International Wire Transfer Regulations - Wise

If you're sending money abroad, your bank or money transfer service ... or are sending or receiving gifts with a higher dollar value from ... Ifyou’resendingawireoutoftheUSorifyou’reexpectingtoreceivingmoneyusinganinternationalwiretransfer,it’sgoodtoknowtheregulationsthatwillapplytoyourtransaction. So,inthisarticle,we’vecollectedallthenecessaryguidelinesandinformationyouneedtoknowaboutthetopic,suchasthedocumentsyoumayneed,thelimitsonawiretransfer,howareyouprotected—andifyouneedtopaytaxes. Wiretransferscangetcostly.Forthisreason,inthisarticle,we’llalsotalkaboutthebestwaysofarranginganinternationaltransfer,tohelpyousavemoney.Forexample,ifyouwanttosavemoreonyourinternationalwiretransfersbyavoidingSWIFTcostsandmarkupfees,tryoutafreeWiseaccount—butmoreonthislater. Saveupto6xwithWise💰 📝Readontofindoutmoreabout: Whatisrequiredforaninternationalwiretransfer?Whatisthelimitonaninternationalwiretransfer?What’sthebestwaytosendmoneyinternationally?WhoregulatesinternationalwiretransfersintheUS?—andmoreinfoontaxesWhataremyrightswhensendingmoneyinternationally? Whatisrequiredforaninternationalwiretransfer? Youmighthavebeenwondering—whatdocuments,checks,orlimitsshouldIbeawareofbeforeIsendmoneyabroad?So,let’sstartwiththis. Ifyou’resendingmoneyabroad,yourbankormoneytransferservicewillneedtogatherenoughinformationtocomplywiththeirownlegalobligations.Whenyouopenabankaccount,thefinancialinstitutionneedstocollectdocumentstoverifyyouridentity.Thesameregulationsrequireonlinemoneytransferproviderstodothesameifyousendmoneywiththemoverseas. Thatmeansifyou’reopeningabankaccountorareusingaspecialisttransferproviderforthefirsttime,they’lllikelyneedanyorallofthefollowingidentifyinginformationfromyou: Agovernment-issuedID(likeyourdriver’slicenseorpassport) Aproofofaddress(likearecentutilitybillorbankstatement) Thereasonforthetransfer YourSSN(SocialSecurityNumber) Proofthatyouownthebankaccountordebitcardthatyou’reusingtopayforthetransfer Theexactinformationrequestedwillvarydependingonexactlyhowmuchyou’resendingandwhichcountryyourmoneyisheadedto. 💡Toavoidbeingflaggedwhendoingawiretransfer,It’simportanttoknowthatyoumayneedtopresentfurtherdocumentationifyou’resendingover$10,000. Whatisthelimitonaninternationalwiretransfer? Inmostcases,it’sthebanksandmoneytransferservicesthattypicallyhavetheirownupperlimits,whichcanvarywidelydependingonthenatureofthetransfer.Yourbankmaylimityoutotransferring$5,000perday—ormayhavenolimitsatall. Togiveapicture,Wisehasanupperlimitof$1millionpertransferifyou’resendingmoneyfromadifferentcountrytotheUS.However,thelimitsforsendingmoneyoutoftheUSwillvaryalittledependingonhowyoupayforyourtransfer,andwhichstateyou’rebasedin. Ifyou’retransferringlargeramounts,youmighthaveIRSreportingresponsibilities.Moreonthatlaterinthearticle. What’sthebestwaytosendmoneyinternationally? Ifyou’resendingmoneyinternationally,youhaveplentyofservicestochoosefrom. Youcoulduseyourregularhighstreetbank,andeithercallintoabranch,orinsomecases,makeawiretransferonlineorbytelephone.Thiscanbeafairlycostlyoption,butit’satleastfamiliar. TherearealsoonlineservicessuchasPayPal,orWesternUnion,whichallowinternationaltransferstobemadeonlineor,insomecases,inperson.However,theseservicestypicallycomewithquitehighcosts,especiallywithregardtotheirpoorexchangerates,soitpaystoresearchbeforeyoucommit. Alternatively,youcouldtryaspecialistprovider,likeWise,whichofferssafe,quick,andlow-costinternationaltransfersatexchangerateslikeyoufindinGoogle. Andwhileyou’reatit,youmightwanttocheckoutWise’smulti-currencyaccount.Thereyoucanmanage,send,andswitchbetweendozensofcurrenciesallfromthesameaccount.Itmaybethesolutionyouwerelookingfor. GetafreeWiseaccountinminutes WhoregulatesinternationalwiretransfersintheUS? Followingtheglobalfinancialcrisisin2008,theObamaadministrationpassedamassivereformprogramaimedatdecreasingriskinthefinancialsystem.Thislegislation,passedin2010,isknownastheDodd-FrankWallStreetReformandConsumerProtectionAct.Theactcoversahugerangeoffinancialactivitiesandagencies,fromregulatingcertainaspectsofWallStreettradingtoensuringthatconsumershavesomebasicprotectioninaspectsoftheirday-to-daybanking.¹ OnegroupthatwascreatedasaresultoftheDodd-FrankWallStreetreformwastheConsumerFinancialProtectionBureau(CFPB).Anagencywhoseoveralljobistofacilitatetransparencyandfairfinancialpracticesthatprotectconsumers.² TheTrumpadministrationhasaimedtorollbacksomeaspectsoftheDodd-FrankframeworkandlimitsomeofthepowersoftheCFPB.AsofMay22,2018,TheHouseofRepresentativeshasvotedtorollbacklargepiecesoftheDodd-Frankact,looseningthestandardsoftheregulationinsomeareas.