insight into these benefits, costs 
and impacts but they do not support a quantitative analysis.
    As discussed above, the May 2011 Proposed Rule was issued by the 
Board prior to the transfer of rulemaking authority to the Bureau. The 
May 2011 Proposed Rule therefore did not contain a proposed Dodd-Frank 
Act section 1022 analysis, and although the Board did generally request 
comment on projected implementation and compliance costs, commenters 
provided little data in response. Furthermore, because of the short 
time period for publication of the final rule imposed by the statutory 
deadline, the Bureau's ability to gather additional information or 
develop new data sources after it assumed rulemaking authority was 
constrained.

B. Potential Benefits and Costs to Consumers and Covered Persons

Disclosure of Accurate Exchange Rates, Fees, and Taxes
    The final rule generally requires remittance transfer providers to 
provide to senders a pre-payment disclosure with accurate information 
about, among other things, the exchange rate, fees, and taxes 
applicable to the transaction, and the amount to be provided to the 
designated recipient. In addition, the provider must generally give the 
sender a receipt that contains, among other things, the date of 
availability of funds to the designated recipient, as well as the 
information contained in the pre-payment disclosure.
    The disclosures required by the Dodd-Frank Act and the final rule 
provide many benefits to consumers. Consumers who have reliable 
information about how much they must spend in order to deliver a 
specific amount of foreign currency to a recipient are better able to 
manage all of their household income than are consumers who lack this 
information. This may be particularly important for low-income 
immigrants who are trying both to manage their personal budgets in the 
United States and support friends or family abroad.
    Disclosing the amount of currency to be provided to the recipient 
enables consumers to engage in comparison shopping, since it accounts 
for both the exchange rate used by the remittance transfer provider and 
fees and taxes that are deducted from the amount transferred. Consumers 
also benefit, however, from having reliable information about the 
individual components of remittance transfer pricing (i.e., exchange 
rates, fees, and taxes). If the amount the provider commits to deliver 
is different from the amount the consumer is expecting, the information 
about the components will help the consumer identify the reason for the 
difference. The consumer can then better determine the benefits to 
additional comparison shopping. Consumers may also be less susceptible 
to deceptive and unfair business practices, and those practices may be 
less common, when the exchange rate, fees, and taxes are all clearly 
and reliably disclosed and the consumer knows (and can communicate to 
the recipient) the amount that the recipient should expect to receive.
    Finally, consumers who shop for remittance transfers place 
competitive pressure on providers, who may lower their prices in 
response. This benefits all consumers who send remittance transfers, by 
either allowing them to send more money abroad for the same price, or 
by allowing them to save on the amount they spend on such transfers.
    By requiring remittance transfer providers to provide accurate 
disclosures to consumers, the Dodd-Frank Act and the final rule thus 
require providers to lock in their prices (at the time of the 
transaction, except when estimates are allowed). As discussed below, 
providers that operate through closed network systems will face 
different costs of making this commitment than will providers that 
operate through open network systems.
    Providers that use closed network systems are generally money 
transmitters, though some depository institutions and credit unions may 
also offer remittance transfers through closed networks. Insofar as 
they use the closed network system, money transmitters or other 
providers often have contractual relationships with agents in the 
United States through which consumers initiate transfers, as well as 
agents abroad, which may be used to distribute transfers in cash to 
recipients. Alternatively, these providers may instead have direct 
relationships with intermediaries that, in turn, contract with and 
manage individual agents.
    Providers that use closed network systems, through the terms of 
their contractual relationships, usually have

[[Page 6273]]

some ability and authority to obtain the information needed for the 
disclosures from their agents or other network partners. Nevertheless, 
the disclosure requirements will likely impose some costs on closed 
network providers (and potentially some of their business partners), to 
the extent that such institutions need to update systems, revise 
contracts, change communication protocols and business practices in 
order to receive the necessary information and comply with the 
disclosure requirements. Furthermore, closed network providers that 
currently offer ``floating rate'' products will need to adjust their 
business processes and relationships for setting exchange rates, and 
change the way they manage foreign exchange rate risk.
    On the other hand, providers that operate through open network 
systems are in a different situation. This group primarily includes 
depository institutions and credit unions, although comments from 
industry stated that some institutions that are not depositories or 
credit unions (including some money transmitters) also use open network 
systems for certain transactions. Providers that operate through open 
networks generally do not have direct relationships with all disbursing 
entities. In some cases, intermediary institutions and recipient 
institutions may charge fees in connection with the transaction; often 
these fees are deducted from the principal amount transferred, although 
some fees may be charged to the sending institution instead. With 
regard to open networks today, there is no global practice of 
communications by intermediary and recipient institutions that do not 
have direct relationships with a sending institution regarding fees 
deducted from the principal amount or charged to the recipient, 
exchange rates that are set by the intermediary or recipient 
institution, or compliance practices. Similar challenges exist for some 
types of international ACH transactions. Thus, to the extent providers 
that use open networks are required to disclose information about fees 
or taxes, they may find it difficult to obtain information that must be 
provided in the disclosures.
    These considerations are relevant for all open network providers, 
but Sec.  1005.32(a) of the final rule provides insured depositories 
and credit unions with an exception to the requirements to provide 
accurate disclosures under certain circumstances until July 21, 2015. 
Thus, to the extent applicable, insured depository institutions and 
credit unions are in a separate category for purposes of this analysis 
and are discussed in the next section below. The discussion that 
follows applies to money transmitters or other institutions that are 
not insured depository institutions or insured credit unions that send 
remittance transfers through open network systems.\96\ Comments on the 
proposed rule did not provide the Bureau with data on the volume of 
transactions done by such entities.
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    \96\ More precisely, the discussion applies to entities that use 
open network systems to direct and make payment to a beneficiary. 
This is in contrast to entities that may direct and effectuate 
payment to the recipient through a closed network system but use 
wire transfers to facilitate settlement among the various parties.
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    Comments on the proposed rule did not provide data on the number of 
entities that use open network systems (besides insured depository 
institutions and credit unions), how costly it may be for them to 
obtain the required information, or how difficult it may be for them to 
change practices so the information is not required. These costs may 
not be knowable until some providers attempt to meet the new 
requirements in the year before the implementation date. The required 
changes may be extensive, however. It is possible that money 
transmitters or other institutions using open network systems may 
increase prices on the products that use open network systems or stop 
providing those products altogether.
Disclosure of Estimated Exchange Rates, Fees, and Taxes
    Section 1005.32 of the final rule implements two statutory 
exceptions that permit remittance transfer providers to disclose 
``reasonably accurate estimates'' of the amount of currency to be 
received, rather than the actual amount, under certain narrow 
circumstances. The first exception, which sunsets on July 21, 2015 
unless the Bureau makes a finding to support an extension for up to 
five additional years, permits estimates where an insured depository 
institution or insured credit union is unable for reasons beyond its 
control to know the actual amount of currency to be received at the 
time that a consumer requests a transfer to be conducted through an 
account held with the provider. The second exception enables remittance 
transfer providers of all types to provide estimates where foreign 
countries' laws or methods of transfer to a country prevent the 
providers from knowing the amount to be received. Section 1005.32(c) of 
the final rule prescribes methods that may be used to provide the 
estimates permitted by the exceptions. Providers may also use any other 
method to disclose estimates as long as the amount of funds the 
recipient actually receives is the same as or greater than the 
disclosed estimate of the amount of funds to be received.
First Exception
    The first exception applies when an insured depository institution 
or insured credit union is unable for reasons beyond its control to 
know the actual amount of currency to be received at the time that a 
consumer requests a transfer to be conducted through an account held 
with the provider. The Bureau assumes that the exception will most 
frequently apply to wire transfers by insured depository institutions 
and credit unions, though it may also apply, for example, to some 
transactions sent through the FedGlobal ACH system, or other 
mechanisms.\97\
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    \97\ The Board reported in July 2011 that only around 410 U.S. 
depository institutions had enrolled in the FedGlobal ACH service; 
that only about a third of those institutions sent transfers in a 
typical month; and that some of the enrolled institutions do not 
offer the FedGlobal ACH services to consumer customers. Board ACH 
Report at 12 & n.53.
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    Data from the Federal Deposit Insurance Corporation and the 
National Credit Union Administration indicate that there are about 
7,445 insured depository institutions and 7,325 insured credit unions 
that may be eligible for the exception. Regulatory filings by insured 
depository institutions, however, do not contain information about the 
number that send consumer international wire transfers. Data from the 
National Credit Union Administration indicate that there are 
approximately 7,325 insured credit unions in the United States as of 
September 2011. About half offer international wire transfers. 
Additionally, regulatory filings by insured credit unions contain an 
indicator for ``low cost wire transfers.'' These are wire transfers 
offered to members for less than $20 per transfer, and about half of 
insured credit unions offer low cost wire transfers. Though the Bureau 
does not have exact data on the number of credit unions that offer wire 
transfers to consumers, the Bureau assumes that a similar fraction 
offer consumer international wire transfers.
    The above discussion on the qualitative benefits to consumers from 
accurate disclosures also generally applies where estimates are used. 
Although disclosures with ``reasonably accurate estimates'' are 
somewhat less reliable than those with actual amounts, they still 
provide consumers with valuable information that they currently do not 
generally receive from insured

[[Page 6274]]

depository institutions or credit unions. The exception also benefits 
consumers by, as discussed below, reducing the costs on insured 
depository institutions and credit unions of providing disclosures, and 
therefore making it less likely that they will increase costs to 
consumers or decrease services.\98\ Thus, relative to accurate 
disclosures, estimated disclosures strike a different balance between 
accuracy and access, offering less accuracy but potentially preserving 
greater access.
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    \98\ Consumers generally benefit from having access to both open 
network products like wire transfers and closed network products 
like those used offered by money transmitters, to the extent that 
both types of products meet any particular consumer's needs.
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    Comments on the proposed rule did not provide any data on how 
costly it may be for insured depositories and credit unions to use the 
allowed methods of estimation. The methods do not necessarily require 
that sending institutions obtain information from receiving 
institutions with which they have no contractual or control 
relationship. To calculate estimates, providers may choose to rely on 
information about typical or most recent fees charged by the recipient 
institution and intermediaries in the transmittal route to that 
institution (or other institutions that set exchange rates that apply 
to remittances). Information is also required about foreign tax rules 
and rates. Thus, as discussed below, the final rule may require 
revisions of contract arrangements and communication systems, to ensure 
that depository institutions can receive the information needed for 
estimates (when permitted) or exact disclosures (when required) and 
provide that information to customers at a branch or elsewhere at the 
appropriate time. Third parties may have some incentive to gather this 
information and deliver it to depositories and credit unions, in order 
to preserve the remittance transfer line of business. However, the 
costs of doing so may be high and potentially prohibitive for transfers 
to some countries.
    The rule also permits insured depositories and credit unions to use 
methods not specified in the rule to calculate estimates, provided the 
estimate for the amount of funds the recipient will receive proves to 
be less than or equal to the amount of funds the recipient actually 
receives. Insured depositories and credit unions will differ in their 
capacity and willingness to make these estimates and to manage the risk 
and error resolution expenses for estimates of currency to be received 
that are too high. For insured depositories and credit unions that 
undertake this approach, the incentive to attract consumers who 
comparison shop makes it likely that they will disclose reasonable 
estimates and that the estimates will improve over time.
    The costs of compliance will ultimately be shared among the 
consumers and businesses involved in remittance transfers in ways that 
are difficult to predict. One credit union submitted data showing that 
little revenue, as a share of total income, came from consumer 
international wire transfers.\99\ Other credit union and credit union 
trade association commenters indicated that consumer international wire 
transfer services are not a financially significant line of business 
for them. In some cases, commenters stated, the service is provided as 
a convenience to customers and prices just cover costs. This suggests 
that some credit unions may fold the costs of complying with the rule 
into the prices they charge consumers or stop offering the service. 
Depository institutions that provide consumer international wire 
transfer services similar to those provided by credit unions may face 
similar costs of compliance.
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    \99\ Navy Federal Credit Union has about $45 billion in assets. 
It states that it processed 19,248 wire transfers in 2010 and 
charged $25 per transfer. It had total income of over $3 billion in 
2010, so the wire income of about $500,000 was about two tenths of 
one percent of total income. United Nations Federal Credit Union did 
submit data indicating that wire transfers were about 2% of total 
income. However, UNFCU serves a distinctively international 
community.
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    The statutory exception for insured depository institutions and 
credit unions expires on July 21, 2015, unless the exception is 
extended by the Bureau as permitted by the statute. Once the exception 
expires, insured depository institutions and credit unions will need to 
provide accurate disclosures. At that time, the benefit to consumers 
from the expiration, in terms of increased accuracy, will be minimal if 
the estimated disclosures tend to be accurate but significant if the 
estimated disclosures tend to be inaccurate. The cost to providers from 
the expiration, and thus to consumers in terms of higher prices or 
reduced access, will depend on business practices by depository 
institutions and credit unions currently eligible for the exception at 
that time. The Bureau lacks data to predict such practices with 
reasonable confidence.
Second Exception
    The second exception permanently permits use of reasonably accurate 
estimates where a foreign country's laws or methods of transfer to a 
country prevent remittance transfer providers from determining the 
actual amount of currency to be received. The rule provides a safe 
harbor for reliance on a list of countries to be published and 
periodically updated by the Bureau. Consumers benefit from the 
exception since it reduces the chance that remittance transfer services 
to these countries will be discontinued or disrupted. Consumers will 
also benefit from the Bureau's publication and periodic update of a 
safe harbor country list since such a list will reduce the chance that 
consumers will receive estimated disclosures when they should receive 
accurate ones. Likewise, transfer providers will benefit from the 
Bureau's publication and periodic update of a list since this will 
reduce the burden on them of having to assess the laws of and transfer 
methodologies used in countries with which they do not conduct frequent 
transfers.
Formatting, Retainability, and Language Requirements in Disclosures
    EFTA section 919(a)(3)(A) states that disclosures must be clear and 
conspicuous. The final rule incorporates this requirement and adds 
grouping, proximity, prominence, size and segregation requirements to 
ensure that it is satisfied. The grouping requirement ensures that the 
disclosures present, in logical order, the computations that lead from 
the amount of domestic currency paid by the sender to the amount of 
foreign currency received by the recipient. The other requirements 
ensure that senders see important information and are not overloaded or 
diverted by less critical information. The final rule provides model 
forms that meet these requirements. These forms were consumer-tested 
for effectiveness.\100\
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    \100\ For a discussion of how the design of disclosures can help 
consumers, see Bureau 2011 Report.
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    The specific format requirements impose a one-time cost on certain 
providers, for programing or updating their systems to produce 
disclosures that comply with the requirements. The cost is mitigated by 
the fact that the rule provides model forms and permits providers to 
use any size paper. Furthermore, as discussed below, the final rule 
provides certain exceptions to certain of the formatting requirements 
for transactions conducted entirely by telephone orally or via mobile 
application or text message. For transactions that must comply with the 
formatting requirements, the cost depends on the systems in place and 
the

[[Page 6275]]

extent to which providers already give disclosures that comply with the 
requirements.
    EFTA section 919(a)(2) and Sec.  1005.31(a)(2) generally require 
disclosures to be retainable. Retainable disclosures generally provide 
greater benefits to consumers than do non-retainable disclosures. For 
example, it is usually easier for consumers to track the costs of 
remittance transfers over time and across providers when disclosures 
are retainable. For transactions conducted entirely by telephone, 
however, providing a retainable pre-payment disclosure may be 
inconvenient or impracticable.
    EFTA section 919(a)(5)(A) allows the Bureau to permit oral pre-
payment disclosures for transactions conducted entirely by telephone. 
In addition to implementing this general statutory exception, the 
regulation provides an additional alternative for transfers conducted 
entirely by telephone via mobile application or text message. 
Specifically, Sec.  1005.31(a)(5) of the final rule provides that for 
such transfers, the pre-payment disclosure may be provided orally or 
via mobile application or text message. Disclosure provided via such 
methods need not be retainable by the consumer. See Sec.  
1005.31(a)(2). When used, this provision likely benefits consumers who 
initiate transfers via mobile application or text message. First, it 
allows the transaction to proceed more quickly using the tools that the 
consumer used to initiate the transaction (mobile application or text 
message). Second, while the disclosures may not be permanently 
retainable in this format as compared to an email or paper disclosure, 
may be able to be retained temporarily without further action by the 
consumer and thus may be more useful and convenient to consumers than 
oral disclosures.
    The final rule permits providers, at their option, to provide pre-
payment disclosures orally or via mobile application or text message 
for transactions conducted entirely by telephone via mobile application 
or text message. Thus, this provision of the rule does not in itself 
impose additional costs on providers, and a provider determines whether 
to incur the cost of the alternative. Overall, this provision of the 
final rule benefits consumers and facilitates the development of 
additional modes of remittance transfer compared to the alternative in 
which the only non-retainable pre-payment disclosure is an oral 
disclosure.
    Finally, EFTA section 919(b) provides that disclosures required 
under EFTA section 919 must be made in English and in each of the 
foreign languages principally used by the remittance transfer provider, 
or any of its agents, to advertise, solicit, or market, either orally 
or in writing, at that office. The final rule incorporates and modifies 
the statutory provision in Sec.  1005.31(g). In particular, Sec.  
1005.31(g)(1)(ii) reduces the number of foreign language disclosures 
that would otherwise be required to be disclosed by the statute. Under 
the statute, the provider must provide the sender with written 
disclosures in English and in each foreign language principally used by 
the provider to advertise, solicit, or market remittance transfers at a 
particular office. Section 1005.31(g)(1)(ii) allows providers instead 
to provide written disclosures in English and in the one foreign 
language primarily used by the sender with the provider to conduct the 
transaction or assert the error, provided such foreign language is 
principally used by the provider to advertise, solicit or market 
remittance transfers at a particular office. The rule therefore 
provides a closer link between the disclosures and the language a 
sender uses with a provider to conduct a particular transaction or to 
assert an error.
    Consumers generally benefit from disclosures that effectively 
convey information that is relevant and accurate in a language that 
they can understand. A written disclosure that consists of information 
in languages the consumer does not understand provides a substantial 
amount of information that is not relevant to that individual consumer. 
Thus, relative to the statute, this provision of the final rule allows 
providers to offer consumers a more effective written disclosure that 
may be tailored to the language the sender uses with the provider to 
conduct a particular transaction or to assert an error. This provision 
of the final rule does not, however, require providers to offer 
different written disclosures from those required by the statute. Thus, 
this provision of the rule does not in itself impose costs on providers 
other than those required by the statute, and a provider determines, at 
its option, whether to incur the cost of the alternative.
Error Resolution
    EFTA section 919(d) requires remittance transfer providers to 
investigate and resolve errors upon receiving oral or written notice 
from the sender within 180 days of the promised date of delivery. The 
obligation includes situations in which the recipient did not receive 
the amount of currency by the date of availability stated in the 
disclosures provided under other parts of the rule. The statute 
requires the Bureau to establish ``clear and appropriate'' standards 
for error resolution to protect senders from such errors, including 
recordkeeping standards relating to senders' complaints and providers' 
findings of investigation. As explained above, the Bureau has taken an 
approach that is generally similar to existing error resolution rights 
for electronic fund transfers under EFTA and Regulation E.
    An error may occur if the provider fails to deliver the promised 
amount of foreign currency to the recipient by the guaranteed 
date.\101\ There are generally three cases of this type of error. In 
one case, funds are delivered on time but the amount is less than the 
amount disclosed. As designated by the sender, the provider must either 
refund to the sender or transfer to the recipient the portion of the 
funds at no additional charge that were not received. In the second 
case, the funds are delivered late but the amount delivered is as 
correctly disclosed. In this case the provider must refund all of the 
fees, and to the extent not prohibited by law, taxes imposed on the 
transfer. In the final case, all of the funds are delivered late, and 
the amount is wrong or the funds are never delivered. In this case the 
consumer receives both remedies described above--the provider must 
either refund or transfer the funds that were not received at no 
additional charge (unless the sender provided incorrect or insufficient 
information) and the provider must refund all of the fees, and to the 
extent no prohibited by law, taxes imposed on the transfer (unless the 
sender provided incorrect or insufficient information). The discussion 
above refers to this refund provision as ``a separate cumulative 
remedy.''
---------------------------------------------------------------------------

    \101\ Other errors are also defined in Sec.  1005.33(a).
---------------------------------------------------------------------------

    The benefits to senders from the error resolution procedures 
specified in the rule are straightforward. When an error occurs, 
senders benefit from the provision that providers must complete the 
transaction at no additional charge or return undelivered funds. 
Senders may also benefit from knowing that the error resolution 
procedures exist since they make remittance transfers less risky. The 
magnitude of these benefits depends on the frequency of errors, the 
financial and other costs that senders currently bear when errors 
occur, and the risk aversion of senders. Senders may also benefit from 
the fact that providers are likely to be deterred from committing 
errors by having to complete the transaction at no additional charge or 
return undelivered funds and also refunding fees and, to the extent not

[[Page 6276]]

prohibited by law, taxes when none of the funds are delivered on time, 
provided the failure was not caused by the sender providing incorrect 
or insufficient information. The magnitude of this benefit depends on 
the extent to which providers are not already sufficiently deterred by 
reputational concerns, and the extent to which providers have 
sufficient control over the entities responsible for any errors such 
that they can reduce the incidence of any errors. Although these 
benefits cannot be quantified, errors can always occur and the error 
resolution provisions will therefore always provide benefits to 
senders.
    Providers will incur additional costs from the error resolution 
procedures. In some instances, providers may be required to refund 
funds or fees and taxes that have already been received by and which 
cannot easily be recouped from other institutions involved in a 
remittance transfer or government entities. Alternatively, in refunding 
or making available funds to a recipient to resolve an error, a 
provider may face additional exchange rate risk, due to changes in a 
foreign exchange market between the time of the transfer and the 
resolution of the error. Furthermore, providers (and their business 
partners) may need to adjust communication practices and business 
processes to comply with the error resolution requirements.
    The magnitude of these and other costs depends on the frequency of 
errors and the financial costs that providers incur. While providers 
cannot charge senders directly for error resolution activities, they 
may build the cost of these activities into their general fees. 
Industry commenters suggests that scenarios in which the entire amount 
transferred must be returned to the sender before the provider has 
recovered it from other institutions may be of particular concern. 
Since this type of error appears to be rare, the quantity of funds 
never recovered would have to be substantial for this particular error 
to have a significant impact on fees.\102\
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    \102\ The Credit Union National Association reports error rate 
of less than 1% for international wire ``exceptions'' (including 
non-timely delivery). Navy Federal Credit Union reports that 75% of 
its wire transfers are between $500 and $10,000 dollars. The full 
principal may rarely be lost when errors occur. However, assuming 
all of the principal is lost 10% of the time (or 10% of the 
principal is lost all of the time), the 1% error rate implies the 
expected loss to the transmitter is 50 cents on a $500 transfer and 
$10 on a $10,000 transfer.
---------------------------------------------------------------------------

    The Bureau considered a number of alternatives in developing the 
error resolution procedures. In the final rule, if funds are not 
available by the date of availability because the sender provided 
incorrect or insufficient information and the sender chooses to have 
the transfer resent as a remedy for the error, the provider may re-
charge third party fees actually incurred. The proposed rule, by 
contrast, did not permit the imposition of such third-party fees. The 
effect of this change is to reduce the costs for providers of 
correcting errors caused by the sender's provision of inaccurate or 
incomplete information, and, conversely, to prevent such costs from 
being passed along to all senders, as opposed to keeping those costs 
with the senders at fault.
    On the other hand, the Bureau was asked to use its exception 
authority to reduce the 180-day statutory time period in which senders 
may assert an error to 60 or 30 days. Given the international nature of 
remittance transfers, the additional time a sender may need to 
communicate with persons abroad, and the lack of information about 
problems associated with this time period, the Bureau concluded that 
using its exception authority to reduce the statutory 180-day time 
period is not currently warranted. As noted above, errors are 
infrequent enough that the incremental cost to providers of the 180-day 
period is likely to be small.
Cancellation and Refund
    EFTA section 919(d)(3) also requires the Bureau to establish 
appropriate remittance transfer cancellation and refund policies for 
consumers. The Board originally proposed a one business day 
cancellation period. The final rule instead requires providers to give 
consumers at least 30 minutes to cancel the transaction for a full 
refund, including fees, and to the extent not prohibited by law, taxes, 
if the transferred funds have not yet been picked up by the recipient. 
If they wish, providers can hold the funds until the cancellation 
period expires.
    The Bureau believes that a brief cancellation period may provide 
benefits to both consumers and providers by allowing and perhaps 
encouraging consumers to review disclosure documents one additional 
time to confirm that they wish to complete the transaction and to 
identify any scrivener's errors on the receipt. For instance, the 
cancellation period affords consumers an opportunity to raise any 
discrepancies between the two documents or identify errors that might 
otherwise cause the funds not to be made available on the disclosed 
date. These actions in turn would allow remittance transfer providers 
to address and correct errors early in the process, when it may be 
faster and less expensive to remedy the problem.
    The Bureau considered a number of alternatives, including longer 
cancellation periods of. It is not clear that a longer cancellation 
period would provide much additional benefit to consumers given that 
the final rule already provides consumers opportunity to engage in cost 
comparison based on the detailed pre-payment disclosures. Conversely, a 
longer cancellation period may impose costs on consumers who want to 
send funds as quickly as possible if, as some commenters suggested, 
providers would delay the transmission of funds until the cancellation 
period expired. Given these conflicting factors, it does not seem 
likely that a longer cancellation period would provide consumers with 
substantial additional net benefits, though the exact difference in 
benefits provided is not known and may differ, depending on the 
consumer. If, as some commenters suggested, providers decide to delay 
transmission of funds until the cancellation period expires, under the 
final rule, they will likely only hold funds for 30 minutes. Compliance 
therefore likely imposes minimal costs on providers.
Conditions of Agent Liability
    The final rule holds a remittance transfer provider liable for any 
violation by an agent when the agent acts for the provider. However, 
EFTA section 919(f)(2) states that enforcement agencies may consider, 
in any action or other proceeding against a provider, the extent to 
which the provider has established and maintained policies or 
procedures for compliance.
    In States where the strict liability standard for acts of agents is 
already in place, consumers derive no additional benefit from this rule 
provision and providers incur no additional costs. In other States, 
consumers may benefit from the additional incentive the rule gives 
providers to oversee and police their agents. Providers are likely to 
incur some additional costs in these States, but the magnitude of such 
costs much cannot be determined. These costs are mitigated somewhat by 
the discretion that the statute grants enforcement agencies to consider 
the extent to which a provider has established and maintained policies 
or procedures for compliance.

