After pushback, rules governing international money transfers reworked

By Peter Schroeder - 12/22/12 07:09 AM ET

The Consumer Financial Protection Bureau (CFPB) has reworked one of its first initiatives on international money transfers after facing industry pushback.

The CFPB announced Friday revisions to its rules on so-called remittances to ensure that consumers can maintain easy access to such transfers while being adequately protected from hidden fees and murky terms. It also said it was delaying the effective date of the rule, which was originally set to take effect in February.

"We are dedicated to bringing new protections to consumers who want to send money internationally,” said CFPB Director Richard Cordray. “Today’s proposal will ensure consumers have continued access to remittance transfer services while making compliance easier for remittance transfer providers.”

The CFPB originally finalized the rules in January as one of its first completed projects since beginning work in 2011. The goal of the new rules is to ensure that consumers know exactly how much they will be charged by companies for making international transfers, as well as how much money will actually arrive at the other end when the transaction is completed and exchange rates are taken into account.

But industry groups warned that the rules would pose a substantial burden to companies as they struggled to comply with them. For example, banks and lending groups contended that it would be extremely difficult to track the tax policies of nations across the globe, particularly in less stable regions.

Under its revisions, the CFPB is granting greater flexibility and clarity when it comes to disclosing such taxes and fees. Furthermore, companies would only have to disclose taxes levied by a nation's central government, as opposed to also having to include any regional or provincial taxes that could be assessed.

In addition, if a company can prove that a transfer failed because a consumer provided incorrect account information, it would only have to try and recover the funds, but would not be responsible for repayment otherwise.

Friday's changes mark the second time the CFPB has reworked the rule.

After announcing its plan, the CFPB later adjusted it so the rules did not apply to companies that made less than 100 such transfers a year, after complaints it would pose an outsized burden on those with relatively light activity.