Dodd-Frank Act and Remittances to Post-Conflict Countries: The Law of Unintended Consequences Strikes Again

Abstract

The Dodd-Frank Act amendments to the Electronic Funds Transfer Act, and the implementing regulations issued by the CFPB, are intended to provide enhanced consumer protections to U.S. residents sending funds to foreign countries. The legislation and regulations were designed for a model in which the remittance transfers are subject to known rules and regulations, where all fees can be determined beforehand, and where exchange rates and timing can be predicted with near certainty. This model does not exist for remittances sent to many post-conflict countries. In these nations, the financial regulatory structure is weak, the political and legal infrastructure unstable, and corruption or fear of corruption prevalent. Under these circumstances, it is difficult, if not impossible, to know with certainty many of the facts that the regulation requires remittance providers to disclose accurately when the remittance is initiated. The CFPB has made attempts to deal with these issues, but much more needs to be done to assure that these new rules will not inhibit fund transfers to post-conflict regions.

Keywords: remittance payments, post-conflict states, post-conflict nations, regulatory burden, consumer financial protection bureau, Dodd-Frank act