WASHINGTON, D.C. — World Council of Credit Unions and Credit Union National Association, the U.S. credit union trade group, have expressed concern about the compliance challenges to credit unions posed by new U.S. rules governing international remittance transfers. The 417-page remittance rules were issued Friday, Jan. 20, by the Consumer Financial Protection Bureau (CFPB) along with an accompanying proposal on remittance safe harbor requirements.
World Council and CUNA have been coordinating input to the CFPB on this issue since the remittance rules were first proposed. After reviewing the final regulations, the two groups indicated they plan to bring the problems they see with the rules to the attention of the CFPB and its newly appointed director, Richard Cordray.
"We are concerned that a number of credit unions that provide remittances as defined by the rule will face challenges in complying with the new regulation," said Brian Branch, president and CEO of World Council.
"CUNA plans to ask the CFPB to provide as much regulatory relief as possible through the accompanying proposed ‘safe harbor,'" said CUNA President and CEO Bill Cheney. "We also plan to meet with CFPB Director Cordray next week to raise this and other issues, and we are raising concerns in our comment letter to the CFPB on the agency's streamlining of regulatory requirements."
The remittances regulation will affect most U.S. credit unions that provide consumers with international electronic funds transfer services because it broadly defines the term "remittances" to include virtually all cross-border electronic funds transfers initiated by consumers in the United States (other than most transfers involving credit, debit and prepaid cards).
The new regulation will apply to consumer-initiated credit union international automated clearing house (ACH) and wire transfers using the SWIFT and similar systems, as well as to World Council's International Remittance Network® (IRnet) and other money transfer organizations more commonly associated with "workers remittances" sent home by immigrant workers to their families. It will not apply to international electronic funds transfers initiated by businesses but will apply to most international consumer ACH and wire transfers sent from the United States to a business overseas, for example to pay bills. The rule takes effect a year following its Jan. 20 publication in the Federal Register.
The accompanying proposed rule would exempt credit unions that provide 25 or fewer international consumer-initiated electronic funds transfers per year from all aspects of the rule. Credit unions performing more than 25 of these transactions per year would be subject to the rule if they provide international funds transfer services "in the ordinary course of business" under a facts and circumstances test.
Key points of the final rule for credit unions include:
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.