Vol. 79 Friday, 

No. 80 April 25, 2014 

Part VI 

Bureau of Consumer Financial Protection 

12 CFR Part 1005 

Electronic Fund Transfers (Regulation E); Proposed Rule 

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23234 Federal Register / Vol. 79, No. 80 / Friday, April 25, 2014 / Proposed Rules 

1Public Law 111–203 was signed into law on July 

21, 2010. 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1005 

[Docket No. CFPB–2014–0008] 

RIN 3170–AA45 

Electronic Fund Transfers (Regulation 

E) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Proposed rule; request for 

public comment. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

proposing to amend subpart B of 

Regulation E, which implements the 

Electronic Fund Transfers Act, and the 

official interpretation to the regulation. 

The proposal would extend a temporary 

provision that permits insured 

institutions to estimate certain pricing 

disclosures pursuant to section 1073 of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act. Absent 

further action by the Bureau, that 

exception expires on July 21, 2015. 

Based on a preliminary determination 

that the termination of the exception 

would negatively affect the ability of 

insured institutions to send remittance 

transfers, the Bureau is proposing to 

extend the temporary exception by five 

years from July 21, 2015, to July 21, 

2020. The Bureau is also proposing 

several clarifying amendments and 

technical corrections to the final rule 

and commentary. 

DATES: Comments must be received on 

or before May 27, 2014. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2014– 

0008 or RIN 3170–AA45, by any of the 

following methods: 

• Electronic: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail/Hand Delivery/Courier: 

Monica Jackson, Office of the Executive 

Secretary, Consumer Financial 

Protection Bureau, 1700 G Street NW., 

Washington, DC 20552. 

Instructions: All submissions should 

include the agency name and docket 

number or Regulatory Information 

Number (RIN) for this rulemaking. 

Because paper mail in the Washington, 

DC area and at the Bureau is subject to 

delay, commenters are encouraged to 

submit comments electronically. In 

general, all comments received will be 

posted without change to http://

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1700 G Street 

NW., Washington, DC 20552, on official 

business days between the hours of 10 

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

make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments 

generally will not be edited to remove 

any identifying or contact information. 

FOR FURTHER INFORMATION CONTACT: Jane 

G. Raso, Jennifer Kozma, and Shiri Wolf, 

Counsels; Eric Goldberg, Senior 

Counsel, Office of Regulations, at (202) 

435–7700 or CFPB_RemittanceRule@

consumerfinance.gov (please do not 

submit comments on the proposal to 

this email address). Please also visit the 

following Web site for additional 

information about the remittance rule: 

http://www.consumerfinance.gov/

remittances-transfer-rule-amendmentto-regulation-e/. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Proposed Rule 

Section 1073 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (Dodd-Frank Act), Public Law 111– 

203, 124 Stat. 1376 (2010), amended the 

Electronic Fund Transfers Act (EFTA) 

by establishing a new and 

comprehensive consumer protection 

regime for remittance transfers sent by 

consumers in the United States to 

individuals and businesses in foreign 

countries. The statute defines 

‘‘remittance transfer’’ to include most 

electronic transfers of funds sent by 

consumers in the United States to 

recipients in other countries. Between 

February 2012 and August 2013, the 

Bureau issued several final rules 

concerning remittance transfers 

pursuant to the Dodd-Frank Act 

(collectively, the 2013 Final Rule or the 

Remittance Rule). The 2013 Final Rule 

took effect on October 28, 2013. 

This document proposes several 

amendments to the provisions adopted 

by the 2013 Final Rule to refine, clarify, 

or revise regulatory provisions and 

official interpretations previously 

adopted by the Bureau. 

A. Temporary Exception 

EFTA section 919(a)(4) creates a 

temporary exception that allows 

covered remittance transfer providers to 

estimate fees and exchange rates in 

certain circumstances; the exception 

expires five years after the enactment of 

the Dodd-Frank Act, or July 21, 2015.1

However, if the Bureau determines that 

expiration of the temporary exception 

would negatively affect the ability of 

insured institutions to send remittances 

to locations in foreign countries, the 

statute permits the Bureau to extend the 

temporary exception for up to ten years 

after enactment of the Dodd-Frank Act 

(i.e., to July 21, 2020). See EFTA section 

919(a)(4)(B). 

The Bureau is proposing to extend the 

Regulation E estimation provision that 

implements this statutory provision, 

§ 1005.32(a) in the 2013 Final Rule. 

Section 1005.32(a) allows remittance 

transfer providers to estimate certain 

third-party fees and exchange rates 

associated with a remittance transfer if 

certain conditions are met, namely, that: 

(1) The provider is an insured 

depository institution or credit union; 

(2) the remittance transfer is sent from 

the sender’s account with the provider; 

and (3) the provider cannot determine 

the exact amounts for reasons outside of 

its control. 

To assist the Bureau in determining 

the appropriateness of extending the 

temporary exception, Bureau staff 

conducted outreach, including 

interviewing approximately 35 industry 

and consumer group stakeholders after 

the 2013 Final Rule took effect to gather 

information on the remittance transfer 

market; industry practices, including 

the extent of reliance on the temporary 

exception; and the impact of the 

exception and its potential expiration 

on providers and consumers. 

Based on this outreach and other 

research and analysis, the Bureau has 

preliminarily determined that the 

termination of the temporary exception 

would negatively affect the ability of 

insured institutions to send remittance 

transfers. Thus, the Bureau is proposing 

to amend § 1005.32(a)(2) by extending 

the temporary exception by five years 

from July 21, 2015, to July 21, 2020. 

B. Additional Clarifications 

Additionally, the Bureau is proposing 

several clarificatory amendments and 

technical corrections to the Remittance 

Rule. First, the Bureau seeks comment 

on whether (and if so, how) it should 

clarify how U.S. military installations 

abroad are treated for purposes of the 

Remittance Rule. The Bureau believes 

there is a potential for confusion in their 

treatment because the Remittance Rule 

does not expressly address their status. 

Second, the Bureau proposes to clarify 

that whether a transfer from an account 

is for personal, family, or household 

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purposes (and thus, whether the transfer 

could be a remittance transfer) is 

determined by ascertaining the purpose 

for which the account was created. 

Third, the Bureau proposes to clarify 

that faxes are considered writings for 

purposes of the Remittance Rule, and 

that, in certain circumstances, a 

remittance transfer provider may 

provide oral disclosures after receiving 

a remittance inquiry from a consumer in 

writing. Finally, the Bureau is proposing 

to clarify two of the rule’s error 

resolution provisions. More specifically, 

the Bureau is proposing to clarify what 

constitutes an ‘‘error’’ caused by delays 

related to fraud and related screening, 

and to clarify the remedies for certain 

errors. 

II. Background 

A. Types of Remittance Transfers 

As discussed in more detail in the 

2013 Final Rule, consumers can choose 

among several methods of transferring 

money to foreign countries. 77 FR 6193 

(Feb. 7, 2012). These methods generally 

involve either closed network or open 

network systems, although hybrids 

between open and closed networks also 

exist. Consistent with EFTA section 919, 

the 2013 Final Rule applies to 

remittance transfers sent through any 

electronic mechanism, including closed 

network and open network systems, or 

some hybrid of the two. As detailed 

below, in practice, the situations in 

which the temporary exception applies 

frequently involve transfers remitted 

through open networks. 

Closed Networks and Money 

Transmitters 

In a closed network, a remittance 

transfer provider uses either its own 

operations or a network of agents or 

other partners to collect funds from 

senders in the United States and 

disburse those funds to designated 

recipients abroad. Through the 

provider’s contractual arrangements 

with those agents or other partners, the 

provider can exercise some control over 

the remittance transfer from end to end, 

including to set, limit, and/or learn of 

fees, exchange rates, and other terms of 

service. Accordingly, the Bureau 

expects that a provider that is sending 

remittance transfers using some version 

of a closed network is likely able to 

leverage its control and knowledge of 

the transfer terms in order to be able to 

disclose the exact exchange rates and 

third-party fees that apply to remittance 

transfers. 

Non-depository institutions, known 

generally as money transmitters, are the 

type of remittance transfer providers 

that most frequently use closed 

networks to send remittance transfers. 

Remittance transfers sent through 

money transmitters can be funded by 

the sender and received abroad using a 

variety of payments devices. However, 

the Bureau believes that most 

remittance transfers sent by money 

transmitters are currently sent and 

received abroad in cash, rather than as, 

for example, debits from and/or direct 

deposits to accounts held by depository 

institutions or credit unions. 

Open Networks and Wire Transfers 

As the data discussed below 

indicates, the most common form of 

open network remittance transfer is a 

wire transfer, an electronically 

transmitted order that directs a 

receiving institution to deposit funds 

into an identified beneficiary’s account. 

Unlike closed network transactions, 

which generally can only be sent to 

entities that have signed on to work 

with the specific provider in question, 

wire transfers can reach most banks (or 

other similar institutions) worldwide 

through national payment systems that 

are connected through correspondent 

and other intermediary bank 

relationships. Unlike closed networks, 

open networks are typically used to 

send funds from and to accounts at 

depository institutions, credit unions, or 

similar financial institutions. The 

Bureau believes that the great majority 

of open network transfers are provided 

by insured institutions (including credit 

unions) and that, in turn, open network 

transfers are the most common type of 

remittance transfer provided by insured 

institutions and broker-dealers. 

However, some money transmitters may 

also use open networks to send some or 

all of their remittance transfers. 

In an open network, the remittance 

transfer provider with which the 

consumer interfaces, i.e., the originating 

entity, typically does not have control 

over, or a relationship with, all of the 

participants in the remittance transfer. 

The provider may communicate 

indirectly with the receiving institution 

by sending funds and payment 

instructions to a correspondent 

institution, which will then transmit the 

instructions and funds to the recipient 

institution directly, such as in the form 

of a book transfer, or indirectly through 

other intermediary institutions (a serial 

payment). Alternatively, under certain 

circumstances, the sending institution 

may send payment instructions directly 

to the recipient institution, but it will 

nevertheless rely on a network of 

intermediary bank relationships to send 

funds for settlement (a cover payment). 

In some cases, depending on how the 

transfer is sent, any one of the 

intermediary institutions through which 

the remittance transfer passes may 

deduct a fee from the principal amount 

(sometimes referred to as a lifting fee). 

Likewise, if the originating institution 

does not conduct any necessary 

currency exchange, any institution 

through which the funds pass 

potentially could perform the currency 

exchange before deposit into the 

designated recipient’s account. 

Institutions involved in open network 

transfers may learn about each other’s 

practices regarding fees or other matters 

through contractual or other 

relationships, through experience in 

sending such transfers over time, 

through reference materials, through 

information provided by the consumer, 

or through surveying other institutions. 

However, at least until the 

implementation of the 2013 Final Rule, 

intermediary and recipient institutions 

did not, as a matter of uniform practice, 

communicate with originating entities 

regarding the fees and exchange rates 

that institutions might apply to 

transfers. Further, as the Bureau has 

previously noted, the communication 

systems used to send these transfers 

typically do not facilitate two-way, realtime transmission of information about 

the exchange rate and fees associated 

with the transfers sent through them. 

See 78 FR 30662, 30663 (May 23, 2013) 

(May 2013 Final Rule). As is explained 

in more detail below, the Bureau 

believes that this is largely due to these 

characteristics of open network systems 

and that insured institutions using those 

networks are sometimes relying on the 

temporary exception to estimate 

exchange rates and/or intermediary fees 

(known as covered third-party fees in 

the Remittance Rule). 

International ACH 

In recent years, some depository 

institutions and credit unions have 

begun to send remittance transfers 

through the automated clearing house 

(ACH) system. In the February 2012 

Final Rule, the Bureau explained that it 

considered international ACH transfers 

to be open network transactions, 

because, 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. The Bureau acknowledged, 

however, that international ACH 

transfers also share some characteristics 

of closed network transfers, in that the 

agreements among gateway ACH 

operators and the United States and 

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2We lack data on the volume of remittance 

transfers sent by broker-dealers. 

3Two additional permanent exceptions, in 

§ 1005.32(b)(2) and (b)(3) are discussed below. 

foreign entities involved may be used to 

control the amount and type of fees that 

are charged and/or exchange rates that 

are applied in connection with a 

remittance transfer. To maintain 

consistency with the February 2012 

Final Rule, international ACH transfers 

are discussed herein as open network 

transactions. 

Available Remittance Transfer Market 

Share Data 

Based on available information and as 

discussed in greater detail below, the 

Bureau believes that closed network 

transactions make up the great majority 

of the remittance transfers sent. 

Relatedly, the Bureau believes that, 

collectively, money transmitters send 

far more remittance transfers each year 

than depository institutions and credit 

unions. The Bureau recently estimated 

that money transmitters annually send 

about 150 million international money 

transfers, most of which the Bureau 

believes would likely qualify as 

remittance transfers pursuant to 

§ 1005.30(e) and, thus, be covered by the 

Remittance Rule. See 79 FR 5302, 5306. 

(Jan. 31, 2014). By comparison, 

information reported by credit unions to 

the National Credit Union 

Administration (NCUA) suggests that 

credit unions may have collectively sent 

less than 1% of this total in 2013 (in 

fact, less than 1 million remittance 

transfers combined). The Bureau 

estimates that depository institutions 

send many more remittance transfers 

than credit unions, due to the relative 

collective size of depository institutions 

and credit unions, but still far fewer 

than money transmitters. For example, 

based on its interviews of some 

depository institutions, the Bureau 

roughly estimates that depository 

institutions collectively may send only 

10 percent or less of the estimated 150 

million remittance transfers sent by 

money transmitters. On the other hand, 

the Bureau believes that the average size 

of the transfers sent by depository 

institutions and credit unions is larger 

than the average size of a remittance 

transfer sent by a money transmitter; a 

transfer sent by a depository institution 

or credit union may be in the thousands 

of dollars, while the Bureau estimates 

that the average size of remittance 

transfers sent by money transmitters 

average in the hundreds of dollars. See 

79 FR at 5306.2

B. Section 1073 of the Dodd-Frank Act 

Section 1073 of the Dodd-Frank Act 

amended the EFTA by establishing a 

new consumer protection regime for 

remittance transfers sent by consumers 

in the United States to individuals and 

businesses in foreign countries. For 

covered transactions sent by remittance 

transfer providers, section 1073 created 

a new EFTA section 919 and generally 

requires: (i) The disclosure of the actual 

exchange rate and remitted amount to 

be received prior to and at the time of 

payment by the consumer; (ii) 

cancelation and refund rights; (iii) the 

investigation and remedy of errors by 

providers; and (iv) liability standards for 

providers for the acts of their agents. 15 

U.S.C. 1693o–1. 

EFTA section 919 provides two 

exceptions to the requirement that 

providers disclose actual amounts.3 The 

first, the temporary exception, is an 

accommodation for insured depository 

institutions and credit unions, in 

apparent recognition of the fact that 

these institutions might need additional 

time to develop the necessary systems 

or protocols to disclose the exchange 

rates and/or covered third-party fees 

that might be imposed on a remittance 

transfer. The temporary exception 

permits an insured institution that is 

sending a remittance transfer from the 

sender’s account to provide reasonably 

accurate estimates of the amount of 

currency to be received where that 

institution is ‘‘unable to know [the 

amount], for reasons beyond its control’’ 

at the time that the sender requests a 

transfer through an account held with 

the institution. EFTA section 

919(a)(4)(A). The temporary exception 

sunsets five years from the date of 

enactment of the Dodd-Frank Act (i.e., 

July 21, 2015), but permits the Bureau 

to extend that date for no more than five 

years (i.e., July 21, 2020) if it determines 

that termination of the temporary 

exception would negatively affect the 

ability of depository institutions and 

credit unions to send remittance 

transfers. EFTA section 919(a)(4)(B). 

The second statutory exception is 

permanent; it provides that if the 

Bureau determines that a recipient 

country does not legally allow, or that 

the method by which the 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). 

C. Remittance Rulemakings Under the 

Dodd-Frank Act 

The Bureau published three final 

rules in 2012 and two final rules in 2013 

to implement section 1073 of the DoddFrank Act. These five final rules are 

summarized below. 

The 2012 Final Rules 

The Board of Governors of the Federal 

Reserve System (the Board) first 

proposed in May 2011 to amend 

Regulation E to implement the 

remittance transfer provisions in section 

1073 of the Dodd-Frank Act. 76 FR 

29902 (May 23, 2011). On February 7, 

2012, the Bureau finalized the Board’s 

proposal in the February 2012 Final 

Rule as authority to implement the new 

Dodd-Frank Act provisions amending 

the EFTA had transferred from the 

Board to the Bureau on July 21, 2011. 

See 12 U.S.C. 5581(bb)(1); 12 U.S.C. 

5481(12) (defining ‘‘enumerated 

consumer laws’’ to include the EFTA). 

The February 2012 Final Rule 

includes provisions that generally 

require a remittance transfer provider to 

provide to a sender a written prepayment disclosure containing detailed 

information about the transfer requested 

by the sender, including, among other 

things, the exchange rate, certain fees 

and taxes, and the amount to be 

received by the designated recipient. In 

addition to the pre-payment disclosure, 

the provider also must furnish to a 

sender a written receipt when payment 

is made for the transfer. The receipt 

must include the information provided 

on the pre-payment disclosure, as well 

as additional information, such as the 

date of availability of the funds, the 

designated recipient’s name and, if 

provided, contact information, and 

information regarding the sender’s error 

resolution and cancellation rights. In 

some cases, providers may provide 

these disclosures orally or via text 

message. § 1005.31(a)(3)–(5). As is noted 

below, the Bureau subsequently 

modified provisions regarding the 

disclosure of foreign taxes and certain 

recipient institution fees in its May 2013 

Final Rule. 

The February 2012 Final Rule 

generally requires that disclosures state 

the actual exchange rate, if any, that will 

apply to the transfer and the actual 

amount that will be received by the 

designated recipient of a remittance 

transfer, unless an exception applies. 

Section 1005.32(a) implements the 

temporary exception and the provision 

that is now § 1005.32(b)(1) implements 

the permanent statutory exception. As 

adopted, this permanent exception 

permits a remittance transfer provider to 

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4See http://files.consumerfinance.gov/f/201209_

CFPB_Remittance-Rule-Safe-Harbor-CountriesList.pdf. The Bureau republished the list on 

November 3, 2013. 78 FR 66251 (Nov. 5, 2013). The 

list contains countries whose laws the Bureau 

believes prevent providers from determining, at the 

time the required disclosures must be provided, the 

exact exchange rate for a transfer involving a 

currency exchange. However, if the provider has 

information that a country’s laws or the method by 

which transactions are conducted in that country 

permit a determination of the exact disclosure 

amount, the provider may not rely on the Bureau’s 

list. When the Bureau first issued the list of such 

countries on September 26, 2012, the Bureau stated 

that the list is subject to change, and invited the 

public to suggest additional countries to add to the 

list. The Bureau continues to accept comment on 

potential changes to this list. 

5On July 10, 2012, the Bureau also published a 

technical correction to the February 2012 Final 

Rule. See 77 FR 40459 (July 10, 2012). 

