Page last updated at 11:21 GMT, Tuesday, 9 February 2010

Warning issued by FSA on sending money overseas

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About 6bn a year is sent abroad by UK residents each year

People transferring money abroad should only use services authorised or registered with the Financial Services Authority, the regulator has warned.

People in the UK send about £6bn a year overseas to their families, friends and communities.

Fresh advice on how to do this securely has now been published in a booklet by the FSA.

It highlights the six main ways of sending cash overseas, including normal bank and building society services.

The international development minister, Gareth Thomas, said as much as a third of the remittances - about £2bn - was sent via "informal" channels, rather than regulated ones.

There are hundreds of money transfer businesses in the UK, and choosing one can be a difficult decision for customers
Dan Waters, Financial Services Authority

"For many of the world's poorest families, money sent home by loved ones is the main source of income," he said.

"Families in the developing world rely heavily on this money for their day-to-day expenses such as food and medical bills."

India, Pakistan, Nigeria, Jamaica and Ghana are among the main developing countries that receive money from people living in the UK.

How to choose

Providers of credit and debit cards, pre-paid cards and bank and building society accounts which can be used to move money abroad have always been regulated.

But since last November the FSA has regulated the other types of services, such as money transfer companies and foreign exchange brokers.

Now they must either be authorised by the FSA, or registered with it - depending on the value of the transactions they handle each month.

The aim of the regulation is to ensure that the people running the services have no criminal background and that they will safeguard their customers' money when they are required to do so.

The FSA's advice highlights the costs of sending money abroad, as the process usually involve fees, sometimes for both the senders and the recipients, and can also leave customers vulnerable to fluctuating exchange rates.

"There are hundreds of money transfer businesses in the UK, and choosing one can be a difficult decision for customers," said Dan Waters of the FSA.

"The FSA's Sending Money Safely leaflet gives simple, straightforward guidance which will help customers check out businesses before they hand over any money."

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