The document summarizes a presentation about the impact of Dodd-Frank regulations on international payments and how credit unions can address these changes. It discusses: - New disclosure requirements for international payments under Dodd-Frank that will take effect in October 2013. - How the Federal Reserve's FedGlobal international ACH system can help credit unions provide lower cost international payments to members while meeting regulatory requirements. - Benefits of using FedGlobal ACH payments include no beneficiary deductions, lower costs, consistent delivery times, and accessibility for institutions of all sizes. - Resources available to help credit unions understand and comply with new international payment rules.

1. International Payments Post
Dodd-Frank: A Game
Changer
Presented by
Evan Shelan, CEO, eZforex
Breffni McGuire, Vice President, NEACH
Jorge Jimenez, FedGlobal Director,
Federal Reserve Bank of Atlanta

2. Outline of Today’s Presentation
• The Problem
• Explanation of Reg E
• Federal Reserve System’s ACH Approach
to Reg E
• Q & A

3. The Problem
• Anxiety within the financial community due to
Dodd-Frank
• Many CU’s have or will discontinue International
Payments
• Section 1073 Reg E Mandates…
• Pre-payment disclosures of:
–Exchange rates
–Estimated Fees
–Date of funds availability
• Error resolution support
• 30-minute consumer opt-out

4. Breffni McGuire, Vice President, NEACH

5. Dodd-Frank 1073, Final Reg E
Remittance Transfer Rule
• Background & highlights
• Evolving requirements in “final” rules
• Status going into the October 28th
deadline
• Current industry issues

6. How we got here
• Dodd-Frank Wall Street Reform &
Consumer Protection Act
– Section 1073 – Expands Reg E (subpart B) to
all consumer-initiated cross-border transfers
• Consumer Financial Protection Bureau
(CFPB) charged with implementation
– Remittance Transfer Rule

7. Definition of a remittance
transfer
• “A‘remittance transfer’is defined broadly to
include all electronic transfers of funds to
designated recipients located in foreign
countries that are initiated by a consumer
in the United States utilizing a remittance
transfer provider’s services”
– Designated recipients may be consumers,
businesses, your member

8. Further Definition
• Consumer-initiated international transfers for
personal, household, or family purposes
– Cross-border wire transfers
– International ACH Transactions (IATs)
– Online bill pay
– Loads onto certain credit cards
Credit/debit card payments to foreign merchants are not
covered
• Limited exceptions
– Transfers of $15 or less
– Payments arising from securities trading

9. Definition of a Remittance
Transfer Provider
• An entity providing remittance transfer
services in the normal course of business
– Credit unions and banks
– Money transmitters
– Broker/dealers
• Normal course of business defined to be
more than 100 transfers a year
• Does not have to hold the consumer’s
account (e.g., Western Union)

10. Safe Harbor Provision
• Credit unions with 100 or fewer remittance
transfers a year are granted safe harbor
under the Rule
– Credit union is not a remittance transfer provider
if it did not exceed 100 remittance transfers in the
prior calendar year and provides 100 or fewer
remittance transfers in current calendar year
– Credit union exceeding the 100-transfer limit has
“a reasonable time period, not to exceed six
months” grace period in which to comply

11. Senders and Recipients
• Sender (your member) must be a
consumer (“natural person”) in a State
– Focus on the account location (for transfers
made from an account)
• Recipient is a person, business, etc.
located in a foreign country
– Focus on location of recipient account (for
transfers made to an account)
• May be the same member

12. Rule Provides Three Consumer
Protections Under Reg E
• Disclosures – Credit union’s responsibility
– Prepayment disclosure to your member
– Receipt discloser to your member; may be
combined into single disclosure w/above
• Cancellation – Consumer’s choice
• Error resolution – Credit union’s
responsibility

13. Disclosure Requirements
- Must be: (1) written; (2) in English and in any foreign
language used by the remittance transfer provider to
advertise, solicit or market; (3) accurate at the time payment
is made

14. Ability to Use Estimates
• 5 exceptions allow estimates:
– Temporary exception: Insured depository
credit union / bank
– Permanent exceptions
• Transfers sent via FedGlobal ACH Payments
• Preauthorized and recurring transfers
• Transfers to (5) nations with laws affecting foreign
exchange rates (“safe harbor”)
• Disclosure of foreign taxes and ‘non-covered’ third
party fees* – optional to provide
* Non-covered third-party fees are not required to
be calculated and disclosed under Reg E, subpart
B

15. Cancellation Right
• Consumer has 30 minutes to cancel a
remittance transfer
– From time of making / authorizing the transfer
• Refunds must be made in full w/in 3 days
• Specific rules for pre-scheduled transfers
– 3 or more days in advance of transfer date
– Uncommon in credit unions

16. Error Resolution
• Sender has 180 days to report error(s)
• Error types include:
– Amount
– Delay
– Documentation
• Credit union must investigate and resolve
within 90 days

17. Evolution of the Final Rule

18. Key Changes in April Final Rule
• Credit union is not liable if a member provides an
incorrect account number or incorrect identifier for
recipient’s institution
• Five conditions must be met
– CU gave member notice before payment that incorrect
data could cause member to lose the transfer amount
– CU can show that member provided incorrect information
– The incorrect data caused the transfer to be credited to the
wrong account
– CU used reasonably-available efforts to verify that the
recipient institution’s identifier corresponded to its name
– CU “promptly used reasonable efforts’ to recover the funds
Extends compliance effective date to Oct. 28, 2013