6The comments submitted regarding this 

proposed rule are available at https://

federalregister.gov/a/2014-01606. 

7Available at http://www.consumerfinance.gov/ 

remittances-transfer-rule-amendment-toregulation-e/. 

8Available at http://www.consumerfinance.gov/

blog/category/remittances/. 

rely on a list of countries published by 

the Bureau to determine whether 

estimates may be provided.4

The February 2012 Final Rule also 

implements EFTA sections 919(d) and 

(f), which direct the Bureau to 

promulgate error resolution standards 

and rules regarding appropriate 

cancellation and refund policies, as well 

as standards of liability for remittance 

transfer providers. 

The Bureau published an amendment 

to the February 2012 Final Rule on 

August 20, 2012.5 The amendments 

adopted in the August 2012 Final Rule 

include a safe harbor defining which 

persons are not remittance transfer 

providers for purposes of the 

Remittance Rule because they do not 

provide remittance transfers in the 

normal course of their business. The 

August 2012 Final Rule also modified 

several aspects of the February 2012 

Final Rule by adding provisions 

governing remittance transfers that are 

scheduled before the date of transfer, 

including a provision allowing 

estimation for transfers scheduled 

before the date of transfer. See 

§ 1005.32(b)(2). The 2012 Final Rule 

originally had an effective date of 

February 7, 2013, but on January 29, 

2013, the Bureau temporarily delayed 

the February 7, 2013 effective date. See 

78 FR 6025 (Jan. 29, 2013). 

The 2013 Final Rule 

Following the publication of the 

February 2012 Final Rule, the Bureau 

engaged in dialogue with both industry 

and consumer groups regarding 

implementation efforts and compliance 

concerns. As an outgrowth of those 

conversations, the Bureau decided to 

propose amendments to specific aspects 

of the 2012 Final Rule in a notice of 

proposed rulemaking published on 

December 31, 2012. See 77 FR 77188 

(Dec. 31, 2012). 

The Bureau finalized these proposed 

amendments in the May 2013 Final 

Rule. The May 2013 Final Rule modifies 

the 2012 Final Rule to make optional, in 

certain circumstances, the requirement 

to disclose fees imposed by a designated 

recipient’s institution (referred to as 

non-covered third-party fees) and the 

requirement to disclose taxes collected 

by a person other than the remittance 

transfer provider. In place of these two 

former requirements, the May 2013 

Final Rule requires, where applicable, 

disclaimers to be added to the rule’s 

disclosures indicating that the recipient 

may receive less than the disclosed total 

due to the fees and taxes for which 

disclosure is now optional. The May 

2013 Final Rule also created an 

additional permanent exception that 

allows providers to estimate, if they 

choose to, non-covered third-party fees 

and taxes collected by a person other 

than the provider. See § 1005.32(b)(3). 

Finally, the May 2013 Final Rule 

revised the error resolution provisions 

that apply when a remittance transfer is 

not delivered to a designated recipient 

because the sender provided incorrect 

or insufficient information. On August 

14, 2013, the Bureau adopted a 

clarificatory amendment and a technical 

correction to the May 2013 Final Rule. 

78 FR 49365 (Aug. 14, 2013). The 2013 

Final Rule became effective on October 

28, 2013. 

Notice of Proposed Rulemaking 

Regarding Larger Participants 

Section 1024 of the Dodd-Frank Act 

establishes that the Bureau may 

supervise certain nonbank covered 

persons that are ‘‘larger participants’’ in 

consumer financial markets as defined 

by rule. 12 U.S.C. 5514(a)(1)(B). 

Pursuant to this authority, the Bureau 

published a proposal on January 31, 

2014, to identify a nonbank market for 

international money transfers and 

define ‘‘larger participants’’ of this 

market that would be subject to the 

Bureau’s supervisory program. 79 FR 

5302. Specifically, the proposal would 

extend Bureau supervisory authority to 

any nonbank international money 

transfer provider that has at least one 

million aggregate annual international 

money transfers to determine 

compliance with, among other things, 

the Remittance Rule. The comment 

period on this proposal ended on April 

1, 2014.6

D. Implementation Initiatives for the 

2013 Final Rule and Related Activities 

The Bureau has been actively engaged 

in an initiative to support 

implementation of the 2013 Final Rule. 

For example, the Bureau has established 

a Web page that contains links to 

various industry and consumer 

resources.7 These resources include a 

small entity compliance guide that 

provides a plain-language summary of 

the 2013 Final Rule and highlights 

issues that businesses, in particular 

small businesses, may want to consider 

when implementing the 2013 Final 

Rule. A video overview of the rule and 

its requirements is also available. 

Consumer resources the Bureau has 

created include answers to frequently 

asked questions regarding international 

money transfers and materials that 

consumer groups and other stakeholders 

can use to educate consumers about the 

new rights provided to them by the 

Remittance Rule.8 Some of these 

resources are available in languages 

other than English. The Bureau has also 

conducted media interviews in English 

and Spanish and participated in other 

public engagements to publicize the 

new consumer rights available under 

the Remittance Rule. Further, the 

Bureau provides ongoing guidance 

support to assist industry and others 

with interpreting the 2013 Final Rule 

and has spoken at conferences and other 

fora where it both provided additional 

guidance on the Remittance Rule and 

learned from providers and others about 

efforts to comply with the Rule. 

III. Efforts To Reach a Preliminary 

Determination Regarding the 

Temporary Exception 

As noted, EFTA section 919(a)(4)(B) 

permits the Bureau to issue a rule to 

extend the temporary exception if it 

determines that the termination of the 

exception on July 21, 2015, would 

negatively affect the ability of insured 

institutions to send remittance transfers. 

In the February 2012 Final Rule, the 

Bureau noted that industry commenters 

urged the Bureau at that time to make 

the temporary exception permanent, or 

in the alternative, extend the exception 

to July 21, 2020. The Bureau declined to 

extend the exception in the 2012 

February Final Rule because it believed 

then that it would be premature to make 

a determination on the extension prior 

to the rule’s release and implementation 

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9The Office of Management and Budget (OMB) 

control number for this information collection is 

3170–0032. 

10See Consumer Finance Protection Bureau 

Request for Approval Under the Generic Clearance: 

Compliance Costs and Other Effects of Regulation, 

available at http://www.reginfo.gov/public/do/

PRAViewIC?ref_nbr=201205-3170- 

003&icID=209232. 

11Staff of the Securities and Exchange 

Commission (SEC) wrote a no-action letter on 

December 14, 2012 that concludes it will not 

recommend enforcement actions to the SEC under 

Regulation E if a broker-dealer provides disclosures 

as though the broker-dealer were an insured 

institution for purposes of the temporary exception. 

The letter is available at http://www.sec.gov/

divisions/marketreg/mr-noaction/2012/financialinformation-forum-121412-rege.pdf. 12See generally http://www.ncua.gov/dataapps/

qcallrptdata/Pages/default.aspx. 13See FDIC Fin. Inst. Letter 4–2014 (Jan. 24, 2014) 

(‘‘FIL 4–2014’’). 

14See 79 FR 2509 (Jan. 14, 2014); FIL 4–2014. 

and three years in advance of the July 

2015 sunset date. See 77 FR 6193, 6202. 

Since the Bureau issued the February 

2012 Final Rule, the Bureau has 

supplemented its understanding of the 

remittance transfer market through 

information received in the course of 

subsequent rulemakings, additional 

research and monitoring of the market, 

and initiatives related to the 

implementation of the 2013 Final Rule. 

The additional research and monitoring 

have included series of in-depth 

conversations with several institutions 

about how they have implemented the 

requirements of the 2013 Final Rule, 

participation in industry conferences 

and related meetings, as well as related 

monitoring efforts. In addition and as 

noted above, Bureau staff conducted 

interviews with approximately 35 

industry stakeholders and consumer 

groups after the Remittance Rule took 

effect.9 Through these interviews, the 

Bureau gathered information regarding 

remittance transfer providers’ reliance 

on the temporary exception for certain 

remittance transfers and whether viable 

alternatives currently exist for those 

transfers. The Bureau conducted the 

interviews in order to build on the 

Bureau’s existing knowledge and assist 

it in making a determination as to 

whether expiration of the temporary 

exception on July 21, 2015, would 

negatively affect the ability of insured 

institutions to send remittance 

transfers.10

The remittance transfer providers and 

service providers that the Bureau 

contacted included community banks, 

nonbank money transmitters, regional 

banks, credit unions, nonbank service 

providers, correspondent banks, brokerdealers, and very large banks that send 

consumer remittance transfers on behalf 

of their retail customers and on behalf 

of other providers. For example, the 

Bureau contacted providers, such as 

broker-dealers, that the Bureau believed 

send transfers via open networks, 

similar to those used by many insured 

institutions.11 Although the temporary 

exception only applies to insured 

institutions, the Bureau believed that 

interviewing certain nonbank money 

transmitters that send open network 

transfers without the advantage of the 

temporary exception would help the 

Bureau better understand what methods 

exist for providing exact disclosures for 

open network transfers because 

nonbank money transmitters cannot rely 

on the temporary exception. The 

correspondent banks and other service 

providers the Bureau contacted include 

corporate credit unions, bankers’ banks 

and foreign banks that offer 

correspondent banking services to U.S. 

providers, or act as intermediaries in the 

payment clearing and settlement chain. 

Insofar as the conversations were 

voluntary, the Bureau did not ultimately 

speak with every institution it 

contacted. 

As noted above, the Bureau has also 

reviewed data collected by the NCUA 

regarding remittance transfers through 

its Call Report and Credit Union Profile 

forms.12 These data regard the number 

and types of remittances sent by credit 

unions, the methods by which credit 

unions send remittance transfers, and 

the payment systems credit unions 

utilize to send remittance transfers. In 

addition, the Bureau expects to be able 

to review data about remittance transfer 

practices collected from depository 

institutions through the Federal 

Financial Institutions Examination 

Council (FFIEC)’s Consolidated Reports 

of Conditions and Income (FFIEC Call 

Report), starting with the reports 

regarding the quarter ending on March 

31, 2014.13 Starting with the report for 

the quarter ending March 31, 2014, the 

FFIEC Call Report form will require 

reporting depository institutions to 

provide select information regarding 

remittance transfers including, as 

relevant here, information on the types 

of remittance transfers provided and, for 

institutions that provide more than 100 

transfers per year, the number and 

dollar value of remittance transfers sent 

by the reporting institutions in their 

capacity as remittance transfer 

providers. The report will also include 

information on the frequency with 

which a reporting institution uses the 

temporary exception in its role as a 

provider.14

The Bureau notes that the NCUA and 

FFIEC call report data do not cover 

every practice or type of remittance 

transfer provider and service provider 

that the Bureau has researched through 

its market monitoring and research 

efforts. However, because some call 

report data regarding remittance 

transfers will be available for every 

depository institution and credit union 

reporting to the NCUA and FFIEC, 

respectively, the call reports will 

provide a valuable, if limited, set of 

comprehensive quantitative data about 

two categories of remittance transfer 

providers (depository institutions and 

credit unions) that complement the 

more in-depth qualitative information 

about certain providers and service 

providers that the Bureau has been able 

to gather through interviews and other 

sources. Furthermore, the Bureau notes 

that the extent of utilization of the 

temporary exception is not the only, nor 

necessarily the primary factor that it 

will consider in determining whether to 

extend the temporary exception under 

EFTA section 919(a)(4)(B). 

Finally, the Bureau also notes that its 

conversations included consultations 

with a number of consumer groups to 

attempt to identify the effect, if any, that 

estimating covered third-party fees and 

exchange rates has on consumers as 

well as the potential effect on 

consumers of the expiration of the 

temporary exception. 

IV. Legal Authority 

Section 1073 of the Dodd-Frank Act 

created a new section 919 of the EFTA 

and requires remittance transfer 

providers to provide disclosures to 

senders of remittance transfers, 

pursuant to rules prescribed by the 

Bureau. As discussed above, the DoddFrank Act established a temporary 

exception in amending the EFTA such 

that, subject to rules prescribed by the 

Bureau, insured depository institutions 

and credit unions may provide 

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. EFTA section 

919(a)(4)(A). The Dodd-Frank Act 

further establishes that the exception 

shall terminate five years from the date 

of enactment of the Dodd-Frank Act 

(i.e., July 21, 2015), unless the Bureau 

determines that the termination of the 

exception would negatively affect the 

ability of depository institutions and 

credit unions to send remittance 

transfers, in which case the Bureau may 

extend the application of the exception 

to not longer than ten years after the 

enactment of the Dodd-Frank Act (i.e., 

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15Under the 2013 Final Rule, a ‘‘designated 

recipient’’ is any person specified by the sender as 

the authorized recipient of a remittance transfer to 

be received at a location in a foreign country 

(§ 1005.30(c)) and 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 (§ 1005.30(g)). 

16Available at http://www.acq.osd.mil/ie/

download/bsr/bsr2010baseline.pdf. 

July 21, 2020). EFTA section 

919(a)(4)(B). 

In addition, EFTA section 919(d) 

provides for specific error resolution 

procedures and directs the Bureau to 

promulgate rules regarding appropriate 

cancellation and refund policies. 

Finally, EFTA section 919(f) requires 

the Bureau to establish standards of 

liability for remittance transfer 

providers, including those providers 

that act through agents. Except as 

described below, the proposed rule is 

proposed under the authority provided 

to the Bureau in EFTA section 919, and 

as more specifically described in this 

Supplementary Information. 

V. Section-by-Section Analysis 

Section 1005.30 Remittance Transfer 

Definitions 

1005.30(c) Designated Recipient & 

1005.30(g) Sender 

Application of the Remittance Rule to 

U.S. Military Installations Abroad 

The 2013 Final Rule only applies 

when a sender located in a ‘‘State’’ 

sends funds to a designated recipient at 

a location in a ‘‘foreign country.’’ 15 See 

§ 1005.30(c) and (g). The commentary to 

the definition of designated recipient 

further explains that receipt of money at 

a location in a foreign country depends 

on whether the funds are received at a 

location physically outside of any State. 

See comment 30(c)–2.i. In the case of 

remittance transfers to or from an 

account, however, the 2013 Final Rule 

and commentary look to the location of 

the account rather than the account 

owner’s physical location at the time of 

transfer. See comment 30(c)–2.ii 

(whether location is in a foreign 

country); comment 30(g) (whether 

consumer is located in a State). The 

Bureau understands that there is a 

potential for confusion about how these 

concepts in the 2013 Final Rule apply 

to transfers of funds to and from U.S. 

military installations that are within 

foreign countries because the 2013 Final 

Rule does not expressly address such 

transfers. 

According to a 2010 Department of 

Defense report, the United States had 

662 military installations in 90 foreign 

countries.16 Many of these installations, 

particularly larger installations and 

those in more remote locations, host 

financial institutions that provide 

services for the electronic transfer of 

funds. These financial institutions may 

include depository institutions, credit 

unions, and agents of nonbank money 

transmission businesses. The Bureau 

understands that, typically, these 

depository institutions or credit unions 

are branches of U.S. institutions 

operating under U.S. banking and other 

laws, and that servicemembers (and 

others) may establish accounts at such 

institutions in the United States. The 

Bureau does not know, however, 

whether any particular institution might 

be subject to a host country’s banking 

laws and believes that this may vary 

depending on the host country and the 

agreement that allows the U.S. military 

installation to operate in that country. 

The Bureau understands that these 

institutions may offer account-toaccount transfers to or from accounts 

that may be located in the United States 

or abroad, as well as cash-based 

transfers. 

The Bureau understands that further 

guidance or clarity regarding the 

treatment of U.S. military installations 

abroad may be useful, particularly when 

cash transfers are sent to and from U.S. 

military bases abroad. For example, 

there could be confusion as to whether 

the Remittance Rule applies when a 

consumer in the United States sends a 

cash transfer to be picked up by a 

recipient at a financial institution on a 

foreign military base. Depending on 

whether the financial institution is 

deemed to be at a location in a ‘‘foreign 

country’’ or a ‘‘State,’’ the 2013 Final 

Rule may or may not apply. There might 

also be confusion about whether a cash 

transfer from a consumer on a foreign 

military installation to a recipient in the 

surrounding country would be subject 

to the rule, again depending on whether 

the foreign military installation is 

deemed to be in a ‘‘State.’’ 

The Bureau notes, however, that the 

application of the Remittance Rule 

could be different for transfers from 

accounts of persons stationed at U.S. 

military installations abroad. When a 

transfer is made from such an account, 

whether the sender is located in a State 

is determined by the location of the 

sender’s account rather than the 

physical location of the sender at the 

time of the transaction. See comment 

30(g)–1. Similarly, whether or not the 

Remittance Rule applies to transfers 

from the United States to accounts of 

different persons stationed at U.S. 

military installations abroad could 

differ, depending on the locations of 

those recipients’ accounts. Thus, there 

may also be confusion as to whether the 

Remittance Rule applies when a transfer 

is sent from an account in the United 

States to an account located at a U.S. 

military installation abroad, to the 

extent such accounts exist. The Bureau 

lacks data regarding the number of 

servicemembers and other individuals 

who have accounts that are considered 

to be located on a U.S. military 

installation abroad. 

As the Remittance Rule does not 

directly address transfers to and from 

foreign military installations and in 

light of the uniqueness of U.S. military 

installations, the Bureau seeks comment 

on whether and how it should clarify 

the application of the Remittance Rule 

to transfers to and from individuals and/ 

or accounts located on U.S. military 

installations abroad. 

The Bureau recognizes that each 

alternative (either considering the 

military installations to be in a State, or 

not) may entail providing the rule’s 

consumer protections to some transfers 

instead of others. For example, if 

locations on these installations are 

treated as being located in a State for 

purposes of the rule, those sending 

remittance transfers from the United 

States to locations on the installation 

would not receive the consumer 

protections of the rule. On the other 

hand, those sending funds from 

locations on the installations to the 

surrounding foreign country would 

receive these protections. Of course, if 

locations on military installations are 

treated as being located within a foreign 

country, the reverse would be true: 

Transfers from the United States would 

be covered, but transfers to the 

surrounding foreign country would not 

be. 

As a result, the Bureau seeks 

comment on whether or not it is 

appropriate or advisable to treat 

locations on U.S. military installations 

abroad as being located within a State 

or a foreign country for the purposes of 

subpart B of Regulation E. The Bureau 

also seeks data on the relative number 

of transfers sent to and from individuals 

and/or accounts located on U.S. military 

installations abroad so it can better 

understand the relative consumer 

protections of each approach. In 

addition, the Bureau seeks comment on 

the appropriateness of extending any 

clarification regarding U.S. military 

installations to apply to other U.S. 

government installations abroad, such 

as U.S. diplomatic missions. 

Non-Consumer Accounts 

The 2013 Final Rule applies only 

when the remittance transfer is 

requested by a consumer primarily for 

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17See also Shames-Yeakel v. Citizens Fin. Bank, 

677 F. Supp. 2d 994, 1006–07 (N.D. Ill. 2009) 

(distinguishing two types of accounts under the 

EFTA); Ironforge.com v. Paychex, Inc., 747 F. Supp. 

