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#1729769 - 08/10/12 05:38 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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Ok I am reviewing the final rule and I have a question about the definition of error.

Say a consumer comes to the branch, provides information for an international wire, including the recipient and their account number.

We follow the instructions but turns out consumer provided the incorrect account number. Consumer comes back, says funds weren't received and tells us that we sent the funds to the wrong account number.

Funds are gone and cannot be retrieved from foreign bank.

Does bank need to refund the consumer the transfer or re-execute transfer with corrected information and take the loss?

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Remittance Transfer Rule
#1729859 - 08/10/12 07:38 PM Re: Remittance Transfer Rule-Intl. Wires Kay
John Burnett Offline
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Yes. The bank would not have to refund fees imposed by a third party, though. The Bureau in fact made some rather outlandish assumptions (my opinion) when discussing this very possibility. On page 6256 of the February 7, 2012, Federal Register document publishing the final rule, column 3, the Bureau in its analysis of §1005.33(c)(2) says --

"Based on this rule, if a remittance transfer is deposited in an account that does not belong to the designated recipient named in the receipt because the sender provided the wrong account number for the designated recipient, the provider may charge the sender for resending the remittance transfer, but may not have the sender provide the principal transfer amount again in the event that the remittance transfer provider is unable to have the funds extracted from the wrong account. The Bureau believes that this approach will encourage providers and other parties involved in the remittance transfer to develop security procedures to limit the risk of funds being deposited in an account when the name of the designated recipient named in the receipt does not match the name associated with the account number. The Bureau notes that remittance transfer providers will be supplied with both the name, and if provided by the sender, the telephone number and/or address of the designated recipient, which the provider must disclose on the receipt under § 1005.31(b)(2)(iii)."
Last edited by John Burnett; 08/10/12 08:11 PM.
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#1729860 - 08/10/12 07:40 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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awesome. Anyone want to join me in buliding a retirement fund through "incorrect" remittance transfers?

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#1729875 - 08/10/12 08:14 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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Apparently, the Bureau expects that U.S. banks and other providers will be able to convince recipients' banks in foreign countries to adopt the added verification to ensure against credits to mismatched accounts.

I agree that might work in a closed system. In an open system, I think there might be some rose-colored glasses in use.
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#1729931 - 08/10/12 10:46 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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Another issue - how can we disclose every intermediary party's fee when we do not even know how many intermediary parties there will be, much less the fees they charge?

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#1730032 - 08/13/12 01:18 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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That is the single most frustrating part of the rule, even with the ability to, in many cases, provide estimates. When it wrote the law, Congress had (IMO) rose-colored glasses on, assuming that the international marketplace would be forced to adapt to its rules, forgetting that it (Congress) has no power to make foreign participants in the market conform, instead of imposing rules reflecting the reality of the marketplace. So that leaves the U.S. banks with the responsibility of figuring out how to make the non-U.S. participants adapt their practices to accommodate the U.S. banks' compliance responsibilities.

As the old punchline says, "Let me know how that works for you."
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#1730083 - 08/13/12 02:43 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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i guess we just tell consumers to go to western union.

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#1730159 - 08/13/12 04:07 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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That'll work. eek
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#1730165 - 08/13/12 04:16 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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Seriously, what are those of you at BofA, Wells, Chase and Citi going to do to comply with this?

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#1730166 - 08/13/12 04:16 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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If we return an IAT from a consumer account as Stop Pay, Unauthorized, etc., does that return count against our total? Wouldn't the bank be initiating a foreign remittance transfer in order to return the item? I know the definition of remittance transfer says "electronic transfer of funds requested by a sender", but would something like a Stop Pay order count as a customer request? If so, would it also meet the definition of "primarily for personal, family, or household purposes"?
I would think that these could be seen as fitting the definition. Any opinions?

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#1730168 - 08/13/12 04:18 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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IMHO, it would not count. The original IAT would count since that is the instruction to remit the funds to another party. Your return is not such a remittance.
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#1730211 - 08/13/12 05:18 PM Re: Remittance Transfer Rule-Intl. Wires Doug Hendrickson
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Originally Posted By: Doug Hendrickson
IMHO, it would not count. The original IAT would count since that is the instruction to remit the funds to another party. Your return is not such a remittance.


But, Doug, the inbound IAT is a debit to the U.S. customer's account, not an instruction from the customer to the bank to send funds out. The instructions were given to the Originator, not the bank. In fact, I can't conceive of a received ACH debit that would be a remittance transfer under subpart B of Reg E.
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#1730213 - 08/13/12 05:20 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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In order for an IAT to be a remittance transfer for your bank, the Originator must be a consumer customer (or the bank must be the Originator at a consumer's request), the bank must be the ODFI and the transfer must be for personal, family or household purposes.
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#1730297 - 08/13/12 06:31 PM Re: Remittance Transfer Rule-Intl. Wires John Burnett
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I stand corrected. Thanks John.
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#1731425 - 08/15/12 08:17 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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Our bill pay service does not allow payments outside the USA. We do not originate IAT ACH. That leaves wires. We had less than a dozen consumer International wires last year. So we are off the hook for disclosures, correct?

If we continue to offer consumer International wires, I believe our remaining hurdle is Reg E disputes. With the larger dollar amounts of wires, I am afraid the risk may still be too much for us. Does anyone have ways to mitigate this risk?

