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AML regulations of international money transfers: chances or challenges

Financial Foundation

AML regulations of international money transfers: chances or challenges?

DNBC Team DNBC Team

Oct 20, 2023

Table of Content

The international money transfer industry is experiencing substantial growth. According to the World Bank, the global remittances amounted to $689 billion in 2018 and $791 billion in 2020.

This surge is, in part, due to the expansion of digital transfer services, which are anticipated to have a growth rate of 11.75% from 2019 to 2024. (Source: Complyadvantage.com)

As the money transfers have evolved, there are so many tricks that illicit actors employ to take advantage of it. To combat these potential risks, all governments and organizations around the world have implemented AML regulations to protect international transactions.

This article is about challenges in AML (Anti-Money Laundering) regulations in international money transfers and some popular international money transfer methods you need to know.

Challenges in AML regulations of transferring money internationally

A remarkable report by the United Nations has estimated that the yearly volume of money laundering amounted to $1.6 trillion in 2020, equal to 2.7% of the global GDP. (Source: Investopedia.com)

These vast sums of illegally laundered money have severe economic and social consequences, often associated with criminal activities such as corruption, drug trade, and terrorism. Money laundering not only threatens financial systems but also adds to global instability, necessitating urgent attention from governments and organizations.

Money laundering is a threat against international Money Transfer

Money laundering is a threat against international Money Transfer

Accordingly, in the context of transferring money internationally, AML refers to a set of laws, regulations, and procedures aimed at preventing the illegal generation of income through money laundering. These regulations require financial institutions to identify and report suspicious transactions.

They may involve fraud or scams, as some service providers may be unlicensed, unregulated, or unreliable, or some criminals may use fake identities or documents to trick people into sending money.

They may have legal or regulatory implications, as some countries may have restrictions or regulations on the amount, frequency, purpose, or destinations of worldwide money transfers, which may require documentation or verification.

Here are some challenges in AML regulations of transferring money internationally:

Sophisticated money laundering techniques

Criminals continually evolve their techniques, making it challenging to identify and trace illicit financial flows.

Online banking, digital wallets, and mobile payment apps are highly vulnerable to exploitation for illicit actors to hide their illegal activities. This includes the use of shell companies or cryptocurrencies to obscure the origin of funds.

Involvements in cross-border transactions

Money laundering often involves international transfers, making it harder for authorities to track and regulate. Different countries may have varying AML regulations and reporting requirements, complicating the process.

Money laundering often involves worldwide money transfer

Money laundering often involves worldwide money transfer

All countries have implemented AML laws that require financial institutions to establish and maintain robust AML programs. These regulations often demand customer due diligence, transaction monitoring, and reporting of suspicious activities.

Money transfer operations will become more difficult, requiring detailed steps. As a result, the transfer process will take more time and become complex, potentially causing inconvenience to customers.

However, the ongoing battle against money laundering necessitates a balance between these challenges and regulations. While criminals become more sophisticated, stricter AML regulations, robust technology, and international cooperation play essential roles in ensuring the integrity of the global financial system.

Despite facing numerous challenges in international money transfers, many financial services and institutions are still available to meet your needs.

Popular international money transfer methods

It’s hard to find out the best and the cheapest way to send money internationally but here’s a detailed overview of international money transfer methods, including their pros and cons:

Bank transfers

Banks are one of the most traditional methods of international money transfer. They offer a variety of services, including wire transfers and international checks.

Banks are one of the most traditional methods of international money transfer

Banks are one of the most traditional methods of international money transfer.

Pros: Bank transfers are widely recognized and secure. They’re ideal for transferring substantial amounts and are regulated by financial authorities.

Cons: They can be slow, taking several business days, and often incur high fees, especially for international transfers. Banks usually offer unfavorable exchange rates, resulting in lower value received by the recipient.

Online payment platforms

Money transfer services are another popular option for international money transfers.

Pros: These platforms are convenient and quick, making them suitable for smaller transfers. They offer user-friendly interfaces and are commonly used for online purchases.

Money transfer services are another popular option for international money transfers

Money transfer services are another popular option for international money transfers.

Cons: Fees can be quite high, particularly for international transfers. Additionally, these platforms may not be accepted in all countries, and their exchange rates might not be the most favorable.

Cash transfer service

This service facilitates the movement of money, typically in the form of physical cash from one location to another. It offers a convenient way to transfer funds across distances.

Pros: Cash transfer services provide options for cash pickup, making them a quick choice. They can be used when the recipient doesn’t have a bank account.

Cons: These services have relatively high fees and may offer less favorable exchange rates compared to other methods.

Bank Drafts/Cheques

Pros: Bank drafts and cheques are secure and can be mailed or deposited at the recipient’s bank.

Bank drafts and cheques can be used in transferring money

Bank drafts and cheques can be used in transferring money

Cons: They are slow, as they require physical transportation. Additionally, there can be fees and potential issues with clearing.

DNBC’s solution in transferring money abroad

DNBC Financial Group stands out as a reliable financial institution that places a strong emphasis on 1-on-1 support for its clients.

DNBC Financial Group places a strong emphasis on 1-on-1 support

DNBC Financial Group places a strong emphasis on 1-on-1 support.

Committed to ensuring a compliant and secure financial environment, DNBC has established itself as a trusted partner for individuals and businesses seeking to support the complexities on how to send money abroad.

In other words, DNBC is fully compliant with all applicable AML regulations. You can be confident that your money is safe and secure.

With a dedicated focus on regulatory compliance and providing professional assistance, DNBC Financial Group is equipped to meet your diverse financial needs.

If you’re seeking an international money transfer solution, DNBC is ready to provide free support and consultation.

DNBC Financial Group is your trusted provider in international money transfer

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Note: The content in this article is for general informative purposes only. You should conduct your own research or ask for specialist advice before making any financial decisions. All information in this article is current as of the date of publication, and DNBC Financial Group reserves the right to modify, add, or remove any information. We don’t provide any express or implied representations, warranties, or guarantees regarding the accuracy, completeness, or currency of the content within this publication.