2d 384, 402 (W.D.N.Y. 2010) (same). 

personal, family, or household 

purposes. See § 1005.30(e) (definition of 

‘‘remittance transfer’’) and (g) 

(definition of ‘‘sender’’). This 

qualification is similar to that of subpart 

A of Regulation E, which applies with 

respect to accounts only when they are 

established primarily for personal, 

family, or household purposes. See 

§ 1005.2(b)(1) (definition of ‘‘account’’); 

§ 1005.3 (coverage and definition of 

‘‘electronic fund transfer’’). 

The term account as defined in 

Regulation E does not include accounts 

held by a financial institution under a 

bona fide trust agreement, and the 

commentary to subpart A of Regulation 

E explains that certain types of 

accounts, including profit-sharing and 

pension accounts established under a 

trust agreement, escrow accounts, and 

accounts for accumulating funds to 

purchase U.S. savings bonds are also not 

accounts under Regulation E. 

§ 1005.2(b)(3); comment 2(b)–3. 

Furthermore, EFTA, and thus subpart A 

of Regulation E, applies only to personal 

accounts, not business accounts. See 

§ 1005.2(b)(1); 15 U.S.C. 1693a(2) (the 

term ‘‘ ‘[a]ccount’ means a demand 

deposit (checking), savings deposit, or 

other consumer asset account . . . 

established primarily for personal, 

family, or household purposes[]’’).17

When developing the Remittance 

Rule, the Board had initially proposed 

defining a sender to be a consumer in 

a State who requests a remittance 

transfer provider to send a remittance 

transfer to a designated recipient. 76 FR 

29902, 29939 (proposed 12 CFR 

205.30(f)). In response, several 

commenters suggested that the Bureau 

limit remittance transfers to those sent 

for personal, family, or household 

purposes. Although subpart A of 

Regulation E’s applicability is generally 

limited to transactions to or from 

consumer asset accounts, that limitation 

is contained in the definition of 

‘‘account’’ in § 1005.2(b), while the 

Remittance Rule applies to more than 

just account-based transfers (e.g., cash 

transfers sent by a money transmitter). 

As a result, these commenters stated 

that an individual who requests a nonaccount based transfer for business 

purposes could arguably be a ‘‘sender’’ 

under the proposed rule. 

To address these concerns, the Bureau 

adopted in the February 2012 Final Rule 

the present definition of ‘‘sender’’ in 

§ 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. The Bureau had 

noted that this revision was consistent 

with § 1005.2(b) and therefore the 2012 

February Final Rule would not apply to 

business-to-consumer or business-tobusiness transactions or to transactions 

that are not for personal, family or 

household purposes. The Bureau noted 

that, for example, a transfer requested 

by a sole proprietor on behalf of his or 

her company would not be covered by 

the rule. 77 FR at 6214. 

Despite this clarification, the Bureau 

believes that additional clarification 

may still be needed regarding treatment 

of transfers from accounts, as defined in 

Regulation E. Specifically, the Bureau 

understands that there may be some 

confusion regarding whether the 

purpose of a transfer from an account is 

determined by the purpose for which 

the account was established or the 

purpose of the particular transfer. The 

Bureau believes that, for purposes of 

Regulation E, financial institutions often 

code accounts as being consumer 

accounts (generally subject to 

Regulation E) as opposed to business 

accounts (not subject to Regulation E). 

Therefore, it could be confusing if 

providers were required to treat some 

transfers from business accounts as 

consumer transactions subject to 

subpart B of Regulation E but not to 

subpart A of Regulation E. It might be 

similarly confusing if some transfers 

from consumer accounts were treated as 

business transactions not subject to 

Regulation E. At the same time, the 

Bureau believes that judged on a 

transaction-by-transaction basis some 

transfers from business accounts might 

be understood to be sent for personal, 

family, or household purposes, and that 

some transfers from consumer accounts 

may be understood to be sent for 

business purposes. 

The Bureau thus believes it is 

appropriate to clarify that the 2013 Final 

Rule applies to transfers from accounts 

primarily used for personal, family, or 

household purposes, but not to transfers 

from non-consumer accounts. The 

Bureau believes that, at least since the 

2013 Final Rule went into effect, 

remittance transfer providers have 

considered all transfers from business 

accounts to be outside the scope of the 

Rule. In addition, Bureau staff has 

provided similar informal guidance on 

this issue. The Bureau believes that the 

additional, proposed commentary will 

clarify that, like subpart A, subpart B of 

Regulation E does not apply to nonconsumer accounts. 

To clarify this in the commentary to 

the Remittance Rule, the Bureau is 

proposing to add comment 30(g)–2, 

which would explain that under 

§ 1005.30(g), a consumer is a ‘‘sender’’ 

only where he or she requests a transfer 

primarily for personal, family, or 

household purposes. A consumer who 

requests a transfer primarily for other 

purposes, such as business or 

commercial purposes, is not a sender 

under § 1005.30(g). For remittance 

transfers from an account, the primary 

purpose for which the account was 

established determines whether a 

transfer from that account is requested 

for personal, family, or household 

purposes. A transfer that is sent from an 

account that was not established 

primarily for personal, family, or 

household purposes, such as an account 

that was established as a business or 

commercial account or an account 

owned by a business entity such as a 

corporation, not-for-profit corporation, 

professional corporation, limited 

liability company, partnership, or sole 

proprietorship, is not requested 

primarily for personal, family, or 

household purposes. A consumer 

requesting a transfer from such an 

account therefore is not a sender under 

§ 1005.30(g). 

Section 1005.31 Disclosures 

31(a) General Form of Disclosures 

31(a)(2) Written and Electronic 

Disclosures 

Although the 2013 Final Rule requires 

that disclosures required by subpart B 

generally be provided to the sender in 

writing, § 1005.31(a)(2), it does not 

specify what qualifies as a writing 

(except to state that written disclosures 

may be provided on any size of paper, 

as long as the disclosures are clear and 

conspicuous, see comment 31(a)(2)–2)). 

During its implementation and market 

monitoring efforts, the Bureau has come 

to understand that some senders request 

remittance transfers by sending a fax to 

a remittance transfer provider 

instructing the provider to process the 

transfer. Similarly, in some cases, the 

provider may send the required 

disclosures back to the sender via fax as 

well. 

Although the Remittance Rule does 

not specifically address disclosures 

provided pursuant to § 1005.31 or .36 by 

fax, Bureau staff has noted in informal 

guidance that disclosures made by fax 

should be considered to be in writing 

under the Remittance Rule since such 

disclosures are generally received on 

paper in a form the sender can retain. 

The Bureau proposes to adopt this 

interpretation in the Remittance Rule. 

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Thus, the Bureau is proposing a new 

comment 31(a)–5, which would explain 

that, for purposes of disclosures 

required to be provided pursuant to 

§ 1005.31 or § 1005.36, disclosures 

provided by facsimile transmission (i.e., 

fax) are considered to be provided in 

writing and not subject to the additional 

requirements for electronic disclosures 

set forth in § 1005.31(a)(2). 

The Bureau does not believe that 

treating faxes as writings will have any 

significant negative impact on the 

benefits consumers derive from the 

Remittance Rule both because many 

consumers have long communicated 

with remittance transfer providers via 

fax and those consumers accept faxes as 

a legitimate and efficient method of 

communication. Thus, the Bureau 

believes it appropriate to treat faxes as 

a writing for purposes of providing the 

disclosures required by subpart B of 

Regulation E. 

31(a)(3) Disclosures for Oral Telephone 

Transactions 

Section 1005.31(a)(3) permits 

providers to make pre-payment 

disclosures orally if the ‘‘transaction is 

conducted orally and entirely by 

telephone’’ and if certain other language 

and disclosure requirements are met. 

The Bureau recognizes that senders 

make requests to remittance transfer 

providers to send a remittance transfer 

in many different forms. For example, 

the Bureau understands that senders 

may send a provider a fax, email, or 

mailed letter requesting a remittance 

transfer, often because a telephone 

request or a visit to a branch or agent 

location is impractical (e.g., because the 

sender is abroad and the provider 

requires a signature to authorize the 

transfer). In some circumstances, 

depending on the nature of the request 

and the location of the sender, providers 

have explained that it may be 

impractical for them to communicate 

back to the sender via that same means 

of communication because the sender is 

far away. For example, if a provider 

receives a mailed request to send a 

remittance transfer, a provider might 

find it impractical to send the prepayment disclosure or combined 

disclosure to a sender via the mail and 

then wait for an acknowledgement from 

the sender, particularly when the 

disclosure of an exchange rate is 

involved. 

Under the 2013 Final Rule, a 

remittance transfer provider may be 

uncertain as how to provide meaningful 

and compliant pre-payment disclosures 

to a sender that is neither physically 

present nor in ‘‘real time’’ 

communication with a provider’s staff. 

Section 1005.31(e)(1) states that a 

provider must provide the pre-payment 

disclosure when the sender requests the 

remittance transfer, but prior to 

payment for the transfer. As a result, in 

such circumstances, senders seeking to 

initiate a remittance transfer by email, 

fax, or mailed letter may benefit from 

receiving pre-payment disclosures from 

the provider sooner via a telephone call 

rather than waiting for written or 

electronic disclosures to be sent. 

Additionally, providers may frequently 

need to call senders who send remote 

and/or time-delayed requests for 

remittance transfers to confirm various 

details such that the telephone call 

would occur in the ordinary course. 

In response to inquiries concerning 

the application of the rule in these 

circumstances, Bureau staff has 

explained in informal guidance that it 

believes that the Remittance Rule’s 

provisions allowing disclosure orally by 

telephone can, in some cases, be applied 

to remittance transfers that senders first 

initiate by fax, mail, or email if the 

requirements for disclosures for oral 

transactions are met. See § 1005.31(a)(3). 

Consistent with that informal staff 

guidance, the Bureau is now proposing 

to revise comment 31(a)(3)–2 to clarify 

further when a transaction is conducted 

orally and entirely by telephone under 

§ 1005.31(a)(3). Comment 31(a)(3)–2 

currently explains that § 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 Bureau is proposing to add to 

comment 31(a)(3)–2 that a remittance 

transfer provider may treat a written or 

electronic communication as an inquiry 

when it believes that treating the 

communication as a request would be 

impractical. For example, if a sender 

physically located abroad contacts a 

U.S. branch of the sender’s financial 

institution and attempts to initiate a 

remittance transfer by first sending a 

mailed letter, further communication 

with the sender by letter may be may be 

judged impractical due to the physical 

distance and likely mail delays. In such 

circumstances, a provider may conduct 

the transaction orally and entirely by 

telephone pursuant to § 1005.31(a)(3) 

when the provider treats that initial 

communication as an inquiry and 

subsequently responds to the 

consumer’s inquiry by calling the 

consumer on a telephone and orally 

gathering or confirming the information 

needed to identify and understand a 

request for a remittance transfer and 

otherwise conducts the transaction 

orally and entirely by telephone. 

To accommodate this change, the 

Bureau is also proposing conforming 

edits to comments 31(a)(3)–1 and 31(e)– 

1. Comment 31(a)(3)–1 explains when a 

transaction is conducted partially by 

telephone and currently explains that a 

transaction cannot be started in person 

and then completed by telephone. The 

proposed change would make clear that 

comment 31(a)(3)–2 states an alternate 

situation. Unlike a transaction started in 

person and completed on the telephone, 

a transaction that a sender attempts to 

initiate with a method of 

communication that the provider 

believes would be impractical to use to 

complete the transaction, has not 

actually started, insofar as the provider 

treats that initial communication as an 

inquiry and otherwise conducts the 

transaction orally and entirely by 

telephone as contemplated in proposed 

comment 31(a)(3)–2. 

As finalized in the May 2013 Final 

Rule, comment 31(e)–1 explains when a 

remittance transfer provider is required 

to provide pre-payment and combined 

disclosures to the sender. To 

accommodate the proposed revision to 

comment 31(a)(3)–2, the Bureau 

proposes to add to comment 31(e)–1 the 

following: For example, a sender that 

has sent an email, fax, mailed letter, or 

similar written or electronic 

communication has not requested a 

remittance transfer if the provider 

believes that it is impractical to treat 

that communication as a request and if 

the provider treats the communication 

as an inquiry and subsequently 

responds to that inquiry by calling the 

consumer on a telephone and orally 

gathering or confirming the information 

needed to process a request for a 

remittance transfer. See comment 

31(a)(3)–2. 

The Bureau recognizes that allowing 

oral disclosures in the cases 

contemplated by the proposed 

comments could result in senders 

sometimes not receiving written 

disclosures prior to authorizing a 

remittance transfer. The Bureau seeks 

comment on the relative tradeoffs of the 

various potential approaches to 

remittance transfers requested in these 

and similar circumstances. 

31(b) Disclosure Requirements 

31(b)(2) Receipt 

In the February 2012 Final Rule, the 

Bureau stated that it was appropriate for 

remittance transfer providers to provide 

the Bureau’s contact information on 

receipts required by the Remittance 

Rule, even in instances where the 

Bureau is not the provider’s primary 

Federal regulator, as required by EFTA 

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18Although under development, the Bureau 

expects these pages to contain information 

regarding consumers’ rights under the Remittance 

Rule, how consumers can use the receipts that they 

receive from providers, and how and when to lodge 

a complaint with the Bureau. The Bureau expects 

that the English and Spanish versions of this Web 

site will be available by the time that the Bureau 

finalizes this proposal. 

19Accordingly, for purposes of the discussion of 

the temporary exception, remittance transfer 

providers eligible to rely on the temporary 

exception are generally referred to herein as 

‘‘insured institutions.’’ 

section 919(a)(2)(B)(ii)(II)(bb). Therefore, 

§ 1005.31(b)(2)(vi) in the 2013 Final 

Rule required a provider to disclose the 

contact information for the Bureau, 

including the Bureau’s Web site and its 

toll-free telephone number. Although 

the rule did not specify which Bureau 

Web site should be provided on 

receipts, the Model Forms published by 

the Bureau all listed the Bureau’s 

Internet homepage— 

www.consumerfinance.gov. See Model 

Forms A–31, A–32, A–34, A–35, A–39, 

and A–40 of appendix A. 

The Bureau is in the process of 

creating a single page that contains 

resources relevant to international 

money transfers at 

www.consumerfinance.gov/sendingmoney. The Bureau is also developing a 

Spanish language Web site that will 

have resources relevant to international 

money transfers at 

www.consumerfinance.gov/enviardinero.18 The Bureau believes that 

remittance transfer providers may want 

to use one of these Web sites, as 

appropriate, on receipts provided to 

senders so that senders can more easily 

find relevant Bureau resources or such 

resources in Spanish when the provider 

provides the receipt in Spanish. The 

Bureau seeks comment on whether it 

should create versions of this Web site 

in languages other than English and 

Spanish. 

Therefore, the Bureau proposes to add 

comment 31(b)(2)–4 to explain how 

remittance transfer providers may 

satisfy the requirement to disclose the 

Bureau’s Web site. The proposed 

comment would state that 

§ 1005.31(b)(2)(vi) requires a provider to 

disclose the name, toll-free telephone 

number(s), and Web site of the 

Consumer Financial Protection Bureau. 

Providers may satisfy this requirement 

by disclosing the Web site of the 

Consumer Financial Protection Bureau’s 

homepage shown on Model Forms A– 

31, A–32, A–34, A–35, A–39, and A–40 

of appendix A. Alternatively, providers 

may, but are not required to, disclose 

the Bureau’s Web site as the address of 

a page on the Bureau’s Web site that 

provides information for consumers 

about remittance transfers, currently, 

www.consumerfinance.gov/sendingmoney. In addition, providers making 

disclosures in a language other than 

English pursuant to § 1005.31(g) may, 

but are not required to, disclose a 

Bureau Web site that provides 

information for consumers about 

remittance transfers that is in the 

relevant language, if such Web site 

exists. For example, a provider that is 

making disclosures in Spanish under 

§ 1005.31(g) may, but is not required to, 

disclose the Bureau’s Web site on 

Spanish-language disclosures as the 

page on the Bureau’s Web site that 

provides information about remittance 

transfers in Spanish, currently, 

www.consumerfinance.gov/enviardinero. 

While disclosure of a Bureau Web site 

remains a requirement of the Remittance 

Rule, adoption of this proposed 

comment would not require remittance 

transfer providers to change existing 

receipts that mirror the Bureau’s current 

model forms and link to 

www.consumerfinance.gov if the 

provider did not choose to make this 

change. Nevertheless, if this proposed 

comment is adopted, the Bureau would 

urge providers to consider adjusting 

their receipts to refer to these other Web 

sites, as appropriate, in the future and 

may eventually consider requiring 

providers to do so if, for instance, the 

Bureau were to conclude that other 

changes to the receipts were necessary. 

To accommodate new proposed 

comment 31(b)(2)–4, the Bureau 

proposes to renumber current comments 

31(b)(2)–4, –5, and –6 as comments 

31(b)(2)–5, –6, and –7, respectively, 

without any other changes. 

Section 1005.32 Estimates 

32(a) Temporary Exception for Insured 

Institutions 

As noted above, the EFTA, as 

amended by the Dodd-Frank Act, 

generally establishes that disclosures 

provided to senders by remittance 

transfer providers must state, among 

other things, the actual exchange rate 

and amount to be received by the 

designated recipient. EFTA section 919 

provides two exceptions to the 

requirement, one of which is the 

temporary exception in EFTA section 

919(a)(4), which expires on July 21, 

2015. EFTA section 919(a)(4)(B), in turn, 

permits the Bureau to issue a rule to 

extend the temporary exception up to 

five more years, to July 21, 2020, if it 

determines that the termination of the 

temporary exception on July 21, 2015, 

would negatively affect the ability of 

insured institutions to send remittance 

transfers. 

To implement EFTA section 919(a)(4), 

the Bureau adopted § 1005.32(a) in the 

February 2012 Final Rule. Section 

1005.32(a)(1), as amended by the May 

2013 Final Rule, provides that, when 

three conditions are met, the remittance 

transfer provider may provide estimates 

instead of actual amounts for the 

following: (1) The exchange rate used by 

the provider; (2) the total amount, in the 

currency in which the funds will be 

received, that will be transferred to the 

designated recipient inclusive of 

covered third-party fees imposed on the 

transfer amount, if any; (3) any covered 

third-party fees, in the currency in 

which the funds will be received by the 

designated recipient; and (4) the amount 

that will be received by the designated 

recipient, in the currency in which the 

funds will be received (i.e., the amount 

received after deducting covered thirdparty fees). 

Consistent with the statute, the three 

conditions that must be met before a 

remittance transfer provider can provide 

an estimate pursuant to the temporary 

exception are: (1) The remittance 

transfer provider cannot determine the 

exact amounts for reasons beyond its 

control; (2) the provider is an insured 

institution; and (3) the remittance 

transfer is sent from the sender’s 

account with the institution. 

