Answer:
Yes, it is effectively a part of the Regulation, since it is, by law, given deference by the courts when matters get considered there. The same can be said of the Official Interpretations in Supplement I to Regulation Z. However, before panicking, make sure you read the last paragraph of this response.
Comment 33(a)-5 is tame compared with Comment 33(c)-2, which covers the error caused by the Sender's providing of incomplete or erroneous information (unless the Sender does so with an intent to defraud). If the funds get misrouted to the wrong account due to the error, the bank still has to correct the error, even if the funds cannot be reclaimed from the person that received them in error. So the bank could be out not only some fee income, but also the amount of the transfer. This view is further supported on page 6256 of the Federal Register document in which the final rule was published (column 3 of that page). In the discussion, the Bureau writes--
"Based on this rule, if a remittance transfer is deposited in an account that does not belong to the designated recipient named in the receipt because the sender provided the wrong account number for the designated recipient, the provider may charge the sender for resending the remittance transfer, but may not have the sender provide the principal transfer amount again in the event that the remittance transfer provider is unable to have the funds extracted from the wrong account. The Bureau believes that this approach will encourage providers and other parties involved in the remittance transfer to develop security procedures to limit the risk of funds being deposited in an account when the name of the designated recipient named in the receipt does not match the name associated with the account number. The Bureau notes that remittance transfer providers will be supplied with both the name, and if provided by the sender, the telephone number and/or address of the designated recipient, which the provider must disclose on the receipt under 1005.31(b)(2)(iii)."
Important new information: The Bureau has proposed (see 77 FR 77187, 12/31/12) to amend the Foreign Remittance Transfers rule to soften the impact of these provisions somewhat, partly in recognition of the fact that the language of the EFT Act (as amended by the Dodd-Frank Act) doesn't provide for strict provider liability in cases in which the Sender has supplied erroneous account number information, and partly due to the hue and cry raised by banks, credit unions and other remittance transfer providers over the inequity of this provision. The proposed change will require a provider to attempt to recover the funds in cases in which the Sender has provided erroneous account number information, but the provider won't be liable to the Sender or recipient if good faith efforts to recover the funds are unsuccessful, and the Sender was informed of this risk at the time the transfer was requested. The proposal also includes amendments that will relax somewhat the requirements for disclosing third-party fee and foreign taxes. Finally, the proposal would delay the effective date of the entire rule (subpart B of Regulation E) from February 7, 2013, to a date which is 90 days after issuance of the final rule originating from this proposal.
First published on BankersOnline.com 1/14/13.
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