U.S. consumer watchdog proposes exemptions for banks, credit unions on remittances

U.S. consumer watchdog proposes exemptions for banks, credit unions on remittances

WASHINGTON (Reuters) – The U.S. consumer watchdog on Tuesday proposed making permanent an exemption that allows certain banks and credit unions to estimate the international remittance fees they charge consumers in instances when it may be too expensive for the firms to provide exact figures.

The Consumer Financial Protection Bureau (CFPB) also proposed raising the transaction threshold at which companies may be entirely exempted from the rule from 100 to 500 or fewer remittances annually, reducing the burden on over 400 banks and almost 250 credit unions, the CFPB said.

The proposal is subject to public consultation.

International regulators have voiced concerns in the past that U.S. banks may be stepping back from offering overseas remittances due to the regulatory burden, including strict anti-money laundering provisions.

Tuesday’s proposal comes after CFPB in April asked for industry feedback on its current remittance regulation, which generally requires lenders to disclose to consumers the exact exchange rate, fees and the amount of money expected to be delivered to the recipient when making a global wire transfer.

The proposal also seeks to codify a temporary safe harbor, due to expire in July 2020, that allows banks and credit unions to provide estimates of the total cost to consumers rather than the exact amount when transferring money abroad.

“A number of credit unions have effectively been prevented from offering remittance transfer services because of the high compliance costs and associated burdens,” said Carrie Hunt, general counsel at the Washington-based National Association of Federally-Insured Credit Unions, adding that the trade group would continue to push for credit unions to be exempted all together.

Reporting by Katanga Johnson in Washington; Editing by Michelle Price and Matthew Lewis

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