Dodd-Frank 1073: A Solution from J.P. Morgan, and a Community Alert

As the deadline for Dodd-Frank 1073 implementation edges closer, J.P. Morgan continues working to help the banking community comply.

Never simple or easy for providers, the disclosure of consumer bank fees and charges will reach a new level of complexity this spring, when Dodd-Frank Act Section 1073 (known as Dodd-Frank 1073) is implemented. Dodd-Frank 1073 requires that any institution that provides U.S. consumers electronic cross-border payment capabilities – referred to in the rule as “remittance transfer providers” -- must also provide disclosure of a full range of fees, including FX conversion rates, at the time the consumer seeks to originate a payment. In addition, all remittance transfer providers, or RTPs, must meet requirements for resolving any inquiries from consumers that arise from a covered transaction.

The original implementation deadline of February 2013 was extended in order to allow the Consumer Financial Protection Bureau time to revise three aspects of the regulation. This delay is welcome news to financial institutions as they prepare to comply. But as J.P. Morgan’s U.S. Dollar Senior Product Manager Matt Loos points out, “This is a postponement, not a cancellation, and we are all working hard to meet the implementation date.” Since last fall, J.P. Morgan has offered its financial institution clients a solution designed to help RTPs meet Dodd-Frank 1073’s disclosure requirements. This Web-based service, which J.P. Morgan calls its Consumer Cross-Border Payment Solution, enables RTPs to retrieve the pre- and post-payment information needed to print required disclosures. Included in the database of information stored by the Cross-Border Solution are required disclosures, beneficiary and pay-through bank fees, taxes, FX rates (when necessary), and more. An online disclosure form provides space for client personalization. There is also an Application Program Interface option (API) that could allow for more automation for the RTP.

The solution includes planning assistance and extensive support. “Clients can leverage our people and technology to meet this compliance challenge,” says J.P. Morgan’s FX Senior Product Manager, Kate Gallivan, who has partnered with Matt Loos to further educate clients on the best ways to engage J.P. Morgan in their Dodd-Frank 1073-related activity. The Consumer Cross-Border Payments Solution is offered with a full implementation plan; a client service plan for wire investigations that meets Dodd-Frank timeframe requirements; and electronic initiation through SWIFT, FED, CHIPS, the J.P. Morgan ACCESS portal, and host-to-host file transmission. “When they leverage J.P. Morgan’s capability, clients can minimize their own technology build and reduce their need to do extensive industry research,” says Gallivan. The solution is intended to provide up-to-the minute information without putting the burden on the client to assemble their own disclosures from raw information.

The entire world of correspondent banking will be impacted by Dodd-Frank 1073 requirements. To ensure that networks continue to operate smoothly in the new environment and that payment originators are able to avoid as much liability as possible, Loos and Gallivan are now making an urgent request to J.P. Morgan’s partners in the banking community. “We are surveying our network and asking for the fee information that’s urgently needed to make our RTP databases and formulas as robust as possible,” says Gallivan. “Since Dodd-Frank 1073 affects every remittance provider, we would like to see everybody buy into a process of information gathering and sharing, and then take immediate action. We need as much fee information as possible, as soon as possible, in order to establish consistent baselines from an adequate sample.”

Loos adds: “J.P. Morgan’s message when we survey our network is simple. If we have your fees, we know we will be able to continue to send you all wire transactions going forward. If we don’t, we may not be able to send consumer-initiated transactions under the new rules. We’re building a solution that relies on data to spare RTPs and consumers extra costs and charges. While there are currently some other banks employing short-term workarounds that involve the use of SWIFT charging options, the goal for J.P. Morgan is to get the community a best-in-class solution where they are applying fees and taxes with maximum accuracy and minimum exposure to risk.”

Complete and submit J.P. Morgan’s Survey, or talk to your representative about J.P. Morgan’s Dodd-Frank 1073 Consumer Cross-Border Payment Solution.