Money Transmitters
The Remittance Transfer Rule Explained (Updated 2025)
Feb 25, 2025
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InnReg
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10 min read
Contents
Regulatory scrutiny on international money transfers is increasing, making compliance with the remittance transfer rule more critical than ever. With recent enforcement actions, remittance providers must stay ahead of evolving requirements to avoid penalties and mitigate risks.
In this guide, we’ll cover the remittance transfer rule’s most recent enforcement actions, updated compliance requirements, and the regulatory changes shaping 2025.
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What Is the Remittance Transfer Rule?
The remittance transfer rule is part of the Electronic Fund Transfer Act (EFTA) and regulates international money transfers sent by US consumers.
The Consumer Financial Protection Bureau (CFPB) implemented this rule, which applies to businesses that process over 100 remittance transfers annually. The rule’s primary focus is to increase transparency in cross-border transactions by requiring service providers to disclose fees, exchange rates, and delivery timelines.
The remittance transfer rule also establishes consumer rights related to error resolution and cancellation, aiming to prevent unexpected costs or transaction issues.
Key Requirements Under the Remittance Transfer Rule
Compliance with the Remittance Transfer Rule involves several key obligations designed to protect consumers and promote fair practices. Below are the essential requirements businesses must follow.
1. Clear and Accurate Fee Disclosures
Before completing a transfer, providers must clearly disclose the total cost of the transaction. This includes transfer fees, exchange rates, and third-party fees, such as intermediary bank charges. Providers must also specify the exact amount the recipient will receive in the destination currency.
Consumers must receive these details in writing before authorizing the transaction. This transparency helps prevent unexpected deductions from the amount sent.
2. Estimated Delivery Date
The provider must inform the sender of the estimated delivery time for the recipient to receive the funds. This estimate must be reasonable and consistent, factoring in bank processing times, foreign exchange settlement periods, and any potential delays due to holidays or weekends.
Consumers rely on remittances for urgent expenses like rent, medical bills, and family support. Knowing when funds will arrive helps them plan accordingly.
3. Rights to Error Resolution and Disputes
Consumers have the right to dispute errors related to their transfers, including incorrect amounts, delays, funds sent to the wrong recipient, or unexpected fees and deductions.
If an error is reported within 180 days, providers must investigate and either correct the mistake or refund the consumer. Businesses have 90 days to resolve disputes and must keep the consumer informed throughout the process.
Mistakes in international transfers can be costly and difficult to correct without proper protections. This rule provides consumers with a straightforward process to recover lost funds.
4. Cancellation and Refund Rights
Senders have the right to cancel a transaction within 30 minutes of authorization as long as the recipient has not yet received the funds. If the consumer cancels in time, the provider must issue a refund within three business days.
Consumers may enter incorrect information or change their minds shortly after initiating a transfer. A short cancellation window provides flexibility while keeping the system efficient.
5. Language Accessibility for Disclosures
All required disclosures must be presented in the same language used to market the service. For example, if a company advertises remittances in Spanish, it must provide all related documents and agreements in Spanish.
6. Recordkeeping and Compliance Monitoring
Financial institutions and money service businesses must maintain transaction records and compliance documentation for at least five years. Regulators may request these records during audits or investigations.
Strong recordkeeping enhances accountability and makes it easier to detect compliance violations. Businesses that fail to keep proper documentation risk regulatory penalties.
Who Must Comply with the Remittance Transfer Rule?
The remittance transfer rule applies to businesses facilitating international money transfers for US consumers. Any provider that processes over 100 remittance transfers per year falls under its requirements, regardless of size or business model.
Businesses Covered by the Remittance Transfer Rule
Entities required to comply include:
1. Banks and Credit Unions: This category includes commercial banks, community banks, and credit unions facilitating international wire transfers or electronic remittances. The rule applies to transactions made through online banking, mobile apps, or in-branch services.
2. Money Transfer Operators (MTOs): This includes companies that specialize in cross-border remittances, such as Western Union, MoneyGram, Ria, and Wise.
3. Fintech and Digital Payment Providers: This category includes online payment apps and mobile-based financial platforms that facilitate international money transfers, such as PayPal, Remitly, Revolut, Skrill, and Xoom.
4. Non-Bank Financial Institutions (NBFIs): These businesses provide money transmission services outside traditional banking. They include foreign exchange service providers and remittance businesses. Some retailers and telecom companies, particularly those offering mobile money transfer services, may also fall under this category.
5. Retailers and Businesses Offering Remittance Services: This includes large retail chains like Walmart that provide money transfer services through licensed partners. The rule also applies to travel agencies, check-cashing businesses, convenience stores, and third-party remittance providers that facilitate international remittances.
