Payments
TCH Comments on Fed’s Proposal to Establish Accounts for Financial Market Utilities
Apr 25, 2013 --
The Clearing House Association submitted a comment letter to the FRB on its proposal to amend Regulation HH, which would authorize a Federal Reserve Bank to establish an account for a financial market utility (FMU) that has been designated as systemically important by the FSOC. In the letter TCH suggests that the Board’s proposal should be revised to address the following issues: (i) the proposed sharing of confidential supervisory information about FMUs with the business operations of the FRBs is unacceptable, (ii) the Board should declare that any accounts established under Regulation HH are covered by the safe harbor of 12 U.S.C. § 4405, and (iii) Reserve Bank accounts should not be mandatory for FMUs. TCH also noted that the provisions of proposed Regulation HH regarding the payment of interest appear reasonable.
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TCH Supports Omnibus Uniform Commercial Code Modernization Act
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Mar 6, 2013 --
The Clearing House Association submitted a letter to the New York State Assembly Judiciary Committee to express support for the Omnibus Uniform Commercial Code Modernization Act, which would make certain changes to New York’s Uniform Commercial Code. These changes are necessary to modernize New York’s commercial law, preserve New York law’s relevance and usefulness for parties that wish to transact business in the state, and sustain New York as a jurisdiction of choice for conducting domestic and international business.
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TCH Suggests Further Modifications to Remittance Transfer Rule
Jan 30, 2013 --
The Clearing House Association submitted a comment letter, joined by six other trade associations, responding to the CFPB’s proposal to revise the remittance transfer rule. The letter suggests that the rule should: (i) eliminate the requirement to disclose recipient institution fees or replace it with a “may apply” statement, (ii) replace the requirement to disclose estimated foreign tax amounts with a “may apply” statement, and (iii) exclude from the definition of “error” any delay, extra cost, or loss of funds that results from a sender’s incorrect instructions, if the provider has correctly executed those instructions. The letter also requests that if the Bureau does not adopt the industry’s suggested changes, the final rule become effective in 180 days, rather than the proposed 90 days, after release.
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TCH Supports Temporary Delay of Remittance Transfer Rule
Jan 15, 2013 --
The Clearing House submitted a comment letter to the CFPB, supporting the temporary delay of the remittance transfer rule and thanking the CFPB for its efforts to address the industry’s concerns. The Associations also urged the CFPB to allow the industry the time needed for an orderly transition once the new final rule is issued.
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TCH Files Brief in NML Capital v. Argentina
Jan 4, 2013 --
The Clearing House filed an Amicus Brief to seek clarification of the applicability of the district court’s order to beneficiary’s banks, funds-transfer networks, and other parties to funds transfers and to discuss the inclusion of the indenture trustee in the injunction, after the 2nd Circuit Court of Appeals issued a stay of the November 21 district court order. The Brief argues that (i) the Amended Injunction improperly expands the scope of nonparties bound by its terms beyond aiders and abettors, (ii) the amended injunction is contrary to law because it interferes with property right of nonparties (iii) the amended injunction violates Federal and New York State law because it improperly interferes with the orderly functioning of payments systems, and (iv) extraterritorial application would violate due process by potentially imposing double liability on financial institutions outside New York.
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TCH Urges a Delay in Upcoming Changes to Social Security ACH Payments Processing
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Dec 20, 2012 --
The Clearing House submitted a letter to the Treasury Department requesting delay of certain technical changes to social security ACH payments beginning in January. Specifically TCH requested that the changes be delayed until March 1 to afford banks and software vendors time to make coding changes so that there would be no disruption to social security recipients.
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TCH Comments on CFPB’s Foreign Remittance Transfer Announcement
Dec 13, 2012 --
The Clearing House Association submitted unsolicited comments to CFPB staff in response to the November 27 bulletin that announced the agency’s intent to issue an NPR to address certain issues with the rule. The comments specifically addressed the CFPB’s proposed “published fee schedule” approach to disclosing beneficiary account fees.
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TCH Assists in International Understanding of the Final Remittance Transfer Rule
Oct 22, 2012 --
The Clearing House Association and the Payment Market Practice Group published a co-authored white paper for the international community regarding Section 1073 and the final rule. The purpose of the paper is to provide information which will enhance the global market’s awareness and understanding of the new regulatory requirements and explain why U.S. providers will need to change the way they handle currency conversions and their need for fee information from their correspondents.
