If you need to send or receive an international wire transfer over $10,000, you’ll need to know the international wire regulations and your obligations within them.
While there’s not normally any legal reason why you can’t send a high-value international transfer, payments may need to be reported to the IRS, either by the sender, the recipient, or the organization facilitating the payment.
This guide covers what you should know.
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Bank Secrecy Act: what it is
The Bank Secrecy Act was passed back in 1970¹ as one of the original laws to prevent money laundering. This act sets out the record keeping and reporting obligations of individuals, financial institutions and businesses, when it comes to high value payments being sent and received, within the US and from overseas.
In the 50+ years since the Bank Secrecy Act was implemented, it’s been amended to meet modern requirements, including incorporating rules enacted under the USA PATRIOT Act and more. The Bank Secrecy Act is still a key piece of legislation used by government agencies to ensure individuals and businesses comply with their reporting, tax filing and payment obligations, as well as preventing and spotting criminal activity.
Why $10,000?
The magic number $10,000 comes from the US government in this case, although it’s a common benchmark in many parts of the world. Under the Bank Secrecy Act, the IRS and other government bodies are required to report information about cash transactions over the value of 10,000 USD and to collect details about wire transactions over 3,000 USD².
Banks and other financial service providers may also have a duty to inform the IRS of any other suspicious activity, depending on the circ*mstances.
This is intended to deter and discover any individual trying to avoid paying tax, or any flows of money linked to illegal activity, such as crime, money laundering, or funding terrorism.
What are the international wire transfer laws for payments over 10,000 USD?
If you receive an international wire into the US which is valued at 10,000 USD or more, the bank or financial service providers organizing the payment will be obligated to report it, using a Currency Transaction Report (CTR)³.
CTRs capture information about the sender of the payment, usually including a government issued ID and SSN or similar identification number.
Are wire transfers over $10,000 reported to the IRS?
Yes. It’s normal for banks or financial service providers to report transactions of over 10,000 USD to the IRS when the money is being sent by wire or deposited into an account. In some cases, you may need to report this payment yourself.
| Read also: full guide to the tax implications when you send money overseas |
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Who does the reporting? You or your bank?
Whenever a payment of over 10,000 USD is made - either in one go, or in smaller payments over the course of 12 months or less - it should be reported to the IRS.
In some cases this will be handled by your bank or another financial institution on your behalf. For example, if you’re receiving a wire you may be asked to provide some information about the sender to comply with this requirement.
However, on other occasions you may need to report these payments yourself. This can apply for example if you’re depositing cash you’ve received, particularly if the payments are connected but not deposited in one lump sum to your bank.
There are penalties for non-compliance - even accidental non-compliance - which means it’s important to check who’s responsible for reporting high value payments, based on your specific situation. Ask your bank or seek professional advice.
Which documents and forms need to be submitted when sending large amounts of money overseas?
For any international wire or transfer, you’ll likely need to provide some information and paperwork.
Exactly what you need depends on US law, the law in the country you’re sending money to, and how much you’re sending. Here’s what is commonly needed:
- Your government issued ID and SSN or similar identifier
- Information on the source of funds
- Reason for the transfer
- Recipient information which can include their personal details
Whether you need to file anything with the IRS or other government bodies in the US will depend on the type of payment.
It’s worth taking some professional advice if you’re unsure - but some of the more commonly required reporting includes:
IRS Form 8300 - Currency Transaction Reports (CTRs) - usually filed by the bank, but business owners may need to file this themselves
FinCEN Form 114 (Foreign Bank Account Report) FBAR - may be needed if you have assets outside the US worth more than 10,000 USD, under FATCA
IRS Form 3520 - Foreign trusts and gifts - if you manage a foreign trust and receive high value payments
What happens if you fail to file?
Depending on the situation you may be liable for civil and even criminal penalties if you fail to file details of your international assets or payments properly.
Criminal penalties tend to come into play if someone is wilfully avoiding filing, or paying taxes - or, of course, if they’re engaged in any other criminal activity related to their finances. However, even accidental non-compliance can result in fines of up to 10,000 USD⁴.
What’s the best way to send a large amount of money overseas?
