Effective July 21, 2020, the Consumer Financial Protection Bureau (CFPB) amended Regulation E pertaining to certain protections for consumers sending U.S. outbound international money transfers or remittance transfers (“Remittance Rule”). The following highlights the amended provisions:
- Increase in safe harbor threshold from 100 to 500 transfers annually
- New, permanent exception that permits insured institutions to estimate the exchange rate for a remittance transfer to a particular country if, among other things, the designated recipient will receive funds in the country’s local currency and the insured institution made 1,000 or fewer remittance transfers in the prior calendar year to that country when the designated recipients received funds in the country’s local currency
- New, permanent exception will permit insured institutions to estimate covered third-party fees for a remittance transfer to a designated recipient’s institution if, among other things, the insured institution made 500 or fewer remittance transfers to that designated recipient’s institution in the prior calendar year
The CFPB announced regulatory flexibility efforts regarding the Remittance Rule due to the impact of COVID-19 by suspending enforcement actions or examination citations for remittance transfers that occur on or after July 21, 2020, and before January 1, 2021, but do not comply with disclosure requirements that become effective on July 21, 2020.
The Regulation E amended provisions may have potential impacts for certain FedGlobal® ACH Payments Subscribers. The most prevalent of these pertains to responsibilities of institutions to provide exact foreign exchange (FX) disclosures. The following provides insights to assist Subscribers in assessing the impact. It is important to note that this information does not reflect legal or consultative advisement. Institutions should consult with their legal, compliance or supervisory authority on the impact of the amended provisions and their FedGlobal ACH Payments usage.
Exact FX disclosures for consumer remittances
Although FedGlobal ACH Payments does not support exact FX disclosure for consumer remittances requiring U.S. dollar to local currency conversion, institutions should consult with their legal, compliance or supervisory authority to assess when FedGlobal ACH Payments can be used. In consideration of guidelines in the final rule for the safe harbor threshold and number of remittances transferred in the prior year, the FedGlobal ACH Payments - FX Disclosure Matrix for Consumer Remittances below has been provided to assist Subscribers with assessing when FedGlobal ACH Payments can be used for consumer remittances.
As previously noted, the Regulation E amended provisions on U.S. outbound cross-border transactions only pertain to consumer remittances and have no impact on non-consumer payments (i.e., business, corporate, government). FedGlobal ACH Payments can still be used for these transactions.
The full announcement on the final rule (Off-site) can be accessed from the CFPB’s website.
|Services||Payment Type by Destination Currency||Exact FX||Estimated FX||Not Applicable||Comments|
|Canada||USD||FX not applied for USD payments|
|Canada||CAD||FX disclosed on US settlement date|
|Europe||USD||FX not applied for USD payments|
|Europe||CHF||FX disclosed one day after US settlement date|
|Europe||EUR||FX disclosed one day after US settlement date|
|Europe||GBP||FX disclosed one day after US settlement date|
|Europe F3X*||EUR||FX set by originating institution|
|Europe F3X*||GBP||FX set by originating institution|
|Mexico||MXN||FX disclosed on US settlement date. Note: permanent exception due to FedGlobal ACH central bank partnership.|
|Mexico F3X*||MXN||FX set by originating institution|
|Panama||USD||FX not applied for USD payments|
*F3X is a messaging service which enables a financial institution to originate payments in foreign currency to receiver accounts in the same currency.
Please contact FedACH® and Check Services Customer Support with any questions about the amendments.