If you’re dealing with $10,000 or more — sending or receiving — abroad, you’ll need to know the international rules surrounding transfers of large sums. International wire regulations for sending less aren’t as stringent.
In most cases, however, there’s no legal reason why you can’t send a high-value international transfer. However, to prevent and discourage crime and tax avoidance, large transfers are reported to the IRS for checking, and in some cases, you might need to do some extra paperwork.
Not sure of your responsibilities? We’ve done the research to make it a little easier on you.
In this article you’ll find:
- Why $10,000 is the magic reporting number
- What fees you can expect for large transfer amounts
- The best way to send a large amount of money overseas
- What documents you’ll need if you’re making an international payment of $10,000 or more
- What forms, taxes, and reports you’ll need to file to be compliant with the IRS, FinCEN, and the Bank Secrecy Act
Get out your notepad. Here’s all you need to know.
The magic number $10,000 comes from the US government in this case, although it’s a common benchmark in many parts of the world. Under the Bank Secrecy Act, the IRS and other government bodies are required to report information about cash transactions over the value of $10,000¹ and to collect details about wire transactions over $3,000.²
Banks also have a duty to inform the IRS of any other suspicious activity. For example, they’ll report it if a customer seems to be trying to split up payments in such a way as to avoid hitting the $10,000 mark by making multiple smaller linked payments.¹ This is intended to deter and discover any individual trying to avoid paying tax, or any flows of money linked to illegal activity, such as crime, money laundering, or funding terrorism.
The fees you pay to transfer money across borders will depend a lot on the method you choose. You have a number of options, including sending an international wire with your regular bank, using a service like PayPal for your international transfer, or choosing a specialist provider like TransferWise.
Just because a method is familiar to you doesn’t necessarily mean you know what you’re being charged. In fact, many consumers miss how much their international transfers actually cost them. There are 3 different fees you should pay attention to:
- Upfront charges
- Poor exchange rates
- SWIFT fees
Fees vary enormously. PayPal, for example, offers low fees or even free transfers for private users sending money domestically — but PayPal international transfer options, especially when a business is involved, often come with high costs.
Similarly, regular banks tend to have higher fees for international transfers. The fees are fixed, though, so you’ll pay the same if you’re sending a large or small sum.
Many customers are actually better off using a provider like TransferWise — who spells out all charges upfront, offers exchange rates like you find on Google, and skips intermediary and international bank fees completely. More on those fees in a minute.
As well as the upfront fees applied to your international transfer, you’ll want to know the exchange rate that will be used. With large transfers, this is especially important — a poor exchange rate can mean your recipient ends up with far less cash than you might expect.
To know whether or not the offered exchange rate is fair, you need to know the mid-market rate for your currency pairing. The mid-market rate is important because it’s the real exchange rate — the one you’ll find on Google or an online currency converter.
Unfortunately, though, banks often don’t use the mid-market rate for their international transfers. Instead, they add an average mark-up of 4-6% to ensure they make an additional profit on the transaction. This is rarely made clear, so it’s easy to miss. And often costs you the most.
To give you a clear example, Bank of America does tell customers about how they profit off of your exchange rate. They call it their rate of return, and it’s part of the cost of your international transfer. But it’s not listed as an upfront charge. It’s buried in the 4th footnote on their international transfer fact sheet — emphasis ours:
The exchange rate that Bank of America will offer or assign to your transaction will be determined by Bank of America in our sole discretion based upon such factors as we determine relevant, including without limitation, market conditions, exchange rates charged by other parties, our desired rate of return, market risk, credit risk and other market, economic and business factors….We provide all-in pricing for exchange rates. The price provided may include profit, fees, costs, charges or other markups as determined by us in our sole discretion.”³
Banks will generally tell you that the mid-market rate, like the one you find on Google, isn’t available to regular customers. But that’s not quite true. Services like TransferWise do choose to offer the real exchange rate to customers and make sure their fees are all set out upfront, rather than being hidden in the small print.
One thing to look out for is the SWIFT fees added for transfers sent through your regular bank. Traditional banks typically use the SWIFT network to process international transfers. This global group of banks work together to move money across borders and, as a result, up to 3 intermediary banks can be involved in your single international transfer. Each of these banks, in addition to the recipient bank, normally deducts their own fees from the transaction. Each of the banks may charge anywhere from $15 to $45, an all-too-often unwelcome surprise.
The frustrating part is that your home bank is unlikely to be able to tell you exactly how much these charges will be. In most cases, the reference to the SWIFT fees will be buried somewhere deep in the small print, and will simply be a vague reference to the possibility of costs incurred because of intermediary or correspondent banks. If you’re considering using your regular bank to make a large transfer, it’s important to ask about SWIFT fees before you confirm your transaction.
