Safe Harbor Expiration Coming Summer 2020

Amy Donaghue

By: Karen Nearing, AAP, APRP, CAMS, CRCM, NCP, Director, Compliance Education

As the days get shorter and the nights get longer, and white fluffy stuff falls from the sky, many of us dream of summer and sunshine. Before you make your summer plans, there is a date you need to know – July 21, 2020, the date the Safe Harbor Exemption is set to expire.

It has been over five years since we started talking about Dodd-Frank Section 1073, which is known today as Regulation E Subpart B. This addition to Regulation E was enacted to better protect consumers when sending international remittances (ACH and Wire Transfers).

Though it took a few years to turn Dodd-Frank Section 1073 into what we know today as Regulation E Subpart B, there was a Safe Harbor provision added to the final regulation that was effective for five years. The Consumer Financial Protection Bureau (CFPB) introduced the Safe Harbor Exemption to allow financial institutions an opportunity to build relationships and partnerships to gather the information required under Regulation E Subpart B disclosures. The Safe Harbor exemption allowed for institutions sending less than 100 consumer-initiated international wires or ACH transactions to forgo the prescribed disclosures.

If the Safe Harbor Exemption expires, all financial institutions sending consumer-initiated international wires and ACH transactions will be required to abide by all stipulations of Regulation E Subpart B. Those requirements include a prepayment disclosure, a receipt disclosure and the ability for the consumer to cancel the request within 30 minutes for a single transfer request or three business days for a recurring transfer. The error resolution timeframe for these transactions is also extended to 180 days for promised funds availability versus 60 days from statement date in traditional Regulation E error resolution.

The Consumer Financial Protection Bureau (CFPB) issued a Request for Comment (RFC) on December 4, 2019 proposing a change to the definition of a remittance transfer provider to adjust the Safe Harbor threshold from 100 to 500 transfers. The RFC also proposes a permanent exception for estimates of the exchange rate for remittance transfers to a particular country if the financial institution remits 1,000 transfers or less to that country and the recipient receives funds in the designated country’s currency. Other fee estimates are also allowed to certain countries based on a list maintained by the CFPB. Comments are due January 21, 2020. We strongly encourage you to participate in our Special Industry Update on January 8th to learn more and share your thoughts on the RFC. Register now!

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Will you be ready for this change and ALL payment system changes coming in 2020? If you are looking for an update on the Regulation E subpart B changes join us for Payment Systems Update at a location near you. EPCOR will also offer a Regulation E Subpart B webinar in May of 2020. Stay tuned to News You Can Use for additional information.