¹ WhatdoestheConsumerFinancialProtectionBureau(CFPB)havetodowithinternationaltransfers? CFPB’smissionistomakefinancialmarketsmorefairforconsumers,enforcepertinentrules,andempowerconsumerstotakemorecontrolovertheireconomiclives.³Today,theCFPBischargedwithoverseeingallinternationaltransfersover$15.⁴Moreonwhatrightsyouhaveinaminute. DoestheIRShaveanyspecificinternationalwiretransferregulationsorrules? TheIRSisprimarilyconcernedwiththereportingofinternationalwiretransfersvaluedat$10,000ormore.(Orwithrelatedinternationalwiresthatadduptoatleast$10,000.)Reportingisgenerallydonebythebankormoneytransferservicetoensurethattransfersaren’tconnectedtoillegalactivity,suchasmoneylaunderingorfundingcrime. DoIhavetopaytaxesoninternationalwiretransfers? Ifyou’retransferringlargeamountsofmoneyinandoutofthecountry,haveabankaccountabroadwithover$10,000init,oraresendingorreceivinggiftswithahigherdollarvaluefromoverseas,it’sagoodideanotonlytoconsultaprofessionalaccountant,buttoalsopersonallyreadupontaxes,documents,andfeesforwiresof$10,000ormore. Whataremyrightsandprotectionsasaconsumersendingmoneyinternationally? TheCFPBsetsouttherightsandprotectionsofferedtoconsumerssendinginternationalremittancesinaseriesofconsumereducationsheets,whichyoucandownloadonline.³ CFPBnotesthat,asaconsumer,youhavetherighttoseecostsbeforeyoudecidetouseabankormoneytransmitter.Thosecostsinclude:⁵ Theamountofmoneythatwillbetransferred Theexchangeratethatwillbeused—althoughbanksandinstitutionsaren’trequiredtorevealanyprofittheymakefromofferingyouapoorone Somefees—notall,though,sowe’llcoverthatinasec Taxescollectedbytheprovider Thesumexpectedtobedeliveredabroad—althoughthatamountdoesn’thavetoincludetaxesorfeesthatmaybedeductedontherecipient’send Unfortunately,asyoumayhavenoticedfromthelistabove,notallcostsnecessarilyareclearlydisplayedupfront.Thebig,not-so-clearly-statedcostculpritsgenerallygotoundisclosedexchangeratespreadsorsurpriseintermediaryandrecipientbankfees.Hereisabreakdownofthesefees: Whatisit?Howmuchisthefee? UndisclosedexchangeratespreadsThedifferencebetweenratesyoufindonGoogleandtheratetheinstitutiongivesyouAnaveragemark-upof4-6%butsomeinstitutionschargingupto10% SurpriseintermediaryandrecipientbankfeesThechargesdeductedfromthetransferamount—byupto3intermediarybanksaswellastherecipientbankCouldrangeanywherefrom$10-$45perbank Thosecostsaddupquickly—especiallytheexchangeratespread.Often,thisisthemostprofitablewayforbanksorinstitutionstomakemoneyonyourinternationaltransfer.Butnevertellyouabout.That’swhatit’simportanttoknowwhatyou’regettingintoupfront. 💡WithafreeWiseaccount,younevergettopaythesehiddenfees.Alltheexchangesaredoneusingthemid-marketrate,andyouonlypayasmallandtransparentfee. Ifyoudothinksomethingwentwrongwithyourwireonceyousenditoverseas,you’llwanttotellthecompanywithin180days.Thecompanywillthenneedtoinvestigatethematter.Ifanerrorwasmade,youmaybeabletogetarefundorhavethetransfersentagain.⁵Althoughit’srarethatyou’llgetthisopportunityforado-over,it’sworthgivingitatryifsomethingwasn’tcorrect. Bottomline Whetheryou’remakinganinternationalpaymentfromtheUSorexpectingtoreceivecashfromabroad,youhavebothconsumerrightsandresponsibilities.It’shelpfultounderstandinadvancehowtheUSlegalframeworkimpactsinternationalwiretransfers,tomakesureyouknowwhototurntoifyouhaveaproblem. Alittleresearchinadvanceisallittakestofindtherightoptiontomeetyourneeds,andensureyoucanmakeaconvenient,safeandfairlypricedinternationaltransfer—youmayfindabetterdealthanaregularwiretransfer.Forexample,withafreeWiseaccount,youcansaveupto6xcomparedtoold-schoolbanks—whynotgiveitatry? LearnmoreaboutWise Sources: Investopedia-Dodd-FrankWallStreetReformandConsumerProtectionAct Investopedia-ConsumerFinancialProtectionBureau(CFPB) CFPB-SendingMoneyAbroadPublications CFPBComplianceGuide-InternationalFundTransfers(PDF) CFPB-Helpingconsumersunderstandremittancetransfers(PDF) Allsourcescheckedon18November2021 Thispublicationisprovidedforgeneralinformationpurposesonlyandisnotintendedtocovereveryaspectofthetopicswithwhichitdeals.Itisnotintendedtoamounttoadviceonwhichyoushouldrely.Youmustobtainprofessionalorspecialistadvicebeforetaking,orrefrainingfrom,anyactiononthebasisofthecontentinthispublication.Theinformationinthispublicationdoesnotconstitutelegal,taxorotherprofessionaladvicefromTransferWiseLimitedoritsaffiliates.Priorresultsdonotguaranteeasimilaroutcome.Wemakenorepresentations,warrantiesorguarantees,whetherexpressorimplied,thatthecontentinthepublicationisaccurate,completeoruptodate. Wiseisthesmart,newwaytosendmoneyabroad. 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