The Dodd-Frank Act amended the Electronic Fund Transfer Act (“EFTA”) and created a new system of customer protections for remittance transfers sent by customers in the United States to individuals and businesses in foreign countries (“Remittance Transfer Rule” or “Rule”). It also established the creation of the Customer Financial Protection Bureau (“CFPB”), a regulatory agency that oversees various financial and non-financial institutions. As part of its rulemaking authority, the CFPB promulgated various rules governing those that perform certain international money transfers (the “Remittance Rules”).
The Remittance Transfer Rule expanded the scope of the EFTA by imposing more requirements on international money transfers. Specifically, the Rule requires Money Transmitters to establish policies and procedures for international remittances including the following: provision of disclosures prior to and at the time of payment by the sender for the transfer, cancellation and refund rights for customers, the investigation and remedy of errors by providers, and liability standards for providers for the acts of their agents. However, since Monty Global Payments operates solely online and does not have agents, the last requirement does not apply.
The Rule identifies remittance transfer providers (“providers”) as those financial institutions that consistently conduct over 100 remittance transfers per year. In addition, for purposes of this Rule, a remittance transfer is an electronic transfer of funds requested by a sender to a designated recipient that is sent by a remittance transfer provider and that is more than $15 and is requested by a customer located in the United States and is sent to a person or business in a foreign country. These transfers may include different types of international transfers such as cash-to-cash money transfers, international wire transfers, international ACH transactions, and certain prepaid card transfers.
For transfers sent to an account, funds are considered to be physically received at a location outside of any state if the designated recipient’s account is located outside of any state in the U.S (foreign country). Transfers to U.S. military bases located in other countries are treated as “states”, and are therefore considered domestic transfers, and not under the purview of this Rule.
Only Customer-to-Customer transfers and Customer-to-Business transfers are covered under the Rule. The following transactions are NOT covered under the Rule:
- Business-to-Customer Transfers
- Business-to-Business Transfers
- Customers providing a checking account number directly to a foreign merchant where the merchant initiates the ACH payment request from a customer’s bank
- Transfers of $15 or less
- Certain transfers in connection with the purchase or sale of securities
- Domestic transfers within the U.S. territory
It is Monty Global Payments USA, LLC’s (“MGP”) policy to fully comply with the requirements of the Dodd Frank Remittance Transfer Rule and ensure that the proper policies, procedures, and processes are established. To effectively implement this policy, MGP’s Compliance Department will coordinate with Operations, Customer Service, IT, and any other areas as deemed necessary to ensure that all departments are aware of and have taken the necessary steps to implement this policy.
MGP’s Chief Compliance Officer is also responsible for ensuring that this policy is properly adopted, implemented, and updated as often as required. This policy will specifically establish the policies and procedures to comply with the following requirements of the Rule:
- Cancellation and Refunds
- Error Resolution
The Rule requires a remittance transfer provider to give their customers, otherwise known as “senders”, two disclosures: a pre-payment disclosure and a receipt disclosure. All disclosures must be clear and conspicuous and must be made in writing and in a retainable form. The information in the disclosures must be presented in at least 8-point font, grouped together in close proximity to one another, and must be segregated from the other information provided to the sender.
In addition, amounts disclosed must be exact, although in limited cases, providers can estimate certain amounts. In addition, disclosures must be provided in English and in any other language that the provider uses to advertise, solicit, or market its services or in which the transaction was conducted. Disclosures must generally be provided when the customer first requests a transfer and again when payment is made. The rule also contains specific provisions applicable to transfers that customers schedule in advance and for transfers that are scheduled to recur on a regular basis.
The first disclosure or “pre-payment disclosure” is required to be given to the sender before they pay for a remittance transfer. The pre-payment disclosure must contain the following information:
- The amount of money to be transferred in the sender’s currency;
- The exchange rate;
- Certain front-end fees and taxes collected by the provider;
- The amount of money to be delivered to the recipient abroad (not including certain recipient institution fees or foreign taxes) in the recipient’s local currency; and
Disclaimer regarding non-covered third-party fees and foreign taxes (if applicable)
- A disclaimer may be required depending on whether foreign taxes and third-party fees apply to the transfer. If the provider does not know that the recipient country does not levy a tax on remittance transfers or not, the provider must include a disclaimer that additional foreign taxes and/or fees may apply.
- In addition, if the transfer is to be sent to a recipient’s account and the recipient’s institution is not an agent of the provider, and the provider does not know if the recipient institution does not charge a fee for receiving a transfer, a disclaimer must also be included.
The pre-payment disclosure is intended to inform the sender of the cost of the transaction before they decide to complete the transfer. The fact that MGP delivers this pre-payment disclosure does not mean that the sender is obligated to complete the transaction. Senders may use these disclosures across several providers to compare pricing, exchange rates, and service, etc.
Since MGP operates its money transfer service strictly online, the pre-payment disclosure will be provided to senders at the time they initiate a transfer online but before they submit payment. Customers will have an opportunity to confirm the details of the transaction on the screen prior to selecting payment method.
