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CFPB to Supervise Larger Nonbank Transmitters

Financial Institutions Law Alert Stanley F. Orszula, Michael Hearon

The Consumer Financial Protection Bureau ("CFPB") issued a final rule on September 12, 2014, defining "larger participants" in the international money transfer market as companies that engage in at least one million international transfers on an annual basis. The rule, which takes effect on December 1, 2014, will subject nonbank money transmitters that meet this threshold to the CFPB's supervisory authority. Although the CFPB has broad rulemaking powers, the Dodd-Frank Wall Street Reform and Consumer Protection Act limits the bureau's powers to supervise entities that provide consumer financial products and services. In addition to banks, thrifts, and credit unions with assets of more than $10 billion, the CFPB has supervisory authority over specific nonbank entities, such as mortgage servicers and payday lenders. The Dodd-Frank Act also gives the CFPB discretionary authority to issue rules that identify "larger participants" in nonbank markets. According to the CFPB, nonbank transmitters transfer approximately $50 billion each year through about 150 million individual transfers.

The CFPB already has the power to enforce consumer protections against banks, credit unions, and nonbanks that transmit money overseas under the bureau's remittance transfer rule adopted in 2013. These protections include mandatory disclosures of fees, exchange rates, and dates related to the transfer. The rule, finalized on September 12, will allow the CFPB to examine nonbank money transmitters for compliance with the remittance rule's disclosure requirements.

The rule can be viewed in its entirety here.

For more information, please contact Stanley Orszula at (312) 715-5123 /, Jim Friedman at (414) 277-5735 /, Kate Kronquist at (202) 372-9519 /, Jim Kaplan at (312) 715-5028 /, Lucy Dollens at (317) 399-2815 /, Kevin Quigley at (602) 229-5433 /, or your Quarles & Brady attorney.