§ 1005.32(a)(1). The Remittance Rule 

explains that insured depository 

institutions, insured credit unions, and 

uninsured U.S. branches and agencies of 

foreign depository institutions are 

considered ‘‘insured institutions’’ for 

purposes of the temporary exception.19

§ 1005.32(a)(3). Comment 32(a)(1)–1 

explains that an insured institution 

cannot determine exact amounts ‘‘for 

reasons beyond its control’’ when a 

person other than the insured 

institution, or a person with which the 

insured institution has no 

correspondent relationship, sets the 

exchange rate or imposes a covered 

third-party fee. Comments 32(a)(1)–2 

and –3 provide, respectively, examples 

of scenarios that qualify and fail to 

qualify for the temporary exception. 

Related to § 1005.32(a), the Bureau 

adopted § 1005.32(c), enumerating the 

list of approaches remittance transfer 

providers can use to estimate exchange 

rates and fees pursuant to the temporary 

exception and the permanent exception. 

See § 1005.32(a) and (b)(1). Section 

1005.32(c)(1) provides that with respect 

to the disclosure of exchange rates, the 

estimation methods are: (1) For certain 

remittance transfers sent via 

international ACH, the most recent 

exchange rate set by the recipient 

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20As amended by the May 2013 Final Rule, 

providers are not required to use the estimation 

methods in § 1005.32(c)(3)(ii) or the catch-all 

method to estimate non-covered third-party fees 

and taxes collected on the remittance transfer by a 

person other than the provider when a provider 

chooses to disclose these amounts. Instead, 

pursuant to § 1005.32(b)(3), such estimates simply 

have to be based on ‘‘reasonable sources of 

information.’’ For a list of such information, see 

comment 32(b)(3)–1. 

21For purposes of this discussion and unless 

otherwise noted, the term service provider refers to 

the entity that is generating the information and/or 

sending the remittance transfer. 

country’s central bank or other 

governmental authority and reported by 

a Federal Reserve Bank; (2) the most 

recent publicly available wholesale 

exchange rate and, if applicable, any 

spread that the provider or its 

correspondent typically applies to such 

a wholesale rate for remittance transfers 

for that currency; and (3) 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. 

Section 1005.32(c)(3)(ii) provides the 

following estimation methods with 

respect to covered third-party fees 

imposed by intermediary institutions or 

the designated recipient’s institution: (1) 

The provider’s most recent remittance 

transfer to the designated recipient’s 

institution; or (2) a representative 

transmittal route identified by the 

provider. Under § 1005.32(c), providers 

also have the option to use an 

alternative approach to estimate 

exchange rates and covered third-party 

fees so long as the designated recipient 

receives the same, or greater, amount of 

funds as compared to the amount 

disclosed to the sender pursuant to the 

Remittance Rule (catch-all method).20

General Findings From Interviews and 

Other Outreach Initiatives 

To determine if the statutory 

predicate to extending the temporary 

exception exists, namely, that sunset of 

the exception would negatively affect 

insured institutions’ ability to send 

remittance transfers, the Bureau 

endeavored to understand how insured 

institutions are providing remittance 

transfers from accounts, how, whether, 

when, and why they are using the 

temporary exception, and, to the extent 

insured institutions are using the 

exception, whether its expiration would 

negatively affect these institutions’ 

ability to continue sending those 

remittance transfers for which they now 

use the temporary exception. The 

Bureau also sought to understand the 

impact on consumers of the temporary 

exception and its potential expiration. 

As is explained above, the Bureau 

used information from a variety of 

sources to enhance its understanding of 

the above issues. These included 

interviews with banks and credit unions 

of various sizes, including community 

banks, nonbank money transmitters, 

nonbank service providers, 

correspondent banks, broker-dealers, 

and very large banks that send 

consumer remittance transfers on behalf 

of their retail customers and on behalf 

of other providers. The Bureau has not, 

however, spoken with all or a majority 

of entities involved in sending 

remittance transfers. The Bureau 

believes that despite the relatively small 

sample size of its informal interviews, 

the process undertaken provides 

significant insights. This is in part 

because the Bureau believes it spoke 

with entities responsible for sending or 

providing information to those entities 

sending a large portion of remittance 

transfers that could qualify for the 

temporary exception. 

Nonetheless, the Bureau recognizes 

that this summary of market practice 

may not accurately represent all details 

of either how insured institutions send 

remittance transfers from accounts, or 

how other institutions send open 

network transfers. Thus, the Bureau 

seeks comments on the accuracy of its 

findings about how these providers send 

these remittance transfers as well as any 

insights or data on remittance transfers 

not reflected here. The Bureau also 

seeks comment regarding the consumer 

impact of providing estimated 

disclosures, including whether and the 

extent to which consumers have 

received estimates that are different 

from actual exchange rates and amounts 

received by the designated recipient, 

and other potential harm or hardships 

caused by the disclosure of estimates 

pursuant to the temporary exception. 

Industry Implementation of the 

Remittance Rule 

As noted earlier, the Bureau believes 

that the great majority of remittance 

transfers sent by insured institutions 

from accounts are wire transfers, which 

are typically considered to be open 

network transfers. The Bureau believes 

that ACH transfers are used by a limited 

number of insured institutions sending 

remittance transfers to a limited number 

of foreign countries, and that only a few 

insured institutions use closed networks 

for remittance transfers from accounts. 

These institutions typically send 

international wires as well. 

With regard to wire transfers, the 

Bureau believes that the majority of 

insured institutions providing 

remittance transfers from accounts get 

the necessary information about 

exchange rates and covered third-party 

fees (hereinafter, the covered 

information) from service providers 

(including correspondent banks and 

nonbank service providers offering 

specialized international transfer 

services); those intermediary service 

providers, in turn, may rely on other 

entities to generate the information 

about covered third-party fees and, 

often, exchange rates.21 Indeed, many 

insured institutions, and small 

institutions in particular, rely almost 

entirely on intermediary service 

providers to provide a complete 

solution for complying with the 

requirements of the Remittance Rule 

that integrates with the institutions’ 

existing system. 

The Bureau believes that the market 

for covered information has developed 

in such a way that much of the 

information EFTA section 919 and the 

2013 Final Rule require providers to 

disclose is originally generated by a 

limited number of entities acting as 

information aggregators for providers 

that are sending wire transfers. The 

information generated by these 

information aggregators may be exact fee 

and exchange rate figures or it may be 

estimates of these amounts (presumably 

determined pursuant to one of the 

methods of estimation permitted by the 

Remittance Rule). In the remittance 

transfer market, these information 

aggregators may act as remittance 

transfer providers themselves (i.e., they 

may originate remittance transfers for 

their own consumer clients), or may 

exclusively act as service providers. 

Based on its outreach efforts, the 

Bureau understands that insured 

institutions that are remittance transfer 

providers have, for the most part, 

already invested significant time and 

energy in compliance with the 

requirements of the Remittance Rule 

whether they are providing exact 

disclosures or using the temporary 

exception. Moreover, most institutions 

reported that, where possible, they 

provided exact disclosures and only rely 

on the temporary exception where they 

deemed it necessary to do so. Indeed, 

the Bureau’s understanding of the 

market indicates that insured 

institutions are typically disclosing 

exact amounts where they believe they 

are able to do so, even though they 

might have additional flexibility 

pursuant to the temporary exception to 

estimate some disclosed amounts in 

certain cases had they developed 

different compliance solutions. This is a 

significant change from what those same 

insured institutions generally did before 

the effective date of the 2013 Final Rule, 

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when Federal law did not generally 

require price disclosures for remittance 

transfers. To the extent that insured 

institutions provided disclosures before 

October 28, 2013, we believe these 

institutions generally did not disclose, 

or have access to, all of the information 

required to be disclosed by the 2013 

Final Rule. 

Thus, to prepare for the Remittance 

Rule’s effective date, many insured 

institutions (and/or the service 

providers on which they rely) had to 

engage in preparations including 

changes in operations and systems, to be 

able to provide the required disclosures. 

Such changes might have included, for 

example, changing their correspondent 

banking relationships, establishing or 

expanding other relationships with new 

foreign and domestic institutions, and 

enhancing their information gathering 

capabilities. Furthermore, the Bureau 

understands that because the temporary 

exception is set to expire less than two 

years after the effective date of the 2013 

Final Rule absent Bureau action, some 

insured institutions (and/or service 

providers) have been investing in the 

development of long-term solutions that 

would allow them to provide senders 

with exact fee and exchange rate 

amounts for an increasing percentage of 

their remittance transfers. In sum, 

although significant work remains, the 

Bureau believes that the majority of the 

insured institutions the Bureau spoke 

with that are using the exception have 

been working and are continuing to 

work to provide accurate disclosures in 

as many cases as possible. 

Notwithstanding the significant 

progress these institutions have made, 

insured institutions and their service 

providers report that they continue to 

face formidable challenges in attempting 

to expand their access to covered 

information. As a result and as 

explained in greater detail below, the 

Bureau believes that both small and 

large insured institutions continue to 

rely on the temporary exception for 

transfers from accounts when they 

believe fee and exchange rate 

information is not readily available. 

These institutions have indicated to the 

Bureau that they are unlikely to find an 

alternative to their reliance on the 

temporary exception by July 21, 2015, 

for at least some portion of the 

remittance transfers for which they 

currently use the temporary exception. 

The Bureau has preliminarily 

determined, therefore, that these 

institutions’ ability to send remittance 

transfers would be negatively impacted 

if the temporary exception is not 

extended. 

Current Industry Practice—Exchange 

Rates 

As noted, the Bureau conducted 

outreach on how insured institutions 

disclose exchange rates where necessary 

and whether these insured institutions 

are using the temporary exception to do 

so. The Bureau understands that use of 

the temporary exception for estimating 

the foreign exchange rate is quite 

limited—most insured institutions and 

service providers told the Bureau that 

they are not using it, or that they are 

using it less frequently to estimate 

exchange rates than they do to estimate 

covered third-party fees. Most 

companies with which the Bureau 

spoke stated that when the 2013 Final 

Rule requires disclosure of an exchange 

rate, they are able to disclose an exact 

exchange rate in most cases and for 

most currencies in which their 

customers seek to send remittance 

transfers. 

In addition, the Bureau has learned 

that, as a result of the 2013 Final Rule’s 

disclosure requirements, a possibly 

substantial portion of insured 

institutions have changed their business 

practices: prior to the rule, those 

institutions sent out wires denominated 

in U.S. dollars, even when they knew 

those wires might be sent to accounts 

denominated in a foreign currency (and, 

thus, that the currency would be 

exchanged before being deposited into 

the recipient’s account). As a result of 

the 2013 Final Rule, the Bureau believes 

some of these institutions are now 

offering to send wires denominated in 

the appropriate foreign currency by 

obtaining an exchange rate from service 

providers. 

In general, remittance transfer 

providers either generate an exchange 

rate in-house or obtain one from a 

service provider (which may be one of 

the limited number of information 

aggregators described above or some 

other entity). Some insured institutions 

reported that service providers provide 

them with exchange rates that are fixed 

for a certain time (such as from a rate 

sheet provided at the start of each day). 

Other insured institutions stated that 

they receive exchange rates from the 

service provider at the time of each 

sender’s request. In either of these cases, 

the insured institutions disclose to their 

customers an exact rate equal either to 

the rate provided by the service 

provider or that rate plus a spread 

applied by the insured institution. Thus, 

for these remittance transfers, providers 

cannot use (and do not need to use) the 

temporary exception to disclose an 

estimated exchange rate in most cases. 

Nonetheless, the Bureau believes that 

there are a number of currencies that, in 

the view of any particular institution, 

are either (1) so thinly traded that 

insured institutions or their service 

providers find that purchasing such 

currencies for consumer wire transfers 

is impossible, impracticable, or 

economically undesirable, or (2) 

otherwise impracticable to purchase for 

other reasons, such as foreign laws 

barring purchase of that currency in the 

United States. While these include 

currencies used in countries currently 

covered by the permanent exception 

under § 1005.32(b)(1), they also include 

other currencies. The Bureau does not 

know all of these currencies, nor does 

it have information on whether and to 

what extent such currencies are viewed 

and treated differently by different 

providers. 

In conversations with the Bureau, 

insured institutions and service 

providers explained that they believe 

that they may not have a viable 

mechanism to provide exact exchange 

rate information for remittance transfers 

received in the currencies that fall into 

either of the two categories described 

above. These entities indicated to the 

Bureau that typically, the volume of 

remittance transfers that they provide in 

those currencies is low, leading them to 

believe that it is impracticable to 

expend significant resources to disclose 

exact exchange rates for those 

remittance transfers, even if such efforts 

were possible. Therefore, the Bureau 

believes that without the temporary 

exception, some insured institutions 

would cease or limit remittances 

denominated in those currencies for 

which they are unable to use a set 

exchange rate, negatively affecting their 

ability to send remittance transfers to 

certain foreign locations. 

Current Industry Practice—Covered 

Third-Party Fees 

The Bureau also conducted outreach 

about how insured institutions sending 

wires via an open remittance transfer 

network disclose covered third-party 

fees and use the temporary exception to 

disclose estimates of covered third-party 

fees in some cases. Based on this 

outreach, the Bureau believes that a 

small number of insured institutions, 

mostly very large ones and including 

some institutions that act as information 

aggregators, are able to generate directly 

information about third-party fees. Most 

other insured institutions, however, 

obtain covered third-party fee 

information directly or indirectly from 

the limited number of entities described 

above as information aggregators. 

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22The Bureau lacks data on which national 

payments systems allow institutions to know the 

fees that will be imposed (or to know that no fees 

will be imposed) for such transfers. 

23See generally https://www.chips.org/about/

pages/033738.php. 

For a particular institution, the 

information aggregator used to obtain 

fee information may be the same service 

provider used to obtain exchange rates, 

but this is not always the case. 

Nevertheless, we believe that 

information aggregator is generally only 

providing information for remittance 

transfers it sends, using specific 

methods and/or corridors; as such, in 

order for an insured institution to rely 

on the fee information provided by an 

information aggregator for a particular 

remittance transfer, the insured 

institution must also generally use the 

information aggregator to help process 

the remittance transfer. 

In most cases, both the large 

institutions that generate covered thirdparty information directly and the 

information aggregators that provide 

such information for their clients either 

limit the fees that will be charged for a 

particular remittance transfer or obtain 

exact fee information for the transfer 

such that reliance on the temporary 

exception is unnecessary. In the 

alternative, they use the temporary 

exception. In many cases, the 

information aggregators are able to 

leverage relationships in order to 

facilitate the gathering (or control) of 

relevant information. These 

relationships can take various forms, as 

detailed below, and each information 

aggregator may use a combination of 

these methods. The effectiveness and 

prevalence of each method varies, and 

may depend on the presence of 

established relationships between the 

insured institution (or its service 

provider) and the other institutions 

involved in effecting the remittance 

transfer. 

Overall, the Bureau understands that 

given the current methods insured 

institutions use to send remittance 

transfers, one reason they cannot 

disclose exact amounts in all cases is 

that they (or their service provider) 

cannot reliably control or know covered 

third-party fees in every case. The 

Bureau understands, however, that at 

least some of the parties involved in 

sending remittances from insured 

institutions are changing the methods 

they use to send such transfers, and in 

some cases, the payment systems 

themselves are evolving so that 

providers are increasingly able to 

disclose exact fees. 

Limiting covered third-party fees. 

Information aggregators explained that 

there are several ways of limiting or 

eliminating covered third-party fees. 

When fees can be limited to a known 

amount or eliminated altogether, an 

exact figure of covered third-party fees 

(or no figure) can be disclosed and 

reliance on the temporary exception is 

unnecessary, and in some cases, 

disallowed under the 2013 Final Rule. 

Generally, there are two ways (which 

may be combined) to limit or eliminate 

covered third-party fees: developing 

relationships with foreign institutions or 

coding transfers in a way that instructs 

intermediary institutions to not deduct 

fees from the transfer amount. 

One way in which information 

aggregators can limit the third-party fees 

charged in association with a particular 

remittance transfer is by entering into 

bilateral relationships with recipient 

institutions. One such relationship 

could exist between the insured 

institution (or its service provider) and 

a foreign institution hosting the 

institution’s nostro account. Nostro 

accounts are accounts established by 

U.S. institutions with foreign banks; 

funds in the account are typically 

denominated in the currency of that 

country. An insured institution or its 

information aggregator can generally 

avoid covered third-party fees when 

depositing funds directly into its nostro 

account because it bypasses 

intermediary institutions. Thus, for 

situations in which the nostro 

accountholder is the designated 

recipient’s bank, the provider or 

information aggregator could leverage 

its relationship to specify the fee terms 

that would apply to the transfer. As 

such, the provider would control the fee 

terms, and would thus not meet the 

conditions necessary to rely on the 

temporary exception. In cases where the 

recipient institution is not the nostro 

accountholder, the funds are transferred 

from the nostro account to the 

designated recipient’s account using the 

recipient country’s national payment 

system or the ultimate recipient bank 

may have a nostro account with the 

initial nostro accountholder. In some 

countries or areas, the national 

payments system may then limit or bar 

downstream covered third party fees.22

A second method of controlling 

covered third-party fees is by sending 

cover payments, a method in which the 

originator of the wire transfer sends 

payment instructions directly to the 

designated recipient’s institution and 

asks that institution to credit the 

designated recipient the transfer 

amount. Under this method, the 

designated recipient’s institution may 

receive the payment instructions before 

receiving the funds, which are cleared 

and settled separately through 

intermediary banks. Accordingly, 

intermediary fees would not be 

deducted from the payment, and as 

such, there would be no covered thirdparty fees that the originating institution 

would have to disclose. The Bureau 

further understands that entities may 

use cover payments to send remittance 

transfers received in foreign currency 

and U.S. dollars. 

The cover payment method has 

certain limitations, however. One very 

large bank explained that it believes that 

it can only send cover payments to 

recipient entities with which it has a 

preexisting agreement or contractual 

relationship because absent this 

relationship, the bank cannot be sure 

that the cover payment instruction will 

be honored. Separately, several 

information aggregators referred to a 

‘‘long tail problem’’: in their experience, 

expanding their networks is often a 

time-consuming, resource-intensive 

process because relationships must be 

established on a country-by-country, or 

institution-by-institution basis. These 

aggregators further indicated to the 

Bureau that it is unlikely that they 

would be able to establish relationships 

to reach every recipient financial 

institution or country by July 21, 2015, 

if the temporary exception expired. 

However, the institutions indicated that 

they would endeavor to use the 

additional time afforded by any 

extension of the temporary exception to 

expand the networks of recipient 

institutions with which they have 

relationships or pursue other 

alternatives that would allow them to 

ascertain actual fees in cases where they 

cannot do so today. 

