The global remittance industry has seen a significant boom in the past few years. Every year, a large number of NRIs living overseas remit money to India to their loved ones. According to a 2017 report, remittances to developing nations are estimated to be around $444 billion annually.
Provision of federal laws to transfer money in the US
The biggest chunk of remittances to India come from the US. Since money transfers have a prominent role to play in any country, they need to be regulated by the government. Initially, in 2001 the USA Patriot Act (an acronym for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism) introduced various regulations which primarily focused on the security aspect of the remittances. Under this Act, banks have double identity requirements, which are not easy for migrant workers to meet.
In 2011, the Consumer Financial Protection Bureau was founded. This is an agency in the US for protection of consumers exclusively in the financial sector. It is directed by the Dodd-Frank Wall Street Reform Act, a federal law that gives all the authority to the government.
The CFPB encompasses all banks, credit unions, payday lenders, security firms, financial companies, etc. operating in the country. It has control over money transfer companies too. The rules laid down by the Consumer Financial Protection Bureau have to be mandatorily followed by the remittance providers making your money transfers safe and secure.
Key highlights of the Electronic Fund Transfer Act
– If any e-transaction is charged a fee, the customer must be notified of this money transfer fee.
– When transactions are done, there are certain terms and conditions. These should be mentioned in a clear way which can be understood by everyone.
– Fees, prominent dates, contact details, stop payment information, etc. must be mentioned.
– A log of all online money transfer transactions must be maintained by all financial institutions.
– A consumer is protected if it is the bank’s error. It may arise due to non-implementation of stop payment option, even when all steps have been followed correctly, mistakes during processing, failing to credit an account, etc.
– Banks and other institutions must be provided with a written consent from the consumer before initiating any kind of international money transfer request.
A new set of rules were introduced in October 2016, which includes the power to cancel the transactions, obligation for institutions to let you know what they do with your money and the right to have any lapse or errors resolved. This allows you to transfer money anywhere in the world without any worries.
According to the latest reports, the CFPB is looking for comments from the general public since it is reassessing the efficacy of its money transfer rules. Consumers, industry representatives, other parties are welcomed by the CFPB to offer suggestions and recommendations, to make the review easier and more effective.
Disclaimer: “The contents of this article is meant merely for informational purpose. Any reliance placed on such information is therefore strictly at one’s own risk.”