WASHINGTON (Reuters) – More U.S. banks and credit unions will be allowed to estimate the international remittance fees they charge consumers in instances when it may be too expensive to provide exact figures under a new rule issued on Monday.
The Consumer Financial Protection Bureau (CFPB) said the measure raises the transaction threshold at which companies may be entirely exempted from providing exact figures from 100 to 500 or fewer remittances annually, reducing the burden on more than 400 banks and almost 250 credit unions.
International regulators have voiced concerns that U.S. banks may not be offering overseas remittances due to the regulatory burden, including anti-money laundering provisions.
Monday’s rule comes after the agency asked for industry feedback last year on the previous remittance regulation, which generally required 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.
It also codifies a temporary safe harbor, due to expire in July 2020, that allows banks and credit unions to estimate the total cost to consumers rather than the exact amount when transferring money abroad.
This came as part of a December 2019 proposal by the CFPB, which last month said it expects that after the temporary exception expires some insured institutions could face challenges disclosing actual costs and may cease providing remittance services without intervention.
The Washington-based National Association of Federally-Insured Credit Unions (NAFCU) said that while “a step in the right direction,” the new remittance rule fell short of its recommendations for an even higher threshold increase.
“A number of credit unions have effectively been prevented from offering remittance transfer services because of the high compliance costs and associated burdens,” said Ann Kossachev, the director of regulatory affairs at NAFCU.
Kossachev said she will continue to push for credit unions to be exempted from compliance with the remittance rule all together.
Reporting by Katanga Johnson, Editing by Franklin Paul and Alexander Smith