C. Impact of the Final Rule on Depository Institutions and Credit 
Unions With $10 Billion or Less in Total Assets, As Described in 
Section 1026

    Given the general lack of data on the frequency and other 
characteristics of remittance transfers by depository institutions and 
credit unions, it is not

[[Page 6277]]

possible for the Bureau to distinguish the impact of the final rule on 
depository institutions and credit unions with $10 billion or less in 
total assets as described in section 1026 of the Dodd-Frank Act from 
the impact on depository institutions and credit unions in general. 
Overall, the impact of the rule on depository institutions and credit 
unions depends on a number of factors, including whether they offer 
consumer international wire transfers or other remittance transfers, 
the importance of consumer wire transfer and other remittance transfers 
as a business line for the institution, how many institutions or 
countries they send to, and the cost of complying with the rule. The 
institution's general asset size is not necessarily a good proxy for 
estimating impacts, since some small institutions which conduct 
frequent transfers particularly to specific countries may be better 
positioned to implement the new requirements than larger institutions 
that may conduct consumer remittance transfers to a larger number of 
countries on an infrequent basis.
    The impact of the rule on small depository institutions and credit 
unions is discussed in further detail in the Regulatory Flexibility Act 
analysis below.

D. Impact of the Final Rule on Consumers in Rural Areas

    The Bureau consulted a number of sources for data with which to 
study consumers and providers of remittance transfers in rural areas 
and to consider the impact of the rule. The Bureau consulted research 
done by the Federal Reserve Bank of Kansas City, which specializes in 
research on agricultural and rural economies, and surveys done by 
Economic Research Service of the U.S. Department of Agriculture. The 
Bureau also consulted surveys done by the Census Bureau and reports 
published by the Government Accountability Office. The Bureau believes 
there is no data or body of research with which to study this subject 
at this time.
    There are likely to be concentrations of individuals in rural areas 
who want to send remittance transfers and who provide an attractive 
base of customers for a provider. For example, money transmitters could 
serve these individuals with agents that have other lines of business 
and that do not rely exclusively on sending international remittances.
    It is likely more difficult for consumers in rural areas than for 
consumers elsewhere to send large remittance transfers. Both demand and 
competition for this business is likely stronger outside rural areas. 
Large remittance transfers are more commonly sent through depository 
institutions and credit unions than through money transmitters. Insofar 
as the rule may cause insured depository institutions and credit unions 
to raise prices or reduce remittance transfer services, and insofar as 
there are fewer alternative providers in rural areas, consumers in 
rural areas may be more heavily affected by the rule than consumers 
outside rural areas. However, insofar as these factors are uncertain, 
it is not clear that rural consumers who use money transmitters would 
be more heavily affected by the rule than consumers elsewhere.
    The Bureau believes that the disclosures required by the rule are 
as beneficial to consumers in rural areas as they are to those residing 
in non-rural areas. These disclosures help them identify the lowest-
cost providers among those they find on the internet and in-person. 
Similarly, the Bureau expects that the error resolution procedures and 
the other benefits of the rule are as beneficial to consumers in rural 
areas as they are to those residing in non-rural areas.

E. Consultation With Federal Agencies

    In developing the final rule,\103\ the Bureau consulted or offered 
to consult the Board, Federal Deposit Insurance Corporation (FDIC), the 
Office of the Comptroller of the Currency (OCC), the National Credit 
Union Administration (NCUA), and the Federal Trade Commission (FTC), 
including with respect to consistency with any prudential, market, or 
systemic objectives that may be administered by such agencies. As 
discussed above, the Bureau also held discussions with FinCEN regarding 
the impact of extending the EFTA to regulate remittance transfers on 
application of regulations administered by that agency.
---------------------------------------------------------------------------

    \103\ Section 1022(b)(2)(B) of the Dodd-Frank Act requires the 
Bureau to conduct consultations with appropriate prudential 
regulators or other Federal agencies prior to proposing a rule and 
during the comment process regarding consistency with any 
prudential, market, or systemic objectives that may be administered 
by such agencies. In this case, the May 2011 Proposed Rule was 
developed by the Board, which is not subject to section 
1022(b)(2)(B), prior to the transfer of rulemaking authority to the 
Bureau. Accordingly, the Bureau held its first consultation meeting 
after the closing of the comment period on the proposed rule. The 
Bureau also consulted with other agencies regarding the January 2012 
Proposed Rule.
---------------------------------------------------------------------------

    In the course of the consultation, the OCC submitted written 
objections to the proposed rule pursuant to section 1022(b)(2)(C) of 
the Dodd-Frank Act \104\ urging modification of certain aspects of the 
proposed error resolution rules to address risk of fraud and the need 
for financial institutions to conduct monitoring pursuant to Office of 
Foreign Assets Control (OFAC) requirements. The OCC also urged 
extension of the temporary exception permitting depository institutions 
and credit unions to provide estimated disclosures as a means of 
mitigating impacts on community banks and consumers who may rely on 
them for remittance transfer services. Finally, the OCC urged the 
Bureau to mitigate the potential regulatory gaps created by Congress's 
extension of the EFTA to regulate remittance transfers, given that 
Article 4A of the Uniform Commercial Code and certain Bank Secrecy Act 
regulations currently exclude transactions subject to EFTA.
---------------------------------------------------------------------------

    \104\ Although the OCC's letter was not designated as a written 
objection pursuant to section 1022(b)(2)(C), OCC staff orally 
confirmed that it was intended as such. The Bureau has asked that 
agencies designate objections under section 1022(b)(2)(C) as such to 
distinguish them from other communications.
---------------------------------------------------------------------------

    As discussed in detail in the section-by-section analysis, the 
Bureau takes seriously all of the concerns raised in the OCC letter, 
which were also generally raised during the comment period. The final 
rule adopts both of the error resolution changes advocated by the OCC, 
specifically, excluding from the definition of error instances of 
``friendly fraud'' by a sender or persons acting in concert with the 
sender and delays due to OFAC requirements or other similar monitoring 
activities. The Bureau believes that it is premature to extend the 
sunset date of the exception allowing estimates by depository 
institutions and credit unions, but is working in other ways to provide 
greater certainty to community banks and other small remittance 
transfer providers. For instance, the Bureau is working to develop safe 
harbors that will provide greater clarity as to what remittance 
transfer providers are excluded from the regulations because they do 
not provide transfers in the ``normal course of business'' and to 
publish a list of countries for which estimated disclosures may be used 
because the laws of the country or the method of transfer to a country 
prevents remittance transfer providers from determining the amount to 
be provided to the recipient. The Bureau will also develop a compliance 
guide for small remittance transfer providers and continue dialogue 
with industry regarding implementation issues.
    Finally, the Bureau shares concerns regarding the potential gaps in 
State law and Federal anti-money laundering regulation created by the 
expansion of

[[Page 6278]]

the EFTA to regulate remittance transfer providers. The Bureau does not 
have authority to amend either State law or the Federal anti-money 
laundering regulations to override their exclusion of transfers 
regulated by EFTA, and as discussed above, does not believe that it can 
fill the gaps through operation of preemption or by incorporating these 
separate bodies of law into Regulation E. The Bureau is therefore 
working to coordinate with State governments and FinCEN to facilitate 
action.

VIII. Final Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (``RFA'') 
generally requires an agency to publish an initial and final regulatory 
flexibility analysis on the impact a rule is expected to have on small 
entities. In the May 2011 Proposed Rule, the Board conducted an initial 
regulatory flexibility analysis (IRFA) and concluded that the proposed 
rule could have a significant economic impact on small entities that 
are remittance transfer providers for international wire transfers. The 
Board solicited comment on the impact of the rule on small remittance 
transfer provides, and in particular, on remittance providers for 
consumer international wire transfers. The Board also solicited comment 
in its broader Notice of Proposed Rulemaking on a number of proposed 
provisions that could mitigate the impact on small entities, such as 
whether to adopt safe harbors and the length of the implementation 
period.
    The Bureau received a number of comments on the Board's IRFA and 
the broader Notice of Proposed Rulemaking addressing the burden imposed 
by the proposed rule and potential mitigation measures and 
alternatives. These included comments by the Small Business 
Administration's Office of Advocacy (SBA). Section 1601 of the Small 
Business Jobs Act of 2010 generally requires Federal agencies to 
respond in a final rule to written comments submitted by the SBA on a 
proposed rule, unless the public interest is not served by doing so. As 
described further below, the Bureau carefully considered the comments 
received and performed its own independent analysis of the potential 
impacts of the rule on small entities and alternatives to the final 
rule. Based on the comments received and for the reasons stated below, 
the Bureau is not certifying that the final rule will not have a 
significant economic impact on a substantial number of small entities. 
Accordingly, the Bureau has prepared the following final regulatory 
flexibility analysis (FRFA) pursuant to section 604 of the RFA.
    Section 604(a)(2) of the RFA generally requires that the FRFA 
contain a summary of significant issues raised by public comments in 
response to the IRFA, the Bureau's assessment of such issues, and a 
statement of any changes made in the proposed rule as a result of such 
comments. For organizational purposes, this FRFA generally addresses 
public comments received by the Bureau in the topical section that 
relates to the subject matter of the comment, i.e., Section 2 addresses 
comments relating to compliance and other requirements, Section 3 
addresses comments relating to the number of small entities affected, 
and Section 5 addresses other comments received.
    1. Statement of the need for, and objectives of, the final rule. 
The EFTA, as amended by the Dodd-Frank Act, was enacted to provide a 
basic framework establishing the rights, liabilities, and 
responsibilities of participants in electronic fund and remittance 
transfer systems. The primary objective of the EFTA is the provision of 
individual consumer rights. 15 U.S.C. 1693. The EFTA authorizes the 
Bureau to prescribe regulations to carry out the purpose and provisions 
of the statute. 15 U.S.C. 1693b(a). The EFTA expressly states that the 
Bureau's regulations may contain ``such classifications, 
differentiations, or other provisions, and may provide for such 
adjustments or exceptions * * * as, in the judgment of the Bureau, are 
necessary or proper to effectuate the purposes of [the EFTA], to 
prevent circumvention or evasion [of the EFTA], or to facilitate 
compliance [with the EFTA].'' 15 U.S.C. 1693b(c).
    Section 1073 of the Dodd-Frank Act adds a new section 919 to the 
EFTA 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. Consumers transfer 
tens of billions of dollars from the United States each year, but these 
transactions previously were largely excluded from existing Federal 
consumer protection regulations in the United States. Congress 
concluded that there was a need to fill this gap. Specifically, the 
Dodd-Frank Act requires: (i) The provision of disclosures concerning, 
among others, the exchange rate and amount to be received by the 
remittance recipient, prior to and at the time of payment by the 
consumer for the transfer; (ii) Federal rights regarding transaction 
cancellation periods; (iii) investigation and remedy of errors by 
remittance transfer providers; and (iv) standards for the liability of 
remittance transfer providers for the acts of their agents.
    Furthermore, section 1073 of the Dodd-Frank Act specifically 
requires the Bureau to issue rules to effectuate these four 
requirements. The objective of the final rule is therefore to implement 
section 1073 of the Dodd-Frank Act consistent with congressional intent 
and the general purposes of the Bureau as specified in section 1021 of 
the Dodd-Frank Act. Accordingly, the final rule generally requires 
remittance transfer providers to provide the sender a pre-payment 
disclosure containing information about the specific remittance 
transfer, such as the exchange rate, applicable fees and taxes, and the 
amount to be received by the designated recipient. The remittance 
transfer provider generally must also provide a written receipt for the 
remittance transfer that includes the above information, as well as 
additional information such as the date of availability and the 
recipient's contact information. Alternatively, the final rule permits 
remittance transfer providers to provide the sender a single written 
pre-payment disclosure containing all of the information required on 
the receipt.
    As required by statute, the Bureau is also adopting provisions in 
the final rule which require remittance transfer providers to furnish 
the sender with a brief statement of the sender's error resolution and 
cancellation rights, and require providers to comply with related 
recordkeeping, error resolution, cancellation, and refund policies. The 
final rule also implements standards of liability for remittance 
transfer providers that act through an agent.
    The Bureau believes that the revisions to Regulation E discussed 
above fulfill the statutory obligations and purposes of section 1073 of 
the Dodd-Frank Act, in a manner consistent with the EFTA and within 
Congress's broad grant of authority to the Bureau to adopt provisions 
and to provide adjustments and exceptions that carry out the purposes 
of the EFTA.
    2. Description of the projected reporting, recordkeeping, and other 
compliance requirements of the rule.
    The final rule does not impose new reporting requirements. The 
final rule does, however, impose new recordkeeping and compliance 
requirements on certain small entities. For the most part, these 
requirements appear specifically in the statute. Thus, for the most 
part, the impacts discussed below are impacts of the statute, not of 
the regulation per se--that is, the Bureau discusses impacts against a 
pre-statute baseline. The Bureau uses a pre-statute baseline here to 
facilitate

[[Page 6279]]

comparison of this FRFA against the Board's IRFA, which uses a pre-
statute baseline.\105\
---------------------------------------------------------------------------

    \105\ The Bureau has discretion in future rulemaking to use a 
post-statute baseline when it applies Regulatory Flexibility Act 
analysis.
---------------------------------------------------------------------------

Compliance Requirements
    As discussed in detail in VI. Section-by-Section Analysis above, 
the final rule imposes new compliance requirements on remittance 
transfer providers. For example, remittance transfer providers 
generally are required to implement new disclosure and related 
procedures or to review and potentially revise existing disclosures and 
procedures to ensure compliance with the content, format, timing, and 
foreign language requirements of the rule, as described above. 
Remittance transfer providers are also required to review and 
potentially update their error resolution and cancellation procedures 
to ensure compliance with the rule, also as described above. For 
remittance transfer providers that employ agents, remittance transfer 
providers are liable for any violations of the rule by their agents, 
which may require providers to revise agreements with agents or develop 
procedures for monitoring agents.
Recordkeeping Requirements
    Because section 1073 of the Dodd-Frank Act incorporates the 
remittance transfer provisions in the EFTA, small remittance transfer 
providers that were not previously subject to the EFTA and Regulation E 
would now be subject to 12 CFR 1005.13, which requires such entities to 
retain evidence of compliance with the requirements of EFTA and 
Regulation E for a period of not less than two years from the date 
disclosures are required to be made or action is required to be taken. 
Moreover, under section 1073, the Bureau must establish clear and 
appropriate standards for remittance transfer providers with respect to 
error resolution relating to remittance transfers, to protect senders 
from such errors. The statute specifically provides that such standards 
must include appropriate standards regarding recordkeeping, including 
retention of certain error-resolution related documentation. The Bureau 
adopted Sec.  1005.33(g) to implement these error resolution standards 
and recordkeeping requirements.
    As discussed above in VI. Section-by-Section Analysis, Sec.  
1005.33(g)(1) requires remittance transfer providers, including small 
remittance transfer providers, to develop and maintain written policies 
and procedures that are designed to ensure compliance with respect to 
the error resolution requirements applicable to remittance transfers. 
Furthermore, under Sec.  1005.33(g)(2), a remittance transfer 
provider's policies and procedures concerning error resolution would be 
required to include provisions regarding the retention of documentation 
related to an error investigation. Such provisions would be required to 
ensure, at a minimum, the retention of any notices of error submitted 
by a sender, documentation provided by the sender to the provider with 
respect to the alleged error, and the findings of the remittance 
transfer provider regarding the investigation of the alleged error, 
which is consistent with EFTA section 919(d)(2).
Comments Received
    The IRFA conducted by the Board stated that the proposed rule could 
have a significant economic impact on small financial institutions that 
are remittance transfer providers for consumer international wire 
transfers. The Board solicited comment on the impact of the rule on 
small remittance transfer providers, and in particular, on remittance 
providers for consumer international wire transfers. Although the 
Bureau did not receive very specific comment on costs, as discussed in 
the SUPPLEMENTARY INFORMATION, depository institution and credit union 
commenters expressed concern about the burden and complexity associated 
with complying with the rule, and in particular providing the required 
disclosures for remittances that are sent by international wire 
transfer. Some commenters argued that the implementation and compliance 
costs would be prohibitive for depository institutions and credit 
unions that are small entities. Commenters also warned that the burden 
associated with the rule would force depository institutions and credit 
unions that are small entities out of the international wire and ACH 
business. The SBA also urged the Bureau to conduct more outreach to 
small providers to further assess the economic impacts of the 
compliance and recordkeeping requirements.
    The Bureau carefully considered these comments from the SBA and 
other commenters regarding impacts on small entities, and discusses the 
relative implementation burdens and impacts for different types of 
remittance transfer providers in this section and Section 3 below. The 
Bureau conducted further outreach to industry trade associations, 
financial institutions, consumer groups, and nonbank money 
transmitters. The Bureau agrees as discussed elsewhere in the FRFA and 
SUPPLEMENTARY INFORMATION that implementation is likely to be most 
challenging for depository institutions and credit unions that engage 
in open network wire transactions, though similar challenges may be 
associated with some types of international ACH transactions.
    For instance, the final rule may require revision of existing 
contract arrangements and improvement of communications systems and 
methodologies between contractual partners, as well as between 
headquarters and branches of financial institutions. Depository 
institutions and credit unions that provide transfers will need to 
obtain exchange rate and fee information from correspondent banks and 
other contractual partners, and possibly third parties, in order to 
provide required disclosures, and they will need mechanisms to ensure 
that such information can be provided at the appropriate time to the 
customer, who may be waiting at a branch, or transacting by phone or 
online. Current contracts, information technology systems, and 
practices may not provide for the exchange of such information in order 
to comply with the timing required by the final rule. Accordingly, 
modifications may be required, and remittance transfer providers that 
are small entities may incur implementation costs to comply with the 
rule.
    The final rule may also expose depository institutions and credit 
unions to new types of risk. In some cases, commenters have suggested, 
small depository institutions and credit unions may be required by 
Sec.  1005.33(c)(2) to refund funds or fees or taxes that were already 
received by other entities, and which they cannot easily recoup, due to 
the lack of contractual arrangements among the entities involved or an 
applicable comprehensive worldwide legal regime. The legal right of a 
depository institution or credit union to recoup previously transmitted 
funds or fees or taxes from other entities may depend on a number of 
factors, including the exact nature of the error involved, the source 
of the mistake, the payment systems involved in the error, and the 
relationships among the entities involved. In other cases, compliance 
with Sec.  1005.33(c)(2) may expose small depository institutions and 
credit unions (as well as other providers) to additional exchange rate 
risk, due to changes in a foreign exchange market between the time of 
the transfer and the resolution of the error.

[[Page 6280]]

    However, as discussed elsewhere, Congress crafted a very specific 
accommodation (i.e., a temporary exception) to address some of the 
challenges involved in collecting information required for disclosures, 
and the Bureau must implement the statutory regime consistent with the 
language and intent of section 1073 of the Dodd-Frank Act. Furthermore, 
as discussed above, the Bureau expects that the incidence of errors 
requiring investigation and resolution under Sec.  1005.33 will be 
small. The statutory requirements the regulation implements may prompt 
small depositories and credit unions to increase their prices or stop 
providing consumer international wire or ACH transfers altogether.
    3. Description of and an estimate of the number of small entities 
affected by the final rule. Under regulations issued by the Small 
Business Administration, banks and other depository institutions are 
considered ``small'' if they have $175 million or less in assets, and 
for other financial businesses, the threshold is average annual 
receipts that do not exceed $7 million.\106\ The initial regulatory 
flexibility analysis stated that the number of small entities that 
could be affected by the rule was unknown. That analysis stated that 
there were approximately 9,458 depository institutions (including 
credit unions) that could be considered small entities. The analysis 
also stated based on data from the Department of Treasury that there 
were approximately 19,000 registered money transmitters, of which 95% 
or 18,050 were small entities. The SBA comments urged the Bureau to 
reexamine the determination of the number of small money transmitters 
impacted by the rule, asserting based on a telephone conversation with 
a trade association that the number was 200,000 to 300,000, including a 
large number of agents. The Bureau notes that this trade association 
did not assert this estimate in its comment letter nor was any evidence 
provided to support this estimate. In response to SBA's comments, the 
Bureau has reviewed and updated these calculations for the final 
regulatory flexibility analysis, as discussed below.
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    \106\ 13 CFR 121.201; SBA, Table of Small Business Size 
Standards (available at: http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf).
---------------------------------------------------------------------------

Depository Institutions and Credit Unions
    Of the 7,445 insured depository institutions, 3,989 are small 
entities.\107\ Of the 7,325 insured credit unions, 6,386 are small 
entities.\108\ These institutions could offer remittance transfers 
through wire transfers, international ACH, or other means.
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    \107\ Federal Deposit Insurance Corporation, http://www2.fdic.gov/idasp/main_bankfind.asp. Data as of September 2011.
    \108\ National Credit Union Administration, http://webapps.ncua.gov/customquery/. Data as of September 2011.
---------------------------------------------------------------------------

    Regulatory filings by insured depositories do not contain 
information about the number that send consumer international wire 
transfers. The Bureau believes that the number is substantial, and the 
analysis below assumes that all 3,989 small depository institutions 
send consumer international wire transfers.
    Data from the National Credit Union Administration indicate that 
there are approximately 7,325 insured credit unions in the United 
States as of September 2011. About half offer international wire 
transfers. Additionally, regulatory filings by insured credit unions 
contain an indicator for ``low cost wire transfers.'' These are wire 
transfers offered to members for less than $20 per transfer. Also about 
half of insured credit unions offer low cost wire transfers. Though the 
Bureau does not have exact data on the number of credit unions that 
offer wire transfers to consumers, the Bureau assumes that a similar 
fraction offer consumer international wire transfers. Specifically, the 
Bureau assumes that half of the 6,386 credit unions that are small 
entities, or 3,193, offer consumer international wire transfer.
    Thus, in total, there are approximately 7,182 depository 
institutions and credit unions that are small entities that could be 
affected by the statute.\109\
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    \109\ Only a small number of depository institutions and credit 
unions offer FedGlobal ACH or other international ACH services. In 
July 2011, the Board reported that smaller depository institutions 
and credit unions were the early adopters of the FedGlobal ACH 
service, but that only about 410 such institutions offered the 
service, and that some enrolled institutions do not offer the 
service for consumer-initiated transfers. Furthermore, only a very 
small fraction of depository institutions and credit unions send any 
kind of international ACH transaction, and the Bureau does not know 
which of those are small entities. See Board ACH Report at 9, 12 & 
n.53. The Bureau assumes that any small depository institutions or 
credit unions that offer international ACH services to consumers 
also offer international wires to consumers, though the Bureau has 
not found any exact data. Similarly, the Bureau understands that 
some depository institutions offer remittance transfers through 
means other than wire or international ACH, but assumes that any 
such depository institutions also offer international wires to 
consumers.
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    Regulatory filings by insured depositories and credit unions do not 
report the revenue these institutions earn from consumer international 
wire transfers, international ACH transactions, or other remittance 
transfers. One credit union that is not a small entity for purposes of 
RFA showed that little revenue, as a share of total income, came from 
this source.\110\ Another credit union that is not a small entity for 
purposes of RFA submitted data indicating that wire transfers were a 
noticeable share of gross income.\111\ The Bureau has no other data 
from commenters on the amount of revenue that small depository 
institutions and credit unions obtain from consumer international wire 
transfers.
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    \110\ Navy Federal Credit Union has about $45 billion in assets. 
It states that it processed 19,248 wire transfers in 2010 and 
charged $25 per transfer. It had total income of over $3 billion in 
2010, so the wire income of about $500,000 was about two tenths of 
one percent of total income.
    \111\ United Nations Federal Credit Union has about $3 billion 
in assets. It states that it processes over 120,000 consumer wire 
transfers every year. It charges between $20 and $35 per transfer 
and had total income of about $146 billion, so the wire income of 
$2.5 to $4.2 million was 2% to 3% of total income.
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Non-Bank Money Transmitters and Agents
    In response to the SBA's comments, the Bureau has reviewed the 
estimated number of money transmitters and agents, which may be 
affected by the statute. As stated above, the numbers in IRFA were 
originally reported by the Financial Crimes Enforcement Network 
(FinCEN).\112\ The Bureau understands that FinCEN derived its estimates 
using data from the registration database for money services businesses 
(MSBs).\113\ As the registration instructions for the database make 
clear, the estimated 19,000 figure (of which 18,050 have less than $7 
million in gross receipts annually) includes some, but not all, agents 
of remittance transfer providers. Businesses that are MSBs solely 
because they are agents of another MSB are not required to register. 
Businesses that are agents and also engage in MSB activities on their 
own behalf are required to register.\114\ Thus, the database would 
include a money transmitter that is an agent of a remittance transfer 
provider only if it also engages in MSB activities as a principal, such 
as cashing checks or selling money orders.
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    \112\ Notice of Proposed Rulemaking, Cross-Border Electronic 
Transmittal of Funds, 75 FR 60377, 60392 (Sept. 30, 2010) (estimates 
based on FinCEN's February 2010 Money Service Business Registration 
List).
    \113\ FinCEN, http://www.fincen.gov/financial_institutions/msb/msbstateselector.html.
    \114\ FinCEN, http://www.fincen.gov/forms/files/fin107_msbreg.pdf. See also Money Services Business Registration Fact 
Sheet, http://www.fincen.gov/financial_institutions/msb/pdf/FinCENfactsheet.pdf.
---------------------------------------------------------------------------

    The Bureau has searched for additional data with which to refine 
its estimate of the number of small remittance transfer providers and 
agents. No comments on the proposed rule provided administrative or 
survey

