Transaction Trends

Susun Hardel, Compliance Officer, Alipay US
Christine Liu, Senior Legal Counsel, Alipay US
Schulte Roth & Zabel LLP

On November 5, 2022, the new MSB regulation known as “Regulation to Govern Money Service Businesses” in Puerto Rico went into effect.  A key change in this regulation is Section 3.3.1(D)(5) of Regulation 9393 (“Section 3.3.1(D)(5)”), where  Puerto Rico mandated that receipts issued by remittance transfer providers, including money service businesses who transmit funds electronically on behalf of consumers in the U.S. to businesses and people outside of the U.S., for all monetary transmittals must comply with the Remittance Rule of Regulation E, 12 CFR 1005 et seq.

According to the Consumer Financial Protection Bureau (“CFPB”), the Remittance Rule (“Rule”), “imposes requirements on entities that send international money transfers, or remittance transfers, on behalf of consumers.  The Rule’s objective is to protect consumers who send money abroad primarily by requiring remittance transfer providers to be transparent about the related fees to send money abroad and disclosure when the funds would be available to the designated recipient.   Further, the Rule provides recourse for consumers in the event that there was an error with their remittance.

Among its disclosure requirements, the Rule mandates that remittance transfer providers generally must disclose the amount of certain fees, the exact exchange rate, and the amount expected to be delivered to the designated recipient.  Puerto Rico’s Section 3.3.1(D)(5) adopted the Rule’s detailed disclosure requirements by stating that the remittance receipts must include, among other remittance information, the amount of the transfer, service charges, total amount charged, exchange rate, and date of availability of the funds for the designated recipient [our translation to English from Spanish].  Further, Puerto Rico has confirmed that Section 3.3.1(D)(5) applies to commercial transactions involving senders who are businesses which differs from the Rule’s receipt requirements that are only applicable to transfers involving senders who are consumers (12 C.F.R. 1005.30(g)).

Puerto Rico’s adoption of the Rule’s receipt requirements extends protection of the sender by making the transparent pricing and date of remitted funds availability to the designated recipient into enforceable promises.

This article is only intended to highlight a change in Puerto Rico’s receipt requirements for electronic funds transfer and shall not be construed as legal advice on any subject matter, please consult with the Government of Puerto Rico, Office of the Commissioner of Financial Institutions for appropriate application of detailed receipt requirements.