Sending Money Overseas article discussion

bristolian

colsten said:

be very careful - none of the currency transfer services is FSCS protected. If you want FSCS protection (which I would always want if I can have it), Starling Bank is your best option. They have the same, or better, rates as Transferwise. You have to have a UK address to get a Starling account though.

Starling started using Wise (formerly called Transferwise) to handle international transfers in 2017: https://www.wired.co.uk/article/transferwise

The amount Starling quoted me yesterday was identical to Wise's quote (on Monito), so I guess Starling still uses Wise.

Given that, is Starling's FSCS protection actually any help? It must cease as soon as your money leaves Starling and arrives at Wise, so it's no different from sending funds from any FSCS-protected account to Wise.

The only advantage I can imagine to using Starling + Wise over any other bank + Wise would be if Starling does money-laundering checks instead of Wise: in that case, your funds would still be protected whilst the checks were being done. But I don't know which of them does the checks. (Also, recent reviews suggest Wise has become a nightmare: https://www.consumeraffairs.com/finance/transferwise.html)

A more general issue is what happens when your money leaves any FSCS-protected institution on its way abroad. I gather it can go via partner banks or by SWIFT, SWIFT Go, through an FX broker, and maybe other options, but is there any protection?

The speed of options on monito ranges from "minutes" to days; almost all take between 1 and several days, but larger amounts can take up to 10 days. For the larger amounts I imagine the money is mostly sitting somewhere waiting for someone to check for money-laundering.

According to wikipedia's SWIFT page: "Though widely utilized, SWIFT has been criticized for its inefficiency. In 2018, the London-based Financial Times noted that transfers frequently "pass through multiple banks before reaching their final destination, making them time-consuming, costly and lacking transparency on how much money will arrive at the other end."" https://web.archive.org/web/20190927142951/https://www.ft.com/content/631af8cc-47cc-11e8-8c77-ff51caedcde6

If your funds take multiple days to pass through multiple banks outside the UK, the part of the trip that's FSCS-covered might be quite small.

Even in the simplest and seemingly-safest case, if you had, say, HSBC accounts in your name in both the UK and the destination country, in the very unlikely event HSBC failed in the other country, the FSCS would be no help (though hopefully the other country would have its own equivalent to FSCS).