Is it illegal to send money to friends in other countries?

Recently on our legal forum a user asked, “I have been working in the United States for three years. I still have family who live in another country and I want to periodically send money to them. I do not want to do anything illegal. What do I need to know about sending money to other countries?”

It’s estimated that each year six million U.S. households send billions of dollars from the United States to people living outside of the U.S. The good news is there are a variety of legal options available to complete the transfers including remittance services in supermarkets, convenience and drug stores, retailers, and other money transfer services available from banks and websites.

Additionally, the costs for transfers have been declining over the last several years with new federal consumer-protection regulations requiring certain services to provide prepayment disclosure of exchange rates, the amount of foreign currency to be delivered, the fees assessed, and methods which can be used to resolve errors.

What are the best ways to send money overseas?

Common methods to transfer monies overseas include cash to cash- where you can take your money to a money transfer center and they convert your cash to the currency of the destination country, bank account transfers from your account to the recipient’s bank account, credit and debit card transfers, loading the money to a prepaid debit card for the recipient, or another type of online money transfer service such as PayPal or Western Union which allows you to send money to a mobile phone “wallet” of cell phone users in specific countries.

Considerations before choosing a method for transferring money

Not only is it important to understand all of your options for transferring money, it’s also important to take several other steps prior to the transfer.

  • Determine the costs for the transfer.

One of the most important things to consider prior to a money transfer is to calculate the costs, which can vary substantially by provider. Keep in mind; federal rules now require services to provide you with information about the costs.

  • Understand the exchange rates and the fees.

Exchanges rate will vary based on the international currency market. If possible, make sure you get a guaranteed exchange rate rather than an indicative or estimated rate.

Additionally, the fees to send money will vary by company or service. It can also vary based on the amount sent, the timeframe for the transfer, or whether the transfer is done online or in person.

When is it illegal to send money overseas?

Now, you asked about transferring money out of the United States after the money had been generated by legal means- your job. It must be stated, however, that it is illegal to transfer money out of the United States if the money was obtained from criminal activity and your goal of the transfer is to launder the money. Money laundering is specifically defined as the act of “concealing or disguising the nature, the location, the source, the ownership, or the control of the proceeds of unlawful activity.” This remains true even if the transfer is done through legitimate channels.

Money laundering may be done by breaking up large sums of money and making transfers to avoid federal detection or simply smuggling cash into another country and depositing it in a financial institution, such as an offshore bank.

Money laundering is a very serious offense. To prove money laundering the government will be required to prove the following: You (1) knowingly engaging in a financial transaction (2) with the proceeds of a crime (3) for the purpose of concealing or disguising the illicit origin of the property from governments.

Finally, it would also be illegal to send money overseas to fund any type of criminal activity such as terrorism.

Bottom Line:

It is generally legal to send money to persons outside of the United States if you use a common banking or money transfer service and the money sent is not derived from illegal activities with the purpose of concealing the origin of the money.

Given the large number of options available, however, it’s best to review the pros and cons of each service and determine what type of service is best for you given your current needs before making any type of transfer.

(Tags - Assets - crimes and law - wages )

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