& §1005.2(j) “Person” means a natural person or an organization, including a corporation, government agency, estate, trust, partnership, proprietorship, cooperative, or association.


?

In the 1005.2(j) definition of "person," a natural person is an individual -- a human bean (yes, I know I spelled it incorrectly) and the others in the list are not natural persons -- they are entities.

And please resist the temptation to say that there are natural persons (whatever passes for normal) and unnatural persons (freak-shows).

Well that's no fun.

So something rlcarey pointed out as well:

§1005.2(b)(3) The term does not include an account held by a financial institution under a bona fide trust agreement.

However: "The term bona fide trust agreement is not defined by the act or regulation; therefore, financial institutions must look to state or other applicable law for interpretation."


I tried searching everywhere in California law & I can't seem to find it. Help? (I'll post in the CA forum too, but it's usually crickets in there)

Anyone esle listening to the Alston & Bird teleconference on this?

I just did and I fowarded the link to Senior Mgmt.

Given the section of the staff commentary below, would it be correct that a bank would not leave safe harbor until 6 months after it performed it's 101st remittance transer? For example, if we perform a count of remittance transfers on November 1st and have only 80, and don't hit 101 until December 1st, we would have 6 months from that date?

iv. Example of safe harbor and transition period. Assume that a person provided 90 remittance transfers in 2012 and 90 such transfers in 2013. The safe harbor will apply to the person’s transfers in 2013, as well as the person’s first 100 remittance transfers in 2014. However, if the person provides a 101st transfer on September 5, the facts and circumstances determine whether the person provides remittance transfers in the normal course of business and is thus a remittance transfer provider for the 101st and any subsequent remittance transfers that it provides in 2014. Furthermore, the person would not qualify for the safe harbor described in § 1005.30(f)(2)(i) in 2015 because the person did not provide 100 or fewer remittance transfers in 2014. However, for the 101st remittance transfer provided in 2014, as well as additional remittance transfers provided thereafter in 2014 and 2015, if that person is then providing remittance transfers for a consumer in the normal course of business, the person will have a reasonable period of time, not to exceed six months, to come into compliance with subpart B. Assume that in this case, a reasonable period of time is six months. Thus, compliance with subpart B is not required for remittance transfers made on or before March 5, 2015 (i.e., six months after September 5, 2014). After March 5, 2015, the person is required to comply with subpart B if, based on the facts and circumstances, the person provides remittance transfers in the normal course of business and is thus a remittance transfer provider.

That's correct, LVC. And if you reach 100 on 12/31/20xx, you get to start counting over on January 2 of the next year.

post deleted...duplicate

How do you plan to process requests for int. outgoing wire transfers submitted by fax? Would you process them the same as phone requests? How do you plan to provide the required disclosures?

IMHO, Fax requests should receive fax disclosures.

we no longer accept fax wire instructions. Have been burned too many times.

I heard a law firm discussing this question (fax instructions) and agree with their assessment. There is nothing in the rule addressing fax instructions for a covered remittance transfer. They said their clients would probably pick up the phone and have the instructions recited as a phone request, so they could follow the oral disclosure (pre-purchase disclosure) and the more liberal timing requirement for the delivery of written receipt.

That method they discussed did make sense.

This is a good summary of coverage from a Washington Law firm:
Scope of the Final Rule

The Final Rule applies to the vast majority of consumer-initiated electronic funds transfers that originate in the U.S. and are sent to recipients in foreign countries. The definition of “remittance transfer” may include consumer-initiated ACH and wire transactions, as well as bill pay arrangements that involve electronic transfers. It also includes the addition of funds to a prepaid card where the prepaid card is sent or was previously sent to a person in a foreign country.

Specifically, the Final Rule defines the term “remittance transfer” to mean the electronic transfer of funds requested by a “sender” to a “designated recipient” that is sent by a “remittance transfer provider.” The term “sender” is defined to mean a consumer in a state who primarily for personal, family, or household purposes requests a remittance transfer provider to send a remittance transfer to a designated recipient. The term “designated recipient” is defined to mean any person specified by the sender as the authorized recipient of a remittance transfer to be received at a location in a foreign country (and may include either a natural person or an organization). The term “remittance transfer provider” is defined to mean any person that provides remittance transfers for a consumer in the normal course of its business, regardless of whether the consumer holds an account with such person.

