Is it Still Safe to Electronically Transfer Funds Overseas? What are the risks?

By Reese Kimmons, MS ISA

Unrest in Eastern Europe, new threats from nation state actors targeting the financial sector, and an overall increase in the cyber threat level world-wide has some questioning whether safe options still exist for the electronic transfer of funds internationally. 

The short answer is yes, but there will always be some risks associated with these transfers.  The key is to select the right service provider to maximize security and thereby minimize those risks. 

It’s also important to know that not all of the bad actors out there are targeting the transfer service companies and their technical infrastructure.  Some are targeting you.

Sending Money: What to look for

Banks and other well-established secure money transfer providers offer the following services to protect their clients and lower security risks:

  • Encryption – All data relating to the transfer of funds is encrypted from end to end during the transaction to ensure that, even if it is somehow intercepted by a bad actor, it cannot be decrypted and read.
  • Verification of identity – Clients are required to create accounts with secure passwords and provide answers to selected security questions.  Many companies now utilize multi-factor authentication as well. If the client is receiving transferred funds, he or she is required to produce an official identification in order to collect.
  • Tracking services – The transfer is tracked from start to finish.  The client is provided with a confirmation/tracking number and can use it to verify that the transfer was completed and the funds were delivered to the intended recipient.
  • Fraud prevention services – These services cause alerts to be issued if any suspicious or unusual activity is detected on the client’s account.  This could include a login from a new device, the client apparently attempting to transfer an unusually large sum of money, a higher than normal volume of transfers being made, or transfers made to a recipient who appears suspicious in some way.

If a fraud alert is generated, the client may be asked to answer security questions to verify his or her identity and to provide a PIN number that is sent to the client’s device of record.  Once the client’s identity is verified, he or she will then be asked questions to determine whether the alert was valid and whether additional action is warranted. 

Some of the most secure providers of money transfer services (which are not required to abide by the same regulations as banks) have voluntarily agreed to adhere to consumer protection regulations, including those set forth in the Payment Card Industry Data Security Standards. 

Many also abide by standards requiring that clients’ funds be held in separate trust accounts so that they are not commingled with company operating funds or otherwise converted for unauthorized uses.

When shopping for a money transfer service provider, it is a good idea to search online for complaints against the company you’re considering and to read some reviews posted to third-party sites by former customers.  Sources like TrustPilot and the Better Business Bureau can often provide valuable information that will allow you to make a good choice.

Infographic of electronic wire transfer word cloud

Bank wire transfers – the industry standard

Bank wire transfers remain one of the safest options for transferring funds to other countries.  Depending on the policies of your banking institution, you may be able to easily set the transaction up online or by phone to avoid making a trip to your local branch.

On the negative side, using your bank to make a wire transfer may cost you more than other secure alternatives.  The transfer fees and currency exchange rates charged by banks are often higher than the fees charged by money transfer services.

Money transfer services

Money transfer service companies began popping up about ten years ago to compete with banks in the international funds transfer market. 

They have been able to simplify the process of securely sending money overseas while reducing the costs of doing so.  The security practices of reputable transfer services are on a par with those of banks.

Taking security, fees, and quality of service into consideration, recently ranked the top money transfer service companies.  Here are their top ten:

  1. Wise (formerly Transferwise)
  2. Xe
  3. Instarem
  4. WorldRemit
  5. TorFX
  6. Azimo
  7. OFX
  8. Key Currency
  9. Currencies Direct
  10. VertoFX

The average markup fees charged by these companies ranged from near 0 to 5% of the amount being transferred. 

Banks generally charge $45 to $60 transfer fees per transaction.  Considering the pricing, your bank may be the best option for transferring larger amounts. 

For smaller transactions, using a money transfer service would likely cost less.  Bear in mind, however, that currency exchange fees may also need to be considered when looking for the best deal.  Banks’ exchange fees tend to be higher.

Money transfer sign in neon lights

DIY is not the answer

Perhaps you’re thinking that going through your bank or shopping around for a money transfer service is too much trouble.  It would be easier to simply do it yourself.  This is not recommended.

It should go without saying, but sending cash is a bad idea. 

First, those responsible for checking packages received from other countries could simply abscond with your money.  You could send a cashier’s check, but if it gets lost in the mail you’ll need to pay a fee to cancel it. 

Sending a money order could work, but they, too, can get lost in the mail.  There can also be issues with cashing in money orders.  Not all countries accept them even if they are designated as “international” money orders. 

As with other options, personal checks can get lost in the mail.  And, if they fall into the wrong hands, someone you don’t know could end up with your name, address, phone number, and bank account and routing numbers.

If someone is paying you for goods or services and you receive a money order or check, make sure the instrument clears and you receive your funds before delivering your product.  Bad checks are always a concern and fraudulent payment instruments can appear to be authentic when, in fact, they are worthless.

Remember, not all threats target the transfer service providers

Not all risks associated with international and domestic money transfers are technical in nature.  Many involve the targeting of individuals rather than the technology used by the transfer service providers.  

Cybercriminals operating from countries where they have no fear of extradition or prosecution are always coming up with new ways to deceive and steal from their victims. 

They contact their potential victims via email, text, social media messages, and even directly by phone to try and convince them to send money.  These criminals will often convey a sense of urgency to cause their victims to act hastily without thinking things through or taking time to verify the claims they make. 

You should never transfer funds to someone you don’t know or whose identity you cannot verify, regardless of the story they tell you.

If, for whatever reason, you are asked to make a payment by purchasing prepaid debit cards, don’t do it.  This is a preferred method of electronic payment among cybercriminals because of the anonymity it provides. 

The victim is directed to purchase debit cards from specific vendors, then provide the card numbers to the scammer so their value can be redeemed.  Being asked for payment via prepaid debit card is one sure sign that you are dealing with a cyber criminal.  

world map of money transfers

Final thoughts…

Bad actors constantly target the financial sector.  The number and frequency of attacks is growing.  Unrest in Europe and threats made by nation state actors are certainly reason for concern. 

This notwithstanding, your bank can still provide secure international money transfer services.  Other providers of these services are also readily available.  You simply need to do a bit of research to find a provider that offers secure services for a reasonable fee. 

“Top 10 lists” and customer reviews are available to help you make an informed choice. 

When you do transfer funds, be sure to make use of the tracking number you are given.  Monitor your transactions from start to finish and be on the lookout for anything suspicious.  Use the tracking number to confirm that the funds have been delivered to the intended recipient.

Finally, remember that not all attacks target the providers of these services.  Scammers use social engineering tactics to try and persuade their victims to send them money.  When someone contacts you and indicates that you need to send funds immediately to resolve some issue or to collect a prize of some sort, chances are very high that you’re dealing with a criminal.

About the Author:

Reese Kimmons is an experienced IT executive with an AAS in Applications Programming, a BS in IT Management and an MS in Information Security and Assurance. During his time in the IT industry, Reese has earned certifications in ethical hacking, forensics investigations, ISO/GIAC, and Cisco networking.

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