June 4, 2013 11:53 am

Good morning!

Football season is just around the corner and along with it comes…the new Reg. E Remittance Transfer Rule, effective October 28, 2013?!?!?

That’s right.  As the rule was ready to implement in February, 2013, the CFPB jerked the reins and stopped the wagon just in the nick of time before it went over the cliff.  So, here’s a quick reminder about what needs to happen in case you’re more interested in ESPN than Reg. E.


Like a program at a ballgame, the definitions make it possible to know who is responsible for what.  So, here are a couple of important ones.

1005.30(e) A “remittance transfer” means the electronic transfer of funds requested by a sender to a designated recipient that is sent by a remittance transfer provider. The term applies regardless of whether the sender holds an account with the remittance transfer provider, andregardless of whether the transaction is also an electronic fund transfer, as defined in § 1005.3(b) which is “including, but is not limited to: (i) Point-of-sale transfers; (ii) Automated teller machine transfers; (iii) Direct deposits or withdrawals of funds; (iv) Transfers initiated by telephone; and  (v) Transfers resulting from debit card transactions, whether or not initiated through an electronic terminal.”

Most likely, your bank provides remittance transfers for consumers.  These include wires, international ACH, bill-pay (unless ALL international payments are made by check), and some prepaid card transactions that are initiated by a consumer and payable to a person or entity in a foreign country.  Transactions that debit a consumer account at your bank (international ACH debit, for example), are not counted as a covered transaction for your bank because they are not “sent” by your bank.  The regulatory commentary on 1005.30(e) is quite helpful in giving examples of what is and what isn’t a remittance transfer.  We encourage you to peruse that section.

12 CFR 1005.30(f) A “remittance transfer provider” or “provider” means any person that provides remittance transfers for a consumer in the normal course of its business, regardless of whether the consumer holds an account with such person. =

A person (bank) is deemed not to be providing remittance transfers for a consumer in the normal course of its business if the person provided 100 or fewer remittance transfers in the previous calendar year and provides 100 or fewer remittance transfers in the current calendar year.

Most likely, your bank is a remittance transfer provider.  The “100 per year” exception, however, may or may not apply to your bank and includes all forms of remittance transfers.  You’ll need to do the math to determine whether you exceed the threshold.

12 CFR 1005.30(g) “Sender” means a consumer in a State who primarily for personal, family, or household purposes requests a remittance transfer provider to send a remittance transfer to a designated recipient.

The remittance transfer rules apply only to remittance transfers initiated by consumers, but the transfer can be payable to another consumer or a business.


In order for the remittance transfer rule to apply, your bank must be a remittance transfer provider for consumers and make more than 100 consumer remittance transfers per year.  Also, transactions of $15 or less are not to be included in the total.

In addition, some securities and commodities transfers are excluded from coverage of the rule.


For covered transactions, the bank must provide initial disclosures that disclose any bank fees, third party fees/taxes, dollars to be received after exchange rates are applied, error resolution remedies available to the sender, and a host of other rights and responsibilities.  There are safe harbor disclosure formats that should be used, and 12 CFR 1005.31-1005.34 provide the gory details of what is required of remittance transfer providers.


Your bank should count the foreign remittance transfers to determine whether your bank is exempt from the disclosure rules.  In addition, a best practice would be to log or code the transactions in such a way that you can verify for examiners the number of covered transactions because they will most likely ask how you know that your bank hasn’t met the “100 per year” threshold, if you claim this exemption.

If the remittance transfer is a covered transaction for Reg. E purposes (it meets the 1005.3(b) definition), the bank is responsible for performing its Reg. E error resolution responsibilities even though the transaction is not covered by the remittance transfer rules.

Please let us know if you have questions about this new rule.

Your partner in the madness,

Posted by Mikel Dunnagan at 11:53 AM