[[Page 6281]]

data on the number of small providers, and this information cannot be 
constructed from public sources. The Bureau used other information, 
however, to construct useful lower and upper bounds on the number of 
nonbank money transmitters and agents.\115\
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    \115\ Commenters state that there may be other entities that 
serve as remittance transfer providers and that are not depository 
institutions, credit unions, or money transmitters, as traditionally 
defined. These entities could include, for example, brokerages that 
send remittance transfers. Though the Bureau does not have an 
estimate of the number of any such providers, the Bureau believes 
that they account for a number of entities that is significantly 
less than the sum of remittance transfer providers and agents of 
money transmitters. Similarly, the Bureau believes that the number 
of any such providers that is a small entity for purposes of RFA is 
much less than the sum of small remittance transfer providers and 
small agents of money transmitters.
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    In 2005, one survey of the money services business industry 
estimated there were about 67,000 principal money transmitters and 
agents involved in international money transfers.\116\ From 2005 
through 2010 employment in the broader sector to which money 
transmitters belong shrunk almost 19%.\117\ The Bureau chooses to use 
the 67,000 figure recognizing that it may overestimate the number of 
providers and agents, and that persons who act as agents on behalf of 
another provider generally will not be providers themselves unless they 
are engaged in activities on their own behalf that would otherwise 
qualify them as providers. In public comment, one trade association 
estimated there are about 500 state-licensed principal money 
transmitters. Deducting 500 providers from the 67,000 estimate of total 
money transmitters and agents would suggest that there are currently 
approximately 66,500 agents.
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    \116\ KPMG, 2005 Money Services Business Industry Survey Study, 
September 2005; Table 20.
    \117\ The Bureau of Labor Statistics publishes data on Credit 
Intermediation and Related Activities (NAICS 5223), which 
encompasses electronic funds transfer services (NAICS 52232) and 
money transmission services (NAICS 52239).The 2010 employment figure 
is 262,300, available at http://www.bls.gov/oes/current/naics4_522300.htm; the 2005 employment figure is 323,920, available at 
http://www.bls.gov/oes/2005/may/naics4_522300.htm.
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    To estimate how many of these money transmitters are small 
entities, the Bureau relied on survey research done by the World Bank 
in 2006 that found that the median money transmitter had $2 million in 
annual revenue while the average had $10 million.\118\ Fitting an 
exponential function to this revenue data suggests that about 350 of 
the 500 providers had $7 million or less in revenue. By assuming that 
the agents are distributed across providers in proportion to revenue, 
the Bureau estimates that roughly 5,500 of the 66,500 agents are 
working for small entity money transmitters and the remaining 61,000 
agents are working for larger money transmitters.\119\
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    \118\ Ole Andreassen, Remittance service providers in the United 
States: how remittance firms operate and how they perceive their 
business environment, The World Bank, Financial Sector Discussion 
Series, June 2006, p. 15.
    \119\ Since median revenue is far less than average revenue, a 
two-parameter exponential function provides a straightforward way to 
model the distribution of firm revenue. The parameters (a,b) in the 
exponential function y=b*exp(a*x) are calculated using two 
equations, where y is firm revenue and x is the rank of the firm 
when firms are ordered from smallest to largest by revenue. The 
equation 2,000,000=b*exp(a*250) formalizes the condition that the 
250th largest firm (the median firm) has $2 million in revenue. The 
second equation formalizes the condition that the average firm has 
$10 million in revenue. To keep the analysis simple, firms are 
assumed to be identical in groups of 50, so firms 1-50 are the same, 
firms 51-100 are the same, and so forth. The second equation is then 
50*b*[exp(a*50) +exp(a*100)+* * *+exp(a*450)+exp(a*500)]/500 = 
10,000,000. Solving the two equations gives (.0126,85,340) for the 
parameters (a,b). These parameters in the equation y = b*exp(a*x) 
imply that if x = 350 then approximately y = 7,000,000. Thus, the 
firm ranked 350th has approximately $7 million in revenue and the 
smallest 350 firms are small businesses for purposes of RFA. The 
function can also be used to compute the distribution of revenue 
over the industry and then the distribution of agents, all exclusive 
of two large providers, Moneygram and Western Union (which were not 
part of Andreassen's analysis). For example, assume 30,000 of the 
66,500 agents work for Moneygram and Western Union. Allocating the 
remaining 36,500 agents across firms by firm revenue implies that 
approximately 5,500 agents work for the 350 small firms and the 
remaining 31,000 agents work for the 150 large firms. If instead 
20,000 of the 66,500 agents work for Moneygram and Western Union 
then about 7,000 agents work for the 350 small firms; if 40,000, 
then the corresponding number is about 4,000 agents work for the 350 
small firms.
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    The Bureau has no way to estimate directly how many of the agents 
working for larger money transmitters are small entities. However, the 
Bureau expects that such small agents are not likely to bear a 
significant economic impact as a result of the rule. The Bureau 
believes that large money transmitters are likely to facilitate 
compliance for their agents, achieve substantial benefits to scale and 
widely leverage the systems and software investments required for 
compliance across a large base of agent locations.
    With regard to agents working for small entity money transmitters, 
the Bureau assumes that these agents are all small entities themselves. 
Thus, the Bureau estimates there are approximately 5,500 small agents 
working for approximately 350 small money transmitters. Sensitivity 
analysis suggests the actual figure of small agents lies between 4,000 
and 7,000 giving a total of between 4,350 and 7,350 small entities.
    In general, money transmitters are likely to have significantly 
less burden in implementing the new regime than depository institutions 
and credit unions because they generally rely on closed networks.\120\ 
The parties to closed network transactions are interconnected by 
contractual agreements, making it easier to predict fees and taxes 
deducted over the course of a transaction, to obtain information about 
exchange rates and other matters, and to ensure compliance with 
procedures designed to reduce and resolve errors. Furthermore, because 
some small providers focus only on transfers to a few specific 
countries, they may have significant contacts and expertise that may 
facilitate determining information necessary to generate the 
disclosures. Nevertheless, small providers managing their own networks 
are less likely to have extensive legal and professional staffs to help 
minimize the costs of compliance for themselves and their agents. They 
may not maintain as sophisticated information technology systems to 
facilitate generation of receipts and communications necessary to 
exchange information with which to provide the required disclosures. 
Finally, some one-time investments that may not be significant for 
larger providers will be more significant for small providers, who must 
amortize them against a smaller base of revenues and agents.\121\ 
Finally, many of these providers may pass on significant costs to any 
agents, in part because the agents themselves may have particular 
customers and specialized knowledge that is useful in serving them.
---------------------------------------------------------------------------

    \120\ Commenters also stated that some money transmitters, as 
well as some other entities that are not insured depository 
institutions or insured credit unions, offer open network transfers. 
To the extent that any such money transmitters are small entities, 
they may face costs that are similar to or more extensive than those 
faced by insured depository institutions or insured credit unions 
offering open network transfers.
    \121\ Andreassen finds that median firm in his sample, which is 
a small business for purposes of RFA, has a 3% after-tax profit 
margin. The average firm in his sample, which is not a small 
business for purposes of RFA, has a 12% after-tax profit margin. See 
Andreassen, p. 15.
---------------------------------------------------------------------------

Conclusion
    Assuming that nearly all of the estimated 67,000 money transmitters 
and agents are small entities and adding that total to the number of 
depository institutions and credit unions that are small entities that 
may engage in wire transfers, the total number of small entities that 
could be affected by the rule is approximately 74,000.

[[Page 6282]]

    4. Steps to minimize the significant adverse economic impact on 
small entities and reasons for selecting the alternative adopted in the 
final rule. As discussed above in the SUPPLEMENTARY INFORMATION, 
section 1073 of the Dodd-Frank Act imposes a comprehensive new consumer 
protection regime for remittance transfers and prescribes specific 
requirements for remittance transfer providers. The statute requires 
four major elements: (i) The provision of reliable disclosures 
concerning, among others, the exchange rate and amount to be received 
by the remittance recipient; (ii) consistent Federal rights regarding 
transaction cancellation periods; (iii) investigation and remedy of 
errors by remittance transfer providers; and (iv) standards for the 
liability of agents who work for remittance transfer providers.
    The statute also prescribes certain accommodations that will reduce 
potential adverse economic impacts. First, in order to address 
potential difficulties in implementing the disclosure requirements for 
open network transactions, section 1073 of the Dodd-Frank Act 
prescribes specific and limited accommodations which allow financial 
institutions to provide ``reasonably accurate estimates'' of the amount 
received where the institutions are unable to know the actual numbers 
for reasons beyond their control. Second, the Dodd-Frank Act also 
prescribes an accommodation for remittance transfer providers to 
provide estimates of certain disclosures if a recipient nation does not 
legally allow remittance transfer providers to know the amount of 
currency to be received or the method by which transactions are 
conducted in the recipient nation prevents that determination as of the 
time that disclosures are required. Pursuant to this statutory 
accommodation, the Bureau expects to publish and maintain a list of 
affected countries as a safe harbor, which will significantly reduce 
compliance burdens for remittance transfer providers that are small 
entities.
    The specific and prescriptive nature of the Dodd-Frank Act 
requirements and accommodations works to constrain the range of 
possible alternatives to the final rule. For instance, as discussed 
above in VI. Section-by-Section Analysis, the Bureau believes that the 
plain language of the statute precludes interpretations urged by 
various commenters that would relieve remittance transfer providers 
from the general requirement of having to determine fees and taxes that 
may be deducted from the amount to be received by the designated 
recipient. In such instances, the Bureau believes it is not necessary 
or proper to exercise its authority under EFTA sections 904(a) and 
904(c).
    The Bureau has sought to reduce the regulatory burden associated 
with the rule in a manner consistent with the purposes of section 1073 
of the Dodd-Frank Act.\122\ For example, as discussed above in VI. 
Section-by-Section Analysis, the Bureau has provided model forms in 
order to ease compliance and operational burden on small entities. The 
rule offers flexibility that will mitigate its impact on remittance 
transfer providers that are small entities. For example, the rule gives 
remittance transfer providers some flexibility in drafting their 
disclosures, consistent with formatting requirements needed to ensure 
that senders notice and can understand the disclosures. In addition, 
disclosures may be provided on a register receipt or 8.5 inches by 11 
inches piece of paper, consistent with current practices in the 
industry.
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    \122\ The statute and rule establish federal rights in 
connection with remittance transfers by consumers. The statute and 
rule do not apply to credit transactions or to commercial 
remittances. Therefore the Bureau does not expect the rule to 
increase the cost of credit for small businesses. The statute and 
rule impose compliance costs on depositories and credit unions, many 
of which offer small business credit. Any effect of this rule on 
small business credit, however, would be highly attenuated. In any 
case the Bureau has taken steps to reduce regulatory burdens 
associated with this rule in a manner consistent with the purposes 
of section 1073 of the Dodd-Frank Act, as described in Parts VI and 
VIII (including this subpart) of the SUPPLEMENTARY INFORMATION, and 
in the proposal issued concurrently with this rule.
---------------------------------------------------------------------------

    Additionally, EFTA section 919(a)(5) provides the Bureau with 
exemption authority with respect to several statutory requirements. The 
Bureau is exercising its exemption authority in the rule in order to 
reduce providers' compliance burden. For instance, the Bureau is 
exercising its authority under EFTA Section 919(a)(5)(C) to permit 
remittance transfer providers to provide the sender a single written 
pre-payment disclosure under the conditions described above, instead of 
both pre-payment and receipt disclosures. Similarly, consistent with 
EFTA section 919(a)(5)(A), the rule permits remittance transfer 
providers to provide pre-payment disclosures orally when the 
transaction is conducted entirely by telephone. The Bureau has also 
used its authority under section 919(a)(5)(A) and other provisions of 
EFTA to tailor the disclosure requirements to reduce potential burdens 
for transactions conducted by telephone via text message or mobile 
application and for preauthorized transactions.
    One commenter urged the Bureau to consider consolidating federal 
regulation of remittance transfer providers and money services 
businesses, citing FinCEN regulations covering money services 
businesses. The Bureau notes that those regulations implement the Bank 
Secrecy Act and effectuate other purposes, such as imposing anti-money 
laundering program requirements. The Bureau believes that alternative 
would be inconsistent with the statutory mandate in section 1073 of the 
Dodd-Frank Act to create a comprehensive new consumer protection regime 
for consumers who send remittance transfers. The suggested alternative 
would not effectuate the key protections under section 1073 of the 
Dodd-Frank Act, such as the requirement to provide reliable disclosures 
prior to and at payment by the consumer and the establishment of 
cancellation rights and error resolution procedures. Furthermore, the 
Bureau believes consolidating the requirements of two statutes would be 
impracticable under the respective authorities of two agencies.
    Other measures intended to provide flexibility to remittance 
transfer providers are discussed above in this SUPPLEMENTARY 
INFORMATION and in the Bureau's Notice of Proposed Rulemaking that is 
being published elsewhere in today's Federal Register.
    5. Summary of other significant issues raised by public comments in 
response to the IRFA, a summary of the assessment of the agency of such 
issues, and a statement of any changes made in the proposed rule as a 
result of such comments. In addition to the SBA's comments discussed 
above regarding the number of small entities affected and various other 
substantive issues, the SBA's comment letter urged the Bureau to 
publish a supplemental IRFA prior to issuing a final rule in order to 
determine the impact on small entities and to consider less burdensome 
alternatives. The Bureau has taken the substantive issues raised by the 
SBA into careful account in developing the FRFA. However, the Bureau 
concluded that publishing a supplemental IRFA prior to issuance of the 
rule was not required under the RFA and was not practicable in light of 
statutory deadlines.
    The IRFA described the types of small entities that would be 
affected by the rule (both depository institution/credit union and 
nonbank money transmitter), specifically acknowledged that the rule 
would impose implementation costs on such entities, described the 
nature of those implementation burdens, and noted ways in which the 
rule had been drafted to reduce some of those burdens. The IRFA also 
sought public comment on all aspects of its analysis,

[[Page 6283]]

particularly on the anticipated costs to small entities. Further, the 
Board in the proposed rule solicited comment on any alternatives that 
would reduce the regulatory burden on small entities associated with 
the rule. These specifically included the types of alternatives 
suggested for consideration by the Regulatory Flexibility Act, 
including the length of time that remittance transfer providers may 
need to implement the new requirements, whether to create certain 
limited exemptions under the new regime, whether to adopt certain safe 
harbors to reduce implementation burdens, whether particular standards 
could be less prescriptive, and alternative standards for agency 
liability.
    In light of these elements, the public's opportunity to comment on 
the IRFA's analysis, and the statutory deadlines set by Congress, the 
Bureau concluded that it would best serve small entities affected by 
this rule to focus its resources on development of the final rule, the 
FRFA, and the concurrent proposal being published elsewhere in today's 
Federal Register.

IX. Paperwork Reduction Act

    The Bureau's information collection requirements contained in this 
final rule have been submitted to the Office of Management and Budget 
(OMB) in accordance with the requirements of the Paperwork Reduction 
Act (44 U.S.C. 3507(d)) as an amendment to a previously approved 
collection under OMB control number 3170-0014. Under the Paperwork 
Reduction Act, an agency 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. Upon 
receipt of OMB's final action with respect to this information 
collection, the Bureau will publish a notice in the Federal Register.
    The information collection requirements in this final rule are in 
12 CFR part 1005. This information collection is required to provide 
benefits for consumers and is mandatory. See 15 U.S.C. 1693 et seq. The 
respondents/recordkeepers are financial institutions and entities 
involved in the remittance transfer business, including small 
businesses. Respondents are required to retain records for 24 months, 
but this regulation does not specify types of records that must be 
retained.
    Any entities involved in the remittance transfer business 
potentially are affected by this collection of information because 
these entities will be required to provide disclosures containing 
information about consumers' specific remittance transfers. Disclosures 
must be provided prior to and at the time of payment for a remittance 
transfer, or alternatively, in a single pre-transaction disclosure 
containing all required information. Remittance transfer providers also 
must make available a written explanation of a consumer's error 
resolution, cancellation and refund rights upon request. Disclosures 
must be provided in English and in each foreign language principally 
used to advertise, solicit or market remittance transfers at an office.
    Entities subject to the rule will have to review and revise 
disclosures that are currently provided to ensure that they accurately 
reflect the disclosure requirements in this rule. Entities subject to 
the rule may need to develop new disclosures to meet the rule's timing 
requirements.
    Data from the Federal Deposit Insurance Corporation indicate that 
there are approximately 7,445 insured depository institutions in the 
United States. Regulatory filings by insured depository institutions do 
not contain information about the number that offer consumer 
international wire transfers. The Bureau assumes that the 152 large 
insured depositories and the approximately 7,293 other insured 
depositories all send consumer international wire transfers.
    Data from the National Credit Union Administration indicate that 
there are approximately 7,325 insured credit unions in the United 
States as of September 2011. About half offer international wire 
transfers. Additionally, regulatory filings by insured credit unions 
contain an indicator for ``low cost wire transfers.'' These are wire 
transfers offered to members for less than $20 per transfer. 
Furthermore, about half of insured credit unions offer low cost wire 
transfers. Though the Bureau does not have exact data on the number of 
credit unions that offer wire transfers to consumers, the Bureau 
assumes that a similar fraction offer consumer international wire 
transfers. Specifically, the Bureau assumes that the three largest 
credit unions offer consumer international wire transfers and as do 
approximately 3,662 of the other federally insured credit unions. In 
summary, the Bureau has responsibility for purposes of the PRA for 155 
(=152+3) large depository institutions and credit unions (including 
their depository and credit union affiliates) that send consumer 
international wire transfers. The Bureau does not have responsibility 
for the approximately 11,000 other insured depository institutions and 
credit unions that send consumer international wire transfers.\123\
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    \123\ The Bureau assumes that any depository institutions or 
credit unions that offer international ACH services or other forms 
of remittance transfers to consumers also offer international wires 
to consumers.
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    In 2005, one survey of the money services business industry 
estimated there were about 67,000 money transmitters, including agents, 
sending international remittances.\124\ From 2005 through 2010 
employment in the broader sector to which money transmitters belong 
shrunk almost 19%.\125\ The Bureau chooses to use the 67,000 figure, 
recognizing that it may overestimate the number of providers and 
agents. All of these money transmitters are likely either to have 
direct responsibilities for compliance with the rule, or to be 
indirectly involved in assisting business partners in complying with 
the rule. Thus, the Bureau assumes that all 67,000 money transmitters 
will have ongoing annual burden to comply with the rule. Based on the 
Bureau's estimate of the number of money transmitters as discussed 
above in Section VIII. Final Regulatory Flexibility Analysis, the 
Bureau estimates that the rule would also impose a one-time annual 
burden on 6,000 money transmitters (500 network providers and 5,500 
agents).\126\
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    \124\ KPMG Report at Table 20.
    \125\ The Bureau of Labor Statistics publishes data on Credit 
Intermediation and Related Activities (NAICS 5223), which 
encompasses electronic funds transfer services (NAICS 52232) and 
money transmission services (NAICS 52239). The 2010 employment 
figure is 262,300, available at: http://www.bls.gov/oes/current/naics4_522300.htm; the 2005 employment figure is 323,920, available 
at: http://www.bls.gov/oes/2005/may/naics4_522300.htm.
    \126\ Commenters state that there may be other entities that 
serve as remittance transfer providers and that are not depository 
institutions, credit unions, or money transmitters, as traditionally 
defined. These entities could include, for example, brokerages that 
send remittance transfers. Though the Bureau does not have an 
estimate of the number of any such providers, the Bureau believes 
that they account for a number of entities that is significantly 
less than the sum of money transmitters and their agents.
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    The current annual burden to comply with the provisions of 
Regulation E is estimated to be 1,904,000 hours. This estimate 
represents the portion of the burden under Regulation E that 
transferred to the Bureau in light of the changes made by the Dodd-
Frank Act. The estimates of the burden increase associated with each 
major section of the rule are set forth below and represents averages 
for the institutions described. The Bureau expects that the amount of 
time required to implement each of the changes for a given institution 
may vary based on the size and complexity of the institution.

[[Page 6284]]

A. Insured Depository Institutions and Credit Unions

Insured Depositories and Credit Unions Supervised by the Bureau
    The Bureau estimates that the 155 large depository institutions and 
credit unions (including their depository and credit union affiliates) 
supervised by the Bureau would take, on average, 120 hours (three 
business weeks) to update their systems to comply with the disclosure 
requirements addressed in Sec.  1005.31. This one-time revision would 
increase the burden by 18,600 hours. Several commenters believed that 
the compliance burden developed by the Board generally was 
underestimated. In particular, one commenter claimed that the one-time 
burden associated with compliance could be as much as 1000 hours (25 
business weeks). Although the Bureau understands that the number of 
hours to update systems may vary, the Bureau's estimate of the one-time 
burden increase is based on the average hours the 155 respondents 
supervised by the Bureau would take to comply with the rule. Therefore, 
the Bureau believes its estimate of the one-time revision is 
appropriate.
    On a continuing basis the Bureau estimates that the 155 large 
depository institutions and credit unions (including their depository 
and credit union affiliates) supervised by the Bureau would take, on 
average, 8 hours (one business day) monthly to comply with the 
requirements under Sec.  1005.31 and would increase the ongoing burden 
by 14,880 hours. In an effort to minimize the compliance cost and 
burden, particularly for small entities, the rule contains model 
disclosures in appendix A (Model Forms A-30 through A-41) that may be 
used to satisfy the statutory requirements. The Bureau received several 
comments with concerns and suggestions about the terminology and 
formatting of the model forms. These comments are addressed elsewhere 
in the SUPPLEMENTARY INFORMATION.
    The Bureau estimates on average 262,500 consumers would spend 5 
minutes in order to provide a notice of error as required under Sec.  
1005.33(b). This would increase the total annual burden for this 
information collection by approximately 21,875 hours.
    The Board estimated that 1,133 respondents supervised by the Board 
would take, on average, 1.5 hours (monthly) to address a sender's 
notice of error as required by Sec.  1005.33(c)(1). One commenter 
estimated that the ongoing burden would take, on average, 15 hours 
(monthly). Based on the comment received and upon consideration, the 
Bureau estimates that the 155 large depository institutions and credit 
unions (including their depository and credit union affiliates) 
supervised by the Bureau would take, on average, approximately 12 hours 
(monthly) to address a sender's notice of error as required by Sec.  
1005.33(c)(1). This would increase the total annual burden for this 
information collection by 21,875 hours.
    The Bureau estimates that the 155 respondents supervised by the 
Bureau would take, on average, 40 hours (one business week) to develop 
written policies and procedures designed to ensure compliance with 
respect to the error resolution requirements applicable to remittance 
transfers under Sec.  1005.33. This one-time revision would increase 
the burden by 6,200 hours. On a continuing basis the Bureau estimates 
that the 155 respondents would take, on average, 8 hours (one business 
day) annually to maintain the requirements under Sec.  1005.33 and 
would increase the ongoing burden by 1,240 hours.
    The Bureau estimates that the 155 respondents supervised by the 
Bureau would take, on average, 40 hours (one business week) to 
establish policies and procedures for agent compliance as addressed 
under Sec.  1005.35. This one-time revision would increase the burden 
by 6,200 hours. On a continuing basis the Bureau estimates that 155 
respondents would take, on average, 8 hours (one business day) annually 
to maintain the requirements under Sec.  1005.35 and would increase the 
ongoing burden by 1,240 hours.
    In summary, the rule would impose a one-time increase in the 
estimated annual burden on these institutions of approximately 31,000 
hours. On a continuing basis the rule would increase the estimated 
annual burden by approximately 61,000 hours.
Insured Depositories and Credit Unions Not Supervised by the Bureau
    Other Federal agencies are responsible for estimating and reporting 
to OMB the total paperwork burden for the entities for which they have 
administrative enforcement authority under this rule. They may, but are 
not required to, use the following Bureau estimates. The Bureau 
estimates that the 11,000 insured depositories and credit unions not 
supervised by the Bureau would take, on average, 120 hours (three 
business weeks) to update their systems to comply with the disclosure 
requirements addressed in Sec.  1005.31. This one-time revision would 
increase the burden by 1,320,000 hours. On a continuing basis the 
Bureau estimates that 11,000 institutions would take, on average, 8 
hours (one business day) monthly to comply with the requirements under 
Sec.  1005.31 and would increase the ongoing burden by 1,056,000 hours. 
In an effort to minimize the compliance cost and burden, particularly 
for small entities, the rule contains model disclosures in appendix A 
(Model Forms A-30 through A-41) that may be used to satisfy the 
statutory requirements.
    The Bureau estimates on average 875,000 consumers would spend 5 
minutes in order to provide a notice of error as required under section 
1005.33(b). This would increase the total annual burden for this 
information collection by about 73,000 hours. The Bureau estimates that 
the 11,000 institutions would take, on average, 73,000 hours annually 
to address a sender's notice of error as required by Sec.  
1005.33(c)(1).
    The Bureau estimates that the 11,000 institutions would take, on 
average, 40 hours (one business week) to develop written policies and 
procedures designed to ensure compliance with respect to the error 
resolution requirements applicable to remittance transfers under Sec.  
1005.33. This one-time revision would increase the burden by 440,000 
hours. On a continuing basis the Bureau estimates that 11,000 
institutions would take, on average, 8 hours (one business day) 
annually to maintain the requirements under Sec.  1005.33 and would 
increase the ongoing burden by 88,000 hours.
    The Bureau estimates that 11,000 institutions would take, on 
average, 40 hours (one business week) to establish policies and 
procedures for agent compliance as addressed under Sec.  1005.35. This 
one-time revision would increase the burden by 440,000 hours. On a 
continuing basis the Bureau estimates that 11,000 institutions would 
take, on average, 8 hours (one business day) annually to maintain the 
requirements under Sec.  1005.35 and would increase the ongoing burden 
by 88,000 hours.
    In summary, the rule would impose a one-time increase in the 
estimated annual burden of approximately 2,200,000 hours. On a 
continuing basis the rule would increase the estimated annual burden by 
approximately 1,378,000.

B. Money Transmitters

    Based on the Bureau's estimate of the number of money transmitters 
as discussed above in Section VIII. Final Regulatory Flexibility 
Analysis, the Bureau estimates that the rule would impose a one-time 
annual burden on 6,000 money transmitters (500 networks and 5,500 
agents) and an ongoing

[[Page 6285]]

annual burden on all 67,000 money transmitters. The Bureau estimates 
the one-time annual burden of 200 hours and an ongoing annual burden of 
42 hours. The Bureau therefore estimates that the rule would impose a 
one-time annual burden of 1,200,000 hours and an annual burden of 
2,814,000 hours.