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TCH Comments on CPSS-IOSCO’s Consultation on Resolution Plans for FMIs
Sep 28, 2012 --
The Clearing House Association filed a comment letter with CPSS and the IOSCO, in response to their Consultative Report on the Recovery and Resolution of Financial Market Infrastructures. TCH urged CPSS-IOSCO to convene expert panels on insolvency law as well as FMI specific operational concerns, and to issue another round of commentary which takes into consideration the pressing concerns included in TCH’s comment letter and the findings from the experts prior to issuing a final proposal.
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Joint Trade Statement for the Record on Remittance Transfers
Jun 21, 2012 --
The Clearing House Association submitted a statement for the record to the HFSC in connection with its June 21 hearing on “Safe and Fair Supervision of Money Services Business.” The statement provides an overview of TCH concerns over the remittance transfer provisions of Section 1073 of Dodd-Frank and its unintended consequences for consumers. Remittance transfers were briefly discussed during the hearing.
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TCH Comments on Global Regulators’ Financial Market Infrastructures Proposal
Jun 15, 2012 --
The Clearing House Association filed a comment letter to CPSS and IOSCO on two consultative reports: Assessment Methodology for the Principles for FMIs and the Responsibilities of Authorities and Disclosure Framework for Financial Market Infrastructures. The letter supports the proposed assessment methodology and disclosure framework, but suggests ways that certain of the principles should be clarified.
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TCH Urges CFPB to Assess Impact of Remittance Transfer Rules on Consumer International Transfers
Apr 9, 2012 --
The Clearing House Association’s comment letter to the CFPB responded to the Bureau proposal to (i) exclude providers that send 25 remittance transfers a year from the Regulation E remittance transfer requirements and (ii) refine the disclosure and cancellation requirements for preauthorized transfers. TCH (i) asserted that 25 transfers a year is too low to be a useful exemption and (ii) argued that providers should not have to guarantee an exchange rate for a transfer scheduled more than one day in advance. In addition, TCH reminded the CFPB that the overall impact of the remittance transfer regulations may make the issue of preauthorized transfers moot because many financial institutions will no longer offer international transfers to consumers at all. TCH urged the CFPB to assess the impact of the final remittance transfer rules on the market for consumer international transfer services and delay the effective date of the final rule.
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TCH Files Brief in Sovereign Debt Restructuring Case
Apr 4, 2012 --
The Clearing House Association filed an amicus brief with the U.S. Court of Appeals for the Second Circuit in NML Capital v. Republic of Argentina. The brief argues that the trial court’s order to prohibit any payments on restructured debt unless ratable payments are also made on outstanding prior debt obligations is contrary to the expectations of the market, would make sovereign debt restructurings extremely difficult if not impossible, and would impermissibly burden the payments system by potentially requiring intermediary banks to screen for payments that violated the court’s order.
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TCH Asks NACHA to Better Balance Its Expedited Processing and Settlement Proposal
Dec 12, 2011 --
In response to NACHA’s Expedited Processing and Settlement Proposal, TCH Payments Company submitted a comment letter suggesting that the costs and benefits of same day ACH settlement need to be balanced among all ACH participants. In particular, the proposal needs to provide a business case that enables participants to recover the significant costs that will be incurred to enable same day settlement as well as future core ACH improvements. The Payments Company also thinks that (i) default settlement should remain next day, (ii) same day entries should be identified in manner that enables them to be readily recognized, (iii) a $25,000 dollar cap should apply to same day entries and be enforced by operator edit or the ability to return over the limit entries, and (iv) industry participants will need 18 to 24 months to implement same day settlement.
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TCH to Fed: Debit Card Fraud Prevention Adjustment Amount Too Low
Sep 30, 2011 --
TCH Association filed a letter with the FRB to comment on the fraud prevention adjustment provisions articulated as an interim final rule in Regulation II. TCH Association believes that the 1 cent amount is insufficient to cover the true costs that issuers bear for fraud prevention for several reasons: (i) the Interim Rule bases the 1 cent adjustment amount on what the Federal Reserve calculates to be the median fraud prevention costs of covered issuers, which would deny half of all covered issuers the ability to recoup crucial fraud prevention costs that they incur above 1 cent per transaction, (ii) the 1 cent amount does not include the important fraud prevention costs that issuers incur in responding to customer inquiries about fraudulent or potentially fraudulent activity related to their debit cards, (iii) the 1 cent amount does not include any costs incurred by issuers for adopting and utilizing new fraud prevention technology and systems, and (iv) the 1 cent amount fails to consider at all the higher fraud prevention costs of issuers with assets under $10 billion. The associations believe that when these flaws in the Interim Rule’s calculation of the fraud prevention adjustment amount are rectified, the appropriate amount would be at least 4 to 5 cents per transaction.
