Laws and regulations about international exchanges of money?

score:3

Accepted answer

Legal problems in this (outside trust factors) usually come from two sources:

  1. Some countries (e.g. China, Iran, Argentina) impose general currency exchange measures for economic and political reasons. Any exchanges not at official locations may be technically in violation of law. The enforcement varies in different countries (even in different regions e.g. of China). Although private exchanges are common place in almost all these countries and to some extent tolerated, legal risks still exist. Of course, small amounts are usually less likely to be a problem than larger amounts.
  2. Almost all advanced economies nowadays have anti-money laundering/fraud/terrorism financing measures in place. The exact regulations differ in each jurisdictions.
    • In general, if physical cash (or other "untraceable" instruments) is involved, most countries have a threshold (often around US$10,000) above which a report must be made to government authorities who may investigate the source of funds and the purpose of transaction. Even if electronic transfer is used, financial institutions are required to report any suspicious transactions. Suspicion can arise from large values or large numbers of transactions between accounts without clear business purposes.
    • You can unknowingly become a "money mule" (participants in money laundering rings) and subject to criminal investigations and liability. Some countries have laws such as civil forfeiture and investigative asset freezing measures. Your entire assets may be inaccessible during a long investigation and a significant amount may be even seized.
    • if you do currency exchanges regularly with indeterminate individuals, even without making a profit, you may be required to register as a money service business and subject to related banking regulations (e.g. in the UK).

Of course, despite these risks, private money exchanges can be commonplace. A small amount between families and friends, who have clear traceable origin of their funds, is unlikely to be a problem. But doing so regularly or for large amounts exposes you to legal risks; for example, (UK) crime agency freezes foreign students’ bank accounts (for unsourced funds that may be gains from criminal activities).

Upvote:1

You might want to look into Hawala money transfer "money transfer without money movement" operates (apparently common in the MENA, especially in Dubai):

Investopedia claims:

Is a Hawala Illegal? Hawala trades are illegal in the United States and many other countries because financial regulations require money services businesses to obtain appropriate licenses and follow anti-money laundering laws.

Upvote:4

Are there laws and regulations about the amount of money which can be transferred between countries this way,

Yes, of course.

and where can I read about them?

The internet is good starting point.

Currently there 180 different currencies which results in 32220 different combinations of currency exchange. There is no single law that governs all of this and the rules are vary greatly. You need to research he specific combination you are interested in.

The best way to get local currency varies enormously from country to country. For example if you walk down Calle Florida in Buenos Aires, Argentina, many people will yell "Cambio, Cambio" at you. They will exchange US$ to Argentinian Pesos for just about double the official rate or what you would get at a bank. This happens to be perfectly legal in Argentina, but will easily get you arrested in other countries. There is no single set of rules.

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