A third way in which the provider or 

information aggregator can attempt to 

exercise control over covered thirdparty fees is by coding its payment 

instructions in a way that prohibits 

other entities from deducting fees from 

the transfer. Such codes may be used in 

conjunction with other methods 

discussed herein. International wire 

transfers originating in the United States 

are generally processed between three 

types of payment and messaging 

systems. For transfers settled in U.S. 

dollars between United States and other 

financial institutions that are members 

of the relevant payment systems, 

entities can use one of two wire 

systems: either the Clearing House 

Interbank Payments System (CHIPS), 

operated by the Clearing House 

Association,23 or the Fedwire Funds 

System (Fedwire), operated by the 

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24See generally http://www.federalreserve.gov/

paymentsystems/fedfunds_about.htm. 

25See Swift Payments Market Practice Group and 

the Clearing House Ass’n, White Paper on Dodd 

Frank Section 1073—Cross-border Remittance 

Transfers, v.3 (‘‘SWIFT White Paper’’) (Sept. 2013), 

available at http://www.swift.com/resources/

documents/PMPG_Dodd_Frank_1073_Whitepaper_

v2.0.pdf. 

26SWIFT White Paper. Other methods include 

BEN and SHAR. A transfer coded BEN means that 

the beneficiary will pay all fees while a transfer 

coded SHAR means that the fees will be shared by 

the sender and the beneficiary. 

27Federal Reserve Bank Services, Press Release 

(announcing that effective February 7, 2013, 

financial institutions that have agreements 

requiring special handling for remittance transfers 

sent using Fedwire should use the charge code CTO 

to identify a remittance transfer in which the 

originator pays all transaction charges) (Sept. 5, 

2012), available at https://www.frbservices.org/files/ 

communications/pdf/fedwire/090512_dodd_

frank.pdf. See also SWIFT White Paper (‘‘The use 

of OUR charge code instructions is fairly limited in 

US Dollar clearing between US financial 

institutions since CHIPS and Fedwire cannot carry 

a full OUR code.’’). 

28A RMA is an agreement established between 

SWIFT members. See http://www.swift.com/

products_services/relationship_management_

application_overview. 

29See http://www.frbservices.org/files/

communications/pdf/fedwire/090512_dodd_

frank.pdf. 

Federal Reserve Banks.24 For transfers 

between other entities or transfers 

settled in currencies other than U.S. 

dollars, SWIFT is the dominant 

international payments messaging 

system; the Bureau believes that the 

majority of international interbank 

messages use the SWIFT network.25

When SWIFT is used, funds are 

generally settled through chains of 

bilateral correspondent relationships 

and/or national payment systems. 

All three payment or messaging 

systems support a charge code that 

institutions may use to provide specific 

instructions about the way downstream 

entities handle the fees associated with 

a remittance transfer. For transfers sent 

via SWIFT, members have long been 

able to use the OUR charge code.26

When the OUR charge code is used, the 

SWIFT member coding the transfer is 

instructing downstream institutions that 

receive the SWIFT message not to 

deduct a fee, but rather to bill all fees 

back to the sending institution after 

delivery of the transfer. Fees charged 

back to the originating institution are 

not required to be disclosed under the 

Remittance Rule because they are not 

deducted from the transfer amount. 

The two U.S. wire systems, CHIPS 

and Fedwire, do not support the OUR 

charge code used by SWIFT. However, 

in reaction to the Remittance Rule, the 

Clearing House Association and the 

Federal Reserve Banks developed a 

charge code, CTO, that is intended to be 

the functional equivalent of the OUR 

charge code that can be used for 

institutions using Fedwire and CHIPS 

but only if the institution sending the 

transfer has a preexisting relationship 

with the entity receiving the transfer.27

Certain insured institutions with 

which the Bureau spoke indicated that 

they use the OUR code for most of their 

remittance transfers because they 

believe that doing so enables them to 

provide certainty for their customers 

insofar as use of the code is intended to 

prevent imposition of covered thirdparty fees. Some of the entities with 

which the Bureau spoke that use OUR 

for remittance transfers are passing on to 

their customers in the form of higher 

upfront prices the cost of the fees that 

are charged back to providers by 

intermediary institutions. Others are 

absorbing the extra expense without 

changing their prices but reported that 

they are continuing to analyze the 

impact of using the OUR charge code 

message on their pricing. Other 

institutions, however, indicated that 

they decided not to use OUR for most 

transactions due to the increased cost 

and that they either do not want to take 

on the additional costs or do not want 

to pass the costs on to their customers. 

In addition to cost considerations, the 

Bureau understands that there may be 

additional challenges with using the 

OUR or CTO charge code instructions to 

avoid covered third-party fees. First, the 

Bureau understands that, though OUR 

can and is used in transfers to most 

destination countries and to most 

recipient institutions that are SWIFT 

members, some remittance transfer 

intermediaries may disregard the OUR 

or CTO charge codes and deduct a fee 

from the transfer amount despite the 

instruction. In the case of the OUR code, 

disregarding the instruction is a 

violation of SWIFT rules; however, 

SWIFT does not enforce violations and 

there is limited ability to seek redress if 

an institution violates an OUR 

instruction in a particular instance. As 

such, certain interview participants 

indicated that, while a bilateral 

agreement is not required when using 

the OUR charge code, the OUR 

instruction may be more effective where 

such a relationship, formalized through 

a Relationship Management Agreement, 

or RMA, is in place among the 

participating institutions.28 The CTO 

code, in turn, is understood as a market 

convention; it is currently only honored 

if the sending and receiving institution 

have entered into a bilateral 

agreement.29

A third challenge is the difficulty of 

ensuring that the charge code 

instructions reach all the banks 

involved in the remittance transfer. For 

example, the Bureau understands that 

there are several countries in which the 

national financial messaging or payment 

system does not support the OUR charge 

code for transfers that are sent to 

institutions that are not SWIFT 

members. Additionally, the OUR charge 

codes may not be passed on to the next 

bank in the transmittal route if that bank 

is not a SWIFT member institution. 

Finally, certain smaller institutions that 

originate remittance transfers may not 

have the accounting systems in place 

necessary to account for OUR 

transactions when the charges are billed 

back to them from the intermediary 

institutions after the transfer is sent. 

Similar concerns exist in connection 

with the CTO charge code. 

The Bureau asked interview 

participants whether they expected use 

of the OUR and CTO codes to expand 

in response to the new remittance rule 

disclosure requirements. Although the 

Bureau understands that the OUR code 

has long been used for some commercial 

wire payments, a number of providers 

and information aggregators were 

skeptical that the reliability of the OUR 

payment instruction will improve in the 

near future and some actually expected 

its reliability to decline as its use 

expanded. Indeed, these institutions 

reported that based on their analyses, 

they determined that use of the OUR 

code for all remittance transfers sent as 

wires was not feasible as a reliable 

method to reduce the use of the 

temporary exception. These institutions 

speculated that if use of the OUR charge 

code became widespread its 

effectiveness could lessen as more 

foreign banks would either ignore it or 

bill exorbitant amounts back to the 

originating institutions. Further, some 

remittance transfer providers indicated 

that, in their opinion, sending OUR 

payments is not in the best interest of 

the consumer. They asserted that 

entities originating the wire transfer will 

increase fees on some or all of their wire 

services to recoup the fees that 

intermediaries charged back to them 

and that generally consumers may 

overpay when the provider uses this 

method. At least one provider, however, 

surmised that a growth in the use of the 

OUR code method could normalize 

behavior and expectation in the 

international remittance transfer 

industry such that institutions will be 

more likely to honor the code as its use 

expanded. 

Neither SWIFT nor providers or 

aggregators using the OUR code method 

provided the Bureau with concrete data 

on the prevalence or efficacy of the 

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30The Bd. of Governors of the Fed. Reserve Sys., 

Report to the Congress on the Use of the ACH 

System and Other Payment Mechanisms for 

Remittance Transfers to Foreign Countries, Apr. 

2013. 

method as a way of controlling 

remittance transfer fees. As such, it is 

not clear at this point how expanded 

use of the OUR code would affect its 

usefulness as a possible tool for 

controlling, and therefore predicting, 

third-party fees associated with 

remittance transfers. Likewise, as the 

CTO charge code has only recently been 

introduced, interview participants were 

reluctant to speculate about using it to 

control covered third-party fees and 

whether and how necessary 

relationships have been established. 

Some suggested that a change in the 

CHIPS rules obligating members to 

honor the code (similar to the SWIFT 

member rules) would be necessary to 

ensure compliance with the CTO code 

without obligating entities to enter into 

numerous bilateral agreements. We seek 

comment on the efficacy of these charge 

codes and whether and when they are 

reliable methods of controlling the 

imposition of covered third party fees 

(and thus providing a remittance 

transfer disclosure without reliance on 

the temporary exception). 

A small number of insured 

institutions with which the Bureau 

spoke use international ACH for some 

portion of their remittance transfers. 

International ACH products, such as the 

Federal Reserve’s FedGlobal ACH 

Payments Service or services developed 

by individual financial institutions or 

service providers, may provide 

additional mechanisms to limit the fees 

that can be charged on a remittance 

transfer. 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 transfer 

amount. FedGlobal and other ACH 

services may not currently be widely 

used by remittance transfer providers, 

however: According to a report of the 

Board of Governors of the Federal 

Reserve, at the end of 2012, 446 

depository institutions offered 

FedGlobal services, representing about 

5% of the institutions that originate 

ACH services.30

Institutions with which the Bureau 

spoke indicated continued reluctance to 

develop international ACH systems for 

a variety of reasons, including the 

following. First, international ACH 

services generally are developed on a 

country-by-country or region-by-region 

basis because they require agreements 

on protocol with foreign gateway 

providers and/or other foreign entities. 

As a result, the currently available 

international ACH services generally 

have a much more limited reach than 

wire services (even though those ACH 

services generally focus on popular 

destination countries). Second, insured 

institutions with which the Bureau 

spoke indicated that, unlike wire 

services, international ACH services are 

not a set of services that they already 

offered to consumers prior to the 

Remittance Rule. These institutions 

worried that developing an international 

ACH service, or signing onto someone 

else’s ACH service, would involve startup costs and/or changes in risk 

management protocol that at present 

outweigh the potential long-term cost 

savings (as well as any additional value 

of facilitating compliance with the 

Remittance Rule). 

Finally, a small number of the biggest 

institutions with which the Bureau 

spoke have independently developed 

closed network remittance transfer 

products that resemble those closednetwork solutions offered by money 

transmitters. Often designed with a 

focus on modest-sized transfers, these 

products include account-to-account, 

account-to-cash, and cash-to-account 

products. The institutions that have 

developed these products operate them 

independently or in partnership with 

other institutions, and can therefore 

know the exact fees and exchange rate 

that will be applied to specific 

remittance transfers. However, the 

closed networks currently in existence 

and used by insured institutions limit 

the dollar amount of most transfers, 

provide services to a limited number of 

countries and within those countries, to 

a limited number of pickup locations or 

recipient institutions, and as such 

cannot currently provide a complete 

solution for all of the locations to which 

insured institutions send remittance 

transfers. Further, setting up such a 

network takes significant time and 

resources. Accordingly, most of the 

institutions with which the Bureau 

spoke did not have such a system and 

have not planned to develop one prior 

to the planned July 21, 2015, expiration 

of the temporary exception as a method 

of resolving their reliance on the 

temporary exception. 

In speaking to remittance transfer 

providers using various combinations of 

these methods, the Bureau understands 

that the methods vary in effectiveness 

and scope, and that entities’ views of 

the feasibility or effectiveness of any 

particular method also vary. Interview 

participants indicated to the Bureau that 

many factors—including the efficacy of 

using the OUR charge code for transfers 

to a particular location or particular 

institution, concerns about lack of 

controls at a particular foreign bank, 

concerns about prudential regulators’ 

reactions to relationships with foreign 

banks, sheer volume of institutions in 

the world and limited resources to reach 

them all, and the business case for 

investing in new protocols or payment 

systems—can affect the actual feasibility 

or effectiveness of a particular method, 

or an entity’s view of such feasibility or 

effectiveness. Some institutions 

reported that they are attempting to 

address these issues by developing an 

increasing number of relationships with 

intermediary and recipient institutions; 

however, these institutions also stated 

that at present, it is very difficult and 

often impractical to establish such 

relationships with all banks in the 

world to which a U.S. consumer might 

seek to send a remittance transfer. Some 

institutions also indicated that the 

limited volume of international wire 

transfers they currently send to those 

corridors for which they cannot disclose 

exact fee amounts does not justify the 

expense of reaching these corridors 

using methods currently available for 

disclosing exact fees. 

Obtaining covered third-party fee 

information. A number of information 

aggregators that are banks indicated to 

the Bureau that they have been able to 

obtain actual covered third-party fee 

information through the banks to which 

they offer correspondent banking 

services, as well as the banks that offer 

them correspondent services, and other 

efforts (such as independent research), 

but also reported that this information is 

not available for all institutions 

involved in all of the remittance 

transfers they or their partners send. 

Although some entities with which the 

Bureau spoke reported conducting 

internet research regarding intermediary 

bank fees, some aggregators also 

indicated that information available on 

the internet takes time and resources to 

find, may not be complete, and may be 

subject to change. 

Entities with which the Bureau spoke 

stated that it is difficult to get fee 

information from other banks absent a 

correspondent relationship or assistance 

from a correspondent or to get 

information from another institution 

that might be deemed as a competitor. 

Specifically, insured institutions and 

others indicated to the Bureau that 

many United States and foreign banks 

treat such information as proprietary, 

and therefore, rarely make the 

information available to others upon 

request (let alone publish it on the 

Internet). See May 2013 Final Rule (78 

FR at 30671). On the other hand, some 

consumer groups maintain that insured 

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23248 Federal Register / Vol. 79, No. 80 / Friday, April 25, 2014 / Proposed Rules 

institutions have had sufficient time 

since the 2013 Final Rule was first 

finalized to develop methods to 

determine actual fees in all cases, and 

that institutions could better utilize 

existing trade associations and other 

networks to complete this work. 

Additionally, entities stated that even 

banks that have correspondent 

relationships with each other are 

unlikely to share fee information with 

each another because they may, in other 

circumstances, be competitors and 

typically do not share pricing 

information. In particular, it appears 

that some U.S. institutions are 

concerned that sharing fee information 

would raise antitrust concerns. 

Accordingly, participants indicated that 

these and similar forms of research have 

been difficult to complete on any 

comprehensive basis. See May 2013 

Final Rule (78 FR at 30671). 

Another method of learning fee 

information is to trace individual 

payments or to send test payments to 

gather transfer-specific data. Few 

information aggregators reported that 

they have tried this on a large scale. 

They reported that this is also a slow 

process that incurs some transaction 

fees. Additionally, some aggregators 

expressed doubts that gathered 

information will remain accurate for 

future transfers because of unknown 

variables or because different amounts 

of fees could be assessed on wire 

transfers sent to the same designated 

recipient institution, even though the 

transfers appear to have similar 

characteristics (e.g., same transfer 

amount). 

Relying on the temporary exception. 

A number of the insured institutions 

that spoke to the Bureau, but not all, 

indicated to the Bureau that they use the 

temporary exception when sending at 

least some of their wire transfers. As 

noted above, these remittance transfer 

providers stated generally that they 

strive to provide actual fee information 

and only use estimates in cases they 

deem such disclosure infeasible, such as 

when the transfer involves an entity 

with whom the U.S. bank has no direct 

relationship and the bank does not 

believe that the OUR charge code is a 

viable solution for that transfer. 

Finally, the Bureau does note that 

some insured institutions reported (or 

their service provider reported to us 

about them) that they did not use the 

temporary exception for any of their 

transfers. Reasons for this varied. For 

example, some service providers used 

the OUR method with increased 

confidence that it could provide a 

comprehensive solution or that they did 

not send to those areas where OUR did 

not work. Notably, even these service 

providers doubted that the OUR method 

could provide a comprehensive solution 

for all remittance transfers sent by 

consumers in the United States. Other 

service providers reported that they 

could leverage nostro accounts around 

the world established primarily for the 

benefit of their corporate customers to 

send funds directly into the recipient 

country. The Bureau believes that it may 

be too early in the use of these methods 

to know if they are truly comprehensive 

or able to allow disclosure of exact 

amounts for all remittance transfers. 

The frequency of reliance on the 

temporary exception for disclosure of 

intermediary fees varied greatly amongst 

those using the exception. Some did not 

use it at all while those that did 

reported that they used the exception 

for a varying range of their transfers: 

From 5 percent to as much as 50 to 60 

percent of remittance transfers although, 

to the extent data was reported to the 

Bureau during its interviews, most 

insured institutions with which the 

Bureau spoke reported using the 

exception for far fewer than half of their 

remittance transfers. The Bureau lacks 

data at this time as to the overall 

industry practice although it anticipates 

that the soon-to-be-available FFIEC Call 

Report data will provide helpful detail 

on this point. The Bureau believes that 

one factor that could explain the 

substantial variance among institutions 

is the destination countries to which 

particular providers’ customers send 

transfers and the size of the providers’ 

correspondent networks. Even when an 

institution’s reliance on the temporary 

exception is for a relatively small 

portion of its (or its customers’) 

remittance transfers, the Bureau 

understands that the institution may use 

estimates for remittance transfers sent to 

a number of countries. These 

institutions indicated that they did not 

believe that it was feasible either to get 

actual fee information or to send wires 

in a way that controls for covered thirdparty fees by July 21, 2015, for 

remittance transfers to those beneficiary 

banks for which they are today using the 

temporary exception. 

As noted above, the Bureau 

recognizes that this summary of market 

practice and consumer impact may not 

accurately represent all details of how 

remittance transfer providers send 

remittance transfers from accounts and, 

thus, the Bureau seeks comments on 

whether there are other methods of 

complying with the requirement to 

disclose covered third-party fees when 

sending such remittance transfers or 

whether other methods of sending 

transfers altogether might allow 

providers to comply with the 

Remittance Rule without reliance on the 

temporary exception. For example, the 

Bureau seeks comment on whether 

international ACH products could grow 

beyond their current, limited use, and 

develop into comprehensive solutions 

enabling insured institutions to provide 

exact disclosures for transfers from 

accounts. The Bureau also seeks 

comment on whether various types of 

closed networks might also play a role 

in the development of a solution to the 

issues outlined above. Finally, the 

Bureau seeks comment on whether, over 

time, additional competition amongst 

service providers will further motivate 

service providers to develop solutions 

that would eliminate a need to rely on 

the temporary exception in more cases. 

The Temporary Exception’s Impact on 

Consumers 

Although EFTA section 919(a)(4) 

provides that the Bureau’s 

determination to extend the temporary 

exception should hinge on the 

exception’s effect on the ability of 

remittance transfer providers to send 

transfers without the exception, the 

Bureau has also considered the impact 

of the temporary exception and its 

potential expiration on consumers. 

Specifically, the Bureau solicited input 

from several consumer groups whose 

constituents send remittance transfers. 

Many of these groups asserted that 

financial institutions have had sufficient 

time, and currently hold sufficient 

resources, to disclose exact figures in all 

cases. Citing a dearth of specific data on 

the effect of estimates on consumer 

experience, these representatives 

expressed concern that estimates could 

be wide-ranging and/or inaccurate. At 

least one of the groups also urged the 

Bureau to narrowly tailor the temporary 

exception, perhaps to allow it to be used 

only for remittance transfers to certain 

countries not already subject to the 

permanent exception. 