6. Cryptocurrency and Blockchain-Based Payment Providers: These providers include digital asset companies that facilitate cross-border money transfers using cryptocurrencies or stablecoins. Businesses that convert crypto to fiat currency for remittance purposes must also comply with the rule. Additionally, blockchain-based fintech firms acting as intermediaries in money transfers may also fall under its requirements.
Businesses Exempt from the Rule
Certain providers are exempt from the remittance transfer rule based on transaction volume, the nature of their services, or the type of customers they serve.
1. Small Providers (Fewer Than 100 Transfers Per Year): The rule does not apply to businesses that process fewer than 100 international remittance transfers annually.
2. Domestic-Only Money Transfer Services: The rule only applies to international transactions. Companies handling domestic transfers only (such as Venmo, Cash App, and Zelle) are exempt.
3. Large Corporate and Institutional Transactions: The rule applies to consumer remittances, not business-to-business (B2B) or institutional transfers above certain thresholds.
4. Certain Cryptocurrency Transactions: Fully decentralized, peer-to-peer (P2P) cryptocurrency transfers without an intermediary may not be subject to the rule.
How the Remittance Transfer Rule Protects Consumers
The remittance transfer rule includes several provisions designed to protect consumers when sending money internationally. Here’s how the rule benefits consumers:
1. Promoting Transparency Through Clear Cost Disclosures
One of the most significant consumer protections under the rule is the requirement for clear cost disclosures. This transparency prevents hidden fees and allows consumers to compare different remittance providers.
Without these disclosures, senders could unknowingly pay excessive fees or receive unfavorable exchange rates, significantly reducing the value of their transfers.
2. Providing a Clear Process for Dispute Resolution
The remittance transfer rule establishes a straightforward process to recover lost funds and manage dispute resolutions, requiring providers to investigate errors reported within 180 days of the transaction.
3. Reducing the Impact of Hidden Fees and Exchange Rate Manipulation
Even with disclosure requirements, consumers sometimes face unexpected costs due to intermediary bank deductions, exchange rate markups, or undisclosed third-party charges. The remittance transfer rule helps mitigate these risks by requiring providers to disclose the exact amount the recipient will receive in the destination currency.
4. Protecting Consumers from Fraud and Unauthorized Transfers
The rule provides protections against fraudulent or unauthorized transactions. If a consumer notices an unauthorized transfer, they can dispute it under the rule’s error resolution framework.
Providers must investigate and, if fraud is confirmed, issue a refund or corrective action.
5. Guaranteeing the Right to Cancel Transfers Within a Set Timeframe
Consumers have a short window (typically 30 minutes) to cancel a transfer if the recipient has not yet received the funds. This allows senders to correct errors, such as mistyped recipient details, before the money is processed.
Once a consumer makes a valid cancellation request, the provider must issue a full refund within three business days.
6. Requiring Language Accessibility for Non-English Speakers
Many remittance customers are immigrants or non-native English speakers. The rule mandates that all disclosures, receipts, and consumer rights information be provided in the same language used in marketing and advertising.
If a provider promotes its services in Spanish, for example, it must also provide key transaction details in Spanish.
CFPB Enforcement Against Wise
The Consumer Financial Protection Bureau (CFPB) recently ordered Wise to pay $25 million in fines and consumer redress for violating the remittance transfer rule.
Wise, a major fintech remittance provider, markets itself as a low-cost alternative for cross-border payments. However, the CFPB found that its practices misrepresented costs, failed to protect consumer rights, and violated regulatory requirements.
As part of the enforcement order, Wise must:
Pay $25 million in penalties and reimburse affected consumers.
Revise its remittance practices to align with regulatory requirements.
Strengthen compliance oversight to prevent future violations.
This enforcement highlights the CFPB’s focus on remittance providers and the increasing regulatory risks for companies that fail to meet consumer protection standards.
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Violations Cited in the Enforcement Order
The CFPB’s investigation found that Wise failed to follow several core requirements of the remittance transfer rule, leading to financial harm for consumers. The violations included:
1. Misleading Fee Disclosures: Wise misrepresented the true cost of international transfers by failing to disclose all fees accurately. Wise led some consumers to believe they were paying lower fees than they actually were, resulting in unexpected costs when funds were delivered.
2. Failure to Refund Consumers for Transaction Errors: Under the remittance transfer rule, providers must investigate and correct transaction errors. Wise, however, failed to provide refunds or resolve mistakes in cases where consumers reported incorrect amounts or delayed payments.
3. Incomplete or Inaccurate Pre-Transaction Disclosures: Some consumers did not receive clear, upfront information about exchange rates, transfer fees, or the total amount their recipient would receive. These missing disclosures made it difficult for consumers to compare transfer costs and make informed decisions.
