Transfers of money across international borders may be payments for goods and services, remittances to family or even money laundering by crime organisations. International money transfers are regulated for many reasons.
Exchange controls are limits on how much money can be transferred internationally. This is done to prevent capital flight, the movement of money out of a country. Capital flight can cause the currency of a small nation to deflate, making it difficult for a government to continue paying its own debt.
The amount and originator of an international money transfer may be recorded and reported to the government. According to Peter Lilley in "Dirty Dealing," the European Union requires registration of the name and bank account of anyone sending an international money transfer, as well as the amount of the transfer. The USA PATRIOT Act requires filing of a Suspicious Activity Report if international money transfer limits are exceeded in either transaction size or volume.
Nations may require all international money transfers to take place through the state bank. This allows the government to set the exchange rate used with other currencies to a rate favourable to itself and to monitor all transactions. Limiting international money transfers to state-approved banks is also done, in an effort to track all international profits so that they can be taxed.
- "Dirty Dealing"; Peter Lilley; 2006
- "Countering Terrorism and Insurgency in the 21st Century"; James J. F. Forest; 2007
- "Capital Flight and Capital Controls in Developing Countries"; Gerald A. Epstein; 2006
- "Remittances: Development Impact and Future Prospects"; Samuel Maimbo, Dilip Ratha; 2005
- "The 21st Century Economy: A Beginner's Guide"; Randy Charles Epping; 2009