At this point, there is little 

information that has been developed 

about the way in which estimation of 

certain fees and exchange rates 

associated with a remittance transfer 

impacts consumers. For example, the 

Bureau does not have data on the 

relative accuracy of the estimates 

provided, nor on whether such 

estimates are on average higher or lower 

than the actual fees and rates associated 

with transactions. Although the Bureau 

did speak with several consumer 

groups, the Bureau also does not know 

the extent to which receipt of an 

estimate impairs a consumer’s ability to 

rely on disclosures provided. The 

Bureau seeks comment on the impact of 

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Federal Register / Vol. 79, No. 80 / Friday, April 25, 2014 / Proposed Rules 23249 

31The Bureau learned from many smaller 

institutions that they preferred to utilize 

compliance solutions that interfaced directly with 

other existing systems. Switching providers could 

require systems changes that impact other parts of 

the institution. 

32 Data can be accessed at https://cdr.ffiec.gov/

public/. 

the use of estimates on consumers as 

well as the potential impact of an 

extension of the temporary exception, 

including whether consumers find 

estimates to be relatively accurate and 

the impact of estimates versus actual 

amounts. 

The Bureau’s Proposal 

Based on information the Bureau has 

gathered regarding the Remittance Rule 

in general, including through outreach 

to industry and consumer groups, 

review of prior comment letters and 

other efforts, and from its recent 

interviews with remittance transfer 

providers, service providers, and 

consumer groups regarding the 

temporary exception, the Bureau has 

reached a preliminary determination 

that the expiration of the temporary 

exception would negatively impact the 

ability of insured institutions to send 

remittance transfers. 

As discussed above, it appears that a 

number of insured institutions are 

relying on the temporary exception to 

comply with the 2013 Final Rule for 

some portion of their remittance 

transfers either to disclose covered 

third-party fees, exchange rates, or both. 

When, as remittance transfer providers, 

they send wire transfers from accounts, 

these institutions (and/or their service 

providers) rely (in varying degrees) on 

action by entities that they do not 

control and that may not always provide 

any or accurate information regarding 

the fees and/or exchange rates that they 

apply. Thus, in at least some cases, the 

insured institutions are unable to 

determine, with accuracy, the actual 

amounts of the fees and/or exchange 

rates for the remittance transfers that 

they provide. Further, it appears that the 

insured institutions that are in the best 

position to ascertain exact fee 

information (i.e., the information 

aggregators that are insured institutions) 

do not believe that they could continue 

sending wire transfers and find an 

alternative to relying on the temporary 

exception for all of those corridors for 

which they are using the exception by 

July 21, 2015. 

Accordingly, the Bureau believes that 

if the temporary exception terminates 

on July 21, 2015, it could cause some of 

these institutions to stop offering 

remittance transfers to at least some of 

the foreign destinations to which they 

currently send remittance transfers 

using estimated disclosures. The Bureau 

further believes that a decision by 

service providers to stop offering 

remittance transfers to certain foreign 

destinations may also negatively impact 

the ability of a number of insured 

institutions that rely on those service 

providers to send remittance transfers 

and disclose covered third-party fees.31

With respect to the extension of the 

temporary exception for disclosure of 

exchange rates, the Bureau believes that 

some insured institutions are using the 

temporary exception for some portion of 

their remittance transfers. Additionally, 

similar to the disclosure of intermediary 

fees, it appears that a number of smaller 

institutions are relying on either service 

providers or larger institutions acting as 

information aggregators to provide their 

senders with exchange rate information. 

It also appears that for the remittance 

transfers for which providers are 

currently using the temporary 

exception, a number of institutions may 

not find a way to provide actual 

exchange rates for certain currencies by 

July 21, 2015. The Bureau believes that 

some portion of these institutions may 

stop offering remittance transfers to 

either all or some number of foreign 

destinations where they are currently 

disclosing estimated exchange rates. 

For the reasons given above, the 

Bureau makes a preliminary 

determination that the expiration of the 

temporary exception on July 21, 2015, 

would negatively affect the ability of 

insured institutions to send remittance 

transfers. Accordingly, the Bureau 

believes that it is necessary and proper 

to additionally exercise its authority 

under EFTA section 919(a)(4)(B) to 

amend § 1005.32(a)(2) to propose to 

extend the sunset of the temporary 

exception to July 21, 2020. 

Notwithstanding this preliminary 

determination, the Bureau will continue 

to dialogue with key stakeholders 

regarding possible long-term solutions 

to facilitate increased accuracy in 

remittance transfer disclosures while 

preserving a broad market for remittance 

transfers sent from accounts at insured 

institutions. The Bureau expects 

providers to continue to work towards 

providing exact disclosures of exchange 

rates and covered third-party fees in all 

cases where disclosure is required. If the 

Bureau finalizes this proposal and the 

expiration of the temporary exception is 

extended to July 2020, the Bureau 

expects that reliance on the temporary 

exception will decrease going forward 

as the industry continues to work 

towards improving solutions that allow 

for exact disclosures. The Bureau also 

expects to continue to review Call 

Report data each quarter to understand 

how use of the temporary exception 

changes over time, as well as to 

continue to engage with insured 

institutions and service providers to 

learn more about how key players are 

working towards the eventual expiration 

of the exception and to confirm that the 

providers are not abusing the exception. 

Furthermore, as the Bureau noted in the 

May 2013 Final Rule (in the context of 

its decision to eliminate the requirement 

to disclosed foreign taxes and certain 

recipient institution fees), it intends to 

monitor whether the development and 

availability of covered third-party fee 

and exchange rate information becomes 

more feasible in the future. 2013 Final 

Rule (78 FR at 30677). 

The Bureau solicits comment on the 

proposed extension of the temporary 

exception. Additionally, the Bureau 

solicits comment on its proposed 

determination that the expiration of the 

temporary exception would have a 

negative impact on the ability of insured 

institutions to send remittance transfers, 

as well as the magnitude of the impact. 

The Bureau also seeks comment on 

whether it should extend the exception 

for a period less than five years and/or 

whether it should place other limits on 

the use of the temporary exception, such 

as to allow only those institutions at or 

below a certain asset size to take 

advantage of the exception. 

As stated above, FFIEC Call Report 

data relevant to various aspects of 

remittance transfer services offered by 

certain reporting financial institutions 

will become available after May 15, 

2014. The Bureau notes that this 

information will include data on the 

frequency with which insured 

institutions use the temporary 

exception.32 The Bureau may use the 

data to supplement its understanding of 

how institutions are using the 

temporary exception. 

The Bureau also recognizes that that 

more information exists regarding the 

potential consumer impact of either the 

expiration or the extension of the 

temporary exception. The Bureau thus 

invites comment on the potential 

consumer impact of either the 

expiration of the temporary exception 

on July 21, 2015, or the proposed 

extension of the exception to July 21, 

2020. 

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23250 Federal Register / Vol. 79, No. 80 / Friday, April 25, 2014 / Proposed Rules 

Section 1005.33 Procedures for 

Resolving Errors 

1005.33(a) Definition of Error 

1005.33(a)(1) Types of Transfers or 

Inquiries Covered. 

Section 1005.33(a) defines what 

subpart B of Regulation E considers to 

be an error in connection with a 

remittance transfer. One of these errors 

is the failure to make funds available to 

a designated recipient by the date of 

availability stated in the disclosure 

provided to the sender under 

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

transfer, unless the failure occurs due to 

certain listed reasons. See 

§ 1005.33(a)(1)(iv). One of the reasons 

listed is for 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. § 1005.33(a)(1)(iv)(B). As 

the Bureau explained in the 2012 

February Final Rule, it did not intend 

for this provision to apply to delays that 

occur in the ordinary course, such as 

delays related to routine fraud screening 

procedures. 77 FR at 6252. 

To clarify the application of this 

provision, the Bureau is proposing to 

revise § 1005.33(a)(1)(iv)(B) so that it 

would expressly apply only to delays 

related to individualized investigation 

or other special action by the remittance 

transfer provider or a third-party as 

required by the provider’s or other 

entity’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. The Bureau 

believes that this proposed change is in 

accordance with the original intent of 

this provision but proposes this 

clarification to remove any ambiguity. 

As the Bureau noted in the 2012 

February Final Rule, it believes that 

individualized investigation or other 

special action could include a need to 

go back to the original sender for 

additional information related to the 

remittance transfer. 

To further clarify which delays would 

fall under this exception, the Bureau is 

proposing to add comment 33(a)–7, 

which would explain that under 

§ 1005.33(a)(1)(iv)(B), a remittance 

transfer provider’s failure to deliver a 

remittance transfer by the disclosed date 

of availability is not an error if such 

failure was caused by a delay related to 

a necessary investigation or other 

special action necessary to address 

potentially suspicious, blocked or 

prohibited activity in accordance with 

the BSA, OFAC requirements, or similar 

laws or requirements. For example, no 

error occurs if delivery of funds is 

delayed because the provider’s fraud 

screening system flags a remittance 

transfer to a designated recipient whose 

name is similar to the name of a blocked 

person under a sanctions program, and 

further investigation is needed to 

determine that the designated recipient 

is not actually a blocked person. 

Similarly, no error occurs if delivery of 

funds is delayed because the 

correspondent bank to which the 

provider forwards the remittance 

transfer identifies the transfer as similar 

to previous fraudulent activity and 

action by a correspondent or the 

provider is necessary to proceed. 

However, if a delay is caused by 

ordinary fraud screening or other 

screening procedures, where no 

potentially fraudulent, suspicious, 

blocked or prohibited activity is 

identified and no further investigation 

or action is required, the exception in 

§ 1005.33(a)(1)(iv)(B) would not apply. 

The Bureau is seeking comment on 

whether the proposed examples and 

description accurately reflect industry 

practice and/or provide sufficient 

guidance on the types of permissible 

delays. 

Finally, to reflect the insertion of new 

comment 33(a)–7, the Bureau proposes 

to renumber existing comments 33(a)–7 

through –10 as comments 33(a)–8 

through –11, respectively. 

1005.33(c) Time Limits and Extent of 

Investigation 

Section 1005.33(c)(2) implements 

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

establishes procedures and remedies for 

correcting an error under the Remittance 

Rule. In particular, where there has been 

an error under § 1005.33(a)(1)(iv) for 

failure to make funds available to a 

designated recipient by the disclosed 

date of availability, § 1005.33(c)(2)(ii) 

generally permits a sender to choose 

either: (1) To obtain a refund of the 

amount tendered in connection with the 

remittance transfer that was not 

properly transmitted, or an amount 

appropriate to resolve the error, or (2) to 

have the remittance transfer provider 

resend to the designated recipient the 

amount appropriate to resolve the error, 

at no additional cost to the sender or 

designated recipient. However, if the 

error resulted from the sender providing 

incorrect or insufficient information, 

§ 1005.33(c)(2)(iii) requires a provider to 

refund or, at the consumer’s request, 

reapply to a new transfer, the total 

amount that the sender paid to the 

provider and it permits the provider to 

deduct from this amount fees actually 

imposed and, where not otherwise 

prohibited by law, taxes actually 

collected as part of the first 

unsuccessful remittance transfer 

attempt. 

As drafted, the Bureau believes that 

the 2013 Final Rule may be ambiguous 

with respect to whether, in instances in 

which the sender provided incorrect or 

insufficient information the remittance 

transfer provider must always refund its 

own fee or whether it has the option of 

not doing so. See § 1005.33(c)(2)(iii). 

While comment 33(c)–12 explains that 

in such circumstances, the provider is 

required to refund its own fees but not 

the fee imposed by a correspondent 

(unless that fee will be refunded to the 

provider by the correspondent), the 

Bureau believes it appropriate to remove 

any ambiguity that might exist in the 

corresponding text of 

§ 1005.33(c)(2)(iii). 

The Bureau also proposes to clarify 

what should happen when an error 

occurs (for any reason) pursuant to 

§ 1005.33(a)(1)(iv), but the funds are 

ultimately delivered to the designated 

recipient before the remedy is 

determined. If the remittance transfer is 

delivered late but before the remedy is 

determined, the provider should be not 

be required to refund the amount 

delivered to the designated recipient or 

apply those funds towards a new 

transfer (as those funds have already 

been delivered). For example, consider 

a situation in which a sender sends 

$100 to a designated recipient and the 

provider charges a $10 fee and there are 

no other non-covered third-party fees or 

foreign taxes deducted from the transfer 

amount (the sender pays a total of $110 

to the provider and $100 is delivered to 

the designated recipient after the 

disclosed date of availability). If $100 is 

deposited into the designated recipient’s 

account after the date of availability, the 

Bureau proposes to clarify that the only 

remedy required would be a refund of 

the $10 fee to the sender. In this 

situation, it is not practical to refund the 

$100 to the sender so that he or she can 

resend the transfer since it was already 

delivered. Instead, § 1005.33(c)(2)(iii) (if 

the error occurred because the sender 

provided incorrect or insufficient 

information in connection with the 

remittance transfer) or (c)(2)(ii) (if the 

error occurred for another reason), 

require the provider to refund its $10 

fee; after that the amount appropriate to 

resolve the error should be zero. To 

require a refund of the $100 would, in 

essence, result in a windfall (insofar as 

the $100 was received by the designated 

recipient). 

To clarify these two issues, the 

Bureau first proposes to revise 

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33Section 1022(b)(2)(A) of the Dodd-Frank Act 

directs the Bureau, when prescribing a rule under 

the Federal consumer financial laws, to consider 

the potential benefits and costs of a regulation to 

consumers and covered persons, including the 

potential reduction of access by consumers to 

consumer financial products or services; the impact 

on depository institutions and credit unions with 

$10 billion or less in total assets as described in 

section 1026 of the Dodd-Frank Act; and the impact 

on consumers in rural areas. 

34The Bureau also solicited feedback from other 

agencies with supervisory and enforcement 

authority regarding Regulation E and the proposed 

rule. 

§ 1005.33(c)(2)(iii) to state that in the 

case of an error under § 1005.33(a)(1)(iv) 

that occurred because the sender 

provided incorrect or insufficient 

information in connection with the 

remittance transfer, the remittance 

transfer provider shall provide the 

remedies required by 

§ 1005.33(c)(2)(ii)(A)(1) and (c)(2)(ii)(B) 

within three business days of providing 

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

(d)(1) except that the provider may agree 

to the sender’s request, upon receiving 

the results of the error investigation, 

that the funds be applied towards a new 

remittance transfer, rather than be 

refunded, if the provider has not yet 

processed a refund. The provider may 

deduct from the amount refunded or 

applied towards a new transfer any fees 

actually imposed on or, to the extent not 

prohibited by law, taxes actually 

collected on the remittance transfer as 

part of the first unsuccessful remittance 

transfer attempts except that the 

provider shall not deduct its own fee. 

To further clarify what remedies must 

be provided for all errors that occur 

pursuant to § 1005.33(a)(1)(iv), the 

Bureau also proposes to modify 

comment 33(c)–5, to add language 

explaining that when the amount that 

was disclosed pursuant to 

§ 1005.31(b)(1)(vii) was received by the 

designated recipient before the provider 

must determine the appropriate remedy 

for an error under § 1005.33(a)(1)(iv), no 

additional amounts are required to 

resolve the error after the remittance 

transfer provider refunds the 

appropriate fees and taxes paid by the 

sender pursuant to § 1005.33(c)(2)(ii)(B) 

or (c)(2)(iii), as applicable. 

VI. Proposed Effective Date 

The Bureau proposes that all of the 

changes proposed herein take effect 

thirty days after publication of a final 

rule in the Federal Register. The 

proposed change to the temporary 

exception does not have a practical 

effect until after July 21, 2015, so an 

effective date before the expiration 

would provide for continuity. The other 

proposed changes generally reinforce 

current Bureau guidance on 

interpretation of the 2013 Final Rule. 

Thus, the Bureau believes that 

remittance transfer providers should not 

need to adjust their practices to align 

them with those proposed herein. The 

Bureau seeks comment on whether 

these changes to the 2013 Final Rule 

should take effect in thirty days after 

publication of a final rule in the Federal 

Register or if a later effective date is 

more appropriate. 

VII. Section 1022(b)(2) Analysis 

A. Overview 

In developing the proposed rule, the 

Bureau has considered potential 

benefits, costs, and impacts 33 and has 

consulted or offered to consult with the 

prudential regulators and the Federal 

Trade Commission, including regarding 

the consistency of the proposed rule 

with prudential, market, or systemic 

objectives administered by such 

agencies.34

The proposal would amend the 2013 

Final Rule (or, the Remittance Rule) that 

took effect on October 28, 2013 and 

which implements section 1073 of the 

Dodd-Frank Act regarding remittance 

transfers. First, the Bureau proposes to 

extend a temporary exception in the 

2013 Final Rule that permits insured 

depository institutions and insured 

credit unions to estimate the exchange 

rate and covered third-party fees under 

specified circumstances. Second, the 

Bureau proposes several clarificatory 

amendments and technical corrections 

to the Remittance Rule. These 

provisions regard: The application of 

the Remittance Rule to transfers to and 

from locations on U.S. military 

installations abroad; the treatment of 

transfers from non-consumer accounts; 

the treatment of faxes; when a provider 

may treat a communication regarding a 

potential remittance transfer as an 

inquiry; the Web site addresses to be 

disclosed on consumer receipts; and 

error resolution provisions related to 

delays and remedies. 

The analysis below considers the 

benefits, costs, and impacts of the 

provisions described above against the 

baseline provided by the 2013 Final 

Rule. With respect to such provisions, 

the analysis considers the benefits and 

costs to senders (consumers) as well as 

remittance transfer providers (covered 

persons). The Bureau has discretion in 

any rulemaking to choose an 

appropriate scope of analysis with 

respect to benefits, costs, and impacts 

and an appropriate baseline. 

The Bureau notes at the outset that 

the analysis below generally provides a 

qualitative discussion of the benefits, 

costs, and impacts of the proposed rule. 

The Bureau believes that quantification 

of the potential benefits, costs, and 

impacts of the proposed provisions is 

not possible. There are limited data on 

consumer behavior, which would be 

essential for quantifying the benefits or 

costs to consumers. For instance, 

information about the accuracy of 

estimates for exchange rates and 

covered third-party fees could help 

inform the Bureau of the potential cost 

to consumers of extending the 

temporary exception to July 21, 2020, in 

terms of the benefit foregone of 

receiving accurate information. There is 

still limited data about the remittance 

transfer market such that the Bureau 

cannot presently quantify the potential 

benefits, costs, and impacts of the 

proposed provisions. Nonetheless, the 

Bureau recognizes that available data 

about the remittance transfer market has 

increased significantly since the initial 

issuance of the Remittance Rule. As 

discussed above, the data collected by 

the NCUA regarding remittance 

transfers through its Call Report and 

Credit Union Profile Forms provide a 

valuable set of responses about credit 

unions. For example, credit union 

respondents are required to indicate 

their international remittance transfer 

volume. As discussed in the Section-bySection Analysis, the Bureau used the 

responses and estimated that credit 

unions sent less than 1% the number of 

international money transfers in 2013 as 

did money transmitters. 

