Today (11/27/12), the CFPB announced that it is delaying implementation of its controversial Remittance Rule (Rule) to make certain refinements to the Rule. The Rule was scheduled to take effect on February 7, 2013, but CFPB now “expects that the proposed effective date will be sometime during the spring of 2013.” The CFPB explained that the delay in implementation was necessary to “refine three elements of its rule regarding foreign remittance transfers.” The three elements identified by the CFPB are: (1) errors resulting from incorrect account numbers provided by senders of remittance transfers; (2) the disclosure of certain foreign taxes and third-party fees; and (3) the disclosure of sub-national, foreign taxes. We believe today’s announcement signals that the Bureau believes its release of the Final Remittance Rule in August 2012 was hasty and not fully vetted.
As previously reported by the CFPB-Lawblog, the Rule has been widely criticized for only exempting those institutions that process fewer than 100 remittances a year. Banking organizations have warned that the rule would force many community banks to no longer offer remittance services to customers. A number of organizations, including a bipartisan congressional group, have repeatedly asked the CFPB to delay implementation of the Rule “to undertake a comprehensive study of their impact before moving forward to avoid irreparable harm to consumers.” Bill Cheney, the President/CEO of the Credit Union National Association, welcomed the news of the delay but expressed concerns that CFPB is still failing to address the widespread concerns about the exemption level.
The CFPB has indicated that it hopes to issue a notice of proposed rulemaking in December to explain the proposed changes in detail and to seek public comment. The CFPB anticipates “proposing to extend the effective date on the original rule until 90 days after it finalizes the proposal. Based on current expectations, this would mean that the effective date for the remittance transfer rule will be during the spring.”