Mon, Dec 16, 2013
Washington, District Of Columbia
Do credit unions need to add inbound PayPal transactions to the tally as they determine whether or not they will meet the 100 transfer threshold for coverage under new remittance regulations? No, the Credit Union National Association compliance team noted in a recent CUNA's Compliance Myths blog post on CompBlog. A credit union does not have to count international automated clearinghouse transactions when it is the receiving depository institution, the CUNA post clarified. One example highlighted in the blog post is an inbound PayPal transaction that debits a member's account. "Remember that the remittance transfer provider must be 'directly engaged with the sender to send a transfer of funds to a person in a foreign country," CUNA wrote. In this case, PayPal, not the credit union, is directly engaged with the sender as the originator of the ACH. The Consumer Financial Protection Bureau has confirmed that this is a correct interpretation. The CFPB's remittance rules, which became effective on Oct. 28, require financial institutions to provide consumers with prepayment and receipt disclosures that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors. Credit unions will not be considered remittance transfer providers under the rule if:
- They provided 100 or fewer remittance transfers in the previous calendar year; and
- If they provide 100 or fewer remittance transfers in the current calendar year.
When tallying the 100, credit unions must count all the various types of remittance transfers covered by the rule together. However, transactions that do not count toward this 100 transfer total include:
- Domestic wire/ACH transactions;
- Transfers where the credit union is the recipient institution of the wire/ACH;
- Debit card purchases from a merchant located in another country;
- International transfers sent by businesses;
- Prepaid cards purchased in the U.S. that are not delivered to a recipient abroad; and
- Online bill payments to recipients located in another country where the agreement states that payments will be made solely by check, draft or similar instrument.
Other Resources: CompBlog Post