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TCH Strongly Supports CPSS-IOSCO Plan to Update FMI Standards
Jul 29, 2011 --
In another example of The Clearing House leadership, the Association sent a letter to the BIS’s Committee on Payment and Settlement Systems and the Technical Committee of the International Organizations of Securities Commissions commenting on their consultative report, Principles for Financial Market Infrastructures. TCH recognizes the systemic importance of large-value payment systems and the risks that they pose if they are not properly managed and therefore strongly supports the CPSS and IOSCO in their goal to update the standards applicable to systemically important payment systems and other financial market infrastructures. In that spirit and in light of over 40 years’ experience in operating a systemically important funds-transfer network, TCH made a number of comments to help clarify the principles and to reduce the burden that the revisions could impose.
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TCH Leads Industry Effort Urging Revisions to Fed’s Proposed Remittance Transfer Rules
Jul 22, 2011 --
The Clearing House Association, along with nine other trade groups, submitted a comment letter to the Fed asserting that the Fed’s proposed Reg E remittance-transfer rules, oriented towards closed networks, are unworkable for open-network (ACH and wire) transfers. The letter urges that the final rule either exclude open-network transfers or provide a separate rule set tailored to such transfers. The letter also suggests that the application of the final rule be limited to transfers in an amount that is consistent with the value of a traditional remittance.
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TCH Urges Changes to Fed’s Proposed Remittance Transfer Rules
Jul 15, 2011 --
The Clearing House Association explains why, if unchanged, the Fed’s proposed remittance transfer rules will result in higher prices and less choice for consumer remittances.
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TCH and Industry Comment on Proposed Changes to Reg CC
Jun 3, 2011 --
The Clearing House Association submitted a joint comment letter with ECCHO, ICBA, and BITS to the Fed regarding proposed changes to Reg CC to facilitate the continuing transition to fully electronic check clearing and return. Key changes include making the duty of expeditious return contingent upon a depository bank’s willingness to accept electronic returns, permitting a paying bank to require the same day settlement items be presented electronically, and expanding certain check warranties to cover paperless remotely created checks. The comment letter responds in detail to each aspect of the Fed’s proposal.
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TCH Comments on Proposed Changes to Reg CC
Jun 3, 2011 --
The Clearing House Association submitted a comment letter to the Fed regarding proposed changes to Reg CC to facilitate the continuing transition to fully electronic check clearing and return. Key changes include making the duty of expeditious return contingent upon a depository bank’s willingness to accept electronic returns, permitting a paying bank to require the same day settlement items be presented electronically, and expanding certain check warranties to cover paperless remotely created checks. TCH’s comment letter focuses on two issues: check fraud liability and the legal status of paperless remotely created checks.
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TCH Opposes Designation of Retail Payments Systems (ACH & Check Image) as Systemically Important under Title VIII
May 20, 2011 --
The Clearing House Association and Payments Company filed a comment letter responding to the FSOC NPR on the criteria, processes, and procedures for the designation of FMUs as systemically important. While not taking specific issue with the criteria, processes, and procedures outlined, The Clearing House provided additional information on why EPN and IPN do not fit the criteria for designation as systemically important under Title VIII and the FSOC proposed rule. On July 18 the FSOC approved a final rule addressing the criteria and process for designation of financial-market utilities (“FMUs”) under Title VIII of Dodd-Frank. Under the rule the FSOC will use a two-step process to designate FMUs. In the first stage the FSOC will use quantitative data to identify a preliminary set of FMUs, and in the second stage it will conduct a closer examination of quantitative data and particular characteristics to designate FMUs.
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TCH Contends Retail Payment Systems Are Not Systemically Important FMUs
May 19, 2011 --
The Clearing House Association and Payments Company filed a comment letter to the FRB regarding risk management standards for FMUs under Section 804 of the DFA and standards for determining when a designated FMU must provide advance notice of a proposed material change to its rules, procedures, or operations under Section 806 of the DFA. The letter argues that the proposed risk management standards demonstrate that ACH clearing and settlement arrangements do not pose the kind of systemic risk contemplated in the DFA, and further suggests that the Board’s proposed definition of materiality for advance notice of changes to rules, procedures, or operations should be crafted more narrowly and the review process provide for more streamlined reviews.