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#1731898 - 08/16/12 07:05 PM Re: Remittance Transfer Rule-Intl. Wires John Burnett
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Looking for clarification:

Commentary to 1005.30(f)(2)(ii) For purposes of determining whether a person qualifies for the safe harbor under 1005.30(f)(2)(i), the number of remittance transfers provided includes any transfers excluded from the definition of "remittance transfer" due simply to the safe harbor. In contrast, the number of remittance transfers provided does not include any transfers that are excluded from the definition of "remittance transfer" for reasons other than the safe harbor, such as small value transactions or securities and commodities transfers that are excluded from the definition of "remittance transfer" by 1005.30(e)(2).

As a subpart to Regulation E I agree that the transfers to be counted toward the 100 would only be consumer but the question I have is what would be considered a transfer that is excluded from the definition of remittance transfer due simply to the safe harbor? Would we not just simply count the number of consumer remittance transfers made to designated recipients, only excluding those in amounts of $15.00 or less or securities/commodities transfers?
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#1732084 - 08/17/12 12:37 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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#1732539 - 08/17/12 08:34 PM Re: Remittance Transfer Rule-Intl. Wires J Hunt
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Originally Posted By: J Hunt
Looking for clarification:

Commentary to 1005.30(f)(2)(ii) For purposes of determining whether a person qualifies for the safe harbor under 1005.30(f)(2)(i), the number of remittance transfers provided includes any transfers excluded from the definition of "remittance transfer" due simply to the safe harbor. In contrast, the number of remittance transfers provided does not include any transfers that are excluded from the definition of "remittance transfer" for reasons other than the safe harbor, such as small value transactions or securities and commodities transfers that are excluded from the definition of "remittance transfer" by 1005.30(e)(2).

As a subpart to Regulation E I agree that the transfers to be counted toward the 100 would only be consumer but the question I have is what would be considered a transfer that is excluded from the definition of remittance transfer due simply to the safe harbor? Would we not just simply count the number of consumer remittance transfers made to designated recipients, only excluding those in amounts of $15.00 or less or securities/commodities transfers?
Correct, J Hunt. But the Bureau wanted to make very clear that you have to count the ones that would have been subject to the rule but for the fact that you weren't subject to the rule. That's all.
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#1732540 - 08/17/12 08:37 PM Re: Remittance Transfer Rule-Intl. Wires Still Developing
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Originally Posted By: Still Developing
Our bill pay service does not allow payments outside the USA. We do not originate IAT ACH. That leaves wires. We had less than a dozen consumer International wires last year. So we are off the hook for disclosures, correct?

If we continue to offer consumer International wires, I believe our remaining hurdle is Reg E disputes. With the larger dollar amounts of wires, I am afraid the risk may still be too much for us. Does anyone have ways to mitigate this risk?


The wires are not subject to subpart A of Regulation A. They are only subject to subpart B. As long as you stay at or under the safe harbor limit of 100, you aren't subject to subpart B.

As we used to say in high school algebra: QED!
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#1734359 - 08/23/12 06:13 PM Re: Remittance Transfer Rule-Intl. Wires YHWB
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Originally Posted By: YHWB
So a Trust wires US dollars to Germany to pay household bills for a home maintained there for the beneficiary of the Trust. Will this be governed by the new disclosures?

And the same situation as above, but a person requests the wire.


Originally Posted By: DeeQ
I don't think so, as the trust is not a consumer...



I was told differently. If it's for personal, family, or household purposes - the regulators will more than likely state it applies.
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#1734423 - 08/23/12 07:04 PM Re: Remittance Transfer Rule-Intl. Wires WonderWoman
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And this is where the definitions are your friend and you can back an examiner away from over-reaching. A "sender" is defined as a "consumer." And, in §1005.2, a "consumer" is defined as a "natural person."
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#1734477 - 08/23/12 07:55 PM Re: Remittance Transfer Rule-Intl. Wires Kay
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but this is the same FDIC that is forcing us to comply with the Overdraft FIL, even though we have an ad hoc program.

The trust accounts scares me. Because yes, I totally agree with you. And if I went with "a trust is not a natural person", we would be way under the 100 a year & life would be peachy.

However, if I get a rouge examiner who says otherwise, we will be WAY over the 100 & then could get cited.


Scared to weigh that risk.


That being said - are there any issues to limiting foreign wires?

Example: We'll only send foreign wires for customers of the bank who have been with us more than 5 years (should help curb fraud attempts). Or, we'll limit the $ amount of wires someone can send in a year's time frame.

Or...the thought even came to mind that since we only have one significant relationship that sends foreign wires (see trust account concerns above), could we say we'll only do foreign wires for them & no one else?
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#1734586 - 08/24/12 12:14 PM Re: Remittance Transfer Rule-Intl. Wires WonderWoman
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Lost in a regulatory fog
You could start a whole ad campaign- "Foreign wires to the first 99 customers. Come get them while they last!"

Sorry, couldn't resist. grin I think we're hitting the tipping point where each new additional consumer protection will have more negative consequences than benefit.

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#1734667 - 08/24/12 01:58 PM Re: Remittance Transfer Rule-Intl. Wires Carolina Blue
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"...Somewhere in Middle Americ...
That cracked me up! Maybe our foreign wire fee could rival our fees for other behaviors we don't want.

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#1734759 - 08/24/12 03:46 PM Re: Remittance Transfer Rule-Intl. Wires Cornfed Turtle
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Originally Posted By: Cornfed Turtle
That cracked me up! Maybe our foreign wire fee could rival our fees for other behaviors we don't want.


Hah! but then we'll get regulated in the fee area too ... though I already foresee that coming down the pipeline ...

shocked
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