The FFIEC Call Report data the 

Bureau expects to be made available 

during the comment period is expected 

to contain responses about the 

temporary exception utilization rate by 

insured depository institutions. 

Although the Bureau does not believe 

that the utilization rate should be 

determinative of the Bureau’s ultimate 

decision with respect to whether to 

extend the temporary exception, 

utilization rate data may affect the 

Bureau’s assessment of the impact on 

depository institutions with respect to 

the extension of the temporary 

exception. 

B. Potential Benefits and Costs to 

Consumers and Covered Persons 

1. Extension of the Temporary 

Exception to July 21, 2020 

The proposed rule would provide that 

remittance transfer providers may 

estimate exchange rates and covered 

third-party fees until July 21, 2020 if (1) 

the provider is an insured depository 

institution or credit union; (2) the 

remittance transfer is sent from the 

sender’s account with the provider; and 

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35As noted above in the Section-by-Section 

Analysis, the temporary exception does not apply 

to broker-dealers. However, SEC staff has issued a 

no-action letter stating that it will not recommend 

an enforcement action under Regulation E against 

broker-dealers that provide disclosures consistent 

with the requirements of the temporary exception. 

See http://www.sec.gov/divisions/marketreg/mrnoaction/2012/financial-information-forum121412-rege.pdf. 

(3) the provider cannot determine the 

exact amounts for reasons outside of its 

control.35 To implement the DoddFrank Act, the 2013 Final Rule provides 

that the exception sunsets on July 21, 

2015. But the Dodd-Frank Act also 

authorizes the Bureau to extend the 

exception up to July 21, 2020 if the 

Bureau determines that the termination 

of the exception would negatively affect 

the ability of insured depository 

institutions and credit unions to send 

remittance transfers to locations in 

foreign countries. EFTA section 

919(a)(4)(B). This analysis considers the 

benefits, costs, and impacts of extending 

the exception against a baseline of 

allowing the exception to expire on July 

21, 2015. 

To determine if the statutory 

predicate to extending the exception 

exists, namely, a negative effect on 

remittance transfers caused by a 

baseline of allowing the exception to 

expire on July 21, 2015, the Bureau 

endeavored to understand how insured 

depository institutions and credit 

unions are providing remittance 

transfers without using the temporary 

exception and when they are using the 

temporary exception. The Bureau 

understands that many insured 

institutions have already taken 

significant steps toward disclosing 

actual exchange rates and covered thirdparty fees when they believe they are 

able to do so, even though they might 

have additional flexibility pursuant to 

the temporary exception to provide 

estimates instead. But it appears that 

both small and large insured institutions 

rely on the temporary exception for 

remittance transfers from accounts in 

which they believe covered third-party 

fee and/or exchange rate information are 

not readily available and for which they 

can otherwise satisfy the criteria for 

using the temporary exception. Further, 

these institutions have generally 

indicated to the Bureau that they are 

unlikely to find an alternative to their 

reliance on the temporary exception by 

July 21, 2015, for at least some portion 

of the remittance transfers for which 

they currently use the temporary 

exception. To the extent that 

institutions believe that finding an 

alternative by July 21, 2015 is possible, 

the Bureau believes that a number of 

institutions view the associated cost as 

a significant burden, even if such cost 

falls short of being prohibitive in all 

cases. 

The information the Bureau has 

gathered thus far with respect to how 

insured depository institutions and 

credit unions are or are not using the 

temporary exception, along with the 

Bureau’s other efforts to understand 

industry’s compliance with the 

requirements of the Remittance Rule, 

have provided the Bureau with a basis 

to make a preliminary determination 

that if the exception sunsets on July 21, 

2015, its expiration would negatively 

impact the ability of insured institutions 

to send remittance transfers. The Bureau 

recognizes that its description of market 

practices may not be accurate in all 

respects, and invites comments to 

further its understanding of such 

practices. 

a. Benefits and Costs to Consumers 

As the Bureau stated in its original 

impact analysis related to the adoption 

of the temporary exception, relative to 

accurate disclosures, estimated 

disclosures strike a different balance 

between accuracy and access, offering 

less accuracy but potentially preserving 

greater access. 77 FR at 6274. The 

Bureau believes that extending the 

temporary exception would benefit 

those consumers who use insured 

institutions to send remittance transfers 

to countries or institutions to which 

some insured institutions would cease 

providing remittance transfer services, if 

the exception were to sunset on July 21, 

2015. To the extent an insured 

institution would curtail certain 

services because it would no longer be 

able to rely on the temporary exception, 

and the ability to rely on the temporary 

exception is instrumental in that 

institution’s decision to continue to 

offer those services, extending the 

temporary exception would benefit a 

consumer using that institution to send 

remittances to a destination that could 

be potentially impacted. In that case, the 

extension would preserve the 

consumer’s ability to continue using 

that particular institution as the 

consumer’s remittance transfer provider. 

Extending the temporary exception 

would also provide benefits to 

consumers in the form of avoiding 

increased prices if providing the actual 

information (as opposed to estimates) 

would require insured institutions or 

their service providers to take costly 

steps to provide that information and 

those institutions decide to pass those 

costs to the consumers. In other words, 

although the consumers would receive 

actual information, they may have to 

pay more to send a remittance transfer 

in some cases. 

Providing estimates instead of actual 

information has costs for consumers as 

well. Disclosures that accurately reflect 

actual covered third-party fees and 

exchange rates would make it easier for 

a consumer to know whether a 

designated recipient is going to receive 

an intended sum of money, or how 

much the consumer must send to 

deliver a specific amount of foreign 

currency to a designated recipient. 

Accurate disclosures would also make it 

easier for consumers to compare prices 

across providers, via, for example, 

prepayment disclosures. Extending the 

temporary exception would impose a 

cost on consumers in the form of these 

foregone benefits because they would 

continue to receive estimated 

disclosures in some cases. Such cost 

could be significant if the estimated 

disclosures they receive from insured 

depository institutions and credit 

unions tend to be inaccurate. However, 

the Bureau lacks data on how often 

estimates of exchange rates and covered 

third-party fees that insured institutions 

disclose to consumers pursuant to the 

temporary exception tend to be 

inaccurate, and the degree of the 

inaccuracy, if any. Additionally, the 

Bureau believes there would be a cost 

associated with an extension of the 

temporary exception in that if 

consumers believe that they cannot rely 

on estimated disclosures and thus do 

not rely on them to, for example, 

compare prices across providers. 

However, the Bureau also lacks data on 

whether consumers that receive 

estimated disclosures perceive such 

information to be unreliable. 

b. Benefits and Costs to Covered Persons 

As noted above, the Bureau believes 

that many insured institutions have 

made significant progress toward 

disclosing exact amounts. But at the 

same time, it appears that both some 

small and some large insured 

institutions rely on the temporary 

exception for some portion of their 

transfers. For these institutions, with 

respect to the segment of their business 

for which they rely on the temporary 

exception and for which they are unable 

to find a practical or cost-effective 

alternative to the temporary exception, 

the Bureau believes that a potential 

benefit associated with extending the 

temporary exception would be that it 

would allow them to avoid the cost 

associated with losing that segment of 

their business. The Bureau 

acknowledges that the magnitude of this 

benefit may be related to how big that 

segment of the business is for an insured 

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institution. Based on the Bureau’s 

outreach efforts, the Bureau has made a 

preliminary finding that it varies greatly 

with respect to covered third-party fees. 

The Bureau also acknowledges that the 

magnitude of this benefit may only be 

marginal with respect to the disclosure 

of exchange rates. As noted above, the 

Bureau’s current understanding is that 

use of the temporary exception for 

estimating the applicable foreign 

exchange rate is quite limited. An 

additional benefit of extending the 

temporary exception may be that it 

could provide additional time for 

insured institutions to search for 

efficient and cost-effective ways to 

disclose actual exchange rates and 

covered third-party fees. 

The Bureau believes that in some 

circumstances, the additional costs that 

insured institutions may have to incur 

to provide exact disclosures may not be 

so prohibitive such that an insured 

institution would curtail sending 

remittance transfers to certain 

destinations altogether, although this 

might be possible in some cases. The 

Bureau notes that entities that currently 

rely on the temporary exception 

generally told the Bureau that they 

believe that the expiration of the 

temporary exception on July 21, 2015 

would create significant costs for them, 

but that they have not evaluated such 

costs such that they could provide the 

Bureau with actual or estimated 

numbers. The Bureau believes that there 

would not be a cost to insured 

institutions of extending the exemption 

because it would not require them to 

alter current practices. To the extent 

that letting the temporary exception 

expire on July 21, 2015 would raise 

transaction costs for insured institutions 

such that it would lead to some insured 

institutions to no longer offer remittance 

transfer services to certain destinations, 

money transmitters that offer services to 

those destinations could benefit from 

less competition. 

2. Technical Corrections and 

Clarifications 

In addition to the proposed extension 

of the temporary exception, the Bureau 

also considers potential benefits and 

costs to consumers and remittance 

transfer providers of the several 

technical corrections and clarifications 

proposed by the Bureau. Generally, 

except for the clarification regarding the 

application of the Remittance Rule to 

transfers to and from locations on U.S. 

military installations abroad, the Bureau 

believes that none of the proposed 

technical corrections or clarifications 

will materially alter the benefits and 

costs to consumers and covered persons 

of the Remittance Rule. Further, because 

the technical corrections and 

clarifications proposed by the Bureau 

are intended to remove ambiguity, the 

Bureau believes that they may actually 

provide some benefit to both consumers 

and covered persons in that they could 

increase the clarity and precision of the 

Remittance Rule and help to reduce 

compliance costs. 

As discussed above, the Remittance 

Rule does not expressly address 

transfers to and from U.S. military 

installations within foreign countries 

and because the Bureau believes that 

there is a potential for confusion, the 

Bureau is considering clarifying the 

application of the Remittance Rule to 

transfers to and from locations on these 

installations. If the Bureau were to treat 

such locations as being in a State, 

transfers sent from the United States to 

those locations would not be subject to 

the Remittance Rule, and there would 

be benefits to covered persons of not 

having to comply with the requirements 

of the rule, while there would be costs 

to consumers of not receiving the 

consumer protections of the rule. The 

costs and benefits would be reversed if 

the Bureau decides to treat locations on 

U.S. military installations as not being 

in a State. 

The Bureau lacks data on current 

practices, particularly information about 

the volume and size of transfers sent by 

consumers in the United States to 

recipients located on U.S. military 

installations within foreign countries, 

and the volume and size of transfers 

being sent from locations on such 

installations to the surrounding foreign 

country or other foreign countries. As 

the Bureau lacks such data, it cannot 

evaluate the relative benefits and costs 

of clarifying the application of the 

Remittance Rule to locations on U.S. 

military installations within foreign 

countries on covered persons and 

consumers. The Bureau seeks comment 

generally on the relative costs and 

benefits of the proposed clarification on 

consumers and covered persons. 

The Bureau is also proposing a 

clarification to the commentary related 

to the definition of ‘‘sender’’ to clarify 

the application of the Remittance Rule 

to transfers sent from non-consumer 

accounts. The proposed clarification 

would provide that if a transfer is sent 

from an account that is not used 

primarily for personal, family, or 

household purposes, such as an account 

that was established as a business or 

commercial account or an account 

owned by a business entity, the 

Remittance Rule would not apply. The 

proposed clarification would also make 

clear that transfers from consumer 

accounts are deemed to be sent for a 

personal, family, or household purpose. 

The Bureau believes that remittance 

transfer providers are currently treating 

transfers from non-consumer accounts 

as being outside of the scope of the 

Remittance Rule, and transfers from 

consumer accounts as being within the 

scope of the rule. Thus, the Bureau does 

not foresee any material impact on the 

cost or benefits from this proposed 

clarification. 

The Bureau further proposes to clarify 

that for purposes of disclosures required 

to be provided pursuant to § 1005.31 or 

.36, such disclosures provided by 

remittance transfer providers via fax are 

considered to be written disclosures for 

purposes subpart B of Regulation E, and 

are not subject to the additional 

requirements for electronic disclosures 

set forth in § 1005.31(a)(2). The Bureau 

believes that this proposed clarification 

would have no material impact on 

covered persons or consumers because 

the Bureau believes that to the extent 

remittance transfer providers already 

send fax disclosures, they treat those 

faxes as a ‘‘writing.’’ Similarly, the 

Bureau believes its proposed 

modification to comment 31(a)(3)–2 

would conform the rule to providers’ 

current practice and thus would have 

minimal impact on covered persons and 

consumers. As discussed above, 

proposed comment 31(a)(3)–2 would 

clarify that: (1) A provider may treat a 

written or electronic communication as 

an inquiry when it believes that treating 

the communication as a request would 

be impractical, and (2) that in such 

circumstances, a provider may conduct 

the transaction orally and entirely by 

telephone pursuant to § 1005.31(a)(3) 

when the provider treats that initial 

communication as an inquiry and 

responds to the inquiry by telephone 

and orally gathers or confirms the 

information needed to identify and 

understand a request for a remittance 

transfer and otherwise conducts the 

transaction orally and entirely by 

telephone. 

The Bureau is additionally proposing 

that remittance transfer providers may 

satisfy the requirement in 

§ 1005.31(b)(2)(vi) to disclose the 

Bureau’s Web site on the receipts they 

provide to consumers by listing the Web 

site that is the address of a page on the 

Bureau’s Web site that provides 

information about remittance transfers, 

and that providers making foreign 

language disclosures pursuant to § 1005 

31(g) may disclose the Web site of the 

Bureaus homepage that is in the 

relevant language, if that Web site 

exists. Although the Remittance Rule 

does not specify which Bureau Web site 

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would be provided on receipts, the 

Model Forms published by the Bureau 

all listed the Bureau’s internet 

homepage. Insofar as this proposed 

change would expand providers’ 

options with respect to meeting the 

requirement in § 1005.31(b)(2)(vi) to 

disclose the Web site of the Bureau, but 

not require them to alter their current 

receipts, the Bureau does not believe 

that the proposed change would impose 

costs on providers, unless providers 

voluntarily choose to adjust their 

receipts. If some consumers would 

receive disclosures with these more 

specific Bureau Web sites if the Bureau 

adopts this proposed change, the Bureau 

believes that those consumers may 

benefit from receiving more direct 

access to relevant Bureau resources 

about their rights under the Remittance 

Rule. 

Finally, the Bureau believes that the 

proposed changes to the error resolution 

provisions in § 1005.33 would also not 

materially alter the costs or benefits of 

the rule to covered persons and 

consumers. The Bureau believes that the 

proposed clarification that 

§ 1005.33(a)(1)(iv)(B) would only apply 

to individualized investigations or other 

special actions by the remittance 

transfer provider or a third party as 

required by the provider’s fraud 

screening procedures or in accordance 

with the Bank Secrecy Act, Office of 

Foreign Assets Control requirements, or 

similar laws or requirements and the 

addition of comment 33(a)–7 would 

conform the rule to its intended scope, 

and is consistent with the current 

understanding of this exception. 

With respect to the proposed changes 

to § 1005.33(c)(2)(iii) regarding how to 

provide remedies for errors under 

§ 1005.33(a)(1)(iv) (failure to make funds 

available to the designated recipient by 

the disclosed date of availability) 

because the sender provided incorrect 

or insufficient information in 

connection with the remittance transfer, 

the Bureau believes that remittance 

providers are not deducting their own 

fees when remedying the error. Current 

comment 33(c)–12 explains the types of 

fees that a provider may deduct, and 

they do not include the provider’s own 

fees. Indeed, an illustration is provided 

in comment 33(c)–12.i. (a remittance 

transfer provider imposes a US$10 fee 

on a remittance transfer, and its 

correspondent imposes a US$15 fee, an 

error under § 1005.33(a)(1)(iv) is 

determined to have occurred, the 

provider is required to refund its $10 

fee). Accordingly, the Bureau does not 

believe that there would be a material 

impact from this provision. 

Lastly, the Bureau is proposing to add 

to comment 33(c)–5 with an example 

that would illustrate what is meant by 

the explanation set forth in the 

comment with respect to the amount 

appropriate to resolve the error for 

purposes of certain remedies set forth in 

rule. The Bureau does not believe that 

there will be a material impact, because 

the proposed addition would not alter 

the current explanation and impact the 

amount consumers would receive as the 

amount appropriate to resolve the error. 

The Bureau believes that the proposed 

addition may have a small beneficial 

impact because it would add clarity to 

the existing commentary. 

C. Access to Consumer Financial 

Products and Services 

The Bureau expects that the proposal 

generally would not decrease 

consumers’ access to consumer financial 

products and services. By extending the 

temporary exception, the proposal could 

preserve consumers’ current set of 

options for sending remittance transfers 

to destinations for which insured 

institutions avail themselves of the 

temporary exception, compared to a 

market in which the temporary 

exception has expired, and some 

remittance transfer providers has 

stopped providing services to some 

destinations, particularly if many 

providers use the exception to send 

remittance transfers to the same 

destinations. Additionally, by 

facilitating insured institutions’ 

continued participation in the segment 

of the market for which they avail 

themselves of the temporary exception, 

the proposal could preserve 

competition. As discussed above, the 

Bureau seeks comments in particular on 

the relative costs and benefits of the 

proposal to clarify the application of the 

Remittance Rule to transfers sent to and 

from locations on U.S. military 

installations abroad. The Bureau also 

invites comment on its potential impact 

on consumer access to consumer 

financial product and services. 

D. Impact on Depository Institutions 

and Credit Unions With $10 Billion or 

Less in Total Assets 

As discussed above, the Bureau 

understands that with regard to 

remittance transfers sent from accounts, 

the majority of insured institutions that 

are remittance transfer providers obtain 

information about exchange rates and 

covered third-party fees from a limited 

number of service providers that are 

either very large insured institutions or 

large nonbank service providers. The 

Bureau believes that this would apply to 

depository institutions and credit 

unions with $10 billion or less in total 

assets. Given that reliance, the nature of 

the impacts on these institutions would 

likely be similar to the effects on larger 

depository institutions. 

The specific impacts of the proposed 

extension on depository institutions and 

credit unions would depend on a 

number of factors, including whether 

they are remittance transfer providers, 

the importance of remittance transfers 

for the institutions, the methods that the 

insured institutions use to send 

remittance transfers, and the number of 

institutions or countries to which they 

send remittance transfers. Information 

that the Bureau obtained during prior 

remittance rulemaking efforts and the 

NCUA Call Report data discussed above 

suggest that among depository 

institutions and credit unions that 

provide any remittance transfers, an 

institution’s asset size and the number 

of remittance transfers sent by the 

institution are positively, though 

imperfectly, related. The Bureau 

therefore expects that among depository 

institutions and credit unions with $10 

billion or less in total assets that provide 

any remittance transfers, compared to 

larger such institutions, a greater share 

will qualify for the safe harbor related 

to the definition of ‘‘remittance transfer 

provider’’ and therefore would be 

entirely unaffected by the proposed 

extension because they are not subject 

to the requirements of the 2013 Final 

Rule. See § 1005.30(f)(2). 