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TCH Concerned by Dodd-Frank Debit Card Interchange Provisions
Apr 11, 2011 --
The Clearing House Association, joined by eight other trade associations, filed a letter with the FRB emphasizing the extraordinary breadth and depth of organizations and Government officials that have expressed concerns similar to those expressed in the associations’ February 22 comment letter to the Board on its proposed rule to implement the debit card interchange provisions of Dodd-Frank. The letter also addresses suggestions that governments in other countries have capped or eliminated debit card interchange fees without any negative consequences to consumers or debit card issuers in those countries, focusing particularly on the experience in Canada where consumers have ended up paying slightly more than the current debit interchange fee of 44 cents received by U.S. issuers. On July 20, 2011 the FRB published in the Federal Register its final Regulation II, implementing the Durbin Amendment. The rule, which differs from the Board’s December 16 proposed rule, caps interchange fees for debit card transactions at 21 cents plus an ad valorem component of five basis points as an adjustment for fraud losses. A debit card transaction interchange fee that does not exceed this threshold is conclusively deemed reasonable and proportional. The FRB also approved an interim final rule that allows an issuer to receive an adjustment of 1 cent to its interchange transaction fee if the issuer complies with certain fraud prevention standards outlined by the FRB. The interchange fee limitations and the interim final rule are effective October 1, 2011.
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TCH Comments on Remittance Transfers
Apr 8, 2011 --
The Clearing House Association submitted a comment letter to the FRB proposing a definition of “error” for purposes of the error resolution rules that the FRB must issue under § 1073 (remittance transfers) of Dodd-Frank. TCH suggests that errors exclude unauthorized wires that are effective against the sender under UCC 4A, variances in amount when a financial institution has provided a reasonably accurate estimate of the amount to be received and delays in receipt or variances in amount which are caused by circumstances beyond a financial institution’s reasonable control. The proposed language also preempts UCC 4A-108 so that remittance transfers that are wires remain funds transfers and, as between financial institutions, UCC 4A is still applicable. Finally, the letter requests that the Board limit the application of § 1073 to remittances less than $500.
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TCH to Fed: Debit Card Interchange Fees Too Low
Feb 22, 2011 --
The Clearing House Association, along with eight other trade associations, submitted a comment letter strongly urging the Federal Reserve Board to fundamentally revise its proposed rule on debit card interchange fees. The proposed rule imposes a fixed cap on interchange fees that the FRB admits will prevent banks and credit unions from recovering even the basic costs of providing debit card services. Hence, the letter urges the FRB to revise its rules and allow issuers to receive fees that, as specified by the Durbin Amendment, are reasonable and proportional to the issuers’ actual costs with respect to debit card transactions. The letter also asks the FRB to follow its mandate from Congress to carefully consider the impact of any price regulation on consumers, financial institutions and the U.S. payments system as a whole.
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TCH Supports Selection of NACHA and CAQH CORE for Development of Medical Payments Processing Rules
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Sep 10, 2010 --
The Clearing House Association filed a letter with the National Committee on Health and Vital Statistics (“NCVHS”) to support the selection of The Council for Affordable Quality Health Care’s Committee on Operating Rules for Information Exchange (“CAQH CORE”) and the National Automated Clearing House Association (“NACHA”) as the uniquely qualified organizations designated to develop operating rules for the HIPAA eligibility, claims status, electronic funds transfer and electronic remittance advice transactions.
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TCH Comments on Federal Government Participation in the ACH
Jul 13, 2010 --
The Clearing House Association submitted a comment letter to the Financial Management Service, an office of the U.S. Treasury Department in charge of government payments services. TCH commented on proposed rules relating to the classification of international ACH transactions by government agencies, a proposed automated reclamations process, proposed rules regarding the use of prepaid debit and stored value card accounts for government payments and other issues. TCH also suggested an ongoing forum with the FMS to discuss these issues. On September 23 the Financial Management Service issued a final rule that amends FMS’s regulation governing the use of the Automated Clearing House (ACH) network by Federal agencies. The rule adopts, with some exceptions, the 2009 ACH Rules published by NACHA as the rules governing the use of the ACH Network by Federal agencies.
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TCH Files Amicus Brief with Appeals Court in Sinoying Logistics Pte Ltd. v. Yi Da Xin Trading Corp
Jul 2, 2010 --
The U.S. Court of Appeals for the Second Circuit invited The Clearing House Association to file an amicus brief and participate in oral argument in this case. The plaintiff is appealing the District Court’s order to release a maritime attachment in light of the Second Circuit’s decision in Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., in which TCH successfully argued that maritime attachments of funds transfers at intermediary banks should not be permitted. The court asked TCH for information on procedures that banks had used when they had to respond to maritime attachment orders and what the status of maritime attachment cases is in the wake of Jaldhi.
