November 20, 2012
Contact: Eric Amig - (212) 441-6807
Brian Finnegan - (212) 441-6877
FHLBNY to Stop Processing International Wire Transfers at Year-End
New York, New York – The Federal Home Loan Bank of New York (the “Bank”) announced today that, as a result of the uncertainty posed by provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”) and rules promulgated by the Consumer Financial Protection Bureau (“Bureau”), it plans to stop processing international wire transfers for its members on December 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 (“wires”). In turn, the Bureau has issued rules to protect U.S. consumers who send money electronically to foreign countries (“international wires”) which are slated to take effect on February 7, 2013. Previously, Federal consumer protection rules had not applied to most of these wires.
Under the new rules and provisions, after February 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.
Federal Home Loan Bank of New York
The Federal Home Loan Bank of New York is a Congressionally chartered, wholesale Bank. It is part of the Federal Home Loan Bank System, a national wholesale banking network of 12 regional, stockholder-owned banks. The FHLB of New York currently serves more than 330 financial institutions in New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands. The mission of the Federal Home Loan Banks is to support the efforts of local members to help provide financing for America’s homebuyers.
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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This report may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as "projected," "expects," "may," or their negatives or other variations on these terms. The Bank cautions that, by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, regulatory and accounting rule adjustments or requirements, changes in interest rates, changes in projected business volumes, changes in prepayment speeds on mortgage assets, the cost of our funding, changes in our membership profile, the withdrawal of one or more large members, competitive pressures, shifts in demand for our products, and general economic conditions. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.