The Consumer Financial Protection Bureau has proposed a rule that will allow it, for the first time, to supervise nonbank international money transfer providers, ensuring they adhere to new rules protecting consumers sending money abroad.

Prior to passage of the Dodd-Frank Act, international money transfers were generally not covered by federal consumer protection regulations. The legislation expanded the scope of the Electronic Fund Transfer Act to provide those protections. In October 2013, the CFPB's Remittance Rule, focused on those money transfers, went into effect.

CFPB examiners already have the authority to assess the largest banks' and credit unions' compliance with the Remittance Rule. The CFPB's proposed rule would also subject any nonbank international money transfer provider that provides more than 1 million international money transfers annually to the CFPB's supervisory authority. It estimates that nonbank providers transfer approximately $50 billion annually through about 150 million individual international money transfers. The proposed rule would bring new oversight to approximately 25 of the largest providers in the market.

The Dodd-Frank Act gave the CFPB authority to supervise “larger participants” in consumer financial markets as defined by rule. The Bureau can oversee larger participants' activity to ensure compliance with federal consumer financial laws. If the rule is finalized, the proposal would be the Bureau's fourth larger participant rule. The first three rules involved markets for student loan servicing, debt collection, and consumer reporting.

With the proposed rule, CFPB examiners would be able to examine larger nonbank international money transfer providers for compliance with the Remittances Rule. Examiners would be looking to ensure that these nonbanks are offering protections that are now required.

Under federal law, remittance transfer providers must disclose information about the exchange rate, fees, the amount of money that will be delivered abroad, and the date the money will be available. Consumers generally receive these disclosures in English and sometimes in other languages. Consumers also have an option to cancel transfers. If they cancel within a 30-minute window, they will get their money back regardless of the reason for the cancellation. If a remittance sender reports a problem with a transfer within 180 days, the provider is obligated to correct all errors.

The proposed rule is available here and is accompanied by a CFPB fact sheet.Comments on the proposed rule may be submitted online for 60 days after its publication in the Federal Register.