It's no longer risk-free to move large quantities of money, undetected, across international borders, are over.
It's true that drug cartels and others still smuggle cash across the U.S.-Mexican border and other international frontiers. But, they take considerable legal risks doing so, including fines, imprisonment, and of course, forfeiture of the cash.
It's perfectly legal to transport cash across the U.S. border, and most other international borders—you just have to make a declaration of that fact to your national authorities. When you transport more than US$10,000 in cash or cash equivalents across a U.S. border, for instance, you must file FinCEN Form 105.
However, when you get your cash to your offshore bank or other offshore service provider, you may find that it's not willing to accept it, especially if you don't already have an existing relationship. That's a consequence of money laundering laws now in effect in virtually every country in the world.
It was once possible to fund international investments with money orders. That's still possible in some situations, but international financial institutions are increasingly reluctant to accept funds that originate in any "unconventional" form. Before you assume you can fund an international investment with money orders, check with it in advance.
Also be aware that when you purchase money orders with cash, the bank or other service provider that sells them to you will probably be required to verify your identity. For instance, under U.S. law, if you purchase bank checks, cashier’s checks, money orders, or traveler’s checks, in amounts between US$3,000 and US$10,000, the issuer must verify your identity and retain a record of the transaction for five years. If the purchase is for more than US$10,000, a record of the transaction must be sent to the U.S. Treasury.
That leaves funding offshore investment with a check or a wire transfer as the most realistic option for most persons. Both options leave a paper trail, so I generally recommend that clients simply wire the proceeds directly to their intended recipient, since it avoids the necessity of waiting for a check to clear. It may be possible to wire funds to an offshore bank's U.S. correspondent account for further credit to a foreign account. This may be a slightly lower profile way to fund the investment than wiring it directly overseas.
However you fund your offshore investment, make certain to comply with the reporting requirements for offshore investments. U.S. persons must file Form TD F 90-22.1 annually for foreign "bank, financial, or 'other' financial accounts" they hold with an aggregate value of US$10,000 or more. They must also disclose the existing of the account(s) on Schedule B of their tax return.
Other reporting requirements may apply as well, depending on the type of investments you make, as well as whether you choose to make them through some kind of offshore entity such as an offshore trust or offshore company.
Learn more about the reporting requirements for international funds transfers, offshore investments—and the investments you can legally avoid reporting—by clicking here.
Copyright © 2007 by Mark Nestmann
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