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Date: Fall 2021
From: Business Lawyer(Vol. 76, Issue 4)
Publisher: American Bar Association
Document Type: Article
Length: 9,886 words
Lexile Measure: 2420L

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Effective April 24, 2020, the Board of Governors of the Federal Reserve System (the 'Board") issued an interim final rule amending its Regulation D (Reserve Requirements of Depository Institutions). (1) Regulation D implements section 19 of the Federal Reserve Act, which authorizes the Board to impose on depository institutions reserve requirements on certain types of customer deposit accounts, including transaction accounts. (2) Regulation D distinguishes between transaction accounts (which are reservable) and savings deposit accounts (which are not reservable), "based on the ease with which the depositor may make transfers (payments to third parties) or withdrawals (payments directly to the depositor) from the account." (3)

Before the interim final rule, Regulation D contained a monthly limit on the number of "convenient" transfers and withdrawals that a depository institution customer could make from a savings deposit account. (4) A "convenient" transfer or withdrawal is a preauthorized or automatic transfer, telephonic transfer, transfer by check, transfer by debit card, or a similar order payable to a third party. (5) Prior to the interim final rule, Regulation D limited a customer to six such transfers from the customer's account per month, and required depository institutions to either prevent such transfers or monitor such accounts ex post for violations of the monthly limit. (6) The interim final rule allowed depository institutions to immediately stop enforcement of the six-transaction limit. (7)

The Board identified two reasons for removing the monthly limit. First, in light of the Board's reduction of reserve requirements to zero percent effective March 26, 2020, there was not a need to maintain a distinction between reservable transaction accounts and non-reservable savings deposit accounts. (8) Second, because of the financial disruptions and branch and other facility closures resulting from the coronavirus pandemic, there was a need for more depositors to have greater access to their funds by remote means. (9) The Board requested comment on all aspects of the interim final rule. (10)


Effective July 21, 2020, the Bureau of Consumer Financial Protection (the "Bureau") issued a final rule amending the remittance rule ("Remittance Rule"). (11) As described in last year's survey, the Bureau had proposed the amendments in December 2019. (12) Consistent with the proposed rule, the final rule makes two sets of changes. First, the Bureau increased a safe harbor threshold in the Remittance Rule, under which a person is deemed not to be a remittance transfer provider. (13) Under the new threshold, a person is deemed not to be a remittance transfer provider if the person provided 500 or fewer transfers in the previous calendar year and 500 or fewer remittance transfers in the current calendar year (both raised from 100 transfers). (14)

Second, the Bureau adopted two exceptions that permit insured institutions to disclose estimates of exchange rates and covered third-party fees instead of exact amounts. (15) With respect to exchange rates, the Bureau adopted a "permanent exception that permits insured institutions to estimate the...

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Gale Document Number: GALE|A681135811