Default Image

Money transfer vs. money laundering: how it works

Money laundering is a serious concern for money transfer firms, but could some businesses be taking the wrong approach in their attempts to cut out corruption? The Bank of England and the Financial Conduct Authority (FCA) think so, and they're worried that it could hurt customers.

According to recent reports, the FCA chief executive Martin Wheatley criticised a number of banks for "de-risking" by giving a "wide berth" to whole groups of customers. Bank of England governor Mark Carney has echoed his comments, saying many countries face "financial abandonment" as banks cut off money transfers. In plain English: they think banks are punishing ordinary people for the crimes of a small minority.


There's no doubt that money laundering has a serious impact. The Financial Action Task Force rightly argues that money laundering risks destroying the trust we have in financial institutions, as well as affecting currency exchange rates and even destabilising economic systems.

However, PwC's recent economic crime survey showed that money laundering accounts for just 11% of global fraud cases. And excessive restrictions on transfers mean vital systems for sending money overseas could be blocked, just because you live in an area considered 'at risk' of money laundering.

What's the alternative?

Foreign exchange brokers assess each client individually, ensuring that they're treated fairly, and that the money transfer environment is kept safe.

Brokers' anti-money laundering measures begin with confirming your identity. It's a simple process: you'll just be asked for documentation like your passport or driving licence, and a utility bill.

Once that's complete, brokers look out for suspicious activity, like sending lump sums overseas through a series of smaller transactions. This is often a sign of money launderers trying to avoid being tracked. It's more about trend-spotting than poking around in your finances, though.

Brokers must also keep a record of correspondence and transfer activity, to prove that both parties acted fairly and within the law. Authorities will only look at this if concerns come up, but do check your broker's privacy policy if you have any queries about this.

Ultimately, the most important element of any international money transfer is trust. That means this process works both ways – it's important for brokers to check your transfers are legitimate, but it's equally important that you know how they're doing this.

Comparison tool

Nicola O'shea

Was going to use our local Post Office until I realised by using your comparison chart how they're loading the exchange rate. You've given me an extra $50 AUD by using Xendpay

Etta and Pierre Deschamps, Documentree Films

We regularly receive funds from overseas and used the Moneycloud to find an FX company who have helped us with a much better exchange rate than our high street bank. We're 3-4% better off as a result. Thank you the Moneycloud
Paying for overseas holidays


When paying for your dream holiday in the local currency of your destination country, you want to make the most of superior exchange rates and low fees offered by the foreign exchange brokers listed on our site. This will ensure that you save money and your funds are protected.

washington hotel


As an overseas investor, regardless of the method of hotel management you will decide to opt for, you will be exposed to what are often volatile exchange rates, whether paying for your investment, running costs and overseas supplies and hotel management employees. Read the definitive guide.

Market Insights

Sign up for our newsletter.

Thank You for subscribing to our Newsletter

You have successfully signed up to our Newsletter