Money

Money in international Settings

Scope of this Page

When moving internationally, funds need to be transferred across borders. This guide focuses primarily on people moving away from the United States but also covers general principles applicable worldwide.

General Warning

U.S. citizens must file for federal income tax in the U.S., no matter where they reside [1], unless they have residency in, and are filing taxes on all their income in, a country with a reciprocal tax treaty. Even then, it might be necessary to file the tax return, even if no taxes will be charged within the US. The specifics of this vary by country, so professional advice is recommended. More information can be found in our subpage on Tax Compliance.
Moving large sums of money often triggers money laundering protection mechanisms. The limit is generally in the ballpark of US$ 10.000, but technically, all digital transactions are monitored and can trigger further inquiries even at much lower amounts if other risk factors or triggers are present. Banks routinely request additional information about recipients or residency when moving large amounts; this should be handled carefully and promptly.
In the EU, anti-money laundering protection laws prohibit cash payments above 10.000€ [2] [3], even for invoiced and reported business transactions.
Navigating this is complicated, and mistakes can have severe implications with the IRS. We strongly suggest you get professional help to ensure everything is taken care of. The information here is not definitive and is purely a starting point for research and self-education.

Considerations

Before deciding on a method for moving funds, several important factors should be evaluated:

Costs

Transfer fees vary widely depending on the provider and method chosen.
Some transfers involve intermediary banks, which may impose additional hidden charges, delays, or intervention risks. There can be a lot of fine print.
Foreign transaction fees may apply, depending on the sending and receiving financial institutions.

Exchange Rates and Fees

Exchange rates fluctuate and can significantly impact the amount received in the destination currency.
Some providers offer better exchange rates than traditional banks, and/or lower fees, and/or faster "clearance".
It is often helpful to compare the amount received after fees, since "low" or "no" fee options often come at a worse exchange rate or hide fees.

Operational Risks

Claiming assets on the other side may require a local account of a certain type or standing, or be flagged as suspicious and thus incur additional assurances or identification process.
Some actions can only be taken during business hours or in-person, making them very costly in the case of unplanned changes of plans.

Tax Implications and Official Surveillance

Moving large sums of money internationally may trigger tax reporting requirements in both the origin and destination countries.
The U.S. has strict regulations on foreign bank accounts (FBAR reporting) and FATCA compliance. Any account whose balance exceeds US$ 10.000 at any moment in the year needs to be reported to stay in compliance. The total amount of ALL foreign assets (including stock and real estate) can incur taxes or penalties, particularly if unreported. [4] See also our subpage on Tax Compliance.
Some countries impose exit taxes or require declarations for significant fund transfers into and/or out of their borders, independent of residency.
Many systems designed to detect illicit activity (money laundering, inauthentic transfers, tax evasion, criminal proceeds) can flag any significant transfers between friends or between accounts owned by the same person. Do not panic if any institutions or middlemen unexpectedly request additional information, identification, statements about your physical location, etc.; in most cases, they are checking boxes and dismissing automated alerts.

Options for Transferring Funds Internationally

Classical Bank Transfer (Wire Transfer)

Overview

A "wire transfer" from one traditional bank to another is the standard method for moving large sums internationally. How easy, how fast, and how expensive this is depends highly on the cooperation and local regulations in both countries.

Advantages

Secure and globally recognized.
Suitable for large transactions.
Some banks offer direct international wire services with preferential rates for account holders.

Disadvantages

Typically involves high fees from both sending and receiving banks, especially for US-based banks.
Exchange rates often bad.
Processing times can vary, sometimes taking several business days.

Crossing Borders

No particular restrictions when crossing the border, the bank takes care of declarations if needed

Wise (formerly TransferWise)

What is Wise?

Wise is a company that specializes in low-cost international money transfers. It is using local bank accounts in multiple countries and has low exchange rates, especially for lower amounts, because it doesn't charge a base fee.

What Can You Do with Wise?

Send money internationally at mid-market exchange rates with typically lower fees than regular banks.
Hold and convert multiple currencies in a Wise multi-currency account.
Obtain a Wise debit card for global spending.
Receive payments in different currencies as if you had local bank accounts in those countries (Warning for EU/EUR countries: You will only get one IBAN that is "located" in Belgium, institutions in some countries such as France still discriminate against foreign EUR bank accounts).

