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By IPSIPay team

International Money Transfer Regulations: What You Need to Know

In our today’s article, we’ll focus on what documents and personal data you need for transaction approval. Also, you'll find out more about international money transfer limits and other essential details.

Table of contents:

In 2022, the total amount of international money transfers will reach $630 billion. With such a considerable volume of funds, the risk of data breaches or fraud is higher than ever. Thus, the international money transfer industry needs regulations to ensure payment safety.

The main goal of these legislative acts is to protect consumers. They enable senders and recipients to receive complete information on money transfer services’ use conditions. On top of that, federal authorities set legal requirements to reveal fraudulent actions, tax evasion, money laundering, and funding of illegal activities.

These regulations may also impact every transfer you make, so you’d better read up on them. In our today’s article, we’ll focus on what documents and personal data you need for transaction approval. Also, you’ll find out more about international money transfer limits and other essential details.

General Requirements for Sending Money Abroad

To complete a money transfer, the service provider needs to verify the identities of the sender and recipient. In the case of online transfers, users typically undergo one-time identity verification when they sign up. It’s a universal step in an online banking platform, digital remittance service, or mobile p2p payment app.

To confirm your identity, you will need to share:

  • Full Name
  • Date of Birth
  • Mobile number
  • Mailing Address
  • SSN/ITIN number

To add payment methods (bank account, debit/credit card account), the system will make two microtransactions: withdrawal and subsequent refund of $1-2. It’s a way to confirm the ownership of the linked account. Afterward, the sender can send money domestically and internationally at no time. The only thing needed to confirm the operation is the OTP password and login credentials.

If somebody runs an international wire transfer through the bank branch or agent location, they must provide:

  • Government-issued ID. Both US-issued and foreign documents are accepted.
  • Recipient’s details. Fill out the form with the receiver’s first and second name (will be verified with their government-issued ID), full address, and phone number. If you need to transfer money to a person’s foreign bank account, you must enter the account number, appropriate IBAN, and/or SWIFT code.

What Are International Money Transfer Limits

Typically, money transfer apps and digital remittance services limit individual transactions to $10,000 per person/per day. This is necessary to make personal transfers comply with Internal Revenue Service (IRS) regulations. Anything over $10,000 would require obligatory reporting.

Still, digital remittance platforms and mobile apps frequently lower the limits for sending money abroad. These mainly depend on the payment and delivery method you choose:

  • The maximum transfer limit can be $3,000 – $5,000 per transaction if you move money between debit cards.
  • The limits for receiving cash at cash pickup locations are even lower. For instance, in Mexico, you can expect to get no more than $1,000 by money order.
  • P2P transactions are mostly limited to $10,000 per day. However, you can significantly increase the single transfer limit through a KYC check. It usually includes approving SSN/ITIN numbers or linking the US domestic bank account.

We strongly recommend you check our guide on choosing an international money transfer service. It will give you insights into the cross-border remittance methods with favorable currency exchange rates, lower transfer fees, and high transaction limits.

Who Regulates International Wire Transfers in the US?

Bank wire transfers and digital remittances in the US are supervised by several regulatory bodies, including CFRB, IRS, PCI DSS, and others. Let’s take a closer look at how they protect consumers of money transfer services.

The Consumer Financial Protection Bureau (CFRB)

It supervises the compliance of money transfer services with consumers’ rights and verifies their transparency.

CFPB has followed new regulations since the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2013. CFPB regulates the disclosures of the rates for international remittance services and supervises their implementation.

According to their regulations, the information on service charges from remittance providers should have:

  • Taxes and service fees for moving funds
  • Exchange rates for currency conversion
  • Service charges of intermediary institutions involved in cross-border transactions
  • The precise amount of cash that the recipient will receive after deduction of service fees and taxes
  • If a company cannot provide the inclusive details on service charges applied to transfers, there must be a disclaimer about the additional deductions.

Submission of receipts is essential for bringing in transparency in consumer services given by money-transferring companies. It also helps customers to get a full picture of how their money orders are taxed and how quickly they get delivered to beneficiary. Receipts must include the payment amount, all service charges, taxes, and fees. Additionally, they must have:

  • The term of transfer processing and when the funds will be available
  • The consumer’s right to cancel the transaction
  • Contacts of customer support service
  • Instructions on how to submit a complaint. 

Receipts must be provided to the consumer before the transfer confirmation or right after it. The proof of payment must be downloadable and print-ready.

