Money Abroad
A large transfer arrives with questions attached
Banks are required to understand where substantial sums come from, which is why a perfectly legitimate payment can be held for days while somebody asks you to prove something you thought was obvious.
By Manish Trivedi3 min read
Nobody involved thinks you are a criminal
A newcomer who moves their savings into a local account, or receives the proceeds of a house sale, is quite likely to meet a hold, a phone call and a request for documentation. It feels like an accusation and it is not one. It is a routine obligation placed on financial institutions by regulators.
The rules require institutions to know their customers and to understand the origin of substantial funds, and they apply them by pattern rather than by judgement of character. A large, unusual, cross-border payment into a recently opened account is the pattern most likely to generate a question.
The reason to understand this is that it converts an alarming event into a paperwork exercise with a known answer. The people asking are not empowered to accept your word, so the response that works is documents rather than explanation.
Source of funds and source of wealth are different questions
Two related things get asked and they are not the same. Source of funds means where this particular money came from immediately: a house sale, an inheritance, the closure of a savings account, a business sale. Source of wealth means how you came to have money in the first place, over a working life.
Most enquiries are about the first and some are about both, particularly where the amount is large relative to a person’s visible income. Answering the wrong one produces another round of questions, so it is worth reading the request carefully.
The documents that satisfy these are ordinary and contemporaneous: a completion statement, a grant of probate, statements showing the account the money left, a contract of sale, tax documents. What rarely satisfies anybody is a letter from you describing what happened.
Prepare before the money moves
The efficient approach is to assemble the paperwork before initiating a large transfer rather than after it is frozen. Tell the receiving institution in advance that a substantial payment is coming and ask what they will want to see, since practice differs and they will usually say.
Keep the chain visible. Money that has passed through several accounts, or been converted more than once, or arrives from an account not in your name, is much harder to evidence, and each additional step multiplies the questions. A single clean path from the origin to the destination is worth some inconvenience.
Avoid the instinct to split a large transfer into smaller ones to attract less attention. Patterns of that kind are precisely what monitoring systems are designed to notice, and the appearance is considerably worse than the original transaction.
Cash and third parties are where it goes wrong
Two things reliably cause difficulty. Cash, because its history can’t be demonstrated, which is why depositing a substantial amount of it is treated quite differently from receiving the same sum by transfer. And money arriving from or sent to somebody else, because the institution then has questions about a person who is not their customer.
Helping a relative by routing a payment through your account is a common act of kindness and a common source of frozen funds, and in some circumstances it carries consequences well beyond inconvenience. It is worth declining politely rather than obliging.
Declaration requirements also apply to carrying money across borders in many places, with thresholds and forms that differ by country and change. Anyone planning to travel with a significant sum should check the current official guidance for both countries before departing.
Keep the file, because it will be asked for again
Whatever you assemble for one institution will be wanted by another, sometimes years later, and often at a moment when the underlying documents are harder to obtain. Keep the evidence pack together with the rest of your records, organised by the transaction it relates to.
This matters particularly around a move, because the sale of a property, the closure of a pension or the receipt of an inheritance may all happen within a short period and then be enquired about long afterwards, in a different country, by somebody with no context.
The rules governing all of this are national, they change, and institutions apply them with different degrees of enthusiasm. Nothing here is advice about your situation, and where large sums or complicated origins are involved, qualified advice and the official guidance for the countries concerned are the right starting points.
Common questions
Why is my own money being questioned?
Because institutions are obliged to understand the origin of substantial funds and they apply those obligations by pattern rather than by judgement of the individual. A large cross-border payment into a newly opened account fits the pattern most likely to prompt a check.
What documents usually satisfy the question?
Contemporaneous third-party documents such as a completion statement, a probate grant, a sale contract or statements showing the account the money left. A written explanation from you alone almost never resolves it.
Should I break a large transfer into several smaller ones?
No. Monitoring systems are specifically designed to identify that pattern, and it looks considerably worse than the original single payment would have. Tell the receiving institution in advance instead and ask what they need.
Reporter, Globetrotter Talks
Manish covers arriving, visas & paperwork, money abroad and the questions readers actually send in and is unreasonably interested in the detail nobody else checks.