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TCH Files Comment Letter to Fed on Reg CC Expeditious-Returns Requirement
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Jun 7, 2010 --
The Clearing House Association submitted a comment letter to the Fed on three possible changes to the Regulation CC expeditious-return requirement. TCH comments suggested a fourth possible change for the Fed’s consideration. The Fed stated that it will adopt this option (TCH Option 4 on p. 4 of the letter) in its proposed regulation.
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TCH Files Amicus Brief with Supreme Court in Shipping Corp of India v. Jaldhi Overseas Pte. Ltd.
Feb 17, 2010 --
The Clearing House Association filed this amicus brief with the U.S. Supreme Court after the plaintiffs filed a petition for certiorari in a maritime attachments case that TCH won at the Second Circuit. The defendants have not opposed granting the petition, but TCH filed this brief opposing the petition. On March 22, 2010, the Supreme Court denied certiorari in this case.
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Wolfsberg Group and TCH Explain SWIFT's New Payment Messages
Aug 18, 2009 --
The Clearing House Association and the Wolfsberg Group published a Q&A document on SWIFT's handbook on cover payments.The document explains the roles of originators and intermediary banks with regard to the use of new payment messages.
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TCH Comments on Draft PEB Commentary on U.C.C. Sections 4A-502(d) and 4A-503
May 11, 2009 --
In a letter to the American Law Institute, The Clearing House Association approves the Permanent Editorial Board’s proposed Commentary. The Editorial Board clarified that credits at an intermediary bank are not property of either the originator or the beneficiary. This clarification will help in resolving the Winter Storm type of maritime disputes. The practice of invoking Rule B to obtain a writ of attachment targeting funds-transfer credits received by banks in the Southern District of New York have resulted in a staggering number of maritime writs of garnishment that New York banks are required to process on a daily basis.
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TCH Files Amicus Brief with District Court in Ex-Im Bank v. Asia Pulp & Paper
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Mar 24, 2009 --
The Clearing House Association filed a brief in Ex-Im Bank v. Asia Pulp & Paper, in which the Export-Import Bank of the United States, through the U.S. Attorney’s office, served a post-judgment writ of garnishment on several New York banks pursuant to the Federal Debt Collection Procedure Act (FDCPA), seeking the debtor’s property. Two N.Y. banks restrained funds transfers involving the debtor, and the debtor sought to have the funds released. The U.S. Attorney filed a reply that cited Winter Storm for the proposition that funds transfers in the hands of an intermediary bank are the property of the originator and thus subject to attachment under the FDCPA. In the brief TCH argued that the FDCPA does not preempt any relevant provision of Article 4A of the U.C.C., that property interests are defined by state law, and that under applicable state law originators and beneficiaries of funds transfers have no property interest in funds in the hands of intermediary banks.
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TCH Files Amicus Brief with Appeals Court in Applicability of Maritime Attachments to EFTs
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Feb 24, 2009 --
The Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd, is a maritime attachment case in which the issue is whether the amount of a funds transfer in the hands of an intermediary bank is property of a maritime defendant where the defendant is the beneficiary of the funds transfer. The Clearing House Association’s amicus brief supports the position of the defendant, Jaldhi Overseas Pte Ltd. in the appeal by The Shipping Corporation of India Ltd. The Clearing House takes position that an electronic funds transfer (EFT) was not property attachable under a maritime attachment order in the district courts of New York pursuant to Rule B of the Admiralty Rules.
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Trade Associations Oppose Substantial Revision of Current U.S. Payments Laws
Dec 17, 2008 --
The Clearing House Association joined with a number of other financial services organizations in a letter to the Uniform Law Commission opposing substantial revision or unification of the current U.S. payments laws at the state or federal level.
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TCH and Wolfsberg Group Submit Letter on Cover Payments to Basel Committee
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Sep 12, 2008 --
The Clearing House Association and the Wolfsberg Group commented on the Basel Committee’s consultative document “Due Diligence and Transparency Regarding Cover Payment Messages Related to Cross-Border Wire Transfers.” The letter stated that intermediary banks, and beneficiaries’ banks processing cover payments, should not be expected to monitor the compliance of originators’ banks with transparency standards and the proper use of payment message formats, and that compliance by originators’ banks can be ensured only by their supervisors.
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