C. Summary

    In summary, the Bureau estimates that the total annual burden to 
comply with the new provisions of Regulation E is 7,684,000 hours. The 
Bureau estimates that the total one-time annual burden of the rule is 
3,431,000 hours. The Bureau estimates that the one-time annual burden 
of the rule includes 31,000 hours for large depository institutions and 
credit unions (including their depository and credit union affiliates) 
supervised by the Bureau and 600,000 hours for money transmitters 
supervised by the Bureau. The Bureau estimates that the total ongoing 
burden of the rule is 4,253,000 hours. The ongoing burden of the rule 
includes 61,000 hours for large depository institutions and credit 
unions (including their depository and credit union affiliates) 
supervised by the Bureau and 1,407,000 hours for money transmitters 
supervised by the Bureau.
    The Bureau is currently discussing appropriate methodologies and 
burden sharing arrangements with other Federal agencies that share 
administrative enforcement authority under this regulation and other 
regulations for which certain rulewriting and administrative 
enforcement transferred to the Bureau on July 21, 2011. The Bureau will 
publish a Federal Register notice upon conclusion of these discussions 
and receipt of OMB's final action with respect to this collection. The 
notice will include any changes to the estimates discussed in this 
section.
    The Bureau has a continuing interest in the public's opinion of the 
collection of information. Comments on the collection of information 
should be sent to: Chris Willey, Chief Information Officer, Bureau of 
Consumer Financial Protection, 1700 G Street NW., Washington, DC 20006, 
with copies of such comments sent to the Office of Management and 
Budget, Paperwork Reduction Project (3170-0014), Washington, DC 20503.

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 set forth in the preamble, the Bureau amends 12 CFR 
part 1005 and the Official Interpretations as follows:

PART 1005--ELECTRONIC FUND TRANSFERS (REGULATION E)

0
1. The authority citation for part 1005 is revised 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; Pub. L. 111-203, 124 Stat. 1376 
(2010).

Subpart A--General

0
2. Designate Sec. Sec.  1005.1 through 1005.20 as subpart A under the 
heading set forth above.

0
3. In Sec.  1005.1, revise paragraph (b) to read as follows:

Sec.  1005.1  Authority and purpose.

* * * * *
    (b) Purpose. This part carries out the purposes of the Electronic 
Fund Transfer Act, which establishes the basic rights, liabilities, and 
responsibilities of consumers who use electronic fund transfer and 
remittance transfer services and of financial institutions or other 
persons that offer these services. The primary objective of the act and 
this part is the protection of individual consumers engaging in 
electronic fund transfers and remittance transfers.

0
4. In Sec.  1005.2, revise the introductory text to read as follows:

Sec.  1005.2  Definitions.

    Except as otherwise provided in subpart B, for purposes of this 
part, the following definitions apply:
* * * * *

0
5. In Sec.  1005.3, revise paragraph (a) to read as follows:

Sec.  1005.3  Coverage.

    (a) General. This part applies to any electronic fund transfer that 
authorizes a financial institution to debit or credit a consumer's 
account. Generally, this part applies to financial institutions. For 
purposes of Sec. Sec.  1005.3(b)(2) and (3), 1005.10(b), (d), and (e), 
and 1005.13, this part applies to any person. The requirements of 
subpart B apply to remittance transfer providers.
* * * * *

0
6. Add subpart B to read as follows:
Subpart B--Requirements for Remittance Transfers
Sec.
1005.30 Remittance transfer definitions.
1005.31 Disclosures.
1005.32 Estimates.
1005.33 Procedures for resolving errors.
1005.34 Procedures for cancellation and refund of remittance 
transfers.
1005.35 Acts of agents.
1005.36 Transfers scheduled in advance.

Subpart B--Requirements for Remittance Transfers

Sec.  1005.30  Remittance transfer definitions.

    For purposes of this subpart, the following definitions apply:
    (a) ``Agent'' means an agent, authorized delegate, or person 
affiliated with a remittance transfer provider, as defined under State 
or other applicable law, when such agent, authorized delegate, or 
affiliate acts for that remittance transfer provider.
    (b) ``Business day'' means any day on which the offices of a 
remittance transfer provider are open to the public for carrying on 
substantially all business functions.
    (c) ``Designated recipient'' means any person specified by the 
sender as the authorized recipient of a remittance transfer to be 
received at a location in a foreign country.
    (d) ``Preauthorized remittance transfer'' means a remittance 
transfer authorized in advance to recur at substantially regular 
intervals.
    (e) Remittance transfer--(1) General definition. A ``remittance 
transfer'' means the electronic transfer of funds requested by a sender 
to a designated recipient that is sent by a remittance transfer 
provider. The term applies regardless of whether the sender holds an 
account with the remittance transfer provider, and regardless of 
whether the transaction is also an electronic fund transfer, as defined 
in Sec.  1005.3(b).
    (2) Exclusions from coverage. The term ``remittance transfer'' does 
not include:
    (i) Small value transactions. Transfer amounts, as described in 
Sec.  1005.31(b)(1)(i), of $15 or less.
    (ii) Securities and commodities transfers. Any transfer that is 
excluded from the definition of electronic fund transfer under Sec.  
1005.3(c)(4).
    (f) ``Remittance transfer provider'' or ``provider'' means 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.
    (g) ``Sender'' means a consumer in a State who primarily for 
personal, family, or household purposes requests a remittance transfer 
provider to send a remittance transfer to a designated recipient.

[[Page 6286]]

Sec.  1005.31  Disclosures.

    (a) General form of disclosures--(1) Clear and conspicuous. 
Disclosures required by this subpart must be clear and conspicuous. 
Disclosures required by this subpart may contain commonly accepted or 
readily understandable abbreviations or symbols.
    (2) Written and electronic disclosures. Disclosures required by 
this subpart generally must be provided to the sender in writing. 
Disclosures required by paragraph (b)(1) of this section may be 
provided electronically, if the sender electronically requests the 
remittance transfer provider to send the remittance transfer. Written 
and electronic disclosures required by this subpart generally must be 
made in a retainable form. Disclosures provided via mobile application 
or text message, to the extent permitted by paragraph (a)(5) of this 
section, need not be retainable.
    (3) Disclosures for oral telephone transactions. The information 
required by paragraph (b)(1) of this section may be disclosed orally 
if:
    (i) The transaction is conducted orally and entirely by telephone;
    (ii) The remittance transfer provider complies with the 
requirements of paragraph (g)(2) of this section; and
    (iii) The provider discloses orally a statement about the rights of 
the sender regarding cancellation required by paragraph (b)(2)(iv) of 
this section pursuant to the timing requirements in paragraph (e)(1) of 
this section.
    (4) Oral disclosures for certain error resolution notices. The 
information required by Sec.  1005.33(c)(1) may be disclosed orally if:
    (i) The remittance transfer provider determines that an error 
occurred as described by the sender; and
    (ii) The remittance transfer provider complies with the 
requirements of paragraph (g)(2) of this section.
    (5) Disclosures for mobile application or text message 
transactions. The information required by paragraph (b)(1) of this 
section may be disclosed orally or via mobile application or text 
message if:
    (i) The transaction is conducted entirely by telephone via mobile 
application or text message;
    (ii) The remittance transfer provider complies with the 
requirements of paragraph (g)(2) of this section; and
    (iii) The provider discloses orally or via mobile application or 
text message a statement about the rights of the sender regarding 
cancellation required by paragraph (b)(2)(iv) of this section pursuant 
to the timing requirements in paragraph (e)(1) of this section.
    (b) Disclosure requirements--(1) Pre-payment disclosure. A 
remittance transfer provider must disclose to a sender, as applicable:
    (i) The amount that will be transferred to the designated 
recipient, in the currency in which the remittance transfer is funded, 
using the term ``Transfer Amount'' or a substantially similar term;
    (ii) Any fees and taxes imposed on the remittance transfer by the 
provider, in the currency in which the remittance transfer is funded, 
using the terms ``Transfer Fees'' for fees and ``Transfer Taxes'' for 
taxes, or substantially similar terms;
    (iii) The total amount of the transaction, which is the sum of 
paragraphs (b)(1)(i) and (ii) of this section, in the currency in which 
the remittance transfer is funded, using the term ``Total'' or a 
substantially similar term;
    (iv) The exchange rate used by the provider for the remittance 
transfer, rounded consistently for each currency to no fewer than two 
decimal places and no more than four decimal places, using the term 
``Exchange Rate'' or a substantially similar term;
    (v) The amount in paragraph (b)(1)(i) of this section, in the 
currency in which the funds will be received by the designated 
recipient, but only if fees or taxes are imposed under paragraph 
(b)(1)(vi) of this section, using the term ``Transfer Amount'' or a 
substantially similar term. The exchange rate used to calculate this 
amount is the exchange rate in paragraph (b)(1)(iv) of this section, 
including an estimated exchange rate to the extent permitted by Sec.  
1005.32, prior to any rounding of the exchange rate;
    (vi) Any 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. 
The 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 Sec.  1005.32, prior 
to any rounding of the exchange rate; and
    (vii) The amount that will be received by the designated recipient, 
in the currency in which the funds will be received, using the term 
``Total to Recipient'' or a substantially similar term. The exchange 
rate used to calculate this amount is the exchange rate in paragraph 
(b)(1)(iv) of this section, including an estimated exchange rate to the 
extent permitted by Sec.  1005.32, prior to any rounding of the 
exchange rate.
    (2) Receipt. A remittance transfer provider must disclose to a 
sender, as applicable:
    (i) The disclosures described in paragraphs (b)(1)(i) through (vii) 
of this section;
    (ii) The date in the foreign country on which funds will be 
available to the designated recipient, using the term ``Date 
Available'' or a substantially similar term. A provider may provide a 
statement that funds may be available to the designated recipient 
earlier than the date disclosed, using the term ``may be available 
sooner'' or a substantially similar term;
    (iii) The name and, if provided by the sender, the telephone number 
and/or address of the designated recipient, using the term 
``Recipient'' or a substantially similar term;
    (iv) A statement about the rights of the sender regarding the 
resolution of errors and cancellation, using language set forth in 
Model Form A-37 of Appendix A to this part or substantially similar 
language. For any remittance transfer scheduled by the sender at least 
three business days before the date of the transfer, the statement 
about the rights of the sender regarding cancellation must instead 
reflect the requirements of Sec.  1005.36(c);
    (v) The name, telephone number(s), and Web site of the remittance 
transfer provider; and
    (vi) A statement that the sender can contact the State agency that 
licenses or charters the remittance transfer provider with respect to 
the remittance transfer and the Consumer Financial Protection Bureau 
for questions or complaints about the remittance transfer provider, 
using language set forth in Model Form A-37 of Appendix A to this part 
or substantially similar language. The disclosure must provide the 
name, telephone number(s), and Web site of the State agency that 
licenses or charters the remittance transfer provider with respect to 
the remittance transfer and the name, toll-free telephone number(s), 
and Web site of the Consumer Financial Protection Bureau.
    (3) Combined disclosure. As an alternative to providing the 
disclosures described in paragraphs (b)(1) and (2) of this section, a 
remittance transfer provider may provide the disclosures described in 
paragraph (b)(2) of this section, as applicable, in a single disclosure 
pursuant to the timing requirements in paragraph (e)(1) of this 
section. If the remittance transfer provider provides the combined 
disclosure and the sender completes the transfer, the remittance 
transfer provider must provide the sender with proof of payment when 
payment is made for the

[[Page 6287]]

remittance transfer. The proof of payment must be clear and 
conspicuous, provided in writing or electronically, and provided in a 
retainable form.
    (4) Long form error resolution and cancellation notice. Upon the 
sender's request, a remittance transfer provider must promptly provide 
to the sender a notice describing the sender's error resolution and 
cancellation rights, using language set forth in Model Form A-36 of 
Appendix A to this part or substantially similar language. For any 
remittance transfer scheduled by the sender at least three business 
days before the date of the transfer, the description of the rights of 
the sender regarding cancellation must instead reflect the requirements 
of Sec.  1005.36(c).
    (c) Specific format requirements--(1) Grouping. The information 
required by paragraphs (b)(1)(i), (ii), and (iii) of this section 
generally must be grouped together. The information required by 
paragraphs (b)(1)(v), (vi), and (vii) of this section generally must be 
grouped together. Disclosures provided via mobile application or text 
message, to the extent permitted by paragraph (a)(5) of this section, 
need not be grouped together.
    (2) Proximity. The information required by paragraph (b)(1)(iv) of 
this section generally must be disclosed in close proximity to the 
other information required by paragraph (b)(1) of this section. The 
information required by paragraph (b)(2)(iv) of this section generally 
must be disclosed in close proximity to the other information required 
by paragraph (b)(2) of this section. Disclosures provided via mobile 
application or text message, to the extent permitted by paragraph 
(a)(5) of this section, need not comply with the proximity requirements 
of this paragraph.
    (3) Prominence and size. Written disclosures required by this 
subpart must be provided on the front of the page on which the 
disclosure is printed. Disclosures required by this subpart that are 
provided in writing or electronically must be in a minimum eight-point 
font, except for disclosures provided via mobile application or text 
message, to the extent permitted by paragraph (a)(5) of this section. 
Disclosures required by paragraph (b) of this section that are provided 
in writing or electronically must be in equal prominence to each other.
    (4) Segregation. Except for disclosures provided via mobile 
application or text message, to the extent permitted by paragraph 
(a)(5) of this section, disclosures required by this subpart that are 
provided in writing or electronically must be segregated from 
everything else and must contain only information that is directly 
related to the disclosures required under this subpart.
    (d) Estimates. Estimated disclosures may be provided to the extent 
permitted by Sec.  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.
    (e) Timing. (1) Except as provided in Sec.  1005.36(a), a pre-
payment disclosure required by paragraph (b)(1) of this section or a 
combined disclosure required by paragraph (b)(3) of this section must 
be provided to the sender when the sender requests the remittance 
transfer, but prior to payment for the transfer.
    (2) Except as provided in Sec.  1005.36(a), a receipt required by 
paragraph (b)(2) of this section generally must be provided to the 
sender when payment is made for the remittance transfer. If a 
transaction is conducted entirely by telephone, a receipt required by 
paragraph (b)(2) of this section may be mailed or delivered to the 
sender no later than one business day after the date on which payment 
is made for the remittance transfer. If a transaction is conducted 
entirely by telephone and involves the transfer of funds from the 
sender's account held by the provider, the receipt required by 
paragraph (b)(2) of this section may be provided on or with the next 
regularly scheduled periodic statement for that account or within 30 
days after payment is made for the remittance transfer if a periodic 
statement is not provided. The statement about the rights of the sender 
regarding cancellation required by paragraph (b)(2)(iv) of this section 
may, but need not, be disclosed pursuant to the timing requirements of 
this paragraph if a provider discloses this information pursuant to 
paragraphs (a)(3)(iii) or (a)(5)(iii) of this section.
    (f) Accurate when payment is made. Except as provided in Sec.  
1005.36(b), disclosures required by this section must be accurate when 
a sender makes payment for the remittance transfer, except to the 
extent estimates are permitted by Sec.  1005.32.
    (g) Foreign language disclosures--(1) General. Except as provided 
in paragraph (g)(2) of this section, disclosures required by this 
subpart must be made in English and, if applicable, either in:
    (i) Each of the foreign languages principally used by the 
remittance transfer provider to advertise, solicit, or market 
remittance transfer services, either orally, in writing, or 
electronically, at the office in which a sender conducts a transaction 
or asserts an error; or
    (ii) The foreign language primarily used by the sender with the 
remittance transfer provider to conduct the transaction (or for written 
or electronic disclosures made pursuant to Sec.  1005.33, in the 
foreign language primarily used by the sender with the remittance 
transfer provider to assert the error), provided that such foreign 
language is principally used by the remittance transfer provider to 
advertise, solicit, or market remittance transfer services, either 
orally, in writing, or electronically, at the office in which a sender 
conducts a transaction or asserts an error, respectively.
    (2) Oral, mobile application, or text message disclosures. 
Disclosures provided orally for transactions conducted orally and 
entirely by telephone under paragraph (a)(3) of this section or orally 
or via mobile application or text message for transactions conducted 
via mobile application or text message under paragraph (a)(5) of this 
section shall be made in the language primarily used by the sender with 
the remittance transfer provider to conduct the transaction. 
Disclosures provided orally under paragraph (a)(4) of this section for 
error resolution purposes shall be made in the language primarily used 
by the sender with the remittance transfer provider to assert the 
error.

Sec.  1005.32  Estimates.

    (a) Temporary exception for insured institutions--(1) General. For 
disclosures described in Sec. Sec.  1005.31(b)(1) through (3) and 
1005.36(a)(1) and (2), estimates may be provided in accordance with 
paragraph (c) of this section for the amounts required to be disclosed 
under Sec.  1005.31(b)(1)(iv) through (vii), if:
    (i) A remittance transfer provider cannot determine the exact 
amounts for reasons beyond its control;
    (ii) A remittance transfer provider is an insured institution; and
    (iii) The remittance transfer is sent from the sender's account 
with the institution.
    (2) Sunset date. Paragraph (a)(1) of this section expires on July 
21, 2015.
    (3) Insured institution. For purposes of this section, the term 
``insured institution'' means insured depository institutions (which 
includes uninsured U.S. branches and agencies of foreign depository 
institutions) as defined in section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813), and insured credit unions as defined in section 
101 of the Federal Credit Union Act (12 U.S.C. 1752).

[[Page 6288]]

    (b) Permanent exception for transfers to certain countries--(1) 
General. For disclosures described in Sec. Sec.  1005.31(b)(1) through 
(3) and 1005.36(a)(1) and (2), estimates may be provided for transfers 
to certain countries in accordance with paragraph (c) of this section 
for the amounts required to be disclosed under Sec.  1005.31(b)(1)(iv) 
through (vii), if a remittance transfer provider cannot determine the 
exact amounts at the time the disclosure is required because:
    (i) The laws of the recipient country do not permit such a 
determination, or
    (ii) The method by which transactions are made in the recipient 
country does not permit such determination.
    (2) Safe harbor. A remittance transfer provider may rely on the 
list of countries published by the Bureau to determine whether 
estimates may be provided under paragraph (b)(1) of this section, 
unless the provider has information that a country's laws or the method 
by which transactions are conducted in that country permits a 
determination of the exact disclosure amount.
    (c) Bases for estimates. Estimates provided pursuant to the 
exceptions in paragraph (a) or (b) of this section must be based on the 
below-listed approach or approaches, except as otherwise permitted by 
this paragraph. If a remittance transfer provider bases an estimate on 
an approach that is not listed in this paragraph, the provider is 
deemed to be in compliance with this paragraph so long as the 
designated recipient receives the same, or greater, amount of funds 
than the remittance transfer provider disclosed under Sec.  
1005.31(b)(1)(vii).
    (1) Exchange rate. In disclosing the exchange rate as required 
under Sec.  1005.31(b)(1)(iv), an estimate must be based on one of the 
following:
    (i) For remittance transfers sent via international ACH that 
qualify for the exception in paragraph (b)(1)(ii) of this section, the 
most recent exchange rate set by the recipient country's central bank 
or other governmental authority and reported by a Federal Reserve Bank;
    (ii) The most recent publicly available wholesale exchange rate 
and, if applicable, any spread that the remittance transfer provider or 
its correspondent typically applies to such a wholesale rate for 
remittance transfers for that currency; or
    (iii) The most recent exchange rate offered or used by the person 
making funds available directly to the designated recipient or by the 
person setting the exchange rate.
    (2) Transfer amount in the currency in which the funds will be 
received by the designated recipient. In disclosing the transfer amount 
in the currency in which the funds will be received by the designated 
recipient, as required under Sec.  1005.31(b)(1)(v), an estimate must 
be based on the estimated exchange rate provided in accordance with 
paragraph (c)(1) of this section, prior to any rounding of the 
estimated exchange rate.
    (3) Other fees. (i) Imposed as percentage of amount transferred. In 
disclosing other fees as required under Sec.  1005.31(b)(1)(vi) that 
are a percentage of the amount transferred to the designated recipient, 
an estimate must be based on the estimated exchange rate provided in 
accordance with paragraph (c)(1) of this section, prior to any rounding 
of the estimated exchange rate.
    (ii) Imposed by intermediary or final institution. In disclosing 
Sec.  1005.31(b)(1)(vi) fees imposed by institutions that act as 
intermediaries or by the designated recipient's institution in 
connection with a remittance transfer, an estimate must be based on one 
of the following:
    (A) The remittance transfer provider's most recent remittance 
transfer to the designated recipient's institution, or
    (B) A representative transmittal route identified by the remittance 
transfer provider.
    (4) Other taxes imposed in the recipient country. In disclosing 
taxes imposed in the recipient country as required under Sec.  
1005.31(b)(1)(vi) that are a percentage of the amount transferred to 
the designated recipient, an estimate must be based on the estimated 
exchange rate provided in accordance with paragraph (c)(1) of this 
section, prior to any rounding of the estimated exchange rate, and the 
estimated fees provided in accordance with paragraph (c)(3) of this 
section.
    (5) Amount of currency that will be received by the designated 
recipient. In disclosing the amount of currency that will be received 
by the designated recipient as required under Sec.  1005.31(b)(1)(vii), 
an estimate must be based on the information provided in accordance 
with paragraphs (c)(1) through (4) of this section, as applicable.

Sec.  1005.33  Procedures for resolving errors.

    (a) Definition of error. (1) Types of transfers or inquiries 
covered. For purposes of this section, the term error means:
    (i) An incorrect amount paid by a sender in connection with a 
remittance transfer;
    (ii) A computational or bookkeeping error made by the remittance 
transfer provider relating to a remittance transfer;
    (iii) The failure to make available to a designated recipient the 
amount of currency stated in the disclosure provided to the sender 
under Sec.  1005.31(b)(2) or (3) for the remittance transfer, unless:
    (A) The disclosure stated an estimate of the amount to be received 
in accordance with Sec.  1005.32 and the difference results from 
application of the actual exchange rate, fees, and taxes, rather than 
any estimated amounts; or
    (B) The failure resulted from extraordinary circumstances outside 
the remittance transfer provider's control that could not have been 
reasonably anticipated;
    (iv) The failure to make funds available to a designated recipient 
by the date of availability stated in the disclosure provided to the 
sender under Sec.  1005.31(b)(2) or (3) for the remittance transfer, 
unless the failure to make the funds available resulted from:
    (A) Extraordinary circumstances outside the remittance transfer 
provider's control that could not have been reasonably anticipated;
    (B) Delays related to the remittance transfer provider's fraud 
screening procedures or in accordance with the Bank Secrecy Act, 31 
U.S.C. 5311 et seq., Office of Foreign Assets Control requirements, or 
similar laws or requirements; or
    (C) The remittance transfer being made with fraudulent intent by 
the sender or any person acting in concert with the sender; or
    (v) The sender's request for documentation required by Sec.  
1005.31 or for additional information or clarification concerning a 
remittance transfer, including a request a sender makes to determine 
whether an error exists under paragraphs (a)(1)(i) through (iv) of this 
section.
    (2) Types of transfers or inquiries not covered. The term error 
does not include:
    (i) An inquiry about the status of a remittance transfer, except 
where the funds from the transfer were not made available to a 
designated recipient by the disclosed date of availability as described 
in paragraph (a)(1)(iv) of this section;
    (ii) A request for information for tax or other recordkeeping 
purposes;
    (iii) A change requested by the designated recipient; or
    (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 Sec.  1005.31(b)(2) or (3) if 
the remittance transfer provider relied on information provided by the 
sender as permitted

