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#2202788 - 01/11/19 08:52 PM
Remittance Transfer - Exchange Rate Error
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Platinum Poster
Joined: Aug 2016
Posts: 540
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We are a remittance transfer provider, but rely on a program to generate the appropriate disclosures and provide the most current exchange rate. After processing some remittance transfers recently, we discovered the exchange rate disclosed had not been updated to the most current one. We contacted our program provider and this has since been corrected. What issues/concerns should we have with those remittance transfers that were processed with an incorrect exchange rate? These were processed with the exchange rate listed on the disclosure given to the customer.
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#2202789 - 01/11/19 09:15 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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Power Poster
Joined: Nov 2004
Posts: 6,694
Illinois
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If the customer came out ahead, then there isn't much to do other than document what happened, how it was fixed and how we will keep it from happening again.
If we charged our customer too much, then we have potential consumer harm so we should identify all of the affected customers, dollar amounts, etc., discuss a potential restitution plan with bank counsel and possibly run the restitution plan past your primary regulator to make sure they agree with your methodology. (e.g. length of look back, customer notification, etc.) Depending on the size/scope of the error, sometimes I've seen regulators let a bank send notices to affected customers advising them to contact the bank if they believe they have a claim, sometimes the regulators say pay up immediately.
Closing our eyes and hoping nobody else notices is generally not a good way to go.
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#2202793 - 01/11/19 09:46 PM
Re: Remittance Transfer - Exchange Rate Error
BrianC
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Platinum Poster
Joined: Aug 2016
Posts: 540
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Thanks BrianC. So how does a bank determine the correct exchange rate for a particular historical date for a particular country? Is there an official site/source for this information? Obviously, we need this information to determine which customers came out ahead and which were charged too much. Thanks.
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#2202992 - 01/15/19 03:27 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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That program provider whom you contacted to alert it about the problem should have all the data you need, or be able to retrieve it for you.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2203834 - 01/24/19 03:45 PM
Re: Remittance Transfer - Exchange Rate Error
BrianC
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Platinum Poster
Joined: Aug 2016
Posts: 540
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Ok, after digging into this matter further, we discovered the transfer (file) actually sent was correct, and only the disclosure contained the incorrect exchange rate. What should be our corrective action in this situation (incorrect exchange rate inforamtion on remittance transfer disclosure)? Thanks.
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#2203841 - 01/24/19 04:15 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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Not sure we have the full story. Were all the monetary amounts on the disclosure correct with the only error being the exchange rate, or did the incorrect exchange rate lead to the receipt of the wrong amount?
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2203860 - 01/24/19 05:09 PM
Re: Remittance Transfer - Exchange Rate Error
John Burnett
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Platinum Poster
Joined: Aug 2016
Posts: 540
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Transfer was processed using the correct amount, with the exchange rate and transfer amount in pesos DISCLOSED incorrectly, but amount actually received by recipient was correct (based on the correct exchange rate).
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#2203869 - 01/24/19 05:51 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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Platinum Poster
Joined: Aug 2016
Posts: 540
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It is this piece of the disclosure that was disclosed incorrectly.... under § 1005.31(b)(1)(v), a provider must disclose the transfer amount in the currency in which the funds will be made available to the designated recipient.
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#2203983 - 01/25/19 02:43 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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Platinum Poster
Joined: Aug 2016
Posts: 540
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Anyone have suggestions on this? To further explain, for example, our customer requests to send $100 to mexico, our disclosure lists an exchange rate of 20.084, but the correct exchange rate to disclose should have been 18.504. Disclosure also lists "Total amount to recipient" so 20,084.00 pesos, rather than 18,504.00 pesos. The file is sent using the correct exchange rate of 18.504, so recipient received correct amount (based on correct exchange rate), even though this was not the amount disclosed. Our disclosure also includes a statement "recipient may receive less due to fees charged by the recipient's bank and foreign taxes." I understand this is not the reason for the recipient receiving less, but wondering if this helps us at all, since amount recipient did receive was less (due to incorrect exchange rate on disclosure)?
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#2250272 - 03/09/21 08:25 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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Diamond Poster
Joined: Mar 2013
Posts: 1,265
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Another exchange rate error.....we recently discovered our system is taking the exchange rate that was entered in full and rounding up to the ten thousandths (.xxxx) decimal place. For example, a rate of 0.045453 is being rounded to 0.0455, which results in a customer being over charged. While the difference is small, are there permissible rounding requirements on exchange rates? Does it depend on the exchange rate that was disclosed?
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#2250341 - 03/10/21 09:11 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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Diamond Poster
Joined: Mar 2013
Posts: 1,265
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#2250345 - 03/10/21 10:08 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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From a disclosure standpoint, you are required to round - or I am missing the point:
(iv) The exchange rate used by the provider for the remittance transfer, rounded consistently for each currency to no fewer than two decimal places and no more than four decimal places, using the term "Exchange Rate" or a substantially similar term;
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2250523 - 03/12/21 11:02 PM
Re: Remittance Transfer - Exchange Rate Error
TeamComply
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Diamond Poster
Joined: Mar 2013
Posts: 1,265
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rlcarey - This was super helpful! Turns out we've been disclosing 8 (yes, 8) decimal places. Ugh! Thanks again.
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