Comment 30(e)(3)(i) provides the following examples of “remittance transfers”:

A. Transfers where the sender provides cash or another method of payment to a money transmitter or financial institution and requests that funds be sent to a specified location or account in a foreign country.
B. Consumer wire transfers, where a financial institution executes a payment order upon a sender’s request to wire money from the sender’s account to a designated recipient.
C. An addition of funds to a prepaid card by a participant in a prepaid card program, such as a prepaid card issuer or its agent, that is directly engaged with the sender to add these funds, where the prepaid card is sent or was previously sent by a participant in the prepaid card program to a person in a foreign country, even if a person located in a State (including a sender) retains the ability to withdraw such funds.
D. D. International ACH transactions sent by the sender’s financial institution at the sender’s request.
E. Online bill payments and other electronic transfers that a sender schedules in advance, including preauthorized remittance transfers, made by the sender’s financial institution at the sender’s request to a designated recipient.

Notably, transfers under an online bill payment service may be considered “remittance transfers” under certain circumstances even when the financial institution makes a payment to the payee using a paper instrument. Comment 30(e)(1) states that while the definition of “remittance transfer” requires an electronic transfer of funds, “an electronic transfer of funds occurs for a payment made by a provider under a bill-payment service available to a consumer via computer or other electronic means, unless the terms of the bill-payment service explicitly state that all payments, or all payments to a particular payee or payees, will be solely by check, draft, or similar paper instrument drawn on the consumer’s account to be mailed abroad, and the payee or payees that will be paid in this manner are identified to the consumer. With respect to such a bill-payment service, if a provider provides a check, draft or similar paper instrument drawn on a consumer’s account to be mailed abroad for a payee that is not identified to the consumer as described above, this payment by check, draft or similar payment instrument will be an electronic transfer of funds.”

Transfers Funded in a Foreign Currency

The currency used to fund a consumer-initiated transfer to a foreign recipient will not affect whether the transfer meets the definition of a “remittance transfer.” Accordingly, a transfer that is funded and received in a foreign currency will still qualify as a “remittance transfer,” provided that the other aspects of the definition of a remittance transfer are met.

However, when a transfer is funded and received in the same currency, a remittance transfer provider is not required to disclose an exchange rate because no exchange rate will be used for the transfer. Comment 31(b)(1) states that “[a] provider need not provide the exchange rate disclosure required by § 1005.31(b)(1)(iv) if a recipient receives funds in the currency in which the remittance transfer is funded, or if funds are delivered into an account denominated in the currency in which the remittance transfer is funded. For example, if a sender in the United States sends funds from an account denominated in Euros to an account in France denominated in Euros, no exchange rate would need to be provided. Similarly, if a sender funds a remittance transfer in U.S. dollars and requests that a remittance transfer be delivered to the recipient in U.S. dollars, a provider need not disclose an exchange rate.”

My questions are on the safe harbor rule. According to the Reg:

"Under § 1005.30(f)(2)(i), a person that provided 100 or fewer remittance transfers in the previous calendar year and provides 100 or fewer remittance transfers in the current calendar year is deemed not to be providing remittance transfers in the normal course of its business. Accordingly, a person that qualifies for the safe harbor in § 1005.30(f)(2)(i) is not a “remittance transfer provider” and is not subject to the requirements of subpart B."

In reference to the "previous year" and current calendar year," which years are they referring to? Since this goes into effect in Feb 2013, is the previous year 2012 and the current year 2013, meaning that we don't start complying with this until 2014, or do we have to count 2011 as the previous year and 2012 as the current year, and start complying with the requirements in 2013 if we do not fall within the safe harbor?

Also, in counting the 100 transfers, I've gathered that they are transfers requested by a consumer, so do we just look at the account the transfer is funded from to determine if it is consumer or non-consumer? What if a consumer has a sole proprietorship and takes some money from his sole prop account and some from his personal account and wires the total to Canada? Does that count as an international transfer?

