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CUNA WOCCU express concern over remittance provision
WASHINGTON (3/26/10)--The definition of remittances in the recently introduced Senate financial regulatory reform package is “overly broad” and “would essentially make it impossible for credit unions to continue to offer any form of international electronic fund transfer services to their members, the Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU) said in a March 25 letter to Senate Banking Committee Chair Chris Dodd (D-Conn.) The language will affect any form of international electronic fund transfer services credit unions offer their members, whether or not those transactions are truly “remittances” sent by an immigrant home to his or her family, CUNA added. CUNA encouraged Dodd to consider exempting credit unions or, more broadly, exempting transactions that are routed through programs administered by the major central banks, including Fedwire, Fed Global ACH, NACHA ACH, and the SWIFT system. Allowing these provisions to apply to credit unions “may have the effect of driving credit unions and small banks out of the international electronic funds transfer business, handing an oligopoly to the big banks, MoneyGram, Western Union, and other money transfer businesses,” CUNA said. About 109 U.S. credit unions participate in WOCCU's IRNet, a remittance service operated by WOCCU Services Group. The service, which works primarily with Hispanic clients, transmits remittances to eight countries and has taken part in over $2.9 billion in total transactions since its inception. Overall, $307 billion in remittances were sent from the U.S. to other nations in 2008, according to WOCCU estimates. Credit unions also participate in wire transfer services that are not specifically remittances, and CUNA in the letter said that these types of transactions will also be affected, as the language in Dodd’s bill will still cover these types of transactions “in a way that will lead most, if not all, U.S. credit unions to cease providing any form of international electronic funds transfer service to its members.” More specifically, CUNA noted that portions of the new regulations that affect remittances conflict with sections of the Uniform Commercial Code, a law adopted by all states concerning electronic funds transfers performed by banks and credit unions. The bill would also “increase costs for remittances, increase liability for remittance transfer providers and slow down the remittance process,” CUNA added. CUNA has also asked Dodd to remove portions of the bill that would amend the Federal Credit Union Act, as these amendments would simply reiterate current Federal credit union authority, “and may actually limit the ability of Federal credit unions to offer other types of international money transfers as well as the ability of the National Credit Union Administration to regulate international money transfers.” For the full CUNA letter, use the resource link.


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