E. Impact of the Proposal on Consumers 

in Rural Areas 

Senders in rural areas may experience 

different impacts from the proposal than 

other senders. The Bureau does not have 

data with which to analyze these 

impacts in detail. However, to the extent 

that the proposal leads more remittance 

transfer providers to continue to provide 

remittance transfer services, the 

proposal may disproportionately benefit 

senders living in rural areas. Senders in 

rural areas may have fewer options for 

sending remittance transfers, and 

therefore may benefit more than other 

senders from a change that keeps more 

providers in the market. The Bureau 

does not expect that any of its other 

proposed changes would have a 

material impact on consumers in rural 

areas. 

F. Request for Information 

The Bureau will further consider the 

benefits, costs and impacts of the 

proposal before finalizing this proposal. 

The Bureau asks interested parties to 

provide comment or data on various 

aspects of the proposed rule, as detailed 

above in the Section-by-Section 

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36 5 U.S.C. 601, et seq. The Bureau is not aware 

of any small governmental units or not-for-profit 

organizations to which the proposal would apply. 

37 5 U.S.C. 601(3) (the Bureau may establish an 

alternative definition after consultation with the 

Small Business Administration and an opportunity 

for public comment). 

38 5 U.S.C. 603–605. 

39 5 U.S.C. 609. 

Analysis and this part. This includes 

comment or data regarding the number 

and characteristics of affected entities 

and consumers; providers’ current 

practices and how this proposal might 

change their current practices or their 

planned practices under the 2013 Final 

Rule; and any other portions of this 

analysis. 

The Bureau requests commenters to 

submit data and to provide suggestions 

for additional data to assess the issues 

discussed above and other potential 

benefits, costs, and impacts of the 

proposed rule. Further, the Bureau seeks 

information or data on the proposed 

rule’s potential impact on consumers in 

rural areas as compared to consumers in 

urban areas. The Bureau also seeks 

information or data on the potential 

impact of the proposed rule on 

depository institutions and credit 

unions with total assets of $10 billion or 

less as described in Dodd-Frank Act 

section 1026 as compared to depository 

institutions and credit unions with 

assets that exceed this threshold and 

their affiliates. 

VIII. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996, requires each agency to consider 

the potential impact of its regulations on 

small entities, including small 

businesses, small governmental units, 

and small not-for-profit organizations.36

The RFA defines a ‘‘small business’’ as 

a business that meets the size standard 

developed by the Small Business 

Administration pursuant to the Small 

Business Act.37

The RFA generally requires an agency 

to conduct an initial regulatory 

flexibility analysis (IRFA) and a final 

regulatory flexibility analysis (FRFA) of 

any rule subject to notice-and-comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities.38

The Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small entity 

representatives prior to proposing a rule 

for which an IRFA is required.39

An IRFA is not required for this 

proposal because the proposal, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities. The Bureau 

believes that the extension of the 

temporary exception would not impose 

a cost on any insured institutions, 

because the extension would not require 

them to alter current practices but 

instead maintain the status quo. With 

regard to the proposed clarifications and 

technical corrections with respect the 

treatment of transfers sent from nonconsumer accounts, the treatment of 

faxes, when a provider may treat a 

communication regarding a potential 

remittance transfer as an inquiry, the 

Web site addresses to be disclosed on 

consumer receipts, and error resolution 

provisions related to delays and 

remedies, the Bureau does not believe 

that any of the proposed provisions 

would have any material cost impact on 

any remittance providers for the reasons 

stated in the Section 1022(b)(2) 

Analysis. 

With respect to the proposal to clarify 

the treatment of U.S. military 

installations located in foreign 

countries, the Bureau believes that 

remittance transfer providers that are 

small entities would not be significantly 

impacted. As discussed above, there is 

a potential for confusion with respect to 

when the Remittance Rule applies to 

transfers to and from locations on U.S. 

military installations abroad. If locations 

on U.S. military installations abroad are 

treated as being in a State, the 

Remittance Rule would apply to 

transfers from locations on installations 

to locations in foreign countries, but 

would not apply to transfers from 

locations in a State to locations on 

installations. If, in the alternative, 

locations on U.S. military installations 

abroad are not treated as being in a 

State, the Remittance Rule would not 

apply to transfers from locations on 

installations to locations in foreign 

countries, but would apply to transfers 

from locations in a State to locations on 

installations. 

Depending on current practice, each 

approach could impose additional costs 

on some entities with respect to some 

transfers (i.e., by applying the 

Remittance Rule to transfers to which 

the rule is not currently being applied), 

and relieve burdens on some entities 

with respect to some other transfers (i.e., 

by clarifying that the Remittance Rule 

does not apply to transfers to which it 

is currently being applied). 

As noted above, the Bureau lacks data 

on the relative impacts of the 

approaches to clarifying the application 

of the Remittance Rule. However, the 

Bureau does not believe that the impacts 

would be large enough to cause a 

significant economic impact on a 

substantial number of small entities for 

at least three reasons. First, for transfers 

to and from the accounts of persons 

stationed on U.S. military bases abroad, 

the Remittance Rule provides that the 

determination of whether or not the rule 

applies depends on the location of the 

account, rather than the account 

owner’s physical location at the time of 

transfer. See comment 30(c)–2.ii 

(whether location is in a foreign 

country); comment 30(g) (whether 

consumer is located in a State). Based 

on the Bureau’s outreach to date, the 

Bureau believes that many 

servicemembers and other consumers 

stationed at U.S. military bases abroad 

opened their accounts in the United 

States. Accordingly, the Bureau believes 

that the impact of a potential 

clarification on account-based transfers 

should be relatively limited. 

Second, the Bureau notes that either 

approach would likely have the burdenrelieving effect of clarifying the 

application of the rule. Third, the 

Bureau does not believe that a 

substantial number of small entities 

send transfers to and from locations on 

U.S. military bases. For such 

transactions, the small entity would 

have to be located on the installation 

(for transfers from locations on the 

installation) or, for most such 

transactions that not are account-based, 

have an agent on the installation (for 

transfers to locations on the 

installation). The Bureau believes that 

remittance transfer providers that are 

small entities generally do not have 

such locations or agent networks. 

Accordingly, the undersigned certifies 

that this proposal, if adopted, would not 

have a significant economic impact on 

a substantial number of small entities. 

The Bureau requests comment on its 

analysis of the impact of the proposed 

rule on small entities and requests any 

relevant data. 

IX. Paperwork Reduction Act 

Under the Paperwork Reduction Act 

of 1995 (44 U.S.C. 3501, et seq.) (PRA), 

the Bureau may not conduct or sponsor, 

and a person is not required to respond 

to, an information collection unless the 

information collection displays a valid 

OMB control number. Regulation E, 12 

CFR 1005, currently contains collections 

of information approved by OMB. The 

Bureau’s OMB control number for 

Regulation E is 3170–0014. 

With the exception of the proposal to 

clarify the application of the Remittance 

Rule to transfers sent from locations on 

U.S. military installations abroad, the 

Bureau does not believe that any of the 

proposed changes to Remittance Rule 

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23256 Federal Register / Vol. 79, No. 80 / Friday, April 25, 2014 / Proposed Rules 

set forth in this proposal would have a 

material impact on the Bureau’s current 

collections of information pursuant to 

Regulation E approved by the Office of 

Management and Budget (OMB) under 

section 3507(d) of the PRA. With respect 

to the proposal to clarify the application 

of the Remittance Rule to transfers sent 

from locations on U.S. military 

installations abroad, the Bureau lacks 

data about current practice and thus is 

unable to determine the potential 

impact of the proposed modification on 

the Bureau’s current collection of 

information pursuant to Regulation E. 

Other than this aspect of the proposal, 

there are no new collections of 

information in this proposal that are 

subject to the PRA that could potentially 

amend current collections of 

information pursuant to Regulation E 

that have been previously submitted to 

and approved by OMB. 

Comments are specifically requested 

concerning information that would 

assist the Bureau with making a 

determination on the impact of 

clarifying the application of the 

Remittance Rule to transfers sent from 

locations on U.S. military installations 

abroad on the Bureau’s current 

collection of information pursuant to 

Regulation E, and whether the 

determination that the rest of the 

changes to the Remittance Rule in this 

proposal would not have a material 

impact on the Bureau’s current 

collections of information pursuant to 

Regulation E approved by OMB is 

correct. Comments should be submitted 

as outlined in the ADDRESSES section 

above. All comments will become a 

matter of public record. 

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 proposes to 

amend 12 CFR part 1005 as follows: 

PART 1005—ELECTRONIC FUND 

TRANSFERS (REGULATION E) 

■ 1. The authority citation for part 1005 

continues to read as follows: 

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

1693b. Subpart B is also issued under 12 

U.S.C. 5601. 

Subpart B—Requirements for 

Remittance Transfers 

■ 2. Amend § 1005.32 by revising 

paragraph (a)(2) to read as follows: 

§ 1005.32 Estimates. 

(a) * * * 

(2) Paragraph (a)(1) of this section 

expires on July 21, 2020. 

* * * * * 

■ 3. Amend § 1005.33 by revising 

paragraphs (a)(1)(iv)(B) and (c)(2)(iii) to 

read as follows: 

§ 1005.33 Procedures for Resolving 

Errors. 

(a) * * * 

(1) * * * 

(iv) * * * 

(B) Delays related to individualized 

investigation or other special action by 

the remittance transfer provider or a 

third party as required by the 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; 

* * * * * 

(c) * * * 

(2) * * * 

(iii) In the case of an error under 

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

occurred because the sender provided 

incorrect or insufficient information in 

connection with the remittance transfer, 

the remittance transfer provider shall 

provide the remedies required by 

paragraphs (c)(2)(ii)(A)(1) and 

(c)(2)(ii)(B) of this section within three 

business days of providing the report 

required by paragraph (c)(1) or (d)(1) of 

this section except that the provider 

may agree to the sender’s request, upon 

receiving the results of the error 

investigation, that the funds be applied 

towards a new remittance transfer, 

rather than be refunded, if the provider 

has not yet processed a refund. The 

provider may deduct from the amount 

refunded or applied towards a new 

transfer any fees actually imposed on or, 

to the extent not prohibited by law, 

taxes actually collected on the 

remittance transfer as part of the first 

unsuccessful remittance transfer attempt 

except that the provider shall not 

deduct its own fee. 

■ 4. In Supplement I to Part 1005: 

■ a. Under Section 1005.30—Remittance 

Transfer Definitions: 

■ i. Under Paragraph 30(g), paragraph 2 

is added. 

■ b. Under Section 1005.31— 

Disclosures: 

■ i. Under Paragraph 31(a)(2), 

paragraph 5 is added. 

■ ii. Under Paragraph 31(a)(3), 

paragraph 1 is revised. 

■ iii. Under Paragraph 31(a)(3), 

paragraph 2 is revised. 

■ iv. Under Paragraph 31(b)(2), 

paragraphs 4, 5, 6 are redesignated as 

paragraphs 5, 6, and 7. 

■ v. Under Paragraph 31(b)(2), 

paragraph 4 is added. 

■ vi. Under Paragraph 31(e)(2), 

paragraph 1 is revised. 

■ c. Under Section 1005.33—Procedures 

for Resolving Errors: 

■ i. Under Paragraph 33(a), paragraphs 

7, 8, 9, 10 are redesignated as 

paragraphs 8, 9, 10, and 11. 

■ ii. Under Paragraph 33(a), new 

paragraph 7 is added. 

■ iii. Under Paragraph 33(c), paragraph 

5 is added. 

The revisions and additions read as 

follows: 

Supplement I to Part 1005—Official 

Interpretations 

Section 1005.30—Remittance Transfer 

Definitions 

* * * * * 

30(g) Sender 

1. * * * 

2. Personal, family, or household 

purposes. Under § 1005.30(g), a 

consumer is a ‘‘sender’’ only where he 

or she requests a transfer primarily for 

personal, family, or household 

purposes. A consumer who requests a 

transfer primarily for other purposes, 

such as business or commercial 

purposes, is not a sender under 

§ 1005.30(g). For transfers from an 

account, the primary purpose for which 

the account was established determines 

whether a transfer from that account is 

requested for personal, family, or 

household purposes. A transfer that is 

sent from an account that is not used 

primarily for personal, family, or 

household purposes, such as an account 

that was established as a business or 

commercial account or an account 

owned by a business entity such as a 

corporation, not-for-profit corporation, 

professional corporation, limited 

liability company, partnership, or sole 

proprietorship, is not requested 

primarily for personal, family, or 

household purposes. A consumer 

requesting a transfer from such an 

account therefore is not a sender under 

§ 1005.30(g). 

Section 1005.31—Disclosures 

31(a) General Form of Disclosures 

31(a)(2) Written and Electronic 

Disclosures 

* * * * * 

■ 5. Disclosures provided by fax. For 

purposes of disclosures required to be 

provided pursuant to § 1005.31 or .36, 

disclosures provided by facsimile 

transmission (i.e., fax) are considered to 

be provided in writing for purposes of 

providing disclosures in writing 

pursuant to subpart B and are not 

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subject to the requirements for 

electronic disclosures set forth in 

§ 1005.31(a)(2). 

* * * * * 

31(a)(3) Disclosures for Oral Telephone 

Transactions 

* * * * * 

1. Transactions conducted partially 

by telephone. Except as provided in 

comment 31(a)(3)–2, for transactions 

conducted partially by telephone, 

providing the information required by 

§ 1005.31(b)(1) to a sender orally does 

not fulfill the requirement to provide 

the disclosures required by 

§ 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 prepayment 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 conducted orally and 

entirely by telephone, such as 

transactions conducted orally on a 

landline or mobile telephone. A 

remittance transfer provider may treat a 

written or electronic communication as 

an inquiry when it believes that treating 

the communication as a request would 

be impractical. For example, if a sender 

physically located abroad contacts a 

U.S. branch of the sender’s financial 

institution and attempts to initiate a 

remittance transfer by first sending a 

mailed letter, further communication 

with the sender by letter may be 

impractical due to the physical distance 

and likely mail delays. In such 

circumstances, a provider may conduct 

the transaction orally and entirely by 

telephone pursuant to § 1005.31(a)(3) 

when the provider treats that initial 

communication as an inquiry and 

subsequently responds to the 

consumer’s inquiry by calling the 

consumer on a telephone and orally 

gathering or confirming the information 

needed to identify and understand a 

request for a remittance transfer and 

otherwise conducts the transaction 

orally and entirely by telephone. 

* * * * * 

31(b) Disclosure Requirements 

31(b)(2) Receipt 

* * * * * 

4. Web site of the Consumer Financial 

Protection Bureau. Section 

1005.31(b)(2)(vi) requires a remittance 

transfer provider to disclose the name, 

toll-free telephone number(s), and Web 

site of the Consumer Financial 

Protection Bureau. Providers may satisfy 

this requirement by disclosing the Web 

site of the Consumer Financial 

Protection Bureau’s homepage, 

www.consumerfinance.gov, as shown on 

Model Forms A–31, A–32, A–34, A–35, 

A–39, and A–40 of appendix A. 

Alternatively, providers may, but are 

not required to, disclose the Bureau’s 

Web site as the address of a page on the 

Bureau’s Web site that provides 

information for consumers about 

remittance transfers, currently, 

www.consumerfinance.gov/sendingmoney. In addition, providers making 

disclosures in a language other than 

English pursuant to § 1005.31(g) may, 

but are not required to, disclose the 

Bureau’s Web site as a page on the 

Bureau’s Web site that provides 

information for consumers about 

remittance transfers in the relevant 

language, if such Web site exists. For 

example, a provider that is making 

disclosures in Spanish under 

§ 1005.31(g) may, but is not required to, 

disclose the Bureau’s Web site on 

Spanish-language disclosures as the 

page on the Bureau’s Web site that 

provides information regarding 

remittance transfers in Spanish, 

currently www.consumerfinance.gov/

enviar-dinero. 

* * * * * 

7. * * * 

31(e) Timing 

1. Request to send a remittance 

transfer. Except as provided in 

§ 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 that has sent an 

email, fax, mailed letter, or similar 

written or electronic communication 

has not requested a remittance transfer 

if the provider believes that it is 

impractical for the provider to treat that 

communication as a request and if the 

provider treats the communication as an 

inquiry and subsequently responds to 

that inquiry by calling the consumer on 

a telephone and orally gathering or 

confirming the information needed to 

process a request for a remittance 

transfer. See comment 31(a)(3)–2. 

Likewise, a consumer who solely 

inquires about that day’s rates and fees 

to send to Mexico has not requested the 

provider to send a remittance transfer. 

Conversely, a sender who asks the 

provider at an agent location to send 

money to a recipient in Mexico and 

provides the sender and recipient 

information to the provider has 

requested a remittance transfer. 

* * * * * 

Section 1005.33 Procedures for 

Resolving Errors 

33(a) Definition of Error 

* * * * * 

7. Failure to make funds available by 

disclosed date of availability—fraud 

and other screening procedures. Under 

§ 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 a 

delay related to the provider’s or any 

third party’s necessary investigation or 

other special action necessary to address 

potentially suspicious, blocked or 

prohibited activity 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. For example, no error 

occurs if delivery of funds is delayed 

because the provider’s fraud screening 

system flags a remittance transfer 

because the designated recipient has a 

name similar to the name of a blocked 

person under a sanctions program and 

further investigation is needed to 

determine that the designated recipient 

is not actually a blocked person. 

Similarly, no error occurs if delivery of 

funds is delayed because the 

correspondent bank to which the 

provider forwards the remittance 

transfer identifies the transfer as similar 

to previous fraudulent activity and 

action by a correspondent or the 

provider is necessary to proceed. 

However, if a delay is caused by 

ordinary fraud or other screening 

procedures, where no potentially 

fraudulent, suspicious, blocked or 

prohibited activity is identified and no 

further investigation or action is 

required, the exception in 

§ 1005.33(a)(1)(iv)(B) would not apply. 

* * * * * 

11. * * * 

33(c) Time Limits and Extent of 

Investigation 

* * * * * 

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23258 Federal Register / Vol. 79, No. 80 / Friday, April 25, 2014 / Proposed Rules 

5. Amount appropriate to resolve the 

error. For purposes of the remedies set 

forth in § 1005.33(c)(2)(i)(A) and (B), 

(c)(2)(ii)(A)(1), and (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. For example, 

when the amount that was disclosed 

pursuant to § 1005.31(b)(1)(vii) was 

received by the designated recipient 

before the provider must determine the 

appropriate remedy for an error under 

§ 1005.33(a)(1)(iv), no additional 

amounts are required to resolve the 

error after the remittance transfer 

provider refunds the appropriate fees 

and taxes paid by the sender pursuant 

to § 1005.33(c)(2)(ii)(B) or (c)(2)(iii), as 

applicable. 

* * * * * 

Dated: April 14, 2014. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2014–09036 Filed 4–24–14; 8:45 am] 

BILLING CODE 4810–AM–P 

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