International wire regulations: What you need to know

Article summary

Before you wire money from a US bank account to a family member or friend abroad, knowing the regulations is important. Sending money overseas is a great way to show loved ones you care, but you wouldn’t want to disappoint the recipient if something went wrong or face an unexpected fee.

In this article, we’ll cover what you need to know about peer-to-peer international wire transfer regulations. This includes the information and documents you need to wire money to people overseas, how regulations safeguard the transfer process, and your legal rights. We’ll also explain how a money transfer provider like Western Union enables you to send money to family or friends abroad differently from a conventional bank wire transfer.

After reading this article, you’ll learn how to confidently wire money from your bank or send money with Western Union to family or friends abroad. You’ll also learn how sending money with Western Union could be a faster and easier option than a conventional bank wire.

In this article

• What are peer-to-peer international wire transfers?
  • How sending money with Western Union differs from conventional bank wire transfers
• What legal documents are needed to wire money overseas?
• How are international wire transfers regulated?
  • Why are they regulated?
• International wire transfer limits
  • Transfer limits and the Financial Crimes Enforcement Network (FinCEN)
• What are the international wire transfer reporting requirements?
• What rights do I have under international wire transfer regulations?
• Are there penalties if I don’t follow the rules?
• FAQs
• Guides
• Send money to family or friends abroad with Western Union

What are peer-to-peer international wire transfers?

Peer-to-peer international wire transfers involve electronic funds transfers between two people with bank accounts in different countries.

To make an overseas wire transfer, you provide your bank with the recipient’s personal information, bank account details, and the amount you want to send. Your bank deducts the money from your account and sends a message to the recipient’s bank through a secure network, such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

Once verified, their bank converts the funds into the recipient’s currency based on the current exchange rate and deposits them into their account from the bank’s reserves.

How sending money with Western Union differs from conventional bank wire transfers

Both conventional bank wire transfers and Western Union can help you send money to family or friends overseas, but they work in slightly different ways.

Think of a conventional wire transfer as moving money between bank accounts. You tell your bank where to send money, and they send it to the recipient’s bank account. Wire transfers can be speedy, secure, and often work best for transfers within the same country, especially for larger amounts. The downside? Both parties need a bank account for it to work.

With Western Union, we act as the intermediary between you and the recipient, which means banks aren’t directly involved in the transfer. You can send money to family or friends online, through our app, or even at one of our many agent locations worldwide. This gives the recipient more options on how to get the money. They can pick it up as cash at an agent location, get it deposited into their bank account (depending on the country), or even receive it in their mobile wallet (depending on the country).

What legal documents are needed to wire money to family or friends overseas?

You must be aware of several security checks, required documentation, and potential limits on how much you can send before wiring money internationally through a bank or sending money with a transfer provider.

Banks and money transfer providers like Western Union are required by law to comply with strict rules to stop criminal activity, such as fraud, money laundering, and funding illegal activities.

For high-value money transfers, you may be required to show:

• Proof of funding source
• Documentation (such as receipts)
• A reason for the transfer

You may need some of the following identification information, too:

• A government-issued ID (such as your driver’s license or passport)
• Proof of address (such as a recent bank statement or utility bill)
• A valid Social Security number (SSN)

The information you need to provide varies depending on the bank or money transfer provider, the amount of money you want to send, and the country the funds will go to.

How are international wire transfers regulated?

International wire transfer regulations differ depending on the bank or money transfer provider and the countries involved in the transfer. Most major banks and money transfer providers like Western Union are regulated to ensure compliance and your protection.

Banks and money transfer providers conducting international money transfers can be regulated at many levels, including:

• National: Each country may have its own regulators overseeing international banks and money transfer providers operating within its borders. These regulators set specific licensing, reporting, and capital requirements.
• Regional: Some countries have regional regulators to oversee international money transfer activity. For example, the Financial Action Task Force (FATF) safeguards international transfers in specific regions against money laundering and terrorist financing.
• International: International organizations like the International Monetary Fund (IMF) and the World Bank can also play a role in setting standards and rules for international money transfer regulations.

Types of regulation can include:

• Licensing: Banks and money transfer providers may need specific licenses to operate in a particular country or region.
• Reporting: They may be required to report their transactions and activities to regulators.
• Money requirements: They may need to maintain a minimum level of capital reserves to ensure they can meet their financial duties.
• Compliance systems: They must have robust systems in place to comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.
• Audits: They may receive regular audits to ensure compliance.

Specific regulations for banks and money transfer providers will depend on various factors but always choose a regulated institution like Western Union when sending money to your family or friends overseas.

Why are they regulated?

International wire transfer rules and regulations are essential for many reasons, primarily:

• Protecting your money
• Stopping financial crimes
• Maintaining the health of financial systems
• Managing cross-border risks
• Aligning with global best practices

Regulations are necessary to provide a layer of protection for you and the safety of the global financial system.

International wire transfer limits

Regulators can impose limits on most international wire transfers, but there isn’t a single universal transfer limit.

Banks and money transfer providers typically decide their own limits, and these vary depending on the nature of each transfer and the receiving method. Some may limit you to a set amount per day, for example.

