CFPB Proposes Definition Of Larger Participants For The International Money Transfer Market

On January 23, 2014, the Consumer Financial Protection Bureau ("CFPB") issued a proposed rule that would define which nonbank covered persons1 would be designated "larger participants" for purposes of the international money transfer market (the "Proposal"). The Proposal would be the fourth rulemaking designating nonbank covered persons as larger participants of markets for "other consumer financial products or services" under section 1024 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").2 Prior rulemakings have defined larger participants in the consumer reporting, consumer debt collection, and student loan servicing markets.3 There is a 60-day comment period for the Proposal, beginning from the date the Proposal is published in the Federal Register.

A Level Playing Field?

By defining larger participants in the international money transfer market, the CFPB would be designating certain nonbanks for CFPB supervision. Such authority would enable the CFPB to supervise and examine designated nonbanks for compliance with the Electronic Fund Transfer Act and Regulation E (including Subpart B of Regulation E, the "Remittance Transfer Rule"), among other federal consumer financial laws, as well as the Dodd-Frank Act prohibition on unfair, deceptive or abusive acts or practices ("UDAAP"). The Remittance Transfer Rule, which took effect on October 28, 2013, sets forth certain protections for senders of remittance transfers: (1) remittance transfer providers are required to provide specific disclosures to each sender of a remittance transfer, (2) senders have the right to dispute errors for up to 180 days following a remittance transfer, and (3) senders have the right to cancel, under certain circumstances, remittance transfers within 30 minutes of requesting the transfer.4

On October 22, 2013, the CFPB released Remittance Transfer Rule exam procedures for use in the CFPB's examinations of entities within its supervisory authority. If adopted, the Proposal would enable the CFPB to use these exam procedures - the same exam procedures the CFPB uses for the largest banks and credit unions providing remittance transfers currently subject to its supervisory authority - to examine nonbank larger participants in the international money transfer market. The CFPB stated that "[f]inalization of this Proposed Rule would bring nonbanks that are larger participants of the international money transfer market within the...

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