5 Lessons for Moving Money Overseas

My wife and I have been buying a car here in Cape Town for about three weeks.

I use the past imperfect tense deliberately. The car-buying process has taken a while… and it’s not over yet.

There’s no problem with the car, the dealership, or anything along those lines. It’s all about money… specifically, getting money from the U.S. to South Africa.

We’ve used a money transfer service called Remitly for some years now. You create a Remitly account, link your U.S. bank account, and then add a foreign beneficiary (in our case, our main South African bank account). When you initiate a transfer, Remitly debits your U.S. account, converts the money into the target currency, and transmits it to your foreign bank account.

Companies like Remitly are bound by the same know your customer (KYC) and anti-money laundering rules as everyone else. A basic account allows you to send limited amounts over periods of 24 hours, one month, and six months. To qualify for higher limits, you must give more information about yourself, the source of your funds, and what you plan to use them for. Since we’ve used the service for years, we’re qualified for the highest amount.

So, when we found the car we wanted, we set about transferring some savings from the U.S. to South Africa. To avoid hitting our daily transfer limits, we sent one transaction on my wife’s Remitly account, and one on mine. Both transfers went to our South African bank account, which is in her name.

That’s when the trouble started. It turns out Remitly isn’t the only player in the money transfer game with transaction limits.

After the first transfer, we got a message from Remitly saying we had to supply more information to its South African partner. (All transfer services use local partners to convert foreign currency into local currency, before it's deposited into your local bank.) They sent us an e-mail with a link to upload the required documentation. But when we got to the section on the source of funds, the only available options assumed my wife had a job in the U.S.

It turns out the South African financial authorities limit how much foreign money a resident can receive in a month via the type of money transfer agency Remitly uses as a partner here. If you can prove you’re earning money from a job overseas, the limit depends on your salary. But if you’re just a regular local trying to bring money in, there’s a strict limit. It’s possible to bring in larger amounts, but you must do it as a direct bank-to-bank transfer.

Fortunately, we were able to send half the funds under November’s limit and the other under December’s limit. We’re scheduled to pick up the car this week.

But my experience has lessons for anyone likely to face a similar circumstance:

Never assume anything about international money transfers. Even if you think you know the rules, there are probably hidden things that can trip you up. Murphy's Law applies.

Remember you’re dealing with two sets of financial authorities. There are rules on the U.S. or Canadian side, and rules in the receiving country. They may not be compatible, or they may contradict each other.

Don’t rely on your money transfer service to know the rules of your receiving country. They can't possibly know all the rules of every country to which they transfer funds. That's why they depend on local agencies to manage inward transfers.

If you’re planning a large transfer, make sure you understand the limits that apply to you. Either space out your transfer over multiple transactions or use a money transfer brokerage with a license to handle large amounts.

Check whether your money transfer service can send money to commercial accounts. When we realized we'd have trouble transferring funds to our own account because of the limits, we asked whether we could send them to the car dealers account directly. But Remitly doesn't allow that.

Fortunately, we were just buying a car, not something as complex as real estate. If a big offshore real estate transaction is in your future, make sure you understand the rules now!