WASHINGTON Large international money transmitters would have to follow the same federal remittance rules that apply to banks under a Consumer Financial Protection Bureau proposal released Thursday.
The proposal would give the CFPB new supervisory authorities to examine money transmitters for the first time, in coordination with existing state oversight over transmitters. The new rule would also put large transmitters on equal footing with banks and credit unions that have followed CFPB requirements for remittance transfers since October, including enhanced disclosures to remittance customers.
Under the Dodd-Frank Act, the bureau is authorized to expand its supervision programs beyond banks to "larger participants" in nonbank sectors. The proposal now to include large transmitters follows similar sweeping changes to larger participants in other nonbank industries, including debt collectors, student loan servicers and consumer credit reporting agencies.
The new proposal would reel in nonbank providers that individually facilitate more than one million money transfers per year. The bureau estimates that that would cover the 25 largest nonbank remittance providers, which together do roughly 150 million transfers per year, totaling about $50 billion.
"The CFPB's remittance rule provides strong consumer protections like better disclosures and the correction of errors," CFPB Director Richard Cordray said in a press release. "Today's proposed rule would help us provide oversight across the entire market so consumers get the protections they deserve."
Companies subject to the bureau's earlier remittance rule are required to provide clearer disclosures to consumers about the fees and taxes charged for money transfers and allow customers the option to cancel transfers within 30 minutes. Institutions also are held more accountable for correcting any errors resulting from a money transfer.
The CFPB will accept comments on its latest proposed "larger participant" rule for 60 days following its publication in the Federal Register.
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Corrected January 24, 2014 at 10:24AM: An earlier version had the incorrect amount of time customers had to cancel transactions.