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Partner Walter Zalenski in National Money Transmitters Association Q&A

Walter E. Zalenski

The National Money Transmitters Association (NMTA) published a Q&A with Partner Walter Zalenski in their September newsletter. Mr. Zalenski discussed the CFPB's final rule, announced September 12, 2014, to oversee larger nonbank international money transfer providers – those that provide more than one million international wire transfers annually.

The CFPB is subject to certain jurisdictional limitations. It generally has enforcement jurisdiction over anyone providing consumer financial products or services, but its supervisory authority – its ability to conduct on-site examinations and gather reports on companies – is more limited. The CFPB’s supervisory authority over nonbanks in most cases exists only with respect to so-called “larger participants” in a market for a consumer financial product. The new rule defines larger participants in the market for international money transfers.

Will the new CFPB rule affect those who do not meet the definition of “larger participant?”
Unfortunately, I do think the rule will have ramifications for others. As I noted, the CFPB has enforcement jurisdiction over all industry participants. Plainly the Bureau’s on-site examination of the big players will make it smarter about the industry generally, and if the agency learns from supervisory exams of a practice with which it takes issue, it will seek to eliminate it with respect to smaller participants as well. I should also mention that, while the Remittance Rule does not extend to providers of domestic money transfers, the CFPB left the door open to expand to rule to do so in the future, saying that the regulation was “only one in a series” of forthcoming rules.