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How To Choose A Safe Remittance Service Provider

In today’s digital world, and with increased government regulation, it is more important than ever to ensure that you are compliant with the relevant laws when sending money overseas.

Marel Pencev -  at MJWebs

Marel Pencev

Sep 23, 2020

Not only will this keep you out of trouble legally, it also means a much more efficient and quick remittance, as suspicious transactions may otherwise be delayed by the relevant authorities. In this article we highlight significant compliance issues in Australia and what to avoid when sending money overseas to ensure a smooth transaction.

Legal Landscape

The legal landscape in relation to remittance services, particularly international remittance, has evolved dramatically, even more so since the September 11 terrorist attacks in the United States. Since 2011, the government has progressively increased regulations concerning anti-money laundering and counter-terrorism financing. Legal development in this area has also followed the rise of technology which has made it much easier to transfer funds overseas.

Further, we have seen in Australia a push towards stricter regulation in relation to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) as major banks have repeatedly, and on large scales, breached their AML/CTF obligations.

Largely, the rules and regulations in this area place obligations on remittance service providers, including the banks, and other remittance institutions (such as ourselves), to report certain transactions to the Australian Transaction Reports and Analysis Centre (AUSTRAC). These reports require that some instructions to send money either from Australia to overseas, or from overseas to Australia must be reported to AUSTRAC. Of course any suspicious activity detected by the remittance service provider must also be reported to AUSTRAC. AUSTRAC is the Australian government agency set up to monitor financial transactions with the aim to identify and prevent money laundering, terrorism financing, organised crime and tax evasion.

Not only does AUSTRAC oversee these reportable transactions, it also governs relevant industry entities. As required by the law, remittance service providers must also be registered with AUSTRAC in order to legally provide these services in Australia.

As a consumer, you should be aware of these regulations at a high level so that you know what is happening with your money when you use a remittance service provider. Importantly, you should ensure that you only use trustworthy and legitimate providers who are compliant in these respects to make sure that you and your community are not put at risk if a provider does not meet their compliance obligations. Despite this, we know that the majority of people sending money overseas are sending it legitimately, most often to family and friends living overseas, and there are legal, safe and low risk ways to transfer this money.

In the following few sections we show you what to avoid if you want to transfer your money overseas.

Underground Money Movers

With heightened AML/CTF regulation, we have seen a corresponding increase in consumers using “underground” remittance services to transfer money overseas. Many of these money moving providers are based solely on a system of trust where two individuals organise to make a payment across borders on behalf of clients, and examples of these have popped up around Australia.

Consumers should instantly see red flags if there come across these types of providers! Sending your money overseas through an underground service carries incredibly high risks and is illegal in Australia, so steer clear!

Money Transfer Scams – beware!

When comparing providers, you should also be aware of money transfer scams. Whilst usually scammers will try to extort money from individuals by convincing them to send money to the scammer, these are not the types of scams that we cover here. What we are referring to are remittance service providers who hold themselves out as providers but are in fact illegitimate.

We have put together a helpful list of indicators to help you spot whether a money transfer provider is legitimate or not. You should look out for the following:

  • The provider is not registered on AUSTRAC’s Remittance Sector Register – you can check this by searching for the business or company name on the register at the following link: https://online.austrac.gov.au/ao/public/rsregister.seam. As we’ve outlined above, compliance with this registration requirement is a critical indicator as to whether a provider is generally compliant or not. So if they don’t appear on the register you should avoid using their services to send your money overseas.
  • The provider doesn’t provide sufficient details as to who owns and/or manages the company and does not commit to a timeframe to facilitate the transfer. Given the world we live in today, all of this information should be listed on the provider’s website and that website should be SSL accredited (look for the lock symbol next to the website in the domain search bar).
  • The provider doesn’t give you an exact exchange rate and you are left wondering what the receiver of your transfer will receive in their own currency. Whilst providers may not always publish the exchange rate on their website as the rates changes daily, they should be able to provide you an exchange rate upon request or, if using an instantaneous online platform, the exchange rate should be visible at the check-out.
  • If you don’t receive a proper record or receipt of the transaction, this is also a red flag. However, given that you may not find this out until after initiating the transaction, you should get in touch with the provider before sending your money to confirm this if it is unclear from their website.
  • Finally, if a salesperson from the provider company is pushing you make a transfer that you are not interested in, this may also be an indicator that the company is not legitimate.

Finding a reliable and safe remittance provider

Despite all of these compliance issues, it’s not all doom and gloom! There are good guys out there providing reliable, safe and completely legitimate overseas remittance services (like us ).

Some handy hints to remember when choosing a provider:

  • Plan your transfer ahead of time – don’t make a rushed decision on a transfer that you are not sure you want to make to avoid scammers or unreliable providers from taking advantage of you.
  • Ensure the institution you use is licensed and is registered with AUSTRAC. It’s super quick and easy to check if they are! See: https://online.austrac.gov.au/ao/public/rsregister.seam
  • Consider whether the provider has customer service support and can easily be contacted. This is an indication that they are legit and it wouldn’t hurt speaking to them before making a transfer if you have any concerns of questions.
  • Keep in mind the above indicators to determine whether you could be dealing with a potential scammer.

As always, take your time choosing a remittance provider because you’d rather be safe than sorry! And if you are looking for a remittance provider to transfer money from Australia to Nepal, our team at City Express Money Transfer are always here to help and would love to hear from you if you have any questions!