The Federal Reserve Board has requested public comment on a proposed rule that would create new protections for consumers who send remittance transfers to recipients located in a foreign country.
The proposed rule would require that remittance transfer providers make certain disclosures to senders of remittance transfers, including information about fees and the exchange rate, as applicable, and the amount of currency to be received by the recipient. In addition, the proposed rule would provide error resolution and cancellation rights for senders of remittance transfers.
The proposal is being made under Regulation E (Electronic Fund Transfers) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Federal Register notice is attached. Comments on the proposal must be submitted within 60 days after publication in the Federal Register, which is expected shortly.
Note: The term “remittance transfer” typically describes a transaction where a consumer sends funds to a relative or other individual located in another country, often the consumer’s country of origin.
Traditional remittance transfers often consist of consumer-to- consumer payments of low monetary value. Information on the volume of remittance transfers varies widely, in part because of the difficulty in obtaining reliable data regarding the subject population, and in part because of differences in the scope of transactions included in estimates.
The World Bank estimates that the total volume of remittance transfers worldwide to developing countries reached $325 billion in 2010. The World Bank further estimates that the United States has the highest volume of remittances, totaling $48.3 billion in 2009.
The U.S. Bureau of Economic Analysis estimates that cash and in-kind “personal transfers” made by foreign-born residents in the United States to households abroad totaled $37.6 billion in 2009, while the U.S. Census Bureau estimates that cash “monetary transfers” from U.S. residents to nonresident households totaled approximately $12 billion in 2008.
The majority of remittances from the United States are sent to the Caribbean and Latin America, and primarily to Mexico. Significant sums are also sent to Asia, and to the Philippines in particular.