[[Page 6289]]

under Sec.  1005.31 in making such disclosure.
    (b) Notice of error from sender. (1) Timing; contents. A remittance 
transfer provider shall comply with the requirements of this section 
with respect to any oral or written notice of error from a sender that:
    (i) Is received by the remittance transfer provider no later than 
180 days after the disclosed date of availability of the remittance 
transfer;
    (ii) Enables the provider to identify:
    (A) The sender's name and telephone number or address;
    (B) The recipient's name, and if known, the telephone number or 
address of the recipient; and
    (C) The remittance transfer to which the notice of error applies; 
and
    (iii) Indicates why the sender believes an error exists and 
includes to the extent possible the type, date, and amount of the 
error, except for requests for documentation, additional information, 
or clarification described in paragraph (a)(1)(v) of this section.
    (2) Request for documentation or clarification. When a notice of 
error is based on documentation, additional information, or 
clarification that the sender previously requested under paragraph 
(a)(1)(v) of this section, the sender's notice of error is timely if 
received by the remittance transfer provider the later of 180 days 
after the disclosed date of availability of the remittance transfer or 
60 days after the provider sent the documentation, information, or 
clarification that had been requested.
    (c) Time limits and extent of investigation. (1) Time limits for 
investigation and report to consumer of error. A remittance transfer 
provider shall investigate promptly and determine whether an error 
occurred within 90 days of receiving a notice of error. The remittance 
transfer provider shall report the results to the sender, including 
notice of any remedies available for correcting any error that the 
provider determines has occurred, within three business days after 
completing its investigation.
    (2) Remedies. If, following an assertion of an error by a sender, 
the remittance transfer provider determines an error occurred, the 
provider shall, within one business day of, or as soon as reasonably 
practicable after, receiving the sender's instructions regarding the 
appropriate remedy, correct the error as designated by the sender by:
    (i) In the case of any error under paragraphs (a)(1)(i) through 
(iii) of this section, as applicable, either:
    (A) Refunding to the sender the amount of funds provided by the 
sender in connection with a remittance transfer which was not properly 
transmitted, or the amount appropriate to resolve the error; or
    (B) Making available to the designated recipient, without 
additional cost to the sender or to the designated recipient, the 
amount appropriate to resolve the error;
    (ii) In the case of an error under paragraph (a)(1)(iv) of this 
section:
    (A) As applicable, either:
    (1) Refunding to the sender the amount of funds provided by the 
sender in connection with a remittance transfer which was not properly 
transmitted, or the amount appropriate to resolve the error; or
    (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 remittance transfer with the 
corrected or additional information; and
    (B) Refunding to the sender any fees and, to the extent not 
prohibited by law, taxes imposed for the remittance transfer, unless 
the sender provided incorrect or insufficient information to the 
remittance transfer provider in connection with the remittance 
transfer; and
    (iii) In the case of a request under paragraph (a)(1)(v) of this 
section, providing the requested documentation, information, or 
clarification.
    (d) Procedures if remittance transfer provider determines no error 
or different error occurred. In addition to following the procedures 
specified in paragraph (c) of this section, the remittance transfer 
provider shall follow the procedures set forth in this paragraph (d) if 
it determines that no error occurred or that an error occurred in a 
manner or amount different from that described by the sender.
    (1) Explanation of results of investigation. The remittance 
transfer provider's report of the results of the investigation shall 
include a written explanation of the provider's findings and shall note 
the sender's right to request the documents on which the provider 
relied in making its determination. The explanation shall also address 
the specific complaint of the sender.
    (2) Copies of documentation. Upon the sender's request, the 
remittance transfer provider shall promptly provide copies of the 
documents on which the provider relied in making its error 
determination.
    (e) Reassertion of error. A remittance transfer provider that has 
fully complied with the error resolution requirements of this section 
has no further responsibilities under this section should the sender 
later reassert the same error, except in the case of an error asserted 
by the sender following receipt of information provided under paragraph 
(a)(1)(v) of this section.
    (f) Relation to other laws--(1) Relation to Regulation E Sec.  
1005.11 for incorrect EFTs from a sender's account. If an alleged error 
involves an incorrect electronic fund transfer from a sender's account 
in connection with a remittance transfer, and the sender provides a 
notice of error to the account-holding institution, the account-holding 
institution shall comply with the requirements of Sec.  1005.11 
governing error resolution rather than the requirements of this 
section, provided that the account-holding institution is not also the 
remittance transfer provider. If the remittance transfer provider is 
also the financial institution that holds the consumer's account, then 
the error-resolution provisions of this section apply when the sender 
provides such notice of error.
    (2) Relation to Truth in Lending Act and Regulation Z. If an 
alleged error involves an incorrect extension of credit in connection 
with a remittance transfer, an incorrect amount received by the 
designated recipient under paragraph (a)(1)(iii) of this section that 
is an extension of credit for property or services not delivered as 
agreed, or the failure to make funds available by the disclosed date of 
availability under paragraph (a)(1)(iv) of this section that is an 
extension of credit for property or services not delivered as agreed, 
and the sender provides a notice of error to the creditor extending the 
credit, the provisions of Regulation Z, 12 CFR 1026.13, governing error 
resolution apply to the creditor, rather than the requirements of this 
section, even if the creditor is the remittance transfer provider. 
However, if the creditor is the remittance transfer provider, paragraph 
(b) of this section will apply instead of 12 CFR 1026.13(b). If the 
sender instead provides a notice of error to the remittance transfer 
provider that is not also the creditor, then the error-resolution 
provisions of this section apply to the remittance transfer provider.
    (3) Unauthorized remittance transfers. If an alleged error involves 
an unauthorized electronic fund transfer for payment in connection with 
a

[[Page 6290]]

remittance transfer, Sec. Sec.  1005.6 and 1005.11 apply with respect 
to the account-holding institution. If an alleged error involves an 
unauthorized use of a credit account for payment in connection with a 
remittance transfer, the provisions of Regulation Z, 12 CFR 1026.12(b), 
if applicable, and Sec.  1026.13, apply with respect to the creditor.
    (g) Error resolution standards and recordkeeping requirements--(1) 
Compliance program. A remittance transfer provider shall develop and 
maintain written policies and procedures that are designed to ensure 
compliance with the error resolution requirements applicable to 
remittance transfers under this section.
    (2) Retention of error-related documentation. The remittance 
transfer provider's policies and procedures required under paragraph 
(g)(1) of this section shall include policies and procedures regarding 
the retention of documentation related to error investigations. Such 
policies and procedures must ensure, at a minimum, the retention of any 
notices of error submitted by a sender, documentation provided by the 
sender to the provider with respect to the alleged error, and the 
findings of the remittance transfer provider regarding the 
investigation of the alleged error. Remittance transfer providers are 
subject to the record retention requirements under Sec.  1005.13.

Sec.  1005.34  Procedures for cancellation and refund of remittance 
transfers.

    (a) Sender right of cancellation and refund. Except as provided in 
Sec.  1005.36(c), a remittance transfer provider shall comply with the 
requirements of this section with respect to any oral or written 
request to cancel a remittance transfer from the sender that is 
received by the provider no later than 30 minutes after the sender 
makes payment in connection with the remittance transfer if:
    (1) The request to cancel enables the provider to identify the 
sender's name and address or telephone number and the particular 
transfer to be cancelled; and
    (2) The transferred funds have not been picked up by the designated 
recipient or deposited into an account of the designated recipient.
    (b) Time limits and refund requirements. A remittance transfer 
provider shall refund, at no additional cost to the sender, the total 
amount of funds provided by the sender in connection with a remittance 
transfer, including any fees and, to the extent not prohibited by law, 
taxes imposed in connection with the remittance transfer, within three 
business days of receiving a sender's request to cancel the remittance 
transfer.

Sec.  1005.35  Acts of agents.

    A remittance transfer provider is liable for any violation of this 
subpart by an agent when such agent acts for the provider.

Sec.  1005.36  Transfers scheduled in advance.

    (a) Timing. For preauthorized remittance transfers, the remittance 
transfer provider must:
    (1) For the first scheduled transfer, provide the pre-payment 
disclosure described in Sec.  1005.31(b)(1) and the receipt described 
in Sec.  1005.31(b)(2), in accordance with Sec.  1005.31(e).
    (2) For subsequent scheduled transfers:
    (i) Provide a pre-payment disclosure as described in Sec.  
1005.31(b)(1) to the sender for each subsequent transfer. The pre-
payment disclosure must be mailed or delivered within a reasonable time 
prior to the scheduled date of the subsequent transfer.
    (ii) Provide a receipt as described in Sec.  1005.31(b)(2) to the 
sender for each subsequent transfer. The receipt must be mailed or 
delivered to the sender no later than one business day after the date 
on which the transfer is made. However, if the transfer involves the 
transfer of funds from the sender's account held by the provider, the 
receipt may be provided on or with the next regularly scheduled 
periodic statement for that account or within 30 days after payment is 
made for the remittance transfer if a periodic statement is not 
provided.
    (b) Accuracy. For preauthorized remittance transfers:
    (1) For the first scheduled transfer, the disclosures described in 
paragraph (a)(1) of this section must comply with Sec.  1005.31(f).
    (2) For subsequent scheduled transfers, the disclosures described 
in paragraph (a)(2) of this section must be accurate when the transfer 
is made, except to the extent permitted by Sec.  1005.32.
    (c) Cancellation. For any remittance transfer scheduled by the 
sender at least three business days before the date of the transfer, a 
remittance transfer provider shall comply with any oral or written 
request to cancel the remittance transfer from the sender if the 
request to cancel:
    (1) Enables the provider to identify the sender's name and address 
or telephone number and the particular transfer to be cancelled; and
    (2) Is received by the provider at least three business days before 
the scheduled date of the remittance transfer.

0
6. Amend Appendix A to part 1005 as follows:
0
a. Add Titles A-30 through A-41, and add reserved A-10 through A-29 to 
the Table of Contents.
0
b. Add Model Forms A-30 through A-41.
    The additions and revisions read as follows:

Appendix A to Part 1005--Model Disclosure Clauses and Forms

* * * * *
A-10 through A-29 [Reserved]
A-30--Model Form for Pre-Payment Disclosures for Remittance 
Transfers Exchanged into Local Currency (Sec.  1005.31(b)(1))
A-31--Model Form for Receipts for Remittance Transfers Exchanged 
into Local Currency (Sec.  1005.31(b)(2))
A-32--Model Form for Combined Disclosures for Remittance Transfers 
Exchanged into Local Currency (Sec.  1005.31(b)(3))
A-33--Model Form for Pre-Payment Disclosures for Dollar-to-Dollar 
Remittance Transfers (Sec.  1005.31(b)(1))
A-34--Model Form for Receipts for Dollar-to-Dollar Remittance 
Transfers (Sec.  1005.31(b)(2))
A-35--Model Form for Combined Disclosures for Dollar-to-Dollar 
Remittance Transfers (Sec.  1005.31(b)(3))
A-36--Model Form for Error Resolution and Cancellation Disclosures 
(Long) (Sec.  1005.31(b)(4))
A-37--Model Form for Error Resolution and Cancellation Disclosures 
(Short) (Sec.  1005.31(b)(2)(iv) and (b)(2)(vi))
A-38--Model Form for Pre-Payment Disclosures for Remittance 
Transfers Exchanged into Local Currency--Spanish (Sec.  
1005.31(b)(1))
A-39--Model Form for Receipts for Remittance Transfers Exchanged 
into Local Currency--Spanish (Sec.  1005.31(b)(2))
A-40--Model Form for Combined Disclosures for Remittance Transfers 
Exchanged into Local Currency--Spanish (Sec.  1005.31(b)(3))
A-41--Model Form for Error Resolution and Cancellation Disclosures 
(Long)--Spanish (Sec.  1005.31(b)(4))
* * * * *

A-30--Model Form for Pre-Payment Disclosures for Remittance Transfers 
Exchanged Into Local Currency (Sec.  1005.31(b)(1))

ABC Company
1000 XYZ Avenue
Anytown, Anystate 12345

    Today's Date: March 3, 2013

NOT A RECEIPT

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................         $100.00
Transfer Fees...........................................          +$7.00
Transfer Taxes..........................................          +$3.00
------------------------------------------------------------------------
    Total...............................................         $110.00
------------------------------------------------------------------------

    Exchange Rate: US$1.00 = 12.27 MXN

[[Page 6291]]

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................    1,227.00 MXN
Other Fees..............................................      -30.00 MXN
Other Taxes.............................................      -10.00 MXN
------------------------------------------------------------------------
    Total to Recipient..................................    1,187.00 MXN
------------------------------------------------------------------------

A-31--Model Form for Receipts for Remittance Transfers Exchanged Into 
Local Currency (Sec.  1005.31(b)(2))

ABC Company
1000 XYZ Avenue
Anytown, Anystate 12345

    Today's Date: March 3, 2013

RECEIPT

SENDER:
Pat Jones
100 Anywhere Street
Anytown, Anywhere 54321
222-555-1212
RECIPIENT:
Carlos Gomez
123 Calle XXX
Mexico City, Mexico
PICK-UP LOCATION:
ABC Company
65 Avenida YYY
Mexico City, Mexico

    Confirmation Code: ABC 123 DEF 456
    Date Available: March 4, 2013

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................         $100.00
Transfer Fees...........................................          +$7.00
Transfer Taxes..........................................          +$3.00
------------------------------------------------------------------------
    Total...............................................         $110.00
------------------------------------------------------------------------

    Exchange Rate: US$1.00 = 12.27 MXN

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................    1,227.00 MXN
Other Fees..............................................      -30.00 MXN
Other Taxes.............................................      -10.00 MXN
------------------------------------------------------------------------
    Total to Recipient..................................    1,187.00 MXN
------------------------------------------------------------------------

    You have a right to dispute errors in your transaction. If you 
think there is an error, contact us within 180 days at 800-123-4567 
or www.abccompany.com. You can also contact us for a written 
explanation of your rights.
    You can cancel for a full refund within 30 minutes of payment, 
unless the funds have been picked up or deposited.
    For questions or complaints about ABC Company, contact:

State Regulatory Agency
800-111-2222
www.stateregulatoryagency.gov
Consumer Financial Protection Bureau
855-411-2372
855-729-2372 (TTY/TDD)
www.consumerfinance.gov

A-32--Model Form for Combined Disclosures for Remittance Transfers 
Exchanged Into Local Currency (Sec.  1005.31(b)(3))

ABC Company
1000 XYZ Avenue
Anytown, Anystate 12345

    Today's Date: March 3, 2013
SENDER:
Pat Jones
100 Anywhere Street
Anytown, Anywhere 54321
222-555-1212
RECIPIENT:
Carlos Gomez
123 Calle XXX
Mexico City
Mexico
PICK-UP LOCATION:
ABC Company
65 Avenida YYY
Mexico City
Mexico
    Confirmation Code: ABC 123 DEF 456
    Date Available: March 4, 2013

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................         $100.00
Transfer Fees...........................................          +$7.00
Transfer Taxes..........................................          +$3.00
------------------------------------------------------------------------
    Total...............................................         $110.00
------------------------------------------------------------------------

    Exchange Rate: US$1.00 = 12.27 MXN

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................    1,227.00 MXN
Other Fees..............................................      -30.00 MXN
Other Taxes.............................................      -10.00 MXN
------------------------------------------------------------------------
    Total to Recipient..................................    1,187.00 MXN
------------------------------------------------------------------------

    You have a right to dispute errors in your transaction. If you 
think there is an error, contact us within 180 days at 800-123-4567 
or www.abccompany.com. You can also contact us for a written 
explanation of your rights.
    You can cancel for a full refund within 30 minutes of payment, 
unless the funds have been picked up or deposited.
    For questions or complaints about ABC Company, contact:

State Regulatory Agency
800-111-2222
www.stateregulatoryagency.gov
Consumer Financial Protection Bureau
855-411-2372
855-729-2372 (TTY/TDD)
www.consumerfinance.gov

A-33--Model form for Pre-Payment Disclosures for Dollar-to-Dollar 
Remittance Transfers (Sec.  1005.31(b)(1))

ABC Company
1000 XYZ Avenue
Anytown, Anystate 12345

    Today's Date: March 3, 2013

NOT A RECEIPT

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................         $100.00
Transfer Fees...........................................          +$7.00
Transfer Taxes..........................................          +$3.00
------------------------------------------------------------------------
    Total...............................................         $110.00
Transfer Amount.........................................         $100.00
Other Fees..............................................          -$4.00
Other Taxes.............................................          -$1.00
                                                         ---------------
    Total to Recipient..................................          $95.00
------------------------------------------------------------------------

A-34--Model Form for Receipts for Dollar-to-Dollar Remittance Transfers 
(Sec.  1005.31(b)(2))

ABC Company
1000 XYZ Avenue
Anytown, Anystate 12345

    Today's Date: March 3, 2013

RECEIPT

SENDER:
Pat Jones
100 Anywhere Street
Anytown, Anywhere 54321
301-555-1212
RECIPIENT:
Carlos Gomez
106 Calle XXX
Mexico City
Mexico

PICK-UP LOCATION:
ABC Company
65 Avenida YYY
Mexico City
Mexico

    Confirmation Code: ABC 123 DEF 456
    Date Available: March 4, 2013

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................         $100.00
Transfer Fees...........................................          +$7.00
Transfer Taxes..........................................          +$3.00
------------------------------------------------------------------------
    Total...............................................         $110.00
Transfer Amount.........................................         $100.00
Other Fees..............................................          -$4.00
Other Taxes.............................................          -$1.00
                                                         ---------------
    Total to Recipient:.................................          $95.00
------------------------------------------------------------------------

    You have a right to dispute errors in your transaction. If you 
think there is an error, contact us within 180 days at 800-123-4567 
or www.abccompany.com. You can also contact us for a written 
explanation of your rights.
    You can cancel for a full refund within 30 minutes of payment, 
unless the funds have been picked up or deposited.
    For questions or complaints about ABC Company, contact:

State Regulatory Agency
800-111-2222
www.stateregulatoryagency.gov
Consumer Financial Protection Bureau
855-411-2372
855-729-2372 (TTY/TDD)
www.consumerfinance.gov

A-35--Model Form for Combined Disclosures for Dollar-to-Dollar 
Remittance Transfers (Sec.  1005.31(b)(3))

ABC Company
1000 XYZ Avenue
Anytown, Anystate 12345

    Today's Date: March 3, 2013
SENDER:
Pat Jones
100 Anywhere Street
Anytown, Anywhere 54321
301-555-1212
RECIPIENT:
Carlos Gomez
106 Calle XXX
Mexico City
Mexico
PICK-UP LOCATION:
ABC Company
65 Avenida YYY
Mexico City
Mexico

[[Page 6292]]

Confirmation Code: ABC 123 DEF 456
Date Available: March 4, 2013

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Transfer Amount.........................................         $100.00
Transfer Fees...........................................          +$7.00
Transfer Taxes..........................................          +$3.00
------------------------------------------------------------------------
    Total...............................................         $110.00
Transfer Amount.........................................         $100.00
Other Fees..............................................          -$4.00
Other Taxes.............................................          -$1.00
------------------------------------------------------------------------
    Total to Recipient..................................          $95.00
------------------------------------------------------------------------

    You have a right to dispute errors in your transaction. If you 
think there is an error, contact us within 180 days at 800-123-4567 
or www.abccompany.com. You can also contact us for a written 
explanation of your rights.
    You can cancel for a full refund within 30 minutes of payment, 
unless the funds have been picked up or deposited.
    For questions or complaints about ABC Company, contact:

State Regulatory Agency
800-111-2222
www.stateregulatoryagency.gov
Consumer Financial Protection Bureau
855-411-2372
855-729-2372 (TTY/TDD)
www.consumerfinance.gov

A-36--Model Form for Error Resolution and Cancellation Disclosures 
(Long) (Sec.  1005.31(b)(4))

    What to do if you think there has been an error or problem:
    If you think there has been an error or problem with your 
remittance transfer:
     Call us at [insert telephone number][; or]
     Write us at [insert address][; or]
     [Email us at [insert electronic mail address]].
    You must contact us within 180 days of the date we promised to 
you that funds would be made available to the recipient. When you 
do, please tell us:
    (1) Your name and address [or telephone number];
    (2) The error or problem with the transfer, and why you believe 
it is an error or problem;
    (3) The name of the person receiving the funds, and if you know 
it, his or her telephone number or address; [and]
    (4) The dollar amount of the transfer; [and
    (5) The confirmation code or number of the transaction.]
    We will determine whether an error occurred within 90 days after 
you contact us and we will correct any error promptly. We will tell 
you the results within three business days after completing our 
investigation. If we decide that there was no error, we will send 
you a written explanation. You may ask for copies of any documents 
we used in our investigation.
    What to do if you want to cancel a remittance transfer:
    You have the right to cancel a remittance transfer and obtain a 
refund of all funds paid to us, including any fees. In order to 
cancel, you must contact us at the [phone number or email address] 
above within 30 minutes of payment for the transfer.
    When you contact us, you must provide us with information to 
help us identify the transfer you wish to cancel, including the 
amount and location where the funds were sent. We will refund your 
money within three business days of your request to cancel a 
transfer as long as the funds have not already been picked up or 
deposited into a recipient's account.

A-37--Model Form for Error Resolution and Cancellation Disclosures 
(Short) (Sec.  1005.31(b)(2)(iv) and (vi))

    You have a right to dispute errors in your transaction. If you 
think there is an error, contact us within 180 days at [insert 
telephone number] or [insert Web site]. You can also contact us for 
a written explanation of your rights.
    You can cancel for a full refund within 30 minutes of payment, 
unless the funds have been picked up or deposited.
    For questions or complaints about [insert name of remittance 
transfer provider], contact:
BILLING CODE 4810-AM-P
[GRAPHIC] [TIFF OMITTED] TR07FE12.000

[[Page 6293]]

[GRAPHIC] [TIFF OMITTED] TR07FE12.001

[[Page 6294]]

[GRAPHIC] [TIFF OMITTED] TR07FE12.002

[[Page 6295]]

[GRAPHIC] [TIFF OMITTED] TR07FE12.003

[[Page 6296]]

[GRAPHIC] [TIFF OMITTED] TR07FE12.004

[[Page 6297]]

[GRAPHIC] [TIFF OMITTED] TR07FE12.005

BILLING CODE 4810-AM-C

0
7. In Supplement I to part 1005:
0
a. Add new Commentary for Sec. Sec.  1005.30, 1005.31, 1005.32, 
1005.33, 1005.34, 1005.35, and 1005.36.
0
b. Under Subheading Appendix A, paragraph (2) Use of forms is revised 
and paragraph (4) is added.
    The revisions and additions read as follows:

Supplement I to Part 1005--Official Interpretations

* * * * *

[[Page 6298]]

Section 1005.30--Remittance Transfer Definitions

    1. Applicability of definitions in subpart A. Except as modified 
or limited by subpart B (which modifications or limitations apply 
only to subpart B), the definitions in Sec.  1005.2 apply to all of 
Regulation E, including subpart B.

30(b) Business Day

    1. General. A business day, as defined in Sec.  1005.30(b), 
includes the entire 24-hour period ending at midnight, and a notice 
given pursuant to any section of subpart B is effective even if 
given outside of normal business hours. A remittance transfer 
provider is not required under subpart B to make telephone lines 
available on a 24-hour basis.
    2. Substantially all business functions. ``Substantially all 
business functions'' include both the public and the back-office 
operations of the provider. For example, if the offices of a 
provider are open on Saturdays for customers to request remittance 
transfers, but not for performing internal functions (such as 
investigating errors), then Saturday is not a business day for that 
provider. In this case, Saturday does not count toward the business-
day standard set by subpart B for resolving errors, processing 
refunds, etc.
    3. Short hours. A provider may determine, at its election, 
whether an abbreviated day is a business day. For example, if a 
provider engages in substantially all business functions until noon 
on Saturdays instead of its usual 3 p.m. closing, it may consider 
Saturday a business day.
    4. Telephone line. If a provider makes a telephone line 
available on Sundays for cancelling the transfer, but performs no 
other business functions, Sunday is not a business day under the 
``substantially all business functions'' standard.

30(c) Designated Recipient

    1. Person. A designated recipient can be either a natural person 
or an organization, such as a corporation. See Sec.  1005.2(j) 
(definition of person).
    2. Location in a foreign country. i. A remittance transfer is 
received at a location in a foreign country if funds are to be 
received at a location physically outside of any State, as defined 
in Sec.  1005.2(l). A specific pick-up location need not be 
designated for funds to be received at a location in a foreign 
country. If it is specified that the funds will be transferred to a 
foreign country to be picked up by the designated recipient, the 
transfer will be received at a location in a foreign country, even 
though a specific pick-up location within that country has not been 
designated.
    ii. For transfers to a designated recipient's account, whether 
funds are to be received at a location physically outside of any 
State depends on where the recipient's account is located. If the 
account is located in a State, the funds will not be received at a 
location in a foreign country.
    iii. Where the sender does not specify information about a 
designated recipient's account, but instead provides information 
about the recipient, a remittance transfer provider may make the 
determination of whether the funds will be received at a location in 
a foreign country on information that is provided by the sender, and 
other information the provider may have, at the time the transfer is 
requested. For example, if a consumer in a State gives a provider 
the recipient's email address, and the provider has no other 
information about whether the funds will be received by the 
recipient at a location in a foreign country, then the provider may 
determine that funds are not to be received at a location in a 
foreign country. However, if the provider at the time the transfer 
is requested has additional information indicating that funds are to 
be received in a foreign country, such as if the recipient's email 
address is already registered with the provider and associated with 
a foreign account, then the provider has sufficient information to 
conclude that the remittance transfer will be received at a location 
in a foreign country. Similarly, if a consumer in a State purchases 
a prepaid card, and the provider mails or delivers the card directly 
to the consumer, the provider may conclude that funds are not to be 
received in a foreign country, because the provider does not know 
whether the consumer will subsequently send the prepaid card to a 
recipient in a foreign country. In contrast, the provider has 
sufficient information to conclude that the funds are to be received 
in a foreign country if the remittance transfer provider sends a 
prepaid card to a specified recipient in a foreign country, even if 
a person located in a State, including the sender, retains the 
ability to access funds on the prepaid card.
    3. Sender as designated recipient. A ``sender,'' as defined in 
Sec.  1005.30(g), may also be a designated recipient if the sender 
meets the definition of ``designated recipient'' in Sec.  
1005.30(c). For example, a sender may request that a provider send 
an electronic transfer of funds from the sender's checking account 
in a State to the sender's checking account located in a foreign 
country. In this case, the sender would also be a designated 
recipient.

30(d) Preauthorized Remittance Transfer

    1. Advance authorization. A preauthorized remittance transfer is 
a remittance transfer authorized in advance of a transfer that will 
take place on a recurring basis, at substantially regular intervals, 
and will require no further action by the consumer to initiate the 
transfer. In a bill-payment system, for example, if the consumer 
authorizes a remittance transfer provider to make monthly payments 
to a payee by means of a remittance transfer, and the payments take 
place without further action by the consumer, the payments are 
preauthorized remittance transfers. In contrast, if the consumer 
must take action each month to initiate a transfer (such as by 
entering instructions on a telephone or home computer), the payments 
are not preauthorized remittance transfers.

