Nov 21 - The Federal Home Loan Bank of New York has announced today that, as a result of the uncertainty posed by provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and rules promulgated by the Consumer Financial Protection Bureau, it plans to stop processing international wire transfers for its members on Dec. 31, 2012.
“We pride ourselves in being an advances bank for our members,” said Alfred A. DelliBovi, president and CEO of the Federal Home Loan Bank of New York. “International third-party wire transfers are a non-core service we have offered for member lenders in our district. With the looming regulatory hurdles being placed on this service, we have concluded that it is prudent for the bank to no longer offer this service at year-end.”
The bank began processing international wires for its members on a very limited basis in the mid-1990s. Member requests to process international wires slowly increased. In 2006, the bank contracted with a correspondent bank to process the wires. In 2008, the bank offered members the ability to process international wire transfers through its 1Linksm system; currently, approximately 86 percent of international wire transfers are processed through 1Linksm.
The act was signed into law on July 21, 2010, and required the bureau to issue rules on remittance transfers. In turn, the bureau has issued rules to protect U.S. consumers who send money electronically to foreign countries, which are slated to take effect on Feb. 7, 2013. Previously, federal consumer protection rules had not applied to most of these wires.
Under the new rules and provisions, after Feb. 7, 2013, covered international wire transfers conducted by remittance transfer providers and sent by consumers in the United States to individuals and businesses in foreign countries will require appropriate disclosures prior to and at the time of payment; cancellation and refund rights; investigation and remedy of errors by remittance transfer providers; and liability standards for remittance transfer providers for the acts of their agents. As a result, the bank determined that the new potential risks associated with international wire transfers were too great for a non-core service.