If you’re unhappy about the potential hidden costs, then it might be time to ditch your high street bank and choose a specialist international transfer service like TransferWise.
If you need to make a large value international wire transfer, as you saw from the previous section, there are fees that won’t be so upfront. Which means you’ll need to do some research to make sure you get the fairest price available.
The normal route people use is their own bank to send money abroad. But before you do that, you’ll want to:
- research your bank’s upfront international wire fees for your particular transfer
- calculate the exchange rate your bank offers so you can compare it to the one on Google to find out how much you may be charged in addition to upfront fees
- take into account any additional intermediary and recipient bank SWIFT charges
- see if your bank will allow you to make international wires from online or abroad or if you have to arrive in person
After taking into account the above, many customers find they’re better off using TransferWise — thanks to:
- low, transparent fee structures
- exchange rates that compare to the ones you find on Google
- online convenience
- the fact that almost all transfers are made in local markets which cuts out all the international fees from the start
- bank-level security
- fast international transfers
With TransferWise there’s no need to worry about hidden fees.
In addition, you can open a free TransferWise borderless multi-currency account to hold, manage, and send your money any time. Switch between dozens of currencies for a small price, and receive local bank transfers in several regions across the world with your very own personal bank details.
See how TransferWise works today and find out if some part of it is right for you.
For any international wire or transfer, you’ll likely need to provide some information and paperwork. Exactly what you need depends on both US law, the law in the country you’re sending money to, how much you’re sending, whether you’re sending as a business or an individual, and whether you’re using a new service.
If you’re signing up for a new service or bank account and sending a large sum, to comply with federal law the bank or money institution may require you to provide⁴ the following:
- Government-issued photo ID
- Your SSN number, if available
- Proof of your address (like a recent bank statement or utility bill)
If you’re sending money on behalf of your business, the documents required will be much more extensive.
If you’re already an established customer or have just signed up for a service there may still be a number of questions or documents asked of you. In general, depending on the amount you’re sending, these are some of the more common possibilities of information you could be requested to provide:
- Source of wealth — This can be how you generate your income. For example, the service may ask to see several previous bank statements showing your monthly salary deposits, etc.
- Source of funds — This is often how you received the specific lump sum you’re currently sending. For example, you may have accumulated money recently stock sales or by selling your home.
- Reason for the transfer — Why you’re sending money from one country to another.
- Proof of purchase — If you’re buying a property or supplies abroad, you may be asked to provide receipts or invoices.
- Recipient information — If you’re sending money to someone else, in a few instances the bank or service may need the date of birth and additional information about the beneficiary. You’ll nearly always need their address.
The above is generally requested in accordance with strict anti-money laundering and fraud prevention regulations. Banks and other money transfer services are obligated by law to ensure that all money comes from legitimate sources, and not as a result of — or in support of — any illegal activity.
What forms or taxes do I need to file to be compliant with The Bank Secrecy Act if I’m sending a large sum? What about IRS and FinCEN regulations?
This section should help you figure out which forms and reports you may need to be responsible for filing if you’re dealing with a large amount of money to or from abroad.
The Bank Secrecy Act encompasses a number of regulatory areas⁵ and requires that more or less any international, and sometimes domestic, transaction over $10,000 likely needs to be reported. Reports help the IRS and the Financial Crimes Enforcement Network (FinCEN) track and monitor payments which may be suspicious, or individuals who may be avoiding paying appropriate tax.⁶ But whether it’s you or a financial institution — or both — that does the reporting depends upon a number of factors.
If you or your business will be involved with sending or receiving — or, in some cases, even holding — at least $10,000 to or from overseas, there are 4 areas of the Bank Secrecy Act you may want to be familiar with:
- Currency transaction reports (CTRs) — A report filed on any domestic or international cash transactions totaling $10,000 or more. In most cases, it’s the financial institution handling that will need to report it. However, if your business receives related domestic or international cash transactions totaling $10,000 or more, you may also need to file.⁵
- Foreign Bank Account Report (FBAR) — If you have accounts or signing powers for an account abroad and those assets total $10,000 or more at any point in a calendar year, then you’ll need to file a form with FinCEN.⁷
- Currency and Monetary Instrument Report (CMIR) — Any person or institution that physically transports, mails, ships, or causes $10,000 in currency or monetary instruments to be transported in or outside of the US must file a report.⁸
- Foreign trusts and gifts — The person who receives the money/gift or manages certain parts of a foreign trust also has an obligation to report.⁹
Currency Transaction Reports (CTRs) are mainly concerned with large cash payments. If you don’t own a business or only send money via domestic or international wire, you can skip this section altogether.
