In February 2012, the Consumer Financial Protection Bureau (“CFPB”) issued a rule under the Electronic Funds Transfer Act (“EFTA”) to implement new protections for consumers sending remittance transfers. The CFPB rule applies to any “remittance transfer,” expanding the EFTA coverage beyond the current, more limited, categories of electronic fund transfers. The effect of the rule would serve to expand the types of transactions excluded from provisions of the Bank Secrecy Act (“BSA”) relating to certain transmittals of funds, as these exclusions are defined by reference to EFTA.

In order to prevent expansion of the transactions excluded from BSA regulations, the Financial Crimes Enforcement Network (“FinCEN”) has proposed a rule that would amend BSA regulations to maintain their current scope once the new EFTA rule goes into effect.

Specifically, the rule would amend the scope of the exclusion from “fund transfers governed by [EFTA]” to “electronic fund transfers as defined in section 903(7) of [EFTA].” Section 903(7) retains the original definition of “electronic funds transfer.” As stated by FinCEN, “remittance transfers that are covered by [the recent EFTA amendment], but do not meet the [previous] definition of electronic fund transfer, would continue to be covered by the travel and recordkeeping rules.”

As such, the amended definitions would preserve the current scope of BSA regulations rather than broaden or narrow them and the exclusion would continue to apply only to “electronic fund transfers” (meaning transfers of funds initiated electronically or by telephone, such as point-of-sale transfers, ATM transactions and direct deposits).

The proposed rule is available here -