30(e) Remittance Transfer

    1. Electronic transfer of funds. The definition of ``remittance 
transfer'' requires an electronic transfer of funds. The term 
electronic has the meaning given in section 106(2) of the Electronic 
Signatures in Global and National Commerce Act. There may be an 
electronic transfer of funds if a provider makes an electronic book 
entry between different settlement accounts to effectuate the 
transfer. However, where a sender mails funds directly to a 
recipient, or provides funds to a courier for delivery to a foreign 
country, there is not an electronic transfer of funds. Similarly, 
generally, where a provider issues a check, draft, or other paper 
instrument to be mailed to a person abroad, there is not an 
electronic transfer of funds. Nonetheless, an electronic transfer of 
funds occurs for a payment made by a provider under a bill-payment 
service available to a consumer via computer or other electronic 
means, unless the terms of the bill-payment service explicitly state 
that all payments, or all payments to a particular payee or payees, 
will be solely by check, draft, or similar paper instrument drawn on 
the consumer's account to be mailed abroad, and the payee or payees 
that will be paid in this manner are identified to the consumer. 
With respect to such a bill-payment service, if a provider provides 
a check, draft or similar paper instrument drawn on a consumer's 
account to be mailed abroad for a payee that is not identified to 
the consumer as described above, this payment by check, draft or 
similar payment instrument will be an electronic transfer of funds.
    2. Sent by a remittance transfer provider. i. The definition of 
``remittance transfer'' requires that a transfer be ``sent by a 
remittance transfer provider.'' This means that there must be an 
intermediary that is directly engaged with the sender to send an 
electronic transfer of funds on behalf of the sender to a designated 
recipient.
    ii. A payment card network or other third party payment service 
that is functionally similar to a payment card network does not send 
a remittance transfer when a consumer provides a debit, credit or 
prepaid card directly to a foreign merchant as payment for goods or 
services. In such a case, the payment card network or third party 
payment service is not directly engaged with the sender to send a 
transfer of funds to a person in a foreign country; rather, the 
network or third party payment service is merely providing 
contemporaneous third-party payment processing and settlement 
services on behalf of the merchant or the card issuer, rather than 
on behalf of the sender. In such a case, the card issuer also is not 
directly engaged with the sender to send an electronic transfer of 
funds to the foreign merchant when the card issuer provides payment 
to the merchant. Similarly, where a consumer provides a checking or 
other account number, or a debit, credit or prepaid card, directly 
to a foreign merchant as payment for goods or services, the merchant 
is not acting as an intermediary that sends a transfer of funds on 
behalf of the sender when it submits the payment information for 
processing.
    iii. However, a card issuer or a payment network may offer a 
service to a sender where the card issuer or a payment network is an 
intermediary that is directly engaged with the sender to obtain 
funds using the

[[Page 6299]]

sender's debit, prepaid or credit card and to send those funds to a 
recipient's checking account located in a foreign country. In this 
case, the card issuer or the payment network is an intermediary that 
is directly engaged with the sender to send an electronic transfer 
of funds on behalf of the sender, and this transfer of funds is a 
remittance transfer because it is made to a designated recipient. 
See comment 30(c)-2.ii.
    3. Examples of remittance transfers.
    i. Examples of remittance transfers include:
    A. Transfers where the sender provides cash or another method of 
payment to a money transmitter or financial institution and requests 
that funds be sent to a specified location or account in a foreign 
country.
    B. Consumer wire transfers, where a financial institution 
executes a payment order upon a sender's request to wire money from 
the sender's account to a designated recipient.
    C. An addition of funds to a prepaid card by a participant in a 
prepaid card program, such as a prepaid card issuer or its agent, 
that is directly engaged with the sender to add these funds, where 
the prepaid card is sent or was previously sent by a participant in 
the prepaid card program to a person in a foreign country, even if a 
person located in a State (including a sender) retains the ability 
to withdraw such funds.
    D. International ACH transactions sent by the sender's financial 
institution at the sender's request.
    E. Online bill payments and other electronic transfers that a 
sender schedules in advance, including preauthorized remittance 
transfers, made by the sender's financial institution at the 
sender's request to a designated recipient.
    ii. The term remittance transfer does not include, for example:
    A. A consumer's provision of a debit, credit or prepaid card, 
directly to a foreign merchant as payment for goods or services 
because the issuer is not directly engaged with the sender to send 
an electronic transfer of funds to the foreign merchant when the 
issuer provides payment to the merchant. See comment 30(e)-2.
    B. A consumer's deposit of funds to a checking or savings 
account located in a State, because there has not been a transfer of 
funds to a designated recipient. See comment 30(c)-2.ii.
    C. Online bill payments and other electronic transfers that 
senders can schedule in advance, including preauthorized transfers, 
made through the Web site of a merchant located in a foreign country 
and via direct provision of a checking account, credit card, debit 
card or prepaid card number to the merchant, because the financial 
institution is not directly engaged with the sender to send an 
electronic transfer of funds to the foreign merchant when the 
institution provides payment to the merchant. See comment 30(e)-2.

30(f) Remittance Transfer Provider

    1. Agents. 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.
    2. Normal course of business. Whether a person provides 
remittance transfers in the normal course of business depends on the 
facts and circumstances, including the total number and frequency of 
remittance transfers sent by the provider. For example, if a 
financial institution generally does not make international consumer 
wire transfers available to customers, but sends a couple of 
international consumer wire transfers in a given year as an 
accommodation for a customer, the institution does not provide 
remittance transfers in the normal course of business. In contrast, 
if a financial institution makes international consumer wire 
transfers generally available to customers (whether described in the 
institution's deposit account agreement, or in practice) and makes 
transfers multiple times per month, the institution provides 
remittance transfers in the normal course of business.
    3. Multiple remittance transfer providers. If the remittance 
transfer involves more than one remittance transfer provider, only 
one set of disclosures must be given, and the remittance transfer 
providers must agree among themselves which provider must take the 
actions necessary to comply with the requirements that subpart B 
imposes on any or all of them. Even though the providers must 
designate one provider to take the actions necessary to comply with 
the requirements that subpart B imposes on any or all of them, all 
remittance transfer providers involved in the remittance transfer 
remain responsible for compliance with the applicable provisions of 
the EFTA and Regulation E.

30(g) Sender

    1. Determining whether a consumer is located in a State. Under 
Sec.  1005.30(g), the definition of ``sender'' means a consumer in a 
State who, primarily for personal, family, or household purposes, 
requests a remittance transfer provider to send a remittance 
transfer to a designated recipient. For transfers from a consumer's 
account, whether a consumer is located in a State depends on where 
the consumer's account is located. If the account is located in a 
State, the consumer will be located in a State for purposes of the 
definition of ``sender'' in Sec.  1005.30(g), notwithstanding 
comment 3(a)-3. Where a transfer is requested electronically or by 
telephone and the transfer is not from an account, the provider may 
make the determination of whether a consumer is located in a State 
based on information that is provided by the consumer and on any 
records associated with the consumer that the provider may have, 
such as an address provided by the consumer.

Section 1005.31--Disclosures

31(a) General Form of Disclosures

31(a)(1) Clear and Conspicuous

    1. Clear and conspicuous standard. Disclosures are clear and 
conspicuous for purposes of subpart B if they are readily 
understandable and, in the case of written and electronic 
disclosures, the location and type size are readily noticeable to 
senders. Oral disclosures as permitted by Sec.  1005.31(a)(3), (4), 
and (5) are clear and conspicuous when they are given at a volume 
and speed sufficient for a sender to hear and comprehend them.
    2. Abbreviations and symbols. Disclosures may contain commonly 
accepted or readily understandable abbreviations or symbols, such as 
``USD'' to indicate currency in U.S. dollars or ``MXN'' to indicate 
currency in Mexican pesos.

31(a)(2) Written and Electronic Disclosures

    1. E-Sign Act requirements. If a sender electronically requests 
the remittance transfer provider to send a remittance transfer, the 
disclosures required by Sec.  1005.31(b)(1) may be provided to the 
sender in electronic form without regard to the consumer consent and 
other applicable provisions of the Electronic Signatures in Global 
and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.). If 
a sender electronically requests the provider to send a remittance 
transfer, the disclosures required by Sec.  1005.31(b)(2) may be 
provided to the sender in electronic form, subject to compliance 
with the consumer consent and other applicable provisions of the E-
Sign Act. See Sec.  1005.4(a)(1).
    2. Paper size. Written disclosures may be provided on any size 
paper, as long as the disclosures are clear and conspicuous. For 
example, disclosures may be provided on a register receipt or on an 
8.5 inch by 11 inch sheet of paper.
    3. Retainable electronic disclosures. A remittance transfer 
provider may satisfy the requirement to provide electronic 
disclosures in a retainable form if it provides an online disclosure 
in a format that is capable of being printed. Electronic disclosures 
may not be provided through a hyperlink or in another manner by 
which the sender can bypass the disclosure. A provider is not 
required to confirm that the sender has read the electronic 
disclosures.
    4. Pre-payment disclosures to a mobile telephone. Disclosures 
provided via mobile application or text message, to the extent 
permitted by Sec.  1005.31(a)(5), need not be retainable. However, 
disclosures provided electronically to a mobile telephone that are 
not provided via mobile application or text message must be 
retainable. For example, disclosures provided via email must be 
retainable, even if a sender accesses them by mobile telephone.

31(a)(3) Disclosures for Oral Telephone Transactions

    1. Transactions conducted partially by telephone. For 
transactions conducted partially by telephone, providing the 
information required by Sec.  1005.31(b)(1) to a sender orally does 
not fulfill the requirement to provide the disclosures required by 
Sec.  1005.31(b)(1). For example, a sender may begin a remittance 
transfer at a remittance transfer provider's dedicated telephone in 
a retail store, and then provide payment in person to a store clerk 
to complete the transaction. In such cases, all disclosures must be 
provided in writing. A provider complies with this requirement, for 
example, by providing the written pre-payment disclosure in person 
prior to the sender's payment for the transaction, and the written 
receipt when the sender pays for the transaction.
    2. Oral Telephone Transactions. Section 1005.31(a)(3) applies to 
transactions

[[Page 6300]]

conducted orally and entirely by telephone, such as transactions 
conducted orally on a landline or mobile telephone.

31(a)(5) Disclosures for Mobile Application or Text Message 
Transactions

    1. Mobile application and text message transactions. A 
remittance transfer provider may provide the required pre-payment 
disclosures orally or via mobile application or text message if the 
transaction is conducted entirely by telephone via mobile 
application or text message, the remittance transfer provider 
complies with the requirements of Sec.  1005.31(g)(2), and the 
provider discloses orally or via mobile application or text message 
a statement about the rights of the sender regarding cancellation 
required by Sec.  1005.31(b)(2)(iv) pursuant to the timing 
requirements in Sec.  1005.31(e)(1). For example, if a sender 
conducts a transaction via text message on a mobile telephone, the 
remittance transfer provider may call the sender and orally provide 
the required pre-payment disclosures. Alternatively, the provider 
may provide the required pre-payment disclosures via text message. 
Section 1005.31(a)(5) applies only to transactions conducted 
entirely by mobile telephone via mobile application or text message.

31(b) Disclosure Requirements

    1. Disclosures provided as applicable. Disclosures required by 
Sec.  1005.31(b) need only be provided to the extent applicable. A 
remittance transfer provider may choose to omit an item of 
information required by Sec.  1005.31(b) if it is inapplicable to a 
particular transaction. Alternatively, a provider may disclose a 
term and state that an amount or item is ``not applicable, '' ``N/
A,'' or ``None.'' For example, if fees or taxes are not imposed in 
connection with a particular transaction, the provider need not 
provide the disclosures about fees and taxes generally required by 
Sec.  1005.31(b)(1)(ii) and (vi). Similarly, a web site need not be 
disclosed if the provider does not maintain a web site. A provider 
need not provide the exchange rate disclosure required by Sec.  
1005.31(b)(1)(iv) if a recipient receives funds in the currency in 
which the remittance transfer is funded, or if funds are delivered 
into an account denominated in the currency in which the remittance 
transfer is funded. For example, if a sender in the United States 
sends funds from an account denominated in Euros to an account in 
France denominated in Euros, no exchange rate would need to be 
provided. Similarly, if a sender funds a remittance transfer in U.S. 
dollars and requests that a remittance transfer be delivered to the 
recipient in U.S. dollars, a provider need not disclose an exchange 
rate.
    2. Substantially similar terms, language, and notices. Certain 
disclosures required by Sec.  1005.31(b) must be described using the 
terms set forth in Sec.  1005.31(b) or substantially similar terms. 
Terms may be more specific than those provided. For example, a 
remittance transfer provider sending funds to Colombia may describe 
a tax under Sec.  1005.31(b)(1)(vi) as a ``Colombian Tax'' in lieu 
of describing it as ``Other Taxes.'' Foreign language disclosures 
required under Sec.  1005.31(g) must contain accurate translations 
of the terms, language, and notices required by Sec.  1005.31(b).

31(b)(1) Pre-Payment Disclosures

    1. Fees and taxes. i. Taxes imposed on the remittance transfer 
by the remittance transfer provider include taxes imposed on the 
remittance transfer by a State or other governmental body. A 
provider need only disclose fees or taxes imposed on the remittance 
transfer by the provider in Sec.  1005.31(b)(1)(ii) and imposed on 
the remittance transfer by a person other than the provider in Sec.  
1005.31(b)(1)(vi), as applicable. For example, if no transfer taxes 
are imposed on a remittance transfer, a provider would only disclose 
applicable transfer fees. See comment 31(b)-1. If both fees and 
taxes are imposed, the fees and taxes must be disclosed as separate, 
itemized disclosures. For example, a provider would disclose all 
transfer fees using the term ``Transfer Fees'' or a substantially 
similar term and would separately disclose all transfer taxes as 
``Transfer Taxes'' or a substantially similar term.
    ii. The fees and taxes required to be disclosed by Sec.  
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 Sec.  1005.31(b)(1)(vi) include fees and taxes imposed on the 
remittance transfer by a person other than the provider. 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 
receiving 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 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. 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. The terms used 
to describe the fees and taxes imposed on the remittance transfer by 
the provider in Sec.  1005.31(b)(1)(ii) and imposed on the 
remittance transfer by a person other than the provider in Sec.  
1005.31(b)(1)(vi) must differentiate between such fees and taxes. 
For example, the terms used to describe fees disclosed under Sec.  
1005.31(b)(1)(ii) and (vi) may not both be described solely as 
``Fees.''
    2. Transfer amount. Section 1005.31(b)(1)(i) and (v) require two 
transfer amount disclosures. First, under Sec.  1005.31(b)(1)(i), a 
provider must disclose the transfer amount in the currency in which 
the remittance transfer is funded to show the calculation of the 
total amount of the transaction. Typically, the remittance transfer 
is funded in U.S. dollars, so the transfer amount would be expressed 
in U.S. dollars. However, if the remittance transfer is funded, for 
example, from a Euro-denominated account, the transfer amount would 
be expressed in Euros. Second, under Sec.  1005.31(b)(1)(v), a 
provider must disclose the transfer amount in the currency in which 
the funds will be made available to the designated recipient. For 
example, if the funds will be picked up by the designated recipient 
in Japanese yen, the transfer amount would be expressed in Japanese 
yen. However, this second transfer amount need not be disclosed if 
fees and taxes are not imposed on the remittance transfer under 
Sec.  1005.31(b)(1)(vi). The terms used to describe each transfer 
amount should be the same.
    3. Exchange rate for calculation. The exchange rate used to 
calculate the transfer amount in Sec.  1005.31(b)(1)(v), the fees 
and taxes imposed on the remittance transfer by a person other than 
the provider in Sec.  1005.31(b)(1)(vi), and the amount received in 
Sec.  1005.31(b)(1)(vii) is the exchange rate in Sec.  
1005.31(b)(1)(iv), including an estimated exchange rate to the 
extent permitted by Sec.  1005.32, prior to any rounding of the 
exchange rate. For example, if one U.S. dollar exchanges for 
11.9483779 Mexican pesos, a provider must calculate these 
disclosures using this rate, even though the provider may disclose 
pursuant to Sec.  1005.31(b)(1)(iv) that the U.S. dollar exchanges 
for 11.9484 Mexican pesos. Similarly, if a provider estimates 
pursuant to Sec.  1005.32 that one U.S. dollar exchanges for 11.9483 
Mexican pesos, a provider must calculate these disclosures using 
this rate, even though the provider may disclose pursuant to Sec.  
1005.31(b)(1)(iv) that the U.S. dollar exchanges for 11.95 Mexican 
pesos (Estimated). If an exchange rate need not be rounded, a 
provider must use that exchange rate to calculate these disclosures. 
For example, if one U.S. dollar exchanges for exactly 11.9 Mexican 
pesos, a provider must calculate these disclosures using this 
exchange rate.

31(b)(1)(iv) Exchange Rate

    1. Applicable exchange rate. If the designated recipient will 
receive funds in a currency other than the currency in which the 
remittance transfer is funded, a remittance transfer provider must 
disclose the exchange rate to be used by the provider for the 
remittance transfer. An exchange rate that is estimated must be 
disclosed pursuant to the requirements of Sec.  1005.32. A 
remittance transfer provider may not disclose, for example, that an 
exchange rate is ``unknown,'' ``floating,'' or ``to be determined.'' 
If a provider does not have specific knowledge regarding the 
currency in which the funds will be received, the provider may rely 
on a sender's representation as to the currency in which

[[Page 6301]]

funds will be received for purposes of determining whether an 
exchange rate is applied to the transfer. For example, if a sender 
requests that a remittance transfer be deposited into an account in 
U.S. dollars, the provider need not disclose an exchange rate, even 
if the account is actually denominated in Mexican pesos and the 
funds are converted prior to deposit into the account. If a sender 
does not know the currency in which funds will be received, the 
provider may assume that the currency in which funds will be 
received is the currency in which the remittance transfer is funded.
    2. Rounding. The exchange rate disclosed by the provider for the 
remittance transfer is required to be rounded. The provider may 
round to two, three, or four decimal places, at its option. For 
example, if one U.S. dollar exchanges for 11.9483779 Mexican pesos, 
a provider may disclose that the U.S. dollar exchanges for 11.9484 
Mexican pesos. The provider may alternatively disclose, for example, 
that the U.S. dollar exchanges for 11.948 pesos or 11.95 pesos. On 
the other hand, if one U.S. dollar exchanges for exactly 11.9 
Mexican pesos, the provider may disclose that ``US$1 = 11.9 MXN'' in 
lieu of, for example, ``US$1 = 11.90 MXN.'' The exchange rate 
disclosed for the remittance transfer must be rounded consistently 
for each currency. For example, a provider may not round to two 
decimal places for some transactions exchanged into Euros and round 
to four decimal places for other transactions exchanged into Euros.
    3. Exchange rate used. The exchange rate used by the provider 
for the remittance transfer need not be set by that provider. For 
example, an exchange rate set by an intermediary institution and 
applied to the remittance transfer would be the exchange rate used 
for the remittance transfer and must be disclosed by the provider.

31(b)(1)(vi) Fees and Taxes Imposed by a Person Other Than the 
Provider

    1. Fees and taxes disclosed in the currency in which the funds 
will be received. Section 1005.31(b)(1)(vi) requires the disclosure 
of fees and taxes in the currency in which the funds will be 
received by the designated recipient. A fee or tax described in 
Sec.  1005.31(b)(1)(vi) may be imposed in one currency, but the 
funds may be received by the designated recipient in another 
currency. In such cases, the remittance transfer provider must 
calculate the fee or tax to be disclosed using the exchange rate in 
Sec.  1005.31(b)(1)(iv), including an estimated exchange rate to the 
extent permitted by Sec.  1005.32, prior to any rounding of the 
exchange rate. For example, an intermediary institution in an 
international wire transfer may impose a fee in U.S. dollars, but 
funds are ultimately deposited in the recipient's account in Euros. 
In this case, the provider would disclose the fee to the sender 
expressed in Euros, calculated using the exchange rate used by the 
provider for the remittance transfer. For purposes of Sec.  
1005.31(b)(1)(v), (vi), and (vii), if a provider does not have 
specific knowledge regarding the currency in which the funds will be 
received, the provider may rely on a sender's representation as to 
the currency in which funds will be received. For example, if a 
sender requests that a remittance transfer be deposited into an 
account in U.S. dollars, the provider may provide the disclosures 
required in Sec.  1005.31(b)(1)(v), (vi), and (vii) in U.S. dollars, 
even if the account is actually denominated in Mexican pesos and the 
funds are subsequently converted prior to deposit into the account. 
If a sender does not know the currency in which funds will be 
received, the provider may assume that the currency in which funds 
will be received is the currency in which the remittance transfer is 
funded.
    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. 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.

31(b)(1)(vii) Amount Received

    1. Amount received. The remittance transfer provider is required 
to disclose the amount that will be received by the designated 
recipient in the currency in which the funds will be received. The 
amount received must reflect all charges imposed on the remittance 
transfer that affect the amount received, including the exchange 
rate and all fees and taxes imposed on the remittance transfer by 
the remittance transfer provider, the receiving institution, or any 
other party in the transmittal route of a remittance transfer. The 
disclosed amount received must be reduced by the amount of any fee 
or tax that is imposed on the remittance transfer by any person, 
even if that amount is imposed or itemized separately from the 
transaction amount.

31(b)(2) Receipt

    1. Date funds will be available. A remittance transfer provider 
does not comply with the requirements of Sec.  1005.31(b)(2)(ii) if 
it provides a range of dates that the remittance transfer may be 
available or an estimate of the date on which funds will be 
available. If a provider does not know the exact date on which funds 
will be available, the provider may disclose the latest date on 
which the funds will be available. For example, if funds may be 
available on January 3, but are not certain to be available until 
January 10, then a provider complies with Sec.  1005.31(b)(2)(ii) if 
it discloses January 10 as the date funds will be available. 
However, a remittance transfer provider may also disclose that funds 
``may be available sooner'' or use a substantially similar term to 
inform senders that funds may be available to the designated 
recipient on a date earlier than the date disclosed. For example, a 
provider may disclose ``January 10 (may be available sooner).''
    2. Agencies required to be disclosed. A remittance transfer 
provider must only disclose information about a State agency that 
licenses or charters the remittance transfer provider with respect 
to the remittance transfer as applicable. For example, if a 
financial institution is solely regulated by a Federal agency, and 
not licensed or chartered by a State agency, then the institution 
need not disclose information about a State agency. A remittance 
transfer provider must disclose information about the Consumer 
Financial Protection Bureau, whether or not the Consumer Financial 
Protection Bureau is the provider's primary Federal regulator.
    3. State agency that licenses or charters a provider. A 
remittance transfer provider must only disclose information about 
one State agency that licenses or charters the remittance transfer 
provider with respect to the remittance transfer, even if other 
State agencies also regulate the remittance transfer provider. For 
example, a provider may disclose information about the State agency 
which granted its license. If a provider is licensed in multiple 
States, and the State agency that licenses the provider with respect 
to the remittance transfer is determined by a sender's location, a 
provider may make the determination as to the State in which the 
sender is located based on information that is provided by the 
sender and on any records associated with the sender. For example, 
if the State agency that licenses the provider with respect to an 
online remittance transfer is determined by a sender's location, a 
provider could rely on the sender's statement regarding the State in 
which the sender is located and disclose the State agency that 
licenses the provider in that State. A State-chartered bank must 
disclose information about the State agency that granted its 
charter, regardless of the location of the sender.

31(b)(3) Combined Disclosure

    1. Proof of payment. If a sender initiating a remittance 
transfer receives a combined disclosure provided under Sec.  
1005.31(b)(3) and then completes the transaction, the remittance 
transfer provider must provide the sender with proof of payment. The 
proof of payment must be clear and conspicuous, provided in writing 
or electronically, and provided in a retainable form. The combined 
disclosure must be provided to the sender when the sender requests 
the remittance transfer, but prior to payment for the transfer, 
pursuant to Sec.  1005.31(e)(1), and the proof of payment must be 
provided when payment is made for the remittance transfer. The proof 
of payment for the transaction may be provided on the same piece of 
paper as the combined disclosure or on a separate piece of paper. 
For example, a provider may feed a combined disclosure through a 
computer printer when payment is made to add the date and time of 
the transaction, a confirmation code, and an indication that the 
transfer was paid in full. A provider may also provide this 
additional information to a

[[Page 6302]]

sender on a separate piece of paper when payment is made. A 
remittance transfer provider does not comply with the requirements 
of Sec.  1005.31(b)(3) by providing a combined disclosure with no 
further indication that payment has been received.

31(c) Specific Format Requirements

31(c)(1) Grouping

    1. Grouping. Information is grouped together for purposes of 
subpart B if multiple disclosures are in close proximity to one 
another and a sender can reasonably calculate the total amount of 
the transaction and the amount that will be received by the 
designated recipient. Model Forms A-30 through A-35 in Appendix A 
illustrate how information may be grouped to comply with the rule, 
but a remittance transfer provider may group the information in 
another manner. For example, a provider could provide the grouped 
information as a horizontal, rather than a vertical, calculation.

31(c)(4) Segregation

    1. Segregation. Disclosures may be segregated from other 
information in a variety of ways. For example, the disclosures may 
appear on a separate sheet of paper or may appear on the front of a 
page where other information appears on the back of that page. The 
disclosures may be set off from other information on a notice by 
outlining them in a box or series of boxes, with bold print dividing 
lines or a different color background, or by using other means.
    2. Directly related. For purposes of Sec.  1005.31(c)(4), the 
following is directly related information:
    i. The date and time of the transaction;
    ii. The sender's name and contact information;
    iii. The location at which the designated recipient may pick up 
the funds;
    iv. The confirmation or other identification code;
    v. A company name and logo;
    vi. An indication that a disclosure is or is not a receipt or 
other indicia of proof of payment;
    vii. A designated area for signatures or initials;
    viii. A statement that funds may be available sooner, as 
permitted by Sec.  1005.31(b)(2)(ii);
    ix. Instructions regarding the retrieval of funds, such as the 
number of days the funds will be available to the recipient before 
they are returned to the sender; and
    x. A statement that the provider makes money from foreign 
currency exchange.

31(d) Estimates

    1. Terms. A remittance transfer provider may provide estimates 
of the amounts required by Sec.  1005.31(b), to the extent permitted 
by Sec.  1005.32. An 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.).''

