Wire and Remittance Transfers

What is a wire/money transfer?

Have you ever sent money quickly to a family, friend, or business? Chances are you did so through a wire (money) transfer. The term “wire transfer” is often used to refer to any electronic transfer of money from one person to another. The term “wire transfer” also has a more narrow technical meaning, referring to one certain method of transferring funds, which usually involves an electronic transfer of funds from one credit union or bank account to another. In general, wire transfers that are made by consumers from the United States to other countries are considered "remittance transfers" under federal law.

Sending a Wire Transfer

If you want to wire money, here are a few things to keep in mind:

  • Contact your financial institution to find out how to wire transfer money 
  • Find out if there is a fee 
  • Make sure your account has the funds ready 
  • Get recipient/payee information 
  • Submit instructions to your financial institution 
  • Confirm that your request was received and verify the transfer was completed

Domestic Wires

A domestic wire transfer is a type of electronic transfer that sends money from one location within a specific country to a different location in that same country. This is in contrast to an international wire transfer in which money is moved between two points that are located in different countries. Domestic wire transfers are typically simple to use and make it possible for the funds to be available to the recipient almost immediately.

Remittances (International Wire Transfers)

Each year, consumers in the United States send tens of billions of dollars to friends, family members or businesses in other countries via remittance transfers—also known as “international wires” or “international money transfers.”

As with any product or service, there are fees, taxes, and other costs associated with conducting the transaction. Many states have consumer protection laws in place to help monitor and ensure proper disclosure of these costs. However, international money transfers fallen largely outside the scope of federal consumer protection laws. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act expanded the Electronic Fund Transfer Act to establish minimum federal consumer protections for remittances.

The new rules issued by the Consumer Financial Protection Bureau (CFPB) went into effect October 2013, providing new rights for consumers related to:

  • Seeing more information about the transfer 
  • Resolving complaints or mistakes 
  • Canceling transfers after they've been requested

Below you will find more details on these new consumer protections so you can start sending money abroad with more confidence.

Disclosures

The disclosures must contain:

  • the exchange rate that will be used when converting the money to the foreign currency
  • fees and taxes associated with the transaction
  • The amount of money expected to be received abroad, not including certain fees charged to the recipient or foreign taxes. 
  • If appropriate, a disclaimer that additional fees and foreign taxes may apply.

Companies must also provide a receipt that repeats the information in the first disclosure or a proof of payment. The receipt must also tell a consumer the date when the money will arrive and how the consumer can report a problem with a transfer.

Other Protections

Cancellations:

  • Consumers may cancel a transfer and receive a full refund as long as the request is made within 30 minutes of completing the transaction request. To cancel a transfer the service provider must be able to identify the sender and the transaction information. The funds must not have been picked up by the designated recipient or deposited into that person’s account.

Transfer Errors:

  • Companies must investigate when a consumer reports a problem with a transfer. For certain errors, consumers can receive a refund or resend the transfer free of charge if the money did not arrive as promised. It’s generally best to report a problem to the provider as soon as possible; however you will have up to 180 days to do so.

Liabilities:

  • Companies that provide remittance transfers are responsible for mistakes made by certain people who work for them. 
  • Note: specific provisions apply to transfers that consumers schedule in advance and for transfers that are scheduled to recur on a regular basis.

Which Transactions Are Covered?

Remittance transfers that are: 

  • More than $15 
  • Made by a consumer in the United States
  • Sent to a person or company in a foreign country

 


Consumer Financial
Protection Bureau
 
Consumer Financial Protection Bureau 
 

NCUA Regulatory Alert to Credit Unions
 

NCUA Regulatory Alert to Credit Unions 
 

 
Money Wiring Scams (video)

 Money Wiring Scams (video)
 

Related Resources:

• Using Money Transfer Services – Federal Trade Commission
• Remittance Transfer Rule - Amendment to Regulation E (CFPB)  Consumer Financial Protection Bureau

(Updated 10/21/13)