The Company must also provide the sender with a receipt when payment is made for the transfer. The receipt must repeat the information of the pre-payment disclosure and provide proof of payment. In addition, if the pre-payment disclosure was inaccurate, a corrected receipt disclosure must be provided to the sender. The receipt must also indicate the date when the money will arrive as well as the following specific information:
- All information contained in the pre-payment disclosure
- Date of availability of the funds
- Name of the designated recipient and, if available, the recipient address and phone number
- Error resolution/cancellation rights
- Remittance Transfer Provider contact information including the company name, phone number and website
State Regulator and CFPB contact information
- The regulator’s contact information explains to the sender that they can contact the provider’s regulators with any questions or complaints they may have
- For each state in which the provider is licensed, the company must provide that regulator’s contact info including name, phone number and website
- The CFPB contact information must include the CFPB’s name, designated CFPB website, and a phone number so that the sender can submit a complaint to the CFPB if necessary
- Transfer date for transfers scheduled in advance and for the first in a serious of preauthorized recurring transfers
MGP will ensure that receipts issued to customers contain all of the necessary information and disclosures. Since the transfer service is only offered online, once the sender completes a transfer and the transaction is funded, a receipt will populate with the information from the pre-payment disclosure and the additional information required on the receipt as described above. Senders will have the ability to print or save a copy of the receipt at this point. In addition, Monty Global Payments will issue a receipt to the customer via email. The receipt remains available in the customer’s account profile under transaction history to download at any time. Receipts will remain available in a customer’s account so long as the customer’s account remains open and active.
5. CANCELLATION AND REFUNDS
Except for transfers scheduled before the date of transfer, the Rule gives senders 30 minutes to cancel a remittance transfer and receive a full refund (e.g., included fees and taxes imposed in connection with the transfer) provided that the funds have not yet been received by the recipient or deposited into the recipient’s bank account. In addition, the sender must provide specified recipient contact info and enough information to properly identify the transaction. Senders can request cancellation orally or in writing.
With respect to transfers scheduled before the date of transfer, special cancellation rules apply when transfers are scheduled three or more business days in advance of the transfer date. The sender must be refunded the total amount of the remittance transfer within three (3) business days of receiving the cancellation request. This refund must include any fees and any taxes imposed in connection with the transfer.
MGP has adopted and incorporated the necessary cancellation and refund policy information onto its receipts according to CFPB guidelines. In addition, the Company has established a procedure to allow customers to cancel transactions that have not yet been paid out to the recipient. If a customer wishes to cancel a transaction, they must contact the Company via phone at 1(850)792-7024 or via email at firstname.lastname@example.org to request the cancellation and refund. After verifying the identity of the customer and the validity of the cancellation request, the customer service agent will confirm that the transfer has not been deposited into the designated recipient’s bank account, and MGP will proceed to cancel the transaction. Any refunds owed to the customer will be provided within 3 business days of the cancellation request. Funds will be returned to the customer via the same method of payment that was used to conduct the transfer.
For more detailed procedures on how to handle a customer’s request for a refund, please refer to MGP’s Consumer Complaint Policy & Procedure.
6. ERROR RESOLUTION
According to the Rule, senders have 180 days from the disclosed date of availability to report an error with their transfer. If a sender reports an error, MGP has 90 days to investigate it and determine what occurred with the transfer. The Company then has 3 business days to report the results of the investigation to the sender. If an error occurred, the Company has an obligation to correct the error within 1 business day of receiving the sender’s choice of remedy or as soon as reasonably practicable. For certain errors, senders can receive a refund or redelivery, without charge, of any amount that did not get delivered to the intended recipient. If an error did not occur, MGP will provide the sender with a written explanation. In addition, the sender may ask for copies of any documents used in the investigation.
