Sending money overseas? Make sure you’re aware of all the laws and regulations that could affect your international money transfer.
The rise of online banking technology and systems means that everyday Australians now have the power to transfer money all over the world. But with great power comes great responsibility, and it’s important to make sure you’re not breaking any laws or falling foul of any government agencies when you send money overseas.
From monitoring systems preventing global crime to the potential tax implications of moving money across international borders, there are a few important rules and regulations you should be aware of before sending an international money transfer. Read on to find out what you need to know.
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Transactions over $10,000
In recent years, governments around the world have started cracking down on global remittance services being used to fund criminal activities, most notably terrorism. With this in mind, the Australian Government monitors all overseas transfers of more than $10,000.
The monitoring is done by a regulatory body known as AUSTRAC (Australian Transaction Reports and Analysis Centre), which collects data on all international transfers that exceed the $10,000 mark. Introduced under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, this tracking of large transactions is designed to ensure that Australia’s banking system isn’t used to fund criminal activities such as money laundering or terrorism.
What does this mean for you? Whenever you send or receive an international money transfer of more than $10,000 (or an equivalent amount in another currency), the bank or remittance provider that handles the transaction must supply details of the transfer to AUSTRAC. You may be asked to provide personal information, for example a valid form of photo ID, as evidence of the person completing the transaction. Failure to comply may result in your transaction request being rejected.
If you’re sending or receiving a transfer on behalf of a business or company, you may need to provide details of your employment. In some cases, you may be asked to supply information such as the business name, Australian Company Number (ACN), Australian Business Number (ABN) and/or the business address.
If you’re performing the transaction on behalf of another person who holds the account, the bank or transfer provider may already have all the necessary information about the account holder.
Any information you provide as part of this requirement will be handled by the transfer provider in accordance with the Privacy Act 1988.
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Every money transfer provider has a list of countries it will let you send money to and those that it won’t. In some cases, a country is not available as a transfer destination simply because the provider does not have the necessary systems and legal clearances in place to transfer funds to that particular country.
However, some countries are not available as transfer destinations because there are diplomatic sanctions in place that make it illegal to transfer money to those countries from Australia. Some sanctions are imposed by the United Nations while others are Australian autonomous sanctions.
As an example, at the time of writing it is not possible to find a money transfer provider that can help you send funds to North Korea, Iran, Libya or Syria, among others.
Another factor worth considering when sending and receiving international money transfers is the tax implications that could come into play. When sending money overseas, you need to make sure you’re fully aware of any tax you may have to pay or declarations you need to make to the Australian Taxation Office (ATO) as a result. For example, if you’re sending money overseas to take advantage of an investment opportunity, remember that all foreign investment income you earn must be reported to the ATO.
Following the global fallout of the Panama Papers Scandal in early 2016, the ATO and tax agencies around the world are also cracking down on funds held by Australians in undeclared offshore accounts. If you’re in any doubt about how sending money overseas could affect your tax bill, speak to your accountant as soon as possible.
When receiving an international money transfer, the source of the funds will need to be taken into account when considering tax implications. Not only will you need to declare all foreign income you earn, but in some cases you could be liable for Capital Gains Tax, for example if you receive an inheritance following the death of a relative.
Commonly asked questions about money transfer laws
I’m transferring $8,000 overseas. Will this amount need to be declared to AUSTRAC?
No. AUSTRAC only monitors overseas money transfers of $10,000 or more.
Where can I find out information about countries upon which sanctions are imposed?
You can find this information on the Australian Government Department of Foreign Affairs and Trade website.
How can I find the most affordable way to transfer money overseas?
The best way to find a good transfer service is to compare international money transfer providers.
I just received a transfer of several thousands of dollars from an overseas relative and I’m not sure if I’ll owe any tax on this amount. What should I do?
The best thing to do is contact your accountant for expert advice. You may need to declare this as income.
Where can I go for more advice on international money transfer regulations?
You may be able to get the answers you’re looking for straight from your bank or money transfer provider. However, for specific advice tailored to your financial situation or individual transactions, ask your accountant.