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News Now

Washington
Preserve intl payments through tighter remittance definition CUNA
WASHINGTON (4/23/10)—The Credit Union National Association ramped up its efforts to affect a change in legislative language addressing remittances and, along with a coalition of financial services groups, sent a letter Thursday to Senate leaders urging a more narrow definition of the service. The letter to Sens. Christopher Dodd (D-Conn.), chairman of the Senate Banking Committee, and Daniel Akaka (D-Hawaii), a committee member with longstanding interest in remittance issues, warned that an overly broad definition would reduce financial institutions’ ability to offer cross-border electronic funds transfers, which are not generally thought of as "remittances." Generally, a "remittance" is a transfer of money by a foreign worker located in the United States to relatives in his or her home country. Language included in the Senate’s financial regulatory reform package is currently so broad, CUNA argues, that is would cover payments and payments systems currently consider way outside the remittance system. “We are concerned about Section 1076 of the Restoring American Financial Stability Act that defines ‘remittances’ differently than the internationally accepted standard and that we believe will prevent our members from competitively offering many forms of international electronic fund transfer services because of the burdens that such an overly broad definition will impose on these services,” said the coalition letter. In addition to CUNA, the letter is signed by the National Association of Federal Credit Unions, the American Bankers Association, and the Independent Bankers Association of America. Dodd and Akaka were urged to make the definition of "remittance transfer" close to one adopted by the World Bank and Bank for International Settlements in 2007 in a white paper. The report, signed off on by now-U.S. Treasury Secretary Timothy Geithner, defined remittance transfers as “cross-border person-to-person payments of relatively low value.” “Generally these ‘remittance transfers’ are for the maintenance and support of the recipient and/or other relatives, and are defined to not include payments to businesses, many transfers between bank accounts, or payments made in exchange for goods or services. In order to ensure a competitive and viable product that serves consumers’ needs, it is critical to properly tailor the statutory definition…” the joint letter recommends. Attached to the missive was the trade groups’ endorsed definitional language. Ryan Donovan, CUNA vice president for legislative affairs, said CUNA’s main concern is that the current legislative language would position credit unions so they are liable for actions of correspondent banks, over which they have no control, and which are not subject to U.S. law. He noted that discussions regarding this provision with the Senate proponents have been positive and constructive. Donovan added, "Our concern here is not the requirements under the section as they relate to what everyone generally considers remittances." The Thursday letter follows up an earlier effort by CUNA and the World Council of Credit Unions (WOCCU). In a March 25 letter, CUNA and WOCCU 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.


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