We believe that an institution sending only five international transfers for consumers per year could qualify for the safe harbor in the CFPB’s new international remittance rules. Because “remittance transfer” is defined as an international transfer requested by a “sender,” and “sender” is defined as a consumer making the transfer for personal, family, or household uses, only consumer-purpose international transfers will be counted for purposes of the safe harbor from the rules. 12 CFR 1005.30(f)(2)(i). Even if an institution had hundreds of business-purpose transfers every year, those business-purpose transfers would not affect the number of consumer-purpose transfers counted for purposes of the safe harbor.

The safe harbor applies to banks that provided one hundred or fewer “remittance transfers” (i.e., consumer transfers) in the previous calendar year and in the current year. In other words, even if your institution provided one hundred or fewer transfers in the previous calendar year, the safe harbor will cease to apply once your institution provides more than one hundred remittance transfers in the current year. 12 CFR 1005.30(f)(2)(i). If that is the case, your institution does not need to immediately need to begin complying with the remittance transfer rules, for the two reasons discussed below.

First, even if your institution has been disqualified from the safe harbor, you could still argue that your institution does not provide remittance transfers in the “normal course of business.” As noted in the staff commentary to this rule, “[w]hether a person provides remittance transfers in the normal course of business depends on the facts and circumstances, including the total number and frequency of remittance transfers sent by the provider.” Comment 2, Official Staff Commentary, 12 CFR 1005.30(f). If, based on an examination of the facts and circumstances of your bank’s program, you can show that you do not provide transfers in the normal course of business, you may still be exempt from the remittance transfer rules.

Second, any institution that is disqualified from the remittance transfer rules’ exemption will have a six-month transition period before it must start complying with the rules. If your institution provides more than one hundred remittance transfers, and the facts and circumstances indicate that it does provide remittance transfers in the normal course of business, then your institution will have to begin complying with the remittance transfer rules within a “reasonable period of time,” which is not to exceed six months. 12 CFR 1005.30(f)(2)(ii). Until the end of that six-month transition period, the remittance transfer rules wouldn’t apply to any transfers conducted by your institution, but they would apply to any remittance transfers conducted after end of the six-month transition period. Comment 2(ii), Official Staff Commentary, 12 CFR 1005.30(f).

Also, after your institution is disqualified from the safe harbor (by providing more than one hundred remittance transfers in a year), it can still requalify for the safe harbor in future years. If your institution again provides one hundred or fewer remittance transfers in a calendar year, it will be able to requalify for the safe harbor in the calendar year after that. In other words, if your institution is disqualified from the safe harbor, it will not be able to requalify for the safe harbor until the second consecutive year in which it provides one hundred or fewer remittance transfers.