4. Noncompliance with Consumer Rights Protections: The CFPB found that Wise’s remittance practices violated federal consumer protection laws, particularly those granting consumers the right to dispute errors, receive refunds, and access clear pricing information. These failures not only disadvantaged consumers but also undermined competition in the remittance market by creating an uneven playing field.
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What This Means for the Industry
The Wise enforcement action signals a more vigorous regulatory stance on remittance compliance and serves as a warning to banks, fintech companies, and money service businesses operating in the international payments sector. Here’s what it demonstrates:
1. Increased Regulatory Scrutiny: The CFPB’s action shows that regulators are closely monitoring remittance providers and will take enforcement action against companies that fail to comply. Noncompliant providers may face fines, operational restrictions, and reputational damage.
2. Fintech Firms Are Not Exempt: While banks and traditional remittance providers have long been subject to regulatory oversight, fintech companies are increasingly under scrutiny. The Wise case demonstrates the necessity for digital-first remittance providers to adhere to the same compliance standards as banks and money transfer operators.
3. Higher Compliance Expectations for Fee Transparency: One of the key violations in the Wise case involved misleading fee disclosures. This suggests that regulators are paying closer attention to how companies present transfer costs, exchange rates, and third-party fees.
4. Greater Consumer Awareness and CFPB Action: High-profile enforcement cases like this bring more attention to consumer rights under the remittance transfer rule. As awareness grows, consumers may become more likely to file complaints with the CFPB, leading to additional investigations and enforcement actions against noncompliant remittance providers.
This case serves as a reminder that regulatory violations carry serious financial and reputational risks. Companies must take proactive measures to review and strengthen their compliance programs to avoid similar enforcement actions.
Future Outlook of the Remittance Transfer Rule
Looking forward, regulators may introduce additional changes to the remittance transfer rule to address evolving risks in the remittance industry. Some potential areas of focus include:
1. Stricter Fee Transparency Rules: The CFPB’s enforcement action against Wise highlighted the risks of unclear and misleading fee disclosures. Regulators may push for more standardized and detailed fee breakdowns, requiring providers to explicitly separate their fees from third-party charges to eliminate confusion.
2. Increased Oversight of Fintech and Digital Remittance Providers: As fintech firms increasingly play a role in cross-border payments, regulators may impose more stringent compliance requirements on digital remittance platforms. These could include enhanced recordkeeping rules, stricter consumer dispute resolution processes, and more frequent audits.
3. Greater Consumer Protections Against Exchange Rate Manipulation: While providers must disclose exchange rates, some still apply hidden markups that reduce the final amount received by the recipient. Future amendments could introduce stricter exchange rate transparency requirements, giving consumers more precise pricing information before completing a transfer.
4. Expanded Fraud Prevention Measures: As the practice of digital remittances grows, so do fraud risks. Regulators may introduce stricter identity verification and fraud detection standards to reduce scams and unauthorized transactions in international money transfers.
5. Regulatory Uncertainty and the CFPB’s Legal Challenges: The Supreme Court is expected to rule on the constitutionality of the CFPB’s funding structure, and if it weakens its mandate, enforcement actions could decline. However, since the rule itself is part of the EFTA, its requirements will remain in effect unless Congress formally repeals or modifies it.
If the CFPB’s enforcement power diminishes, oversight responsibility could shift to other regulatory bodies, such as state financial regulators or the Federal Trade Commission (FTC). While the long-term impact remains uncertain, remittance providers should not assume regulatory scrutiny will disappear. Instead, businesses should maintain compliance programs to mitigate risks, as enforcement actions may continue through alternative channels.
While the remittance transfer rule has not been significantly amended in the past year, regulatory enforcement is intensifying. The recent action against Wise signals a tougher stance on compliance, and future rule changes may introduce even stricter requirements for remittance providers.
Businesses in this sector should take a proactive approach to compliance, meeting current obligations while preparing for potential regulatory changes in 2025 and beyond.
The remittance transfer rule plays a critical role in protecting consumers by promoting transparency, clear dispute resolution, and fair pricing in international money transfers. With regulatory enforcement tightening, businesses that fail to follow the remittance transfer rule risk hefty penalties, reputational damage, and operational setbacks.
To stay ahead, remittance providers must review their compliance programs, enhance consumer disclosures, and strengthen internal controls. This kind of proactive compliance will not only help them avoid enforcement actions but also build trust with consumers in an increasingly regulated financial landscape.
How Can InnReg Help?
InnReg is a global regulatory compliance and operations consulting team serving financial services companies since 2013.
We are especially effective at launching and scaling fintechs with innovative compliance strategies and delivering cost-effective managed services, assisted by proprietary regtech solutions.
If you need help with money transmitter compliance, reach out to our regulatory experts today:
Published on Feb 25, 2025
Last updated on Feb 25, 2025
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