Is it safe to send money overseas? Here’s what you need to know
With scams costing Australians nearly half a billion dollars last year,* we live in a world where just about anyone with a smartphone and a bank account could become a victim of fraud.
So it’s no surprise that sending money overseas often comes with one big worry: whether the transactions are secure. Are your tens of thousands of dollars - or perhaps even your entire life savings - safe and sound as they’re moved across the globe from one account to another?
According to international money transfer (IMT) provider SendFX’s Hannah Churcher, that depends largely on whom you send your money with.
“The security of international money transfers begins with using a reputable provider,” she said.
From customer service to compliance with regulation, there are signs to look for when assessing just how reliable and trustworthy your IMT provider is. Let’s take a look at some questions you should ask yourself before deciding which provider to pick:
1. Is your IMT provider licensed and regulated?
The first step is to check if your IMT provider is regulated and authorised by ASIC (Australian Securities and Investment Commission), as this gives you an extra degree of reassurance if you do have a problem. All locally-regulated financial providers must be a member of the Australian Financial Complaints Authority (AFCA), which gives you a domestic avenue to make complaints, should something go wrong.
“Safety when handling foreign exchange is continuously increasing due to the legal requirements of legislative obligations, regulations and reporting,” Churcher said.
IMT provider WorldFirst’s Managing Director ANZ, Ray Ridgeway, added that IMT businesses who are regulated by ASIC have an AFSL (Australian Financial Services Licence) number, which can be found on their website, usually in the footer.
This number tells us that the provider abides by AUSTRAC (Australian Transaction Reports and Analysis Centre) regulations and obligations, including the requirement to report their financial transactions and any suspicious activity.
For instance, all IMT providers are required by AUSTRAC to apply identity verification processes known as KYC (Know Your Customer) to their customers. KYC helps the provider understand who its customers are, what their typical financial activities look like, and where their money is going. That way, the provider can distinguish between normal and unusual behaviour, and help to prevent cases of fraud.
2. What customer services does the provider offer?
When it comes to having peace of mind that your money is safe during a transfer, customer service matters a lot. After all, the foreign exchange market is a tricky one for everyday customers to navigate, given that it’s full of jargon and complex offerings, so having expert help by your side to guide you through the whole process can make a huge difference.
This is one of the benefits of choosing an foreign exchange (FX) specialist: they have specialised knowledge on IMTs, and many also provide you with your very own account manager. With an FX specialist, you could expect assistance with things like managing your foreign currency payments, and tracking exchange rate fluctuations that could potentially cause you to lose or save thousands of dollars on your money transfer. And in the unfortunate event that something does go wrong, you’ve got someone that you know you can turn to for help.
“While you should always look for a business with a good online platform, having local customer service via dedicated account managers is desirable if you have any questions relating to your transfer,” Ridgeway said.
As Churcher explained further, “[you] need a direct point of contact that knows your circumstances. When chasing queries and payments, if you don’t have support, it becomes stressful very quickly.”
3. Has the provider received positive feedback?
No doubt all IMT providers will make positive claims about their service, but chances are you would wonder how much of those claims you can actually believe. That’s why it’s important to read reviews about different providers before opting for one.
So if you’re interested in seeing what past customers have to say about their experiences using a provider, reputable review websites like Feefo and TrustPilot could be worth a visit.
4. How transparent is the provider?
Another way to assess whether or not your provider is trustworthy is to look at how transparent its IMT procedures and pricing structures are.
“When customers conduct an international transfer, they expect greater transparency. They want to know what is happening, when the transfer has been received and what the related fees are,” Churcher said.
The good news is, many IMT specialists will give you live updates on your transaction, so you can rest assured that your money is going where you want it to go. That’s because they use the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, which sends and receives information, including money transfer instructions, through a standardised system of codes. This network has the same level of security as using a bank, and makes tracing funds in real-time a lot easier, so that providers are able to track the location of your funds at all times.
Transparent pricing structures, like those offered by WorldFirst and Transferwise, are a good sign that an IMT provider is being upfront, and the lack of transparency shown by many providers was an area of concern that ASIC highlighted in a recent report.
Ultimately, the most important thing when comparing IMT prices is to make sure you're looking at quotes that include both the exchange rate on offer and any fees that may apply. In particular, watch out for nasty surprises in the final price.
“You can avoid hidden fees by wisely choosing a provider that offers low fees or fee-free transfers but also has competitive foreign exchange rates,” Churcher said.
Other steps to making your money transfers safer
But the security of an IMT doesn’t stop at choosing a reputable money transfer provider. Here are some other ways to ensure your money and personal details remain safe and sound:
- Avoid sending money to someone you don't know well: Received an email about a get-rich-quick scheme, or asked to send payments through a dating site? Those are frequently scams. Scammers often target Australians, as ASIC doesn’t have international jurisdiction to investigate and prosecute them; however, if you do fall for a scam, you can file a complaint with the Australian Financial Complaints Authority. Just remember: if a deal or opportunity seems too good to be true, it probably is!
- Verify recipient details: If you’re sending funds to people you know personally, call them beforehand to confirm their account number and details, as this can help to prevent mistakes like transferring money to the wrong bank account. Or if you’re a business making payments to an overseas supplier, be sure to verify its company credentials by talking to its directors, checking its business registration and reading reviews online.
- Keep identification documents safe: To safeguard yourself against extreme cases of identity theft, it’s important that you create strong passwords, have security software installed on your computer, and stay alert to any unusual bank transactions.
Ready to send money overseas today? Head over to our international money transfer comparison page to compare secure and competitive options today.
* According to the Australian Competition and Consumer Commission's (ACCC) 'Targeting Scams' report in April 2019