Other Protections

CFPB’s regulations cover transfers of over $15 and international money transfers. Customers have a right to:

  • Cancel the transfer within 30 minutes after the funds have been deposited. However, if you send money between digital wallet accounts, you can reverse the transfer only if it remains pending and unfinalized. It may happen if the addresser has set their accounts not to accept incoming payments automatically.
  • Ask for the company’s investigation on failed transfers and expect a refund. Companies must reimburse the sum if it was withdrawn but hasn’t arrived at the destination due to a failure.
  • Cancel the scheduled and recurring transactions.
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Internal Revenue Service (IRS)

The service monitors incoming foreign transactions to reveal the suspicious ones. The primary purpose of IRS monitoring is to detect tax evasion, money laundering, and funds inflows that might be related to illegal activity.

Obligatory reports to the IRS on cash transactions over $10,000 are the requirement of the Bank Secrecy Act. Service providers must report on:

  • Payment or transfer received from the same payer or agent.
  • Cases when a sum over $10,000 was received in two or more payments from the same payer within 24 hours. 
  • Two or more related transactions with more than $10,000 total within 12 months.

As you can see, the IRS keeps an eye on the total amount of cash received by individuals from the same payer during the year. That’s why breaking the amount of over $10,000 into smaller payments and sending them within a few months doesn’t make much sense. The financial service provider will have to report these transactions one way or another.

PCI DSS (Payment Card Industry Data Security Standard)

The PCI DSS standards became a common thing in 2004 as a response to the rise of fraudulent and unauthorized bank card payments. It is a set of unified safety requirements accepted by leading credit card networks like American Express, Visa, MasterCard, and others. Nowadays, PCI DSS standards are a must for all business entities and merchants that accept debit or credit cards as payment measures.

In short, PCI DSS encompasses encryption technologies, firewalls, and restricted access to cardholder data. As a result, PCI-DSS compliant money transfer companies are totally safe to use.

NACHA (National Automated Clearing House Association)

NACHA is a governing body that shapes a standardized and secure collaboration between interbank money-transferring organizations. Mainly thanks to it, ACH payments like direct deposits, payroll accruing, and peer-to-peer transactions can run seamlessly and on due.

Payers and payees should pay careful attention to the respective certification of the online money transfer companies to make sure that they’re dealing with a trusted and reliable money transfer provider. In addition, we recommend checking if your provider is insured by the FDIC (The Federal Deposit Insurance Corporation) that protects your money by deposit insurance.

FAQs on the US International Money Transfers Regulations

Here are some common questions about international money transfer limits, charges, and other critical details. Go through them before making your first payment to avoid unpleasant surprises.

  • Are There Limitations on Bank Wires for Non-citizens?

There are no specific limitations for sending money via wire transfer, although you should note that banks charge $40 – $50 per transaction. Hence, supporting your friends and relatives across the border might be pretty costly. So you probably should try digital remittance services as a more cost-effective alternative.

Remember that you’ll need to become a bank client and open savings or checking accounts to receive a bank wire in the USA. Being a bank-served would benefit you in many ways. So we suggest you look into our guide on adjusting to life in America that will instruct you on dealing with banks and credit unions.

  • How Can I Tell If My International Money Transfer Provider is Compliant with Regulations?

Authorized and regulated remittance companies typically have the information on their regulatory compliance on their website. The Terms of Use or Legal section lists the company’s customer service policies and liabilities. If in doubt, contact your provider to double-check what certifications and guarantees they offer.

  • Do I Have to Pay Taxes on International Wire Transfers?

Both incoming and outgoing remittances can be considered a gift. Therefore, they are subject to the annual exemption, which is $16,000 for a donatee as of 2022. Besides, there is no tax credit for transfers made to your spouse if they are a US citizen, regardless of the amount sent. If your spouse is a non-citizen, the annual limit is $164,000.

Try IPSIPay for Secure, Instant, and Cost-Free International Money Transfers

The IPSIPay app provides convenient and free P2P payments. It also supports money withdrawals to a prepaid Visa debit card. What’s more, you can move money internationally to 200+ countries around the globe apart from US domestic transfers.

IPSIPay offers:

  • Zero fee for funds withdrawal from mobile wallet to branded Visa card. You can also order a companion card for a one-time activation fee of $2.5. This card you can hand to your family left abroad and top up its balance at no time.
  • Low-cost fees for cashing out at ATMs. Cardholders pay only $1.95 for US domestic withdrawals and $3.00 for international.
  • Quick and affordable e-wallet top-up. Users can link their US bank accounts to load and offload mobile money for $1 only. The funds will arrive in 2-3 business days.

In addition to advantageous terms for international funds transfers, the IPSIPay app ensures an impeccable security level for your financial operations. The service fully complies with PCI DSS and NACHA standards, and each depositor is ensured by FDIC. 

Make your recurrent foreign transaction simple and secure – install the IPSIPay app from the App Store or Google Play!