31(e) Timing

    1. Request to send a remittance transfer. Except as provided in 
Sec.  1005.36(a), pre-payment and combined disclosures are required 
to be provided to the sender when the sender requests the remittance 
transfer, but prior to payment for the transfer. Whether a consumer 
has requested a remittance transfer depends on the facts and 
circumstances. A sender that asks a provider to send a remittance 
transfer, and provides transaction-specific information to the 
provider in order to send funds to a designated recipient, has 
requested a remittance transfer. For example, a sender who asks the 
provider to send money to a recipient in Mexico and provides the 
sender and recipient information to the provider has requested a 
remittance transfer. A consumer who solely inquires about that day's 
rates and fees to send to Mexico, however, has not requested the 
provider to send a remittance transfer.
    2. When payment is made. Except as provided in Sec.  1005.36(a), 
a receipt required by Sec.  1005.31(b)(2) must be provided to the 
sender when payment is made for the remittance transfer. For 
example, a remittance transfer provider could give the sender the 
disclosures after the sender pays for the remittance transfer, but 
before the sender leaves the counter. A provider could also give the 
sender the disclosures immediately before the sender pays for the 
transaction. For purposes of subpart B, payment is made, for 
example, when a sender provides cash to the remittance transfer 
provider or when payment is authorized.
    3. Telephone transfer from an account. A sender may transfer 
funds from his or her account, as defined by Sec.  1005.2(b), that 
is held by the remittance transfer provider. For example, a 
financial institution may send an international wire transfer for a 
sender using funds from the sender's account with the institution. 
Except as provided in Sec.  1005.36(a), if the sender conducts such 
a transfer entirely by telephone, the institution may provide a 
receipt required by Sec.  1005.31(b)(2) on or with the sender's next 
regularly scheduled periodic statement for that account or within 30 
days after payment is made for the remittance transfer if a periodic 
statement is not provided.
    4. Mobile application and text message transactions. If a 
transaction is conducted entirely by telephone via mobile 
application or text message, a receipt required by Sec.  
1005.31(b)(2) may be mailed or delivered to the sender pursuant to 
the timing requirements in Sec.  1005.31(e)(2). For example, if a 
sender conducts a transfer entirely by telephone via mobile 
application, a remittance transfer provider may mail or deliver the 
disclosures to a sender pursuant to the timing requirements in Sec.  
1005.31(e)(2).
    5. Statement about cancellation rights. The statement about the 
rights of the sender regarding cancellation required by Sec.  
1005.31(b)(2)(iv) may, but need not, be disclosed pursuant to the 
timing requirements of Sec.  1005.31(e)(2) if a provider discloses 
this information pursuant to Sec.  1005.31(a)(3)(iii) or 
(a)(5)(iii). The statement about the rights of the sender regarding 
error resolution required by Sec.  1005.31(b)(2)(iv), however, must 
be disclosed pursuant to the timing requirements of Sec.  
1005.31(e)(2).

31(f) Accurate When Payment Is Made

    1. No guarantee of disclosures provided before payment. Except 
as provided in Sec.  1005.36(b), disclosures required by Sec.  
1005.31(b) must be accurate when a sender makes payment for the 
remittance transfer. A remittance transfer provider is not required 
to guarantee the terms of the remittance transfer in the disclosures 
required by Sec.  1005.31(b) for any specific period of time. 
However, if any of the disclosures required by Sec.  1005.31(b) are 
not accurate when a sender makes payment for the remittance 
transfer, a provider must give new disclosures before accepting 
payment.

31(g) Foreign Language Disclosures

    1. Number of foreign languages used in written disclosure. 
Section 1005.31(g)(1) does not limit the number of languages that 
may be used on a single document, but such disclosures must be clear 
and conspicuous pursuant to Sec.  1005.31(a)(1). Under Sec.  
1005.31(g)(1), a remittance transfer provider may, but need not, 
provide the sender with a written or electronic disclosure that is 
in English and, if applicable, in each foreign language that the 
remittance transfer provider principally uses to advertise, solicit, 
or market either orally, in writing, or electronically, at the 
office in which a sender conducts a transaction or asserts an error, 
respectively. Alternatively, the remittance transfer provider may 
provide the disclosure solely in English and, if applicable, the 
foreign language primarily used by the sender with the remittance 
transfer provider to conduct the transaction or assert an error, 
provided such language is principally used by the remittance 
transfer provider to advertise, solicit, or market either orally, in 
writing, or electronically, at the office in which the sender 
conducts the transaction or asserts the error, respectively. If the 
remittance transfer provider chooses the alternative method, it may 
provide disclosures in a single document with both languages or in 
two separate documents with one document in English and the other 
document in the applicable foreign language. The following examples 
illustrate this concept.
    i. A remittance transfer provider principally uses only Spanish 
and Vietnamese to advertise, solicit, or market remittance transfer 
services at a particular office. The remittance transfer provider 
may provide all senders with disclosures in English, Spanish, and 
Vietnamese, regardless of the language the sender uses with the 
remittance transfer provider to conduct the transaction or assert an 
error.
    ii. Same facts as i. If a sender primarily uses Spanish with the 
remittance transfer provider to conduct a transaction or assert an 
error, the remittance transfer provider may provide a written or 
electronic disclosure in English and Spanish, whether in a single 
document or two separate documents. If the sender primarily uses 
English with the remittance transfer provider to conduct the 
transaction or assert an error, the remittance

[[Page 6303]]

transfer provider may provide a written or electronic disclosure 
solely in English. If the sender primarily uses a foreign language 
with the remittance transfer provider to conduct the transaction or 
assert an error that the remittance transfer provider does not use 
to advertise, solicit, or market either orally, in writing, or 
electronically, at the office in which the sender conducts the 
transaction or asserts the error, respectively, the remittance 
transfer provider may provide a written or electronic disclosure 
solely in English.
    2. Primarily used. The language primarily used by the sender 
with the remittance transfer provider to conduct the transaction is 
the primary language used by the sender with the remittance transfer 
provider to convey the information necessary to complete the 
transaction. Similarly, the language primarily used by the sender 
with the remittance transfer provider to assert the error is the 
primary language used by the sender with the remittance transfer 
provider to provide the information required by Sec.  1005.33(b) to 
assert an error. For example:
    i. A sender initiates a conversation with a remittance transfer 
provider with a greeting in English and expresses interest in 
sending a remittance transfer to Mexico in English. If the 
remittance transfer provider thereafter communicates with the sender 
in Spanish and the sender conveys the other information needed to 
complete the transaction, including the designated recipient's 
information and the amount and funding source of the transfer, in 
Spanish, then Spanish is the language primarily used by the sender 
with the remittance transfer provider to conduct the transaction.
    ii. A sender initiates a conversation with the remittance 
transfer provider with a greeting in English and states in English 
that there was a problem with a prior remittance transfer to 
Vietnam. If the remittance transfer provider thereafter communicates 
with the sender in Vietnamese and the sender uses Vietnamese to 
convey the information required by Sec.  1005.33(b) to assert an 
error, then Vietnamese is the language primarily used by the sender 
with the remittance transfer provider to assert the error.
    iii. A sender accesses the Web site of a remittance transfer 
provider that may be used by senders to conduct remittance transfers 
or assert errors. The Web site is offered in English and French. If 
the sender uses the French version of the Web site to conduct the 
remittance transfer, then French is the language primarily used by 
the sender with the remittance transfer provider to conduct the 
transaction.

31(g)(1) General

    1. Principally used. i. All relevant facts and circumstances 
determine whether a foreign language is principally used by the 
remittance transfer provider to advertise, solicit, or market under 
Sec.  1005.31(g)(1). Generally, whether a foreign language is 
considered to be principally used by the remittance transfer 
provider to advertise, solicit, or market is based on:
    A. The frequency with which the foreign language is used in 
advertising, soliciting, or marketing of remittance transfer 
services at that office;
    B. The prominence of the advertising, soliciting, or marketing 
of remittance transfer services in that foreign language at that 
office; and
    C. The specific foreign language terms used in the advertising 
soliciting, or marketing of remittance transfer service at that 
office.
    ii. For example, if a remittance transfer provider posts several 
prominent advertisements in a foreign language for remittance 
transfer services, including rate and fee information, on a 
consistent basis in an office, the provider is creating an 
expectation that a consumer could receive information on remittance 
transfer services in the foreign language used in the 
advertisements. The foreign language used in such advertisements 
would be considered to be principally used at that office based on 
the frequency and prominence of the advertising. In contrast, an 
advertisement for remittance transfer services, including rate and 
fee information, that is featured prominently at an office and is 
entirely in English, except for a greeting in a foreign language, 
does not create an expectation that a consumer could receive 
information on remittance transfer services in the foreign language 
used for such greeting. The foreign language used in such an 
advertisement is not considered to be principally used at that 
office based on the incidental specific foreign language term used.
    2. Advertise, solicit, or market. i. Any commercial message in a 
foreign language, appearing in any medium, that promotes directly or 
indirectly the availability of remittance transfer services 
constitutes advertising, soliciting, or marketing in such foreign 
language for purposes of Sec.  1005.31(g)(1). Examples illustrating 
when a foreign language is used to advertise, solicit, or market 
include:
    A. Messages in a foreign language in a leaflet or promotional 
flyer at an office.
    B. Announcements in a foreign language on a public address 
system at an office.
    C. On-line messages in a foreign language, such as on the 
internet.
    D. Printed material in a foreign language on any exterior or 
interior sign at an office.
    E. Point-of-sale displays in a foreign language at an office.
    F. Telephone solicitations in a foreign language.
    ii. Examples illustrating use of a foreign language for purposes 
other than to advertise, solicit, or market include:
    A. Communicating in a foreign language (whether by telephone, 
electronically, or otherwise) about remittance transfer services in 
response to a consumer-initiated inquiry.
    B. Making disclosures in a foreign language that are required by 
Federal or other applicable law.
    3. Office. An office includes any physical location, telephone 
number, or Web site of a remittance transfer provider where a sender 
may conduct a remittance transfer or assert an error for a 
remittance transfer. The location need not exclusively offer 
remittance transfer services. For example, if an agent of a 
remittance transfer provider is located in a grocery store, the 
grocery store is considered an office for purposes of Sec.  
1005.31(g)(1). Because a consumer must be located in a State in 
order to be considered a ``sender'' under Sec.  1005.30(g), a Web 
site is not an office for purposes of Sec.  1005.31(g)(1), even if 
the Web site can be accessed by consumers that are located in the 
United States, unless a sender may conduct a remittance transfer on 
the Web site or may assert an error for a remittance transfer on the 
Web site.
    4. At the office. Any advertisement, solicitation, or marketing 
is considered to be made at the office in which a sender conducts a 
transaction or asserts an error if such advertisement, solicitation, 
or marketing is posted, provided, or made: at a physical office of a 
remittance transfer provider; on a Web site of a remittance transfer 
provider that may be used by senders to conduct remittance transfers 
or assert errors; during a telephone call with a remittance transfer 
provider that may be used by senders to conduct remittance transfers 
or assert errors; or via mobile application or text message by a 
remittance transfer provider if the mobile application or text 
message may be used by senders to conduct remittance transfers or 
assert errors. An advertisement, solicitation, or marketing that is 
considered to be made at an office does not include general 
advertisements, solicitations, or marketing that are not intended to 
be made at a particular office. For example, if an advertisement for 
remittance transfers in Chinese appears in a Chinese newspaper that 
is being distributed at a grocery store in which the agent of a 
remittance transfer provider is located, such advertisement would 
not be considered to be made at that office. For disclosures 
provided pursuant to Sec.  1005.31, the relevant office is the 
office in which the sender conducts the transaction. For disclosures 
provided pursuant to Sec.  1005.33 for error resolution purposes, 
the relevant office is the office in which the sender first asserts 
the error, not the office where the transaction was conducted.

Section 1005.32--Estimates

    1. Disclosures where estimates can be used. Section 1005.32(a) 
and (b) permit estimates to be used in certain circumstances for 
disclosures described in Sec. Sec.  1005.31(b)(1) through (3) and 
1005.36(a)(1) and (2). To the extent permitted in Sec.  1005.32(a) 
and (b), estimates may be used in the pre-payment disclosure 
described in Sec.  1005.31(b)(1), the receipt disclosure described 
in Sec.  1005.31(b)(2), the combined disclosure described in Sec.  
1005.31(b)(3), and the pre-payment disclosures and receipt 
disclosures for both first and subsequent preauthorized remittance 
transfers described in Sec.  1005.36(a)(1) and (2).

32(a) Temporary Exception for Insured Institutions

32(a)(1) General

    1. Control. For purposes of this section, an insured institution 
cannot determine exact amounts ``for reasons beyond its control'' 
when a person other than the insured institution or with which the 
insured institution has no correspondent relationship sets the 
exchange rate required to be disclosed under Sec.  1005.31(b)(1)(iv) 
or imposes a fee required to be disclosed under

[[Page 6304]]

Sec.  1005.31(b)(1)(vi). For example, if an insured institution has 
a correspondent relationship with a financial institution in another 
country and that correspondent institution sets the exchange rate or 
imposes a fee for remittance transfers sent from the insured 
institution to the correspondent institution, then the insured 
institution must determine exact amounts for the disclosures 
required under Sec.  1005.31(b)(1)(iv) or (vi) because the 
determination of those amounts are not beyond the insured 
institution's control.
    2. Examples of scenarios that qualify for the temporary 
exception. The following examples illustrate when an insured 
institution cannot determine an exact amount ``for reasons beyond 
its control'' and thus would qualify for the temporary exception.
    i. Exchange rate. An insured institution cannot determine the 
exact exchange rate to disclose under Sec.  1005.31(b)(1)(iv) for an 
international wire transfer if the insured institution does not set 
the exchange rate, and the rate is set when the funds are deposited 
into the recipient's account by the designated recipient's 
institution with which the insured institution does not have a 
correspondent relationship. The insured institution will not know 
the exchange rate that the recipient institution will apply when the 
funds are deposited into the recipient's account.
    ii. Other fees. An insured institution cannot determine the 
exact fees to disclose under Sec.  1005.31(b)(1)(vi) if an 
intermediary institution or the designated recipient's institution, 
with which the insured institution does not have a correspondent 
relationship, imposes a transfer or conversion fee.
    iii. Other taxes. An insured institution cannot determine the 
exact taxes to disclose under Sec.  1005.31(b)(1)(vi) if the insured 
institution cannot determine the applicable exchange rate or fees as 
described in paragraphs i. and ii. above, and the recipient country 
imposes a tax that is a percentage of the amount transferred to the 
designated recipient, less any other fees.
    3. Examples of scenarios that do not qualify for the temporary 
exception. The following examples illustrate when an insured 
institution can determine exact amounts and thus would not qualify 
for the temporary exception.
    i. Exchange rate. An insured institution can determine the exact 
exchange rate required to be disclosed under Sec.  1005.31(b)(1)(iv) 
if it converts the funds into the local currency to be received by 
the designated recipient using an exchange rate that it sets. The 
determination of the exchange rate is in the insured institution's 
control even if there is no correspondent relationship with an 
intermediary institution in the transmittal route or the designated 
recipient's institution.
    ii. Other fees. An insured institution can determine the exact 
fees required to be disclosed under Sec.  1005.31(b)(1)(vi) if it 
has agreed upon the specific fees with a correspondent institution, 
and this correspondent institution is the only institution in the 
transmittal route to the designated recipient's institution, which 
itself does not impose fees.
    iii. Other taxes. An insured institution can determine the exact 
taxes required to be disclosed under Sec.  1005.31(b)(1)(vi) if:
    A. The recipient country imposes a tax that is a percentage of 
the amount transferred to the designated recipient, less any other 
fees, and the insured institution can determine the exact amount of 
the applicable exchange rate and other fees; or
    B. The recipient country imposes a specific sum tax that is not 
tied to the amount transferred.

32(b) Permanent Exception for Transfers to Certain Countries

    1. Laws of the recipient country. The laws of the recipient 
country do not permit a remittance transfer provider to determine 
exact amounts required to be disclosed when a law or regulation of 
the recipient country requires the person making funds directly 
available to the designated recipient to apply an exchange rate that 
is:
    i. Set by the government of the recipient country after the 
remittance transfer provider sends the remittance transfer, or
    ii. Set when the designated recipient receives the funds.
    2. Example illustrating when exact amounts can and cannot be 
determined because of the laws of the recipient country.
    i. The laws of the recipient country do not permit a remittance 
transfer provider to determine the exact exchange rate required to 
be disclosed under Sec.  1005.31(b)(1)(iv) when, for example, the 
government of the recipient country, on a daily basis, sets the 
exchange rate that must, by law, apply to funds received and the 
funds are made available to the designated recipient in the local 
currency the day after the remittance transfer provider sends the 
remittance transfer.
    ii. In contrast, the laws of the recipient country permit a 
remittance transfer provider to determine the exact exchange rate 
required to be disclosed under Sec.  1005.31(b)(1)(iv) when, for 
example, the government of the recipient country ties the value of 
its currency to the U.S. dollar.
    3. Method by which transactions are made in the recipient 
country. The method by which transactions are made in the recipient 
country does not permit a remittance transfer provider to determine 
exact amounts required to be disclosed when transactions are sent 
via international ACH on terms negotiated between the United States 
government and the recipient country's government, under which the 
exchange rate is a rate set by the recipient country's central bank 
or other governmental authority after the provider sends the 
remittance transfer.
    4. Example illustrating when exact amounts can and cannot be 
determined because of the method by which transactions are made in 
the recipient country.
    i. The method by which transactions are made in the recipient 
country does not permit a remittance transfer provider to determine 
the exact exchange rate required to be disclosed under Sec.  
1005.31(b)(1)(iv) when the provider sends a remittance transfer via 
international ACH on terms negotiated between the United States 
government and the recipient country's government, under which the 
exchange rate is a rate set by the recipient country's central bank 
on the business day after the provider has sent the remittance 
transfer.
    ii. In contrast, a remittance transfer provider would not 
qualify for the Sec.  1005.32(b)(1)(ii) methods exception if it 
sends a remittance transfer via international ACH on terms 
negotiated between the United States government and a private-sector 
entity or entities in the recipient country, under which the 
exchange rate is set by the institution acting as the entry point to 
the recipient country's payments system on the next business day. 
However, a remittance transfer provider sending a remittance 
transfer using such a method may qualify for the Sec.  1005.32(a) 
temporary exception.
    iii. A remittance transfer provider would not qualify for the 
Sec.  1005.32(b)(1)(ii) methods exception if, for example, it sends 
a remittance transfer via international ACH on terms negotiated 
between the United States government and the recipient country's 
government, under which the exchange rate is set by the recipient 
country's central bank or other governmental authority before the 
sender requests a transfer.
    5. Safe harbor list. If a country is included on a safe harbor 
list published by the Bureau under Sec.  1005.32(b)(2), a remittance 
transfer provider may provide estimates of the amounts to be 
disclosed under Sec.  1005.31(b)(1)(iv) through (vii). If a country 
does not appear on the Bureau's list, a remittance transfer provider 
may provide estimates under Sec.  1005.32(b)(1) if the provider 
determines that the recipient country does not legally permit or 
method by which transactions are conducted in that country does not 
permit the provider to determine exact disclosure amounts.
    6. Reliance on Bureau list of countries. A remittance transfer 
provider may rely on the list of countries published by the Bureau 
to determine whether the laws of a recipient country do not permit 
the remittance transfer provider to determine exact amounts required 
to be disclosed under Sec.  1005.31(b)(1)(iv) through (vii). Thus, 
if a country is on the Bureau's list, the provider may give 
estimates under this section, unless a remittance transfer provider 
has information that a country on the Bureau's list legally permits 
the provider to determine exact disclosure amounts.
    7. Change in laws of recipient country. i. If the laws of a 
recipient country change such that a remittance transfer provider 
can determine exact amounts, the remittance transfer provider must 
begin providing exact amounts for the required disclosures as soon 
as reasonably practicable if the provider has information that the 
country legally permits the provider to determine exact disclosure 
amounts.
    ii. If the laws of a recipient country change such that a 
remittance transfer provider cannot determine exact disclosure 
amounts, the remittance transfer provider may provide estimates 
under Sec.  1005.32(b)(1), even if that country does not appear on 
the list published by the Bureau.

32(c) Bases for Estimates

32(c)(1) Exchange Rate

    1. Most recent exchange rate for qualifying international ACH 
transfers. If the exchange

[[Page 6305]]

rate for a remittance transfer sent via international ACH that 
qualifies for the Sec.  1005.32(b)(1)(ii) exception is set the 
following business day, the most recent exchange rate available for 
a transfer is the exchange rate set for the day that the disclosure 
is provided, i.e. the current business day's exchange rate.
    2. Publicly available. Examples of publicly available sources of 
information containing the most recent wholesale exchange rate for a 
currency include U.S. news services, such as Bloomberg, the Wall 
Street Journal, and the New York Times; a recipient country's 
national news services, and a recipient country's central bank or 
other government agency.
    3. Spread. An estimate for disclosing the exchange rate based on 
the most recent publicly available wholesale exchange rate must also 
reflect any spread the remittance transfer provider typically 
applies to the wholesale exchange rate for remittance transfers for 
a particular currency.
    4. Most recent. For the purposes of Sec.  1005.32(c)(1)(ii) and 
(iii), if the exchange rate with respect to a particular currency is 
published or provided multiple times throughout the day because the 
exchange rate fluctuates throughout the day, a remittance transfer 
provider may use any exchange rate available on that day to 
determine the most recent exchange rate.

32(c)(3) Other Fees

    1. Potential transmittal routes. A remittance transfer from the 
sender's account at an insured institution to the designated 
recipient's institution may take several routes, depending on the 
correspondent relationships each institution in the transmittal 
route has with other institutions. In providing an estimate of the 
fees required to be disclosed under Sec.  1005.31(b)(1)(vi) pursuant 
to the Sec.  1005.32(a) temporary exception, an insured institution 
may rely upon the representations of the designated recipient's 
institution and the institutions that act as intermediaries in any 
one of the potential transmittal routes that it reasonably believes 
a requested remittance transfer may travel.

32(c)(4) Other Taxes Imposed in the Recipient Country

    1. Other taxes imposed in a recipient country that are a 
percentage. Section 1005.32(c)(4) sets forth the basis for providing 
an estimate of only those taxes imposed in a recipient country that 
are a percentage of the amount transferred to the designated 
recipient because a remittance transfer provider can determine the 
exact amount of other taxes, such as a tax of a specific amount 
imposed without regard to the amount of the funds transferred or 
received. However, a remittance transfer provider can determine the 
exact amount of other taxes that are a percentage of the amount 
transferred if the provider can determine the exchange rate and the 
exact amount of other fees imposed on the remittance transfer.

Section 1005.33--Procedures for Resolving Errors

33(a) Definition of Error

    1. Incorrect amount of currency paid by sender. Section 
1005.33(a)(1)(i) covers circumstances in which a sender pays an 
amount that differs from the total amount of the transaction, 
including fees imposed in connection with the transfer, stated in 
the receipt or combined disclosure provided under Sec.  
1005.31(b)(2) or (3). Such error may be asserted by a sender 
regardless of the form or method of payment provided, including when 
a debit, credit, or prepaid card is used to fund the transfer and an 
excess amount is paid. For example, if a remittance transfer 
provider incorrectly charged a sender's credit card account for 
US$150, and US$120 was sent, plus a transfer fee of US$10, the 
sender could assert an error with the remittance transfer provider 
for the incorrect charge under Sec.  1005.33(a)(1)(i).
    2. Incorrect amount of currency received--coverage. Section 
1005.33(a)(1)(iii) covers circumstances in which the designated 
recipient receives an amount of currency that differs from the 
amount of currency identified on the disclosures provided to the 
sender, except where the disclosure stated an estimate of the amount 
of currency to be received in accordance with Sec.  1005.32 and the 
difference results from application of the actual exchange rate, 
fees, and taxes, rather than any estimated amounts, or the failure 
was caused by circumstances outside the remittance transfer 
provider's control. A designated recipient may receive an amount of 
currency that differs from the amount of currency disclosed, for 
example, if an exchange rate other than the disclosed rate is 
applied to the remittance transfer, or if the provider fails to 
account for fees or taxes that may be imposed by the provider or a 
third party before the transfer is picked up by the designated 
recipient or deposited into the recipient's account in the foreign 
country. However, if the provider rounds the exchange rate used to 
calculate the amount received consistent with Sec.  
1005.31(b)(1)(iv) and comment 31(b)(1)(iv)-2 for the disclosed rate, 
there is no error if the designated recipient receives an amount of 
currency that results from applying the exchange rate used, prior to 
any rounding of the exchange rate, to calculate fees, taxes, or the 
amount received rather than the disclosed rate. Section 
1005.33(a)(1)(iii) also covers circumstances in which the remittance 
transfer provider transmits an amount that differs from the amount 
requested by the sender.
    3. Incorrect amount of currency received--examples. For purposes 
of the following examples illustrating the error for an incorrect 
amount of currency received under Sec.  1005.33(a)(1)(iii), assume 
that none of the circumstances permitting an estimate under Sec.  
1005.32 apply (unless otherwise stated).
    i. A consumer requests to send funds to a relative in Mexico to 
be received in local currency. Upon receiving the sender's payment, 
the remittance transfer provider provides a receipt indicating that 
the amount of currency that will be received by the designated 
recipient will be 1180 Mexican pesos, after fees and taxes are 
applied. However, when the relative picks up the transfer in Mexico 
a day later, he only receives 1150 Mexican pesos because the 
exchange rate applied by the recipient agent in Mexico was lower 
than the exchange rate used by the provider, prior to any rounding 
of the exchange rate, to disclose the amount of currency to be 
received by the designated recipient on the receipt. Because the 
designated recipient has received less than the amount of currency 
disclosed on the receipt, an error has occurred.
    ii. A consumer requests to send funds to a relative in Colombia 
to be received in local currency. The remittance transfer provider 
provides the sender a receipt stating an amount of currency that 
will be received by the designated recipient, which does not reflect 
additional foreign taxes that will be imposed in Colombia on the 
transfer. Because the designated recipient will receive less than 
the amount of currency disclosed on the receipt due to the 
additional foreign taxes, an error has occurred.
    iii. Same facts as in ii., except that the receipt provided by 
the remittance transfer provider does not reflect additional fees 
that are imposed by the receiving agent in Colombia on the transfer. 
Because the designated recipient will receive less than the amount 
of currency disclosed on the receipt due to the additional fees, an 
error has occurred.
    iv. A consumer requests to send US$250 to a relative in India to 
a U.S. dollar-denominated account held by the relative at an Indian 
bank. Instead of the US$250 disclosed on the receipt as the amount 
to be sent, the remittance transfer provider sends US$200, resulting 
in a smaller deposit to the designated recipient's account than was 
disclosed as the amount to be received after fees and taxes. Because 
the designated recipient received less than the amount of currency 
that was disclosed, an error has occurred.
    v. A consumer requests to send US$100 to a relative in a foreign 
country to be received in local currency. The remittance transfer 
provider provides the sender a receipt that discloses an estimated 
exchange rate, other taxes, and amount of currency that will be 
received due to the law in the foreign country requiring that the 
exchange rate be set by the foreign country's central bank. When the 
relative picks up the remittance transfer, the relative receives 
less currency than the estimated amount disclosed to the sender on 
the receipt due to application of the actual exchange rate, fees, 
and taxes, rather than any estimated amounts. Because Sec.  
1005.32(b) permits the remittance transfer provider to disclose an 
estimate of the amount of currency to be received, no error has 
occurred unless the estimate was not based on an approach set forth 
under Sec.  1005.32(c).
    4. Incorrect amount of currency received--extraordinary 
circumstances. Under Sec.  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

[[Page 6306]]

anticipated. Examples of extraordinary circumstances outside the 
remittance transfer provider's control that could not have been 
reasonably anticipated under Sec.  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 Sec.  1005.31(b)(2) or (3).
    5. Failure to make funds available by disclosed date of 
availability--coverage. Section 1005.33(a)(1)(iv) generally covers 
disputes about the failure to make funds available in connection 
with a remittance transfer to a designated recipient by the 
disclosed date of availability. If only a portion of the funds were 
made available by the disclosed date of availability, then Sec.  
1005.33(a)(1)(iv) does not apply, but Sec.  1005.33(a)(1)(iii) may 
apply instead. The following are examples of errors for failure to 
make funds available by the disclosed date of availability (assuming 
that none of the exceptions in Sec.  1005.33(a)(1)(iv)(A), (B), or 
(C) apply).
    i. Late or non-delivery of a remittance transfer;
    ii. Delivery of funds to the wrong account;
    iii. The fraudulent pick-up of a remittance transfer in a 
foreign country by a person other than the designated recipient;
    iv. The recipient agent or institution's retention of the 
remittance transfer, instead of making the funds available to the 
designated recipient.
    6. Failure to make funds available by disclosed date of 
availability--extraordinary circumstances. Under Sec.  
1005.33(a)(1)(iv)(A), 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 Sec.  1005.33(a)(1)(iv)(A) include circumstances 
such as war or civil unrest, natural disaster, garnishment or 
attachment of 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.
    7. Recipient-requested changes. Under Sec.  1005.33(a)(2)(iii), 
a change requested by the designated recipient that the remittance 
transfer provider or others involved in the remittance transfer 
decide to accommodate is not considered an error. The exception 
under Sec.  1005.33(a)(2)(iii) is available only if the change is 
made solely because the designated recipient requested the change. 
For example, if a sender requests to send US$100 to a designated 
recipient at a designated location, but the designated recipient 
requests the amount in a different currency (either at the sender-
designated location or another location requested by the recipient) 
and the remittance transfer provider accommodates the recipient's 
request, the change does not constitute an error.
    8. Change from disclosure made in reliance on sender 
information. Under the commentary accompanying Sec.  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, 31(b)(1)(vi)-1, and 31(b)(1)(vi)-2. 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 account-
holding 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 pursuant to 
Sec.  1005.33(a)(2)(iv). Similarly, if the remittance transfer 
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 pursuant to 
Sec.  1005.33(a)(2)(iv).