If an error with a remittance transfer is reported, the sender must contact MGP one of the following ways:
- Via phone at 1(850)792-7024
- Write to the Company at 2999 NE 191 St. Suite 702. Aventura, FL, 33180
- Via e-mail at email@example.com
In addition, the sender must provide MGP with the following information:
- Name and address (or telephone number);
- The error or problem with the transfer, and why they believe it is an error or problem;
- The name of the person receiving the funds (recipient), and if known, his or her telephone number or address;
- The dollar amount of the transfer; and
- The transfer number of the operation
The following are types of errors included in the error resolution process:
- Incorrect amount paid by a sender; such as making a payment for more than the total shown on the receipt
- Error made by the provider relating to the transfer; such as miscalculating the amount to be deposited into the recipient’s account
Failure to provide the amount of currency to the recipient that was disclosed to the sender, unless:
- The disclosure stated an estimate of the amount to be received and the difference results from application of the actual exchange rate, fees, and taxes, rather than any estimated amounts
- The failure resulted from extraordinary circumstances outside the Provider’s control that could not have been reasonably anticipated
- The difference results from the application of non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider and the Provider provided the required disclosures
Late or non-delivery of the remittance transfer to the recipient, unless:
- Extraordinary circumstances outside the provider’s control that could not have been reasonably anticipated
- Delays related to the Provider’s fraud screening procedures or in accordance with the Bank Secrecy Act, Office of Foreign Assets Control requirements, or similar laws or requirements
- The remittance transfer being made with fraudulent intent by the sender or any person acting in concert with the sender
- The sender having provided the provider an incorrect account number or recipient institution identifier for the designated recipient’s account or institution, provided that the remittance transfer provider meets the conditions set forth in 1005.31(h) of the Rule (see section regarding “Exceptions” on page 8 of this policy)
- The sender requests documentation required in the disclosures or for additional information or clarification concerning their remittance transfer, including a request by the sender to determine if an error exists under the Rule
The following are examples that are not considered errors according to the Rule:
- Recipient requested changes after the sender has already sent the transfer
- Changes in amount or type of currency if provider relied on information provided by the sender
- The recipient requests a change in currency type (i.e. the sender’s transfer indicated payment to the recipient in pesos and the recipient then requests to receive the transfer in dollars)
- Delays in payment due to compliance program requirements such as screening for OFAC, BSA/AML or fraud, etc.
Error Resolution Remedies
If an error occurs for reasons other than a mistake made by the sender, the sender then has two options: (i) refund or (ii) redelivery. The refund will be made for the amount of funds that was not properly transmitted or delivered to the designated recipient initially. Alternatively, the customer can request redelivery of the amount appropriate to resolve the error at no additional cost. The appropriate amount to resolve the error is the specific amount of funds transferred that should have been received by the recipient, had there been no error. For example, if MGP disclosed that the recipient would receive $230, but only received $200, the sender could choose to either request a refund of $30 or choose to have the $30 redelivered to the recipient at no additional cost for either option
Remedies for failure to make funds available by the date of availability
If, due to provider error, the funds have not been received by the designated recipient by the date of availability indicated on the transfer receipt, the customer can choose to receive a refund or request redelivery of the amount appropriate to resolve the error. These funds must be redelivered without additional cost. Regardless of whether the refund or redelivery remedy is chosen, MGP must also refund any fees and taxes imposed on the initial transfer. This refund remedy also applies if all the funds have already been received by the recipient but were not ready by the disclosed date of availability. This refund includes covered third-party fees and taxes charged by an entity other than the remittance transfer provider (unless a tax refund is prohibited by law).
Remedies for errors caused by customer provided incorrect or insufficient information
If an error occurred because the customer provided incorrect or insufficient information, the Rule requires MGP, as the provider, to refund the principal amount of the transfer to the customer unless the sender elects to have the transfer redelivered as a new remittance transfer before the refund is sent. The provider may deduct from the transfer amount refunded or applied towards a new transfer any covered third-party fees actually imposed on or, to the extent not prohibited by law, taxes actually collected on the remittance transfer as part of the first unsuccessful remittance transfer attempt. The provider may not deduct its own fees from the amount refunded or applied to a new transfer.
Exception where the customer provided an incorrect account number or recipient institution identifier
In situations where a customer provided an incorrect account number or recipient institution identifier (such as a routing number or Business Identifier Code), the provider may not be required to refund or resend the transfer amount if the following conditions are met:
- The provider can demonstrate that the sender did in fact provide an incorrect number;
- with respect to recipient institution identifiers, the provider used reasonable means to verify the sender provided the correct identifier;
- The provider provided notice to the sender that the transfer amount could be lost;
- The funds were deposited into the wrong account;
- The provider used prompt and reasonable efforts to retrieve the funds.
MGP has registered with the CFPB’s complaint system and has established procedures to resolve any customers disputes promptly. In addition, MGP has updated its Consumer Complaint Policy to incorporate the necessary customer service procedures into its current program. The customer service team will be in charge of handling customer requests, questions and/or complaints.
While MGP’s Customer Service Department is responsible for managing the error resolution requests received by customers, the Compliance Department will have oversight of the program to ensure that this policy is implemented and followed by the Customer Service Team.
7. TRANSFERS SCHEDULED BEFORE DATE OF TRANSFER
Preauthorized remittance transfers are not allowed using MGP’s service, therefore, this part of the Rule does not apply to MGP since all transactions are conducted in real time and cannot be scheduled in advance.
8. COMPLIANCE POLICY AND RECORDKEEPING
MGP must develop and maintain written policies and procedures to ensure compliance with the error resolution requirements of the Rule. These policies and procedures must include recordkeeping procedures, which require the record retention of the following for at least 2 years:
- Notice of error submitted by the sender
- Documentation provided to the Company by the sender regarding the error
- Documentation of any findings from the Company’s investigation of the error
The Customer Service and Compliance Departments will work in conjunction to develop and implement a procedure to ensure that the recordkeeping requirements are being adhered to. This procedure will also be incorporated into MGP’s Consumer Complaint Policy and Procedure and maintained and updated as necessary by the Compliance Department.