Limitations of Wise

Transfers may take longer if sent from or to banks with additional security procedures.
Not all currencies or countries are supported.
Large transfers may require additional identity verification or documentation.
As Wise is not a "real" bank, the money in "checking accounts" is not secured - in case of a bankruptcy everything might be gone. Ideally do not rely on it for keeping large sums.

Crossing Borders

No particular restrictions when crossing the border.

Cash

Advantages

Readily available

Disadvantages

Can easily be stolen, including by officials.
Raises suspicion.

Crossing Borders

Depending on the country, the total value of all cash and other "financial instruments" (including traveler's checks, gold, etc) above a certain threshold needs to be declared. For the US this is 10.000U$
Undeclared cash can be seized.

Valuables (Gold, Jewelry etc.)

Advantages

Can hold value over time.
May be easier to transport discreetly than large sums of cash, entrust to highly-trusted friends or family, etc.

Disadvantages

Value can fluctuate.
Difficult to convert quickly to cash in some locations.
May attract unwanted attention or theft.
Recovery or insurance may be difficult or contingent on declaring value at crossings; this also requires appraisal to determine value accurately.

Crossing Borders

Many countries require declaration of valuable items above a certain value.
Failure to declare can result in seizure or penalties, and reduce chance of recovery if lost or stolen.

Money transfer services

Overview

Companies like MoneyGram, Western Union, Xoom, WorldRemit, and OFX. These services often offer faster transfers than traditional banks, with various payment and delivery options.

Advantages

Transfers can be very quick, even within minutes.
Many providers have extensive networks of agents for cash pick-up.
Various payment methods, including bank transfers, debit/credit cards, and cash.

Disadvantages

Fees can be high, especially for smaller amounts or urgent transfers.
Exchange rates may not be as favorable as mid-market rates.
Transfer limits may apply.
Fees and exchange rate markups may not always be fully transparent.

Crossing Borders

Generally, the money transfer service handles the reporting requirements. However, it's wise to keep records of the transaction.

Digital wallets (Denominated in national currencies)

Overview

Platforms like PayPal, Skrill, etc., enable international money transfers, often faster or cheaper, by using intermediaries or banks with whom they have risk-sharing agreements.

Advantages

Easy to use for those already familiar with the platforms.
Transfered amounts can be quickly, or even instanteously, available to recipients.
Direct control via mobile app, open 24/7.
Often better local relationships than any but the most international of US banks (particularly useful in less globalized economies).

Disadvantages

Fees can be higher than traditional transfers, especially for cross-border transfers in Global South countries.
Exchange rates are often less competitive to counter lower fees (check final amounts to compare).
Geographical restrictions and account limitations often apply.
Risk of hacking or account compromise, malware, etc.
May add one additional interdiction surface, i.e. one more account that may be frozen (more easily than the underlying traditional bank accounts) by state actors, law enforcement, or even impersonal, algorithmic AML risk-detection systems.

Crossing Borders

No physical border crossing is involved.

Digital wallets/Cryptocurrencies (Denominated in private currencies)

Overview

Some mobile apps and digital wallet platforms additionally allow balances to be held and transferred in private currencies, like balance with an international commerce platform (eBay balance, Amazon gift cards, etc) or crypto-currencies. Both of these categories are discouraged except in extreme cases, as both require extensive research and familiarity, and incur many additional risks compared to the other options above.

Advantages

Most of the advantages listed above for traditional digital wallets

Disadvantages

All the disadvantages listed above for traditional digital wallets
Statistically much higher risk of hacking or account compromise, malware, etc. as compared to traditional digital wallets.
In the case of platform balances, there is often extensive fine print excluding migration and cross-border usage from guarantees or even from being honored.
In the case of cryptocurrencies or other decentralized private accounting systems, no centralized party (eBay, Amazon, etc) to appeal to in case of problems.
Tax and law enforcement complexities converting any of these to target-country national currencies vary wildly and are in many cases unregulated/susceptible to enforcement discretion, and thus precarity.