I believe I read somewhere that Sole Props are not covered under the new remittance transfer requirements. Does anyone know any differently?

Depends on the purpose of the transfer - they are consumers, i.e. a natural person.

Agreed. You should not assume that a transfer requested by a sole proprietor is a business transaction, even if it will be funded from a business-type sole proprietorship account. You must get an indication from the individual on the purpose of the transfer.

So if the customer indicates the the purpose of the transfer is personal then it is covered by the rule but if he/she states that it is business-related then it is not? Also, how are you all documenting this question and answer?

From page 12 of the CFPB Small Entity Guide:

Sender (§ 1005.30(g))
For there to be a remittance transfer, there has to be a sender. A sender is an individual consumer located in a state (as defined in § 1005.2(l)) who, primarily for personal, family, or household purposes, requests that a remittance transfer provider send a remittance transfer to a designated recipient. A transfer requested by a business is not a remittance transfer. So, transfers from sole proprietor accounts are not remittance transfers.

And I once again caution against taking the Guides as gospel. While I might agree that absent a statement from the individual that the transaction is for a consumer purpose, if you're told it's for such a purpose and the sender is an individual, I think you have a transaction that's subject to the requirements of the rule.

The guide is absolutely not correct. What we are talking about here is not a "transfer requested by a business". There is no business when dealing with a sole proprietor, there is only the individual. It solely comes down to the purpose of the transfer.

A transfer requested by a business is not a remittance transfer. So, transfers from sole proprietor accounts are not remittance transfers.

I e-mailed the CFPB with the following. We shall see if they respond:

On page 12 of the International Fund Transfers, Small Entity Compliance Guide, Version 2.0, the following statement is made:

For there to be a remittance transfer, there has to be a sender. A sender is an individual consumer located in a state (as defined in § 1005.2(l)) who, primarily for personal, family, or household purposes, requests that a remittance transfer provider send a remittance transfer to a designated recipient. A transfer requested by a business is not a remittance transfer. So, transfers from sole proprietor accounts are not remittance transfers.

I have a client that has a question regarding this statement and as I do not believe that it is totally true, I am looking for further guidance. A sole proprietor is a natural person and is therefore a consumer under 1005.2(l). The fact that the person obtains a fictitious name certificate or equivalent within their jurisdiction does not change that fact. Sole proprietors typically maintain accounts at banks in which both business and personal transactions may occur as there is no differentiation between themselves and their business activity. So, would not the determination on whether the transfer is subject to the rule be based solely on whether or not the transaction is primarily for personal, family, or household purposes?

I think this is supported through the following commentary:

3. Examples of remittance transfers.

i. Examples of remittance transfers include:

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.

Thank you for your consideration.

Interesting enough I received an informal telephone call from the CFPB today. While the individual on the other end could not officially comment on the correctness of the guide versus the wording in the regulation, they did state that the Q&A within the guide was developed specifically to assist in drawing some bright lines. He indicated that if a regulator told a bank that transfers from SP accounts were covered depending on the nature of the transfer, then the bank should point to the guide. I asked if they were going to address this disconnect between the guide and the regulation in the future and he said that the guides were always under review.

I understand their position as they cannot officially countermand an official publication and was really impressed that someone called me within 24 hours. I have found the CFPB to be much more responsive that most of the other regulatory agencies, even if you may or may not like what they have to say.

FYI, the inapplicability of sole proprietorships is also stated in their video on the rule at the time mark of 8:37.

They sought you out, based on posts here? Scary except I wish they would seek me out. I have a question pending with them. Maybe I should post it and say: Dear CFPB,......

Never mind, I see above you emailed them. Well I did too so we will see if I get a response. Or I will give my question to you, Randy.

KB - Randy emailed them a question (see above) about the sole proprietor who requests a remittance transfer. It's my experience that they tend to call with a response, rather than return it in an email. The email would become a retainable record; the phone conversation is probably not recorded. So what sounds like a great customer-service response may be a calculated management decision (am I not cynical enough for you?)

Oh, I don't disagree with that. I did see (and changed my post) that Randy had emailed them. I was at first thinking they just reached out to him! That would be interesting.

Interesting??? I would be very scared. I thought only people like Chancellor Angela Merkel was on the NSA lists

Aren't proprietorships included in the definition of "person" in Reg E and not "consumer"?

A consumer is a natural person.

A person is either a natural person or an organization (including a proprietorship)

A "sender" under the remittance transfer rules must be a consumer and not a person, hence, not a proprietorship.

Now if a proprietorship is somehow different than a sole proprietorship then I'm mistaken, but a few quick searches online for the definition of proprietorship indicate to me that they're one and the same.

Well, I guess that is one way to look at it.

I stick to the fact that a sole proprietor is an individual (or two individuals, if a husband/wife sole proprietorship in Oklahoma). A sole proprietor is one type of proprietor, and a sole proprietor is an individual.

If the Bureau wants to issue a formal interpretation saying that transfers requested by a sole proprietor are deemed to be for business purposes, I'd stop fighting this fight. I realize that the Q&A appears to say exactly that, but the Q&A isn't dispositive of the question, IMHO. I'd be happier with an official interpretation, which the other agencies have to honor.