33(b) Notice of Error From Sender

    1. Person asserting or discovering error. The error resolution 
procedures of this section apply only when a notice of error is 
received from the sender, and not when a notice of error is received 
from the designated recipient or when the remittance transfer 
provider itself discovers and corrects an error.
    2. Content of error notice. The notice of error is effective so 
long as the remittance transfer provider is able to identify the 
elements in Sec.  1005.33(b)(1)(ii). For example, the sender could 
provide the confirmation number or code that would be used by the 
designated recipient to pick up the transfer, or other 
identification number or code supplied by the remittance transfer 
provider in connection with the transfer, if such number or code is 
sufficient for the remittance transfer provider to identify the 
sender (and contact information), designated recipient, and the 
transfer in question. For an account-based remittance transfer, the 
notice of error is effective even if it does not contain the 
sender's account number, so long as the remittance transfer provider 
is able to identify the account and the transfer in question.
    3. Address on notice of error. A remittance transfer provider 
may request, or a sender may provide, the sender's or designated 
recipient's email address, as applicable, instead of a physical 
address, on a notice of error.
    4. Effect of late notice. A remittance transfer provider is not 
required to comply with the requirements of this section for any 
notice of error from a sender that is received by the provider more 
than 180 days from the disclosed date of availability of the 
remittance transfer to which the notice of error applies or, if 
applicable, more than 60 days after a provider sent documentation, 
additional information, or clarification requested by the sender, 
provided such date is later than 180 days after the disclosed date 
of availability.
    5. Notice of error provided to agent. A notice of error provided 
by a sender to an agent of the remittance transfer provider is 
deemed to be received by the provider under Sec.  1005.33(b)(1)(i) 
when received by the agent.
    6. Consumer notice of error resolution rights. Section 1005.31 
requires a remittance transfer provider to include an abbreviated 
notice of the consumer's error resolution rights on the receipt or 
combined notice provided under Sec.  1005.31(b)(2) or (3). In 
addition, the remittance transfer provider must make available to a 
sender upon request, a notice providing a full description of the 
sender's error resolution rights, using language set forth in 
Appendix A of this part (Model Form A-36) or substantially similar 
language.

33(c) Time Limits and Extent of Investigation

    1. Notice to sender of finding of error. If the remittance 
transfer provider determines during its investigation that an error 
occurred as described by the sender, the remittance provider may 
inform the sender of its findings either orally or in writing. 
However, if the provider determines that no error or a different 
error occurred, the provider must provide a written explanation of 
its findings under Sec.  1005.33(d)(1).
    2. Incorrect or insufficient information provided for transfer. 
Under Sec.  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 recipient or 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. 
Third party 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 Sec.  1005.31 for a resend of a 
remittance transfer, and 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. 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. For 
example, a sender is not considered to have provided incorrect or 
insufficient information if the provider

[[Page 6307]]

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.
    i. A sender instructs a remittance transfer provider to send 
US$100 to a designated recipient in local currency, for which the 
remittance transfer provider charges a transfer fee of US$10, and 
the sender provided incorrect or insufficient information that 
resulted in non-delivery of the remittance transfer as requested. If 
the sender chooses the remedy to have the remittance transfer 
provider make the funds available to the designated recipient 
pursuant to Sec.  1005.33(c)(2)(ii)(A)(2) and provides the corrected 
or additional information, the remittance transfer provider may not 
require the sender to provide another US$100 to send to the 
designated recipient or charge the sender the US$10 transfer fee to 
resend the remittance transfer with the corrected or additional 
information. If the funds were not already exchanged into the local 
currency during the first unsuccessful remittance transfer attempt, 
the provider must use the exchange rate it is using for such 
transfers on the date of the resend.
    ii. A sender instructs a remittance transfer provider to send 
US$100 to a designated recipient in a foreign country, for which a 
remittance transfer provider charges a transfer fee of US$10 and an 
intermediary institution charges a lifting fee of US$5, such that 
the designated recipient is expected to receive only US$95, as 
indicated in the receipt. If the sender provided incorrect or 
insufficient information that resulted in non-delivery of the 
remittance transfer as requested, an error has occurred. If the 
sender chooses the remedy to have the remittance transfer provider 
make the funds available to the designated recipient pursuant to 
Sec.  1005.33(c)(2)(ii)(A)(2) and provides the corrected or 
additional information, the remittance transfer provider may not 
charge another transfer fee of US$10 to send the remittance transfer 
again with the corrected or additional information necessary to 
complete the transfer. If the intermediary institution charged a 
lifting fee of US$5 in the first unsuccessful remittance transfer 
attempt, the sender may choose to provide an additional amount to 
offset the US$5 lifting fee deducted in the first unsuccessful 
remittance transfer attempt and ensure that the designated recipient 
receives US$95 or may choose to resend the US$95 amount with the 
understanding that another US$5 fee will be deducted by the 
intermediary institution, as indicated in the receipt. Otherwise, if 
the intermediary institution did not charge a US$5 lifting fee in 
the first unsuccessful remittance transfer attempt, the provider 
must resend the original $100 transfer amount, and a US$5 lifting 
fee may be imposed by the intermediary institution, as indicated in 
the receipt.
    3. Designation of requested remedy. Under Sec.  1005.33(c)(2), 
the sender may choose to obtain a refund of the amount of funds that 
was not properly transmitted or delivered to the designated 
recipient or request redelivery of the amount appropriate to correct 
the error at no additional cost. Upon receiving the sender's 
request, the remittance transfer provider shall correct the error 
within one business day, or as soon as reasonably practicable, 
applying the same exchange rate, fees, and taxes stated in the 
disclosure provided under Sec.  1005.31(b)(2) or (3), if the sender 
requests delivery of the amount appropriate to correct the error. 
The remittance transfer provider may also request that the sender 
indicate the preferred remedy at the time the sender provides notice 
of the error. However, if the sender does not indicate the desired 
remedy at the time of providing notice of error, the remittance 
transfer provider must notify the sender of any available remedies 
in the report provided under Sec.  1005.33(c)(1) if the provider 
determines an error occurred.
    4. Default remedy. The provider may set a default remedy that 
the remittance transfer provider will provide if the sender does not 
designate a remedy within a reasonable time after the sender 
receives the report provided under Sec.  1005.33(c)(1). A provider 
that permits a sender to designate a remedy within 10 days after the 
provider has sent the report provided under Sec.  1005.33(c)(1) 
before imposing the default remedy is deemed to have provided the 
sender with a reasonable time to designate a remedy. In the case a 
default remedy is provided, the remittance transfer provider must 
correct the error within one business day, or as soon as reasonably 
practicable, after the reasonable time for the sender to designate 
the remedy has passed, consistent with Sec.  1005.33(c)(2).
    5. Amount appropriate to resolve the error. For purposes of the 
remedies set forth in Sec.  1005.33(c)(2)(i)(A), (c)(2)(i)(B), 
(c)(2)(ii)(A)(1), and (c)(2)(i)(A)(2) the amount appropriate to 
resolve the error is the specific amount of transferred funds that 
should have been received if the remittance transfer had been 
effected without error. The amount appropriate to resolve the error 
does not include consequential damages.
    6. Form of refund. For a refund provided under Sec.  
1005.33(c)(2)(i)(A), (c)(2)(ii)(A)(1), or (c)(2)(ii)(B), a 
remittance transfer provider may generally, at its discretion, issue 
a refund either in cash or in the same form of payment that was 
initially provided by the sender for the remittance transfer. For 
example, if the sender originally provided a credit card as payment 
for the transfer, the remittance transfer provider may issue a 
credit to the sender's credit card account in the appropriate 
amount. However, if a sender initially provided cash for the 
remittance transfer, a provider may issue a refund by check. For 
example, if the sender originally provided cash as payment for the 
transfer, the provider may mail a check to the sender in the amount 
of the payment.
    7. Remedies for incorrect amount paid. If an error under Sec.  
1005.33(a)(1)(i) occurred, the sender may request the remittance 
transfer provider refund the amount necessary to resolve the error 
under Sec.  1005.33(c)(2)(i)(A) or that the remittance transfer 
provider make the amount necessary to resolve the error available to 
the designated recipient at no additional cost under Sec.  
1005.33(c)(2)(i)(B).
    8. Correction of an error if funds not available by disclosed 
date. If the remittance transfer provider determines an error of 
failure to make funds available by the disclosed date occurred under 
Sec.  1005.33(a)(1)(iv), it must correct the error in accordance 
with Sec.  1005.33(c)(2)(ii)(A), as applicable, and refund any fees 
imposed for the transfer (unless the sender provided incorrect or 
insufficient information to the remittance transfer provider in 
connection with the remittance transfer), whether the fee was 
imposed by the provider or a third party involved in sending the 
transfer, such as an intermediary bank involved in sending a wire 
transfer or the institution from which the funds are picked up in 
accordance with Sec.  1005.33(c)(2)(ii)(B).
    9. Charges for error resolution. If an error occurred, whether 
as alleged or in a different amount or manner, the remittance 
transfer provider may not impose a charge related to any aspect of 
the error resolution process (including charges for documentation or 
investigation).
    10. Correction without investigation. A remittance transfer 
provider may correct an error, without investigation, in the amount 
or manner alleged by the sender, or otherwise determined, to be in 
error, but must comply with all other applicable requirements of 
Sec.  1005.33.

33(d) Procedures if Remittance Transfer Provider Determines No 
Error or Different Error Occurred

    1. Error different from that alleged. When a remittance transfer 
provider determines that an error occurred in a manner or amount 
different from that described by the sender, it must comply with the 
requirements of both Sec.  1005.33(c) and (d), as applicable. The 
provider may give the notice of correction and the explanation 
separately or in a combined form.

33(e) Reassertion of Error

    1. Withdrawal of error; right to reassert. The remittance 
transfer provider has no further error resolution responsibilities 
if the sender voluntarily withdraws the notice alleging an error. A 
sender who has withdrawn an allegation of error has the right to 
reassert the allegation unless the remittance transfer provider had 
already complied with all of the error resolution requirements 
before the allegation was withdrawn. The sender must do so, however, 
within the original 180-day period from the disclosed date of 
availability or, if applicable, the 60-day period for a notice of 
error asserted pursuant to Sec.  1005.33(b)(2).

33(f) Relation to Other Laws

    1. Concurrent error obligations. A financial institution that is 
also the remittance transfer provider may have error obligations 
under both Sec. Sec.  1005.11 and 1005.33. For example, if a sender 
asserts an error under Sec.  1005.11 with a remittance transfer 
provider that holds the sender's account, and the error is not also 
an error under Sec.  1005.33 (such as the omission of an EFT on a 
periodic statement), then the error-resolution provisions of Sec.  
1005.11 exclusively apply to the error. However, if a sender asserts 
an error under Sec.  1005.33 with a remittance transfer provider 
that holds the sender's account, and the error is also an error 
under Sec.  1005.11 (such as when the amount the sender requested to 
be

[[Page 6308]]

deducted from the sender's account and sent for the remittance 
transfer differs from the amount that was actually deducted from the 
account and sent), then the error-resolution provisions of Sec.  
1005.33 exclusively apply to the error.
    2. Holder in due course. Nothing in this section limits a 
sender's rights to assert claims and defenses against a card issuer 
concerning property or services purchased with a credit card under 
Regulation Z, 12 CFR 1026.12(c)(1), as applicable.
    3. Assertion of same error with multiple parties. If a sender 
receives credit to correct an error of an incorrect amount paid in 
connection with a remittance transfer from either the remittance 
transfer provider or account-holding institution (or creditor), and 
subsequently asserts the same error with another party, that party 
has no further responsibilities to investigate the error if the 
error has been corrected. For example, assume that a sender 
initially asserts an error with a remittance transfer provider with 
respect to a remittance transfer alleging that US$130 was debited 
from his checking account, but the sender only requested a 
remittance transfer for US$100, plus a US$10 transfer fee. If the 
remittance transfer provider refunds US$20 to the sender to correct 
the error, and the sender subsequently asserts the same error with 
his account-holding institution, the account-holding institution has 
no error resolution responsibilities under Regulation E because the 
error has been fully corrected. In addition, nothing in this section 
prevents an account-holding institution or creditor from reversing 
amounts it has previously credited to correct an error if a sender 
receives more than one credit to correct the same error. For 
example, assume that a sender concurrently asserts an error with his 
or her account-holding institution and remittance transfer provider 
for the same error, and the sender receives credit from the account-
holding institution for the error within 45 days of the notice of 
error. If the remittance transfer provider subsequently provides a 
credit of the same amount to the sender for the same error, the 
account-holding institution may reverse the amounts it had 
previously credited to the consumer's account, even after the 45-day 
error resolution period under Sec.  1005.11.

33(g) Error Resolution Standards and Recordkeeping Requirements

    1. Record retention requirements. As noted in Sec.  
1005.31(g)(2), remittance transfer providers are subject to the 
record retention requirements under Sec.  1005.13. Therefore, 
remittance transfer providers must retain documentation, including 
documentation related to error investigations, for a period of not 
less than two years from the date a notice of error was submitted to 
the provider or action was required to be taken by the provider. A 
remittance transfer provider need not maintain records of individual 
disclosures that it has provided to each sender; it need only retain 
evidence demonstrating that its procedures reasonably ensure the 
sender's receipt of required disclosures and documentation.

Section 1005.34--Procedures for Cancellation and Refund of Remittance 
Transfers

34(a) Sender Right of Cancellation and Refund

    1. Content of cancellation request. A request to cancel a 
remittance transfer is valid so long as the remittance transfer 
provider is able to identify the remittance transfer in question. 
For example, the sender could provide the confirmation number or 
code that would be used by the designated recipient to pick up the 
transfer or other identification number or code supplied by the 
remittance transfer provider in connection with the transfer, if 
such number or code is sufficient for the remittance transfer 
provider to identify the transfer. A remittance transfer provider 
may also request, or the sender may provide, the sender's email 
address instead of a physical address, so long as the remittance 
transfer provider is able to identify the transfer to which the 
request to cancel applies.
    2. Notice of cancellation right. Section 1005.31 requires a 
remittance transfer provider to include an abbreviated notice of the 
sender's right to cancel a remittance transfer on the receipt or 
combined disclosure given under Sec.  1005.31(b)(2) or (3). In 
addition, the remittance transfer provider must make available to a 
sender upon request, a notice providing a full description of the 
right to cancel a remittance transfer using language that is set 
forth in Model Form A-36 of Appendix A to this part or substantially 
similar language.
    3. Thirty-minute cancellation right. A remittance transfer 
provider must comply with the cancellation and refund requirements 
of Sec.  1005.34 if the cancellation request is received by the 
provider no later than 30 minutes after the sender makes payment. 
The provider may, at its option, provide a longer time period for 
cancellation. A provider must provide the 30-minute cancellation 
right regardless of the provider's normal business hours. For 
example, if an agent closes less than 30 minutes after the sender 
makes payment, the provider could opt to take cancellation requests 
through the telephone number disclosed on the receipt. The provider 
could also set a cutoff time after which the provider will not 
accept requests to send a remittance transfer. For example, a 
financial institution that closes at 5:00 p.m. could stop accepting 
payment for remittance transfers after 4:30 p.m.
    4. Cancellation request provided to agent. A cancellation 
request provided by a sender to an agent of the remittance transfer 
provider is deemed to be received by the provider under Sec.  
1005.34(a) when received by the agent.
    5. Payment made. For purposes of subpart B, payment is made, for 
example, when a sender provides cash to the remittance transfer 
provider or when payment is authorized.

34(b) Time Limits and Refund Requirements

    1. Form of refund. At its discretion, a remittance transfer 
provider generally may issue a refund either in cash or in the same 
form of payment that was initially provided by the sender for the 
remittance transfer. For example, if the sender originally provided 
a credit card as payment for the transfer, the remittance transfer 
provider may issue a credit to the sender's credit card account in 
the amount of the payment. However, if a sender initially provided 
cash for the remittance transfer, a provider may issue a refund by 
check. For example, if the sender originally provided cash as 
payment for the transfer, the provider may mail a check to the 
sender in the amount of the payment.
    2. Fees and taxes refunded. If a sender provides a timely 
request to cancel a remittance transfer, a remittance transfer 
provider must refund all funds provided by the sender in connection 
with the remittance transfer, including any fees and, to the extent 
not prohibited by law, taxes that have been imposed for the 
transfer, whether the fee or tax was assessed by the provider or a 
third party, such as an intermediary institution, the agent or bank 
in the recipient country, or a State or other governmental body.

Section 1005.35--Acts of Agents

    1. General. Remittance transfer providers must comply with the 
requirements of subpart B, including, but not limited to, providing 
the disclosures set forth in Sec.  1005.31 and providing any 
remedies as set forth in Sec.  1005.33, even if an agent or other 
person performs functions for the remittance transfer provider, and 
regardless of whether the provider has an agreement with a third 
party that transfers or otherwise makes funds available to a 
designated recipient.

Section 1005.36--Transfers Scheduled in Advance

    1. Applicability of subpart B. The requirements set forth in 
subpart B apply to remittance transfers subject to Sec.  1005.36, to 
the extent that Sec.  1005.36 does not modify those requirements. 
For example, the foreign language disclosure requirements in Sec.  
1005.31(g) and related commentary continue to apply to disclosures 
provided in accordance with Sec.  1005.36(a)(2).

36(c) Cancellation

    1. Scheduled remittance transfer. Section 1005.36(c) applies 
when a remittance transfer is scheduled by the sender at least three 
business days before the date of the transfer, whether the sender 
schedules a preauthorized remittance transfer or a one-time 
transfer. A remittance transfer is scheduled if it will require no 
further action by the sender to send the transfer after the sender 
requests the transfer. For example, a remittance transfer is 
scheduled at least three business days before the date of the 
transfer, and Sec.  1005.36(c) applies, where a sender on March 1 
requests a remittance transfer provider to send a wire transfer to 
pay a bill in a foreign country on March 15, if it will require no 
further action by the sender to send the transfer after the sender 
requests the transfer. A remittance transfer is not scheduled, and 
Sec.  1005.36(c) does not apply, where a transfer occurs more than 
three days after the date the sender requests the transfer solely 
due to the provider's processing time. The following are examples of 
when a sender has not scheduled a remittance transfer at least three 
business days before the date of

[[Page 6309]]

the remittance transfer, such that the cancellation rule in Sec.  
1005.34 applies.
    i. A sender on March 1 requests a remittance transfer provider 
to send a wire transfer to pay a bill in a foreign country on March 
3.
    ii. A sender on March 1 requests that a remittance transfer 
provider send a remittance transfer on March 15, but the provider 
requires the sender to confirm the request on March 14 in order to 
send the transfer.
    iii. A sender on March 1 requests that a remittance transfer 
provider send an ACH transfer, and that transfer is sent on March 2, 
but due to the time required for processing, funds will not be 
deducted from the sender's account until March 5.
    2. Cancelled preauthorized remittance transfers. For 
preauthorized remittance transfers, the provider must assume the 
request to cancel applies to all future preauthorized remittance 
transfers, unless the sender specifically indicates that it should 
apply only to the next scheduled remittance transfer.
    3. Concurrent cancellation obligations. A financial institution 
that is also a remittance transfer provider may have both stop 
payment obligations under Sec.  1005.10 and cancellation obligations 
under Sec.  1005.36. If a sender cancels a remittance transfer under 
Sec.  1005.36 with a remittance transfer provider that holds the 
sender's account, and the transfer is a preauthorized transfer under 
Sec.  1005.10, then the cancellation provisions of Sec.  1005.36 
exclusively apply.

Appendix A--Model Disclosure Clauses and Forms

* * * * *
    2. Use of forms. The appendix contains model disclosure clauses 
for optional use by financial institutions and remittance transfer 
providers to facilitate compliance with the disclosure requirements 
of sections Sec. Sec.  1005.5(b)(2) and (3), 1005.6(a), 1005.7, 
1005.8(b), 1005.14(b)(1)(ii), 1005.15(d)(1) and (2), 1005.18(c)(1) 
and (2), 1005.31, and 1005.36. The use of appropriate clauses in 
making disclosures will protect a financial institution and a 
remittance transfer provider from liability under sections 916 and 
917 of the act provided the clauses accurately reflect the 
institution's EFT services and the provider's remittance transfer 
services, respectively.
* * * * *
    4. Model forms for remittance transfers. The Bureau will not 
review or approve disclosure forms for remittance transfer 
providers. However, this appendix contains 12 model forms for use in 
connection with remittance transfers. These model forms are intended 
to demonstrate several formats a remittance transfer provider may 
use to comply with the requirements of Sec.  1005.31(b). Model Forms 
A-30 through A-32 demonstrate how a provider could provide the 
required disclosures for a remittance transfer exchanged into local 
currency. Model Forms A-33 through A-35 demonstrate how a provider 
could provide the required disclosures for dollar-to-dollar 
remittance transfers. These forms also demonstrate disclosure of the 
required content, in accordance with the grouping and proximity 
requirements of Sec.  1005.31(c)(1) and (2), in both a register 
receipt format and an 8.5 inch by 11 inch format. Model Form A-36 
provides long form model error resolution and cancellation 
disclosures required by Sec.  1005.31(b)(4), and Model Form A-37 
provides short form model error resolution and cancellation 
disclosures required by Sec.  1005.31(b)(2)(iv) and (vi). Model 
Forms A-38 through A-41 provide language for Spanish language 
disclosures.
    i. The model forms contain information that is not required by 
subpart B, such as a confirmation code and the sender's name and 
contact information. Additional information not required by subpart 
B may be presented on the model forms as permitted by Sec.  
1005.31(c)(4). Any additional information must be presented 
consistent with a remittance transfer provider's obligation to 
provide required disclosures in a clear and conspicuous manner.
    ii. Use of the model forms is optional. A remittance transfer 
provider may change the forms by rearranging the format or by making 
modifications to the language of the forms, in each case without 
modifying the substance of the disclosures. Any rearrangement or 
modification of the format of the model forms must be consistent 
with the form, grouping, proximity, and other requirements of Sec.  
1005.31(a) and (c). Providers making revisions that do not comply 
with this section will lose the benefit of the safe harbor for 
appropriate use of Model Forms A-30 to A-41.
    iii. Permissible changes to the language and format of the model 
forms include, for example:
    A. Substituting the information contained in the model forms 
that is intended to demonstrate how to complete the information in 
the model forms--such as names, addresses, and Web sites; dates; 
numbers; and State-specific contact information--with information 
applicable to the remittance transfer.
    B. Eliminating disclosures that are not applicable to the 
transfer, as permitted under Sec.  1005.31(b).
    C. Correcting or updating telephone numbers, mailing addresses, 
or Web site addresses that may change over time.
    D. Providing the disclosures on a paper size that is different 
from a register receipt and 8.5 inch by 11 inch formats.
    E. Adding a term substantially similar to ``estimated'' in close 
proximity to the specified terms in Sec.  1005.31(b)(1) and (2), as 
required under Sec.  1005.31(d).
    F. Providing the disclosures in a foreign language, or multiple 
foreign languages, subject to the requirements of Sec.  1005.31(g).
    G. Substituting cancellation language to reflect the right to a 
cancellation made pursuant to the requirements of Sec.  1005.36(c).
    iv. Changes to the model forms that are not permissible include, 
for example, adding information that is not segregated from the 
required disclosures, other than as permitted by Sec.  
1005.31(c)(4).

    Dated: January 23, 2012.
Richard Cordray,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2012-1728 Filed 1-30-12; 11:15 am]
BILLING CODE 4810-AM-P
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