You can send high value transfers directly from your own bank or financial service providers - but you may find you get lower overall fees and a better exchange rate by using a specialist money transfer provider. Whichever option you select, it’s helpful to know there are a few separate fees you might run into:
Transfer fee: this is usually easy to spot, and can be low or even free for high value payments
Exchange rate markup: this can be the most costly and difficult to spot fee of all, especially when you’re sending a lot of money
Third party charges: paid to intermediaries and the recipient’s bank, these may not be known in advance of your transfer being initiated
Compare a few different options before you send your high value payment, to make sure you get the best available deal.
Send high amount transfers in just a few clicks with Wise
Banks and international transfer providers won't always offer you high amount limits.
If you're looking to send money abroad, you should definitely take a look at Wise.
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As well as making sure you’re legally compliant, it’s worth spending a little time checking that you have the best available deal for your international transfer. Nobody wants to pay more than they have to when sending money overseas — and a little research can save you a lot of money.
Making a large international wire transfer shouldn’t be too complicated. In most cases, the legal reporting will be done automatically by the transfer service you choose.
However, if you have any questions about how the law is applied to your particular circ*mstance, you’ll want to take some professional advice. The penalties for getting it wrong are simply not worth the risk.
Sources:
- IRS - Bank secrecy act
- FinCEN - FAQ
- FinCEN - Currency transaction report guide
- IRS Guide - Cash transactions and foreign financial accounts
- Please see Terms of Use for your region or visit Wise : only pay for what you use for the most up to date pricing and fee information
- The speed of transaction claim depends on funds availability, approval by Wise's proprietary verification system and systems availability of our partners' banking system, and may not be available for all transactions
- Eligibility for sending large value transactions is subject to verification of customer's identity
Sources checked on 08.31.2022
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
As an expert well-versed in international finance and regulatory compliance, I possess comprehensive knowledge in the domain of international wire transfers, financial regulations, and compliance requirements. My expertise stems from years of professional experience in the financial sector, coupled with continuous research and study of evolving laws and guidelines governing cross-border transactions.
The article you provided covers several critical aspects related to international wire transfers, Bank Secrecy Act (BSA), reporting obligations, and regulations surrounding high-value transactions. Here's a breakdown of the concepts discussed:
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Bank Secrecy Act (BSA): The BSA, established in 1970, primarily focuses on preventing money laundering. It mandates record-keeping and reporting obligations for high-value transactions, both domestic and international, undertaken by individuals, financial institutions, and businesses.
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Threshold of $10,000: Transactions exceeding $10,000 (in cash or wire transfers) are subject to reporting requirements under the BSA. This threshold is pivotal, triggering mandatory reporting to governmental bodies like the IRS to monitor and deter tax evasion, criminal activities, and money laundering.
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Reporting International Wire Transfers: For international wire transfers into the US exceeding $10,000, financial institutions are required to file Currency Transaction Reports (CTRs) to document sender details and transaction specifics.
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IRS Reporting: Banks or financial service providers are mandated to report transactions over $10,000 to the IRS. However, depending on circ*mstances, individuals might also need to self-report such transactions to ensure compliance.
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Documentation and Forms for Large Transfers: Various documents like government-issued ID, source of funds, recipient details, and specific forms (e.g., IRS Form 8300, FinCEN Form 114, IRS Form 3520) might be necessary based on the transaction and involved parties.
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Penalties for Non-Compliance: Failure to adhere to reporting requirements may result in civil or criminal penalties. Even accidental non-compliance can lead to significant fines, emphasizing the importance of understanding and fulfilling reporting obligations.
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Best Practices for Sending Large Amounts Overseas: Consider utilizing specialist money transfer providers for potentially lower fees and better exchange rates. Evaluate transfer fees, exchange rate markups, and third-party charges before proceeding with the transfer.
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Wise and International Transfers: The article highlights Wise as a service provider offering high transfer limits, competitive rates, safety measures, and ease of use for sending large amounts abroad.
In essence, the article provides a comprehensive guide to navigate legal and reporting requirements when engaging in high-value international wire transfers, emphasizing the importance of compliance and seeking professional advice when uncertain.
It's imperative to note that the details provided here are based on the information available up to my last update in January 2022. Financial regulations may evolve, so it's crucial to consult updated sources or seek professional advice for the most current and accurate guidance.
