FRB Proposes Rules for Remittance Transfers
By Stanton R. Koppel
Signed into law July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act or the Act) required implementation of almost all of its provisions through regulations to be promulgated by various agencies over the ensuing 18 months. This article discusses regulations proposed by the Board of Governors of the Federal Reserve System (the board) to implement the Remittance Transfer provisions of the Act.
Remittance transfers are addressed in Section 1073 of the Dodd-Frank Act, which added a new Section 919 to the Electronic Funds Transfer Act (EFTA). This amendment provides significant new protections at the federal level to consumers sending funds to recipients located outside the United States. The Act requires that certain disclosures must be given to senders of funds, including the exchange rate as well as the fees and taxes that will be applied to the specific funds transfer and the date when the funds will be available to the designated recipient. The Act provides limited exceptions when exchange rates, fees and taxes may be estimated. The Act also provides error resolution rights and requires the Board to set standards for resolving errors, to establish recordkeeping requirements and to define consumers cancellation and refund rights. The Board has also proposed Official Commentary to provide guidance on compliance and model disclosure forms that would provide users a safe harbor for compliance purposes. The Board seeks comments on all aspects of the proposed regulations, commentary and model forms.
The Boards Notice of Proposed Rulemaking was issued on May 11, 2011. Rules must be finalized by January 21, 2012. The deadline for comments is July 20, 2011. The Board proposes that the new rules take effect one year after promulgation of the final rules, but requests comment on whether that date is appropriate.