19. Key Changes in April Final Rule
• Lifts mandate for credit union to provide
disclosure of fees charged by non-covered
3rd
party (e.g. bene bank) to the recipient
– Unless the foreign institution is acting as an
agent on behalf of the provider
• Lifts mandate for credit union to disclose
foreign taxes other than national taxes
But, a credit union must include a disclaimer
that such fees and taxes may apply
Extends compliance effective date to Oct. 28, 2013

20. Current Issues to Consider
• Are the April 30th changes enough for your
credit union to provide remittance services?
• Are you on the verge of losing‘safe harbor’
protections under the 100 transfer threshold?
• If you use a correspondent, what is the process
for disclosure, cancellation ‘wait time,’ error
investigation/resolution?
• If you use a correspondent, ensure you’ve
identified international wire transfers
• Does shifting to ACH make sense?

21. Jorge Jimenez, Director Federal Reserve
Bank of Atlanta

22. Federal Reserve’s ACH Approach

23. The need today
23
• How do your members make international
payments?

24. International Payments Today
Traditionally only offered by the
largest global banks
High fees compared to domestic
Beneficiaries paying beneficiary deductions

25. Remittances Today
Traditionally offered by Money
Transfer Providers in non banking
channels
Today many senders have bank
accounts
International Consumer Wires are
now considered remittances too

26. ACH
International
Expanding ACH

27. International ACH benefits
No Beneficiary Deductions
Lower Costs
True Innovation in BankingConsistent Delivery Times
Best Foreign Exchanges
International Offering
Accessible to all
institutions
regardless of size
FI can also handle own exchange
ACH
International
Improves transparency for customers

28. Fixed-to-Variable (FV)
(USD to Pesos)
Example: Fixed-to-Variable payment to Mexico
28
ODFI FedGlobal
Gateway Operator
RDFIBANXICO
Gateway Operator
IAT IAT Local
USD USD MXN
F
X
02:15 a.m. ET
Day 0
Day 1

29. Domestic vs International ACH
In domestic
transactions you
can use US ABA#
and Account
number, but what
about
International
transactions?
Image Source Page: http://howtogeekon.com/2010/05/18/fit/square-peg-in-a-round-hole_0565/

30. International ACH features
• It offers payment delivery options both for
• Account-to-Account (A2A)
• The standard option of distributing payments between two
deposit accounts.
• Account-to-Receiver (A2R) [Outbound Credits
Only]
• This option allows funds from accounts at a U.S.
depository financial institution to be retrieved by any
receiver at either a participating bank location or at a
trusted, third-party provider in certain receiving countries.

31. International
A2A
Gateway RT and
Canada: CPA # and Account number
Panama: RT# and Account number
Mexico: ABM# and CLABE (18 digits)
Europe: BIC# and IBAN

32. International
A2R
Gateway RT and
Mexico: 647R (ABM)
Password (acc#)
Latin America: CO00212336750000023642
(table from fedglobala2r.com)
525565656511
(phone number)

34. How does the IAT Work?
Account number abroad

35. All Consumer originated transactions are now considered Remittances
and fall under Reg.E. Consumers need to be provided with the
following disclosures at time of origination among other provision
• Exact Foreign Exchange (or Estimated in some FedGlobal® cases)
• Exact fees and taxes applied at origination
• Exact intermediary fees applied at receipt (optional)
• Exact day of funds availability to beneficiary
While Industry impact still uncertain, your Regional Payments Association
can help you stay updated
Dodd-Frank’s Impact

36. FedGlobal®Features

37. Transaction Information
37
Default: Current Date
Total Charge to
Customer
Driven by Menu Page
Amount Transferred
Estimate of Exchange
Rate
Date Funds are Available to
Receiver
Estimate After
FX
Estimate of Foreign Fees and
Taxes
Estimate of Amount to be
Received

38. Working past the Silos
When thinking of implementing FedGlobal we suggest you
include representatives from…
YOU have the solution, it is YOUR responsibility
Treasury Product Office Compliance
Community Development International Desk (if
present)
Retail Banking ACH Operations

39. Today’s Takeaways
• Any credit union providing international payment services must
determine what obligations it has under the Dodd-Frank 1073,
CFPB Final Remittance Rule.
• There is less than 4 months to determine what your credit union will
do by the October 28th
effective date.
• Resources and Model Forms are available on the CFPB website
www.consumerfinance.gov) and NACHA has a 1073 Solutions
Center (www.nacha.org/1073-solutions-center/)
• The final, Final Rule eases some major industry pain points but only
FedGlobal ACH Payments offers a permanently compliant solution.
• Instead of dismantling your CU’s existing international payment
program, consider viable alternatives that provide benefits to both
your CU and the members.

40. Questions?

41. Contact Information:
Evan Shelan, CEO
Evan.Shelan@eZforex.com
Jorge Jimenez, FedGlobal Director, Federal Reserve Bank of Atlanta
jorge.jimenez@atl.frb.org
Breffni McGuire, Vice President, NEACH
Breffni.McGuire@nacha.org