When you wake up on the effective date of the regulation, 2/7/13, you need to know your activity for 2012 and what you've done so far in 2013. To be within the safe harbor, your count has to be 100 or less for BOTH years. So if your count for 2012 is only 50, but you hit 101 for 2013 on February 15, 2013 (busy Winter, yes?), your 6-month "transition period" runs starting 2/15/13, and you will have to start complying no later than six months later, or August 15, 2013.

Only consumer-purpose transactions initiated by an individual can be remittance transfers under the rule, so you have to determine in the best way you can whether to count a transaction or not. Using the source account as the determinant is a good idea, I think, for past transactions. Transactions from a sole proprietorship business account that's generally used for business purposes would probably not get counted, but I think you have to look at the recipient, too, in such cases. If it's a wire to a family member, I'd count it.

We particpated in the webinar and still had some questions as to prepaid cards, debit cards and how the change will affect them. I thought I understood if it was a closed loop and not account to account or person to person then the rule would not be applicable to those transactions. Is my understanding correct? An exception would be if the prepaid card was purchased and sent to someone outside of the country then the rule would apply? What about sole proprietorships? Are they covered as a consumer or would they not be covered under the reg?

Stored value cards: If the bank is asked to load a new prepaid card by an individual in the U.S. (or from an account in the U.S) with instructions to deliver the card to a person outside the U.S., the loading of the card is covered. If asked by an individual to loan value to a card known by the bank to be in the possession of someone outside the U.S., the transaction is covered, even if the funds can also be accessed (using a "twin" card) within the U.S. {comment 30(c)-2.iii)

A sole proprietorship can't request a remittance transfer, but the individual behind it can. In general, I think, you can say that a transfer funded from the business account would not likely be for a consumer purpose, and therefore not covered. I think I'd be comfortable using that logic when trying to count my 2012 transfers toward the safe harbor limit. But on a going forward basis, I'd have a declaration at the top of the request form (or data intake form): "Sender: Indicate whether the transfer you are requesting is ___ is not ___ primarily for personal, family or household purposes."

CAN WE ASSUME that the 100 remittance transfers refers to 100 transfers for a consumer? At first glance I thought that was a no brainer but I decided to ask because under 30(f)(2) "Normal course of business" they start talking about remittance transfers available to customers (rather than consumers).

(a) If we add up all FOREIGN Remittance Transfers for both consumers and businesses we will exceed 100.

(b)If we only count foreign transfers initiated by consumers during the year we will be way below the 100 remittance transfers.

Are we safe to assume (b) is what we should be counting?

(Thankfully, our online banking and ACH system does not authorize electronic transfers to go to a foreign country so we are able to simply count the foreign wires)

Here are excerpts from something I just wrote on this question:

Thank you John. I hate it when I read the Final Rule summary,analysis and actual sections and think I understand it and then someone "asks if I am sure". In this case they questioned the example and some discussions early in this forum. I start questioning my interpretation so as usual I went to BOL. I appreciate the details you included- I can share that with the person that questioned the numbers we must use.

Ok so after reading about this my head is spinning... this is what I can say, we only originate on average 2 international wires/ month for consumers and those are sent to businesses also we use an intermediate bank to process the wires but (from what I have read that does not matter, w are still responsible)? The next thing is we have not originated any IAT's all ours are coming in from outside the country to our customers. From what I can see we are under the 100 transaction threshold... I know it can't be that simple so what am I missing?

Hate to disappoint you, but it is that simple, unless you have a bill pay service that allows a consumer to send a check to a foreign address.

Would a "paper check" count as a "remittance transfer"???

If that paper check is issued via a bill payment service and qualifies as an EFT under subpart A of Regulation E (See Comment 3(b)(1)-1.vi.), and if it is sent from a consumer account domiciled at a financial institution in the U.S., to a foreign address, it will be a "remittance transfer" to be counted toward the "safe harbor" limit in subpart B and, if the institution is subject to subpart B, will be subject to the disclosure, error claims and other requirements of subpart B. (see Comment 30(e)-1. on "electronic transfer of funds"}