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

Abstract

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act” or “Act”) was enacted in the United States in response to the financial crisis that began in 2007. Section 1073 of the Dodd-Frank Act provides a new regulatory framework for remittance transfers made from the United States to a foreign country. The regulatory framework includes detailed disclosure requirements and establishes significant civil liability (both fines and potential class action suits) for violation of these requirements. These new rules may have significant unintended consequences with respect to remittances sent to post-conflict nations. These nations often do not have the financial systems and structure in place that are required for compliance with the new disclosures. Therefore U.S. firms may not be able to continue to offer remittances services to these areas. The article urges the regulators consider allowing the use of best estimates, rather than exact figures, when the economic and social disruptions in existence in post-conflict nations prevent full compliance with the required disclosures.

Keywords: remittances, post-conflict, consumer financial protection bureau, CFPB, regulatory burden