If a personal transaction of yours does qualify, then a bank or money service would usually report your payment on its own.⁴ If, however, you’re a business owner or involved with trade, you’ll want to pay a bit closer attention, as you may need to file CTRs.
If you do own a business and most of your business or client transactions are sent or received via debit/credit card or wire, then you won’t need to worry about CTRs specifically — neither method is considered cash in this case.
However, if your business sends or receives cash payments — bills or coins, checks, bank drafts, traveler’s checks, or money orders — of $10,000 or more in one lump sum, in related transactions that totals as much, or in installments within 12 months, then you’ll probably need to file IRS form 8300. Read the fine print and seek out professional tax advice in this case.⁶
As a side note, there are some who try to get around reporting or being reported by breaking up cash payments into smaller amounts. This practice is called structuring. And it’s definitely illegal. Those who try it may face fines of $250,000 or more in addition to imprisonment.⁴ So be on the lookout for clients who may be splitting up payments, and definitely avoid doing so yourself.
If you’re a citizen or resident of the US and hold any money outside of the United States, you may be required to file an (Foreign Bank Account Report) FBAR.
You’ll need to file FinCEN form 114 as a Report of Foreign Bank and Financial Accounts if both of the following are true:⁷
- You have a financial interest in or signature authority over at least one financial account located outside of the US.
- The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the reported calendar year.
There are a few exceptions, however.
For example, if you share certain foreign financial accounts with your spouse or you’re a beneficiary of a US IRA then you may have different filing requirements.⁷ Which means you’ll want to take a look at the exceptions yourself and make sure you flag your accountant when it comes time to file your taxes.
CMIR is aimed more at those who carry physical currency to or from the United States — like armored car services, shippers, or the recipient of physical currency from abroad. If you’re sure that isn’t you, then you can skip this section.
If you think you may be liable, then it’s helpful to know that FinCen states that the obligation to report falls on:
each person who physically transports, mails, or ships the currency or other monetary instruments. The obligation to report also falls on each person who receives currency or other monetary instruments in the United States which have been transported, mailed, or shipped from any place outside the United States.⁸
If that’s you, then you may want to dig into CMIR a bit more. You’ll probably need to file FinCEN form 105.⁸ Ask a tax professional.
If you or someone related to is a US citizen or resident and any of the following are true, you might have to provide an information report to assess whether you owe tax using IRS form 3520.⁹
- You own or manage any part of a foreign trust⁹
- You sent or received any sort of transactions or loans to or from a foreign trust — whether or not you were the owner¹⁰
- You received a gift or bequest of $100,000 or more from a nonresident alien individual or foreign estate¹⁰
- You received a gift of somewhere over $15,000 from a foreign corporation or partnership¹⁰
Again, each scenario has exceptions and exact figures and rules may vary slightly from year to year. So make sure to read up on the latest regulations and seek professional tax advice to see what you may need to file or what you owe.
As well as making sure you’re legally compliant, it’s worth spending a little time checking that you have the best available deal for your international transfer. Nobody wants to pay more than they have to when sending money overseas — and a little research can save you a lot of money.
Making a large international wire transfer shouldn’t be too complicated. In most cases, the legal reporting will be done automatically by the transfer service you choose. However, if you have any questions about how the law is applied to your particular circumstance, you’ll want to take some professional advice. The penalties for getting it wrong are simply not worth the risk.
1. https://www.irs.gov/pub/irs-utl/reporting_cash_transactions_and_foreign_financial_accounts.pdf (July 28, 2018)
2. https://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_025.htm (July 28, 2018)
3. https://www.bankofamerica.com/content/documents/deposits/service/pdf/Domestic-international-wire-transfers-info-sheet.pdf (July 28, 2018)
4. https://www.fincen.gov/sites/default/files/shared/CTRPamphlet.pdf (July 28, 2018)
5. https://www.irs.gov/businesses/small-businesses-self-employed/bank-secrecy-act (July 28, 2018)
6. https://www.irs.gov/pub/irs-utl/irsform8300referenceguide.pdf (July 28, 2018)
7. https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar (July 28, 2018)
8. https://www.fincen.gov/resources/statutes-regulations/guidance/cmir-guidance-common-carriers-currency-including-armored (July 28, 2018)
9. https://www.irs.gov/forms-pubs/about-form-3520 (July 28, 2018)
10. https://www.irs.gov/pub/irs-pdf/i3520.pdf (July 28, 2018)
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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