MADISON, Wis.-The new remittance transfer rules that take effect Oct. 28 bring with them some tough decisions for credit unions-especially those falling just outside the guidelines, reports CUNA Mutual Group.
Due to the work involvedin complying with the new rules, a number of credit unions are deciding it's simpler just to exit the remittance business, reports Lauren Capitini, regulatory compliance manager. "However for those institutions on the cusp of this rule's safe harbor, the decision could be very difficult."
The safe harbor includes any organization making less than 100 remittances a year. "I tell credit unions that if you hover around the 100 mark annually, you are in the most danger, because you could potentially waver in and out of compliance," said Capitini. "You will have to have a robust tracking mechanism so that if you go over the 100 threshold you can start complying. I think for this group it's a very careful decision if they are in or out of the remittance business."
Once the FI passes the 100-transfer safe harbor, the institution must comply with the rules aimed at disclosing to the customer or member all the fees involved with the transfer and the final amount that will be delivered to the recipient outside the U.S. Capitini said that while the disclosure form is very simple, gathering all the fee data and the final transfer total is not.
'Not Easy To Get'
"You need to disclose all the fees along the route that are being imposed-including the one from the financial institution outside the U.S.- the taxes, the exchange rate... That information is not always easy to get. It will impact a lot of credit unions' remittance processes and some are just making the decision to get out altogether."
For some, the decision to exit is really not possible, reminded Capitini. "This service may not make sense for some credit unions going forward, but for those located on military bases and along the southern U.S. border, they will need to have the offering for their members."