The Consumer Financial Protection Bureau will give federally insured banks and credit unions five additional years to comply with new disclosure requirements affecting international money transfers. The extension was included among recently finalized amendments to the Bureau's international remittance transfer rule.

Prior to passage of the Dodd-Frank Act, international money transfers were generally not covered by existing federal consumer protection regulations. In Response, the legislation expanded the scope of the Electronic Fund Transfer Act to provide protections for remittance transfer senders and authority to implement the new requirements transferred from the Federal Reserve Board to the CFPB. The Bureau’s subsequent rule, approved in 2012 and amended last week, created new consumer protections for international money transfers, requiring remittance transfer providers to disclose third-party fees, as well as any exchange rate that will apply to the transfer. The rule also provides consumers with error resolution and cancellation rights.

The Dodd-Frank Act contains an exception that allows federally insured financial institutions to estimate third-party fees and exchange rates when providing remittance transfers to their account holders for which they cannot determine exact amounts. Insured institutions can only use this exception when they cannot determine the exact amounts for reasons beyond their control. The exception was set to expire on July 21, 2015, but the CFPB extended the temporary exception until July 21, 2020.

“Current market conditions would make it impossible for insured institutions to know the exact fees and exchange rates associated with a minority of their remittance transfers,” a statement from the CFPB says. “Without the exemption, these insured institutions reported that they would have been unable to send some transfers to certain parts of the world that they currently serve.”

The extension allows federally insured institutions that offer remittance services additional time to develop “reasonable ways to provide account holders with exact fees and exchange rates for all remittance disclosures,” the CFPB says.

The inability to know the exact fees and exchange rates is unique to insured institutions sending open-network transfers, like wire transfers, the statement explains. In an open network, the provider typically does not have control over, or a relationship with, all of the participants in the remittance transfer. This lack of control can make it difficult to learn all of the potential fees and, in some cases, the exchange rate. By contrast, closed-network providers send cash to recipients through agents, so they are typically able to control or know the transfer terms in advance. This allows them to disclose exact amounts to their customers. Closed-network providers, however, are traditionally nonbanks.

The CFPB also released a revised version of its compliance guide for the financial sector to reflect the rule changes.