Transfer limits are essential for several reasons:

• Balancing costs: Processing international transactions involves various costs, and limits help banks and money transfer providers cover operational expenses.
• Preventing fraud: Limits play a role in minimizing fraud risk by preventing large-scale illegal transfers.
• Meeting compliance rules: Financial institutions must comply with AML and CFT regulations. Transfer limits can aid in detecting suspicious activity.
• Minimizing risk: Setting limits helps manage the overall financial risk for the bank or money transfer provider, preventing potential losses from accidental or intentional misuse.

Transfer limits are not set in stone and can vary depending on several factors, including the sending and receiving countries, the specific bank or money transfer provider, and even the existing relationship between the sender and the recipient.

Transfer limits and the Financial Crimes Enforcement Network (FinCEN)

FinCEN monitors international payments in the US and protects consumer rights when wiring money to family or friends overseas. FinCEN enforces the Bank Secrecy Act (BSA) of 1970. Banks and money transfer providers must retain and report certain international payment information to prevent money laundering.

However, FinCEN doesn’t limit the amount people can send overseas. Banks and money transfer providers must collect information on payments from $3,000 upward.

What are the peer-to-peer international wire transfer reporting requirements?

Peer-to-peer international wire transfer reporting requirements differ when dealing with large amounts of money.

Regulated banks and money transfer providers must report transfers exceeding a cumulative total of $10,000 within a set period to government agencies like the IRS. This enables regulators to review large money transfers for suspicious activity like money laundering. This process falls under the BSA.

If you want to send money internationally, the bank or money transfer provider you choose is usually responsible for making legally required reports or retaining any transfer information. You may have some reporting responsibilities if you receive money in an account in the US or overseas.

For example, you must declare money in overseas accounts in your name if the combined value exceeds $10,000 at any point in a calendar year. This involves filing a Report of Foreign Bank and Financial Accounts (FBAR) with the US Department of the Treasury.

What rights do I have under peer-to-peer international wire transfer regulations?

International wire transfer rules are not just there to prevent criminal activity—they help protect you.

After the 2008 financial crisis in the US, the government passed a reform program to decrease risk in the finance system. The Dodd-Frank Wall Street Reform and Consumer Protection Act (known as the Dodd-Frank Act) was passed in 2010 and covers various activities and agencies, including Wall Street trading regulations and basic consumer protection.

The Consumer Financial Protection Bureau (CFPB) was created in the wake of the Dodd-Frank Act to ensure transparency and fairness in financial products and services for consumers. While the CFPB doesn’t oversee every international money transfer, they regulate the practices of money transfer providers to protect you.

How the CFPB protects your rights

According to the CFPB, you have the right to see any costs involved before using a bank or money transfer provider to send money, including:

• Amount of money transferred
• The current exchange rate (however, banks and money transfer providers aren’t required to reveal any profit they make from rates)
• Some transfer fees
• Taxes the bank or money transfer provider collects

Are there penalties if I don’t follow international wire transfer regulations?

Not following the regulations for international wire transfers can lead to several penalties. Banks and money transfer providers may also cancel your transfer altogether.

For example, non-disclosure of overseas accounts may result in an investigation by the IRS, an audit of tax returns, or even a criminal investigation. The penalty for non-willful failure to file the required FBAR is now a maximum of $10,000 per report.

Civil or criminal repercussions can also include:

• Fines
• Restitution orders
• Incarceration

Make sure you comply with all necessary laws at each stage of the money transfer process to avoid penalties.

FAQs

What are the rules for peer-to-peer international wire transfers?

Peer-to-peer international wire transfers involve different regulations depending on the bank or money transfer provider, the amount of money you want to send, and which country you’re sending money to.

For example, you may be required to show contracts, invoices, bank statements, or official letters showing your source of funds and the purpose of the transfer. You may also have to present several forms of identification to start a transfer, including a government-issued ID, proof of address, or a valid Social Security Number (SSN).

It’s important to note that most banks and money transfer providers limit the amount of money you can send overseas daily, monthly, or yearly. Always check on specific regulations and transfer limits regarding international transfers.

What is the maximum amount you can wire to family or friends internationally?

There is no universal maximum amount for peer-to-peer international wire transfers. The maximum amount of money you can send overseas depends on the sending and receiving countries, rules and regulations set by the bank or money transfer provider you choose, and your unique transfer situation.

Are there restrictions on international peer-to-peer wire transfers?

Yes, you should be aware of a few potential peer-to-peer international wire transfer restrictions, including limits on the amount of money you can send during a specific time frame and the purpose of your transfer.

Are international peer-to-peer wire transfers reported to the IRS?

The Bank Secrecy Act (BSA) of 1970 requires banks and money transfer providers to report transactions exceeding $10,000 to government agencies like the IRS. This aids in detecting and preventing money laundering.

Can I use Western Union to send money to a company or charity overseas?

Western Union specializes in peer-to-peer international money transfers. We designed our services for sending money between individuals, such as family members and friends in different countries.

Our international money transfer services are not designed for sending money to companies, charities, or other overseas organizations. If you need to transfer money to a business or nonprofit internationally, you’ll need to use a different service that facilitates those transactions.

Guides

• How to make a wire transfer
• How to receive a wire transfer
• Wire transfer vs bank transfer: What’s the difference?
• How long do wire transfers take?

Send money to family or friends abroad with Western Union

When you need to send money to family or friends abroad, Western Union can be a more flexible option than conventional bank wire transfers. We provide speed, convenience, and wider receiving options (including cash pickup), even for those without bank accounts.