Is this possibly illegal and will it work altogether? (money transfer)

One of my sons is presently studying in a foreign country, and for this purpose we’ve set up a dedicated joint bank account which allows him to withdraw funds from ATMs in that country in the local currency with no added fee. I have a relative in that country who is looking to invest money in the US, and she needs a way to convert local currency in her country into dollars in the US. So the question is can this be done in reverse: she gives the money to my son, he deposits it into an ATM, and I withdraw it in dollars in the US and pass it along to her agent here?

I’m not sure if it works altogether. The bank in question does not have branches in that country. I’ve never deposited money via ATM and don’t know whether you can do that in another institution’s ATM, let alone in another country. I could always just ask the bank :), but since I’ve started this thread anyway …

But my real question is about whether this type of transaction could be construed as some form of money laundering or other financial crime.

Why doesn’t she just wire the money to the person directly?

Generally speaking, you can’t deposit cash into an ATM that is not part of your “home” system. If I have a Canadian Bank of Montreal account and go to a BMO Harris in Chicago I can’t deposit cash into my account, although some banks do allow this. If I went to a Chase ATM, there is no way to deposit to my BMO Account.

Yes, you would be acting as a “Hawala” , a illegal international money transfer service.

Altho the Feds would likely not come knocking if it was just one friend, your bank will very likely close your account and file a SAR.

Agree with this. What is your relative hoping to accomplish by funneling the money through your account? If your relative is opening an investment account with a US broker, etc. They funds will be converted to US$ at the spot exchange rate. Assuming it’s with a reputable brokerage firm and depending on the size of the transfer, many times any fees can be negotiated away.

Which foreign country, and how much money are we talking about? If you are contemplating depositing it in banknotes into an ATM, I assume a fairly small amount? If so, why not just have your relative give your son local currency to cover his needs over there, and you repay your friend in the USD she needs to her bank account in the US, i.e. effectively doing the forex conversion between the two of you, since you are on the buy & sell side of the same transaction.

Otherwise, if it’s a larger amount, your relative should use WorldFirst to make the transfer if WorldFirst cover the country & currency you are concerned with. They will usually quote & set the exchange rate before you even transfer in funds. WorldFirst will give a much more competitive exchange rate than a bank, obviously better (& negotiable) in percentage terms for larger amounts. They are a well capitalized & reputable firm, registered with financial regulators & compliant with all local banking regs, etc. The customer makes an electronic transfer of the funds in the currency she is selling to WorldFirst’s bank account in that country, and WorldFirst transfer the converted amount of the currency she is buying to her account the other country.

Isn’t it customary in these types of transactions that the person who wants to transfer money through you will offer to give you several million dollars for your assistance as soon as the deal closes?:eek::eek::eek:

Do you have any first hand experience doing this through a US broker? In my experience you are likely to get a very poor rate this way. Banks and brokers have historically relied upon customer ignorance of the true interbank wholesale rate to gouge profits in retail forex transactions, saying nonsense like “no commission”. All that’s relevant is the net price you are getting relative to the interbank rate, which you can find in real time on Bloomberg.

At this time it’s about $4K, but I suspect it will be more over time. (This is single girl, working full-time but living at home, and she’s saving up her earnings for her future and wants to invest it in the US meanwhile. So while she - her father, actually - asked about $4K this time, I suspect it may be an ongoing issue.)

My son mostly uses a credit card and doesn’t spend that much cash.

I’ll look into that - thanks!

You did see where I told you that this was illegal, right?

Huh? He’s now talking about a perfectly legal foreign exchange transaction through a registered dealer.

OP is in NZ right?

OP is in the US, since he talks about himself as “withdrawing [money] in dollars in the US”.

OP’s son is in an unspecified foreign country.

Ahh yes, thanks.

Why is this relevant?
Any bank can transfer US dollars to any other bank in the world, using the SWIFT system.
And any bank in any normal country can convert their local currency to US dollars.
Why can’t your relative just go to her local bank, convert her cash to $ and then send it to wherever she wants?
(Some (usually poor) countries have laws restricting their citizens from owning/dealing in foreign currency, but that’s a legal issue your relatives surely know about if it applies to them.)

No, he’s not. He did say he’d look into it, but that part i quoted was still considering the illegal transfer.

Nope, it’s clear that he’s considering the two possibilities that I suggested, since he quoted me - neither of which are illegal.

Yes, he did say he’d look into your idea. He never said he had dropped the original idea.

His entire post was specifically replying to parts of what I said, that he quoted, in which I was suggesting other ways to do this.

But if you want to insist that he is maintaining a secret agenda to start an illegal money transfer service, thank you for your public service in policing this.

Sure buddy. :rolleyes: