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How to: Send money to the UK.


If you are a private client who wants to use a foreign exchange company to convert a foreign currency into pounds sterling (GBP) and to credit those funds to a GBP denominated account in the UK then here are some guidelines as to what you should expect, indications as to some of the questions you will be asked, and pointers as to how best to prepare for this undertaking. This post also covers how to handle simply dealing with a UK based broker when your money is anywhere but.

REGISTRATION:

Most individuals sending money for the first time do so on the back of a referral or recommendation from a friend or a trusted source like a solicitor or financial adviser. It can be an anxious time sending money off into the abyss to a company whose history, competency and authenticity can only be verified, for the most part, online or by word of mouth.

When you are asked to register with a foreign exchange firm you should be equipped with certain bits of verifiable information as well as your own questions. For instance, you can ask who the company bank with and attempt to verify the authenticity of that relationship – there is genuinely no harm in calling the bank with whom a broker might pro-port to do business.

You will be provided with their FCA registration or authorisation number via their website or an application form. In a practical sense (in terms of the way you might deal with the company) there is little difference between one being ‘registered’ and one being authorised…however, behind the scenes the authorised company will be more stringently regulated by the Financial Conduct Authority. They will have been vetted to a greater extent and their banking and best practice policies will be more rigorously overseen. You might take confidence from this, but it is unlikely to make any difference to the rate you will receive at the end of the day - the rate is determined by the front end operations. So, it is Prime Cap's relationship with our transaction partner that gives you the better rate. If you just called up to deal with our partners directly you would get much the same rate as your bank might offer.

Many customers get swept up in comparing their currency company of choice purely based on the competitiveness of the rate. Bear in mind that until you become a customer there is very little stock in the indicative rate of exchange you are quoted. Once you’re registered you can ask to buy or sell at the rate quoted, hence you are likely to get a far truer understanding of how good or bad the rate is. If the rate is too close to your bank’s rate then you can be confident the company isn’t pricing it as competitively as they should.

For instance, if your online banking platform tells you that the exchange rate is 1.20 and you see on Google that the rate is 1.25, the broker that gives you a rate of 1.24 rather than the one that offers 1.21 is the most competitive. It is a rule of thumb and your bottom line is that this whole process should actually be saving you money. Why use a specialist otherwise?

You may be asked for copies of documents to verify your identity and your current residential address. This used to be standard and it would be more alarming if you weren’t asked for these because they are the means by which a company can electronically verify who you are - however, lately the advances in online data storage/mining and sharing between data collecting entities means that many FX businesses, Prime Cap included, can usually verify your details without the need for copies of things like passports.

Bear in mind that when we refer to 'electronic checks' we do not mean a a credit check, as an FX firm doesn’t need to know your credit worthiness, but it verifies your public and statutory ‘footprint’ on a points based system. Sometimes you might score too few points and this can be because you’re a tenant and don’t handle the utilities for where you live, you’re not on the electoral role…or simply that your driver’s license address does not match your utility bill address thereby making the former invalid. If you wish to use an FCA regulated firm and/or a broker like Prime Cap then, sadly, these hoops must be jumped through.

AMOUNT:

Unlike when sending money out from the UK to a foreign currency account, when using a UK based foreign currency company you need to bear in mind that your overseas bank will, in effect, need to make an international payment in order to get your foreign currency to the foreign currency account of your broker.

Invariably the above incurs a fee or more than one set of fees. It is rare that your foreign bank will ask you to pay all the fees deductible 'up front' and this is because they’re not the institution that necessarily applies all the charges. Imagine going to your UK bank and saying you want to send a payment abroad. They will normally charge you between £10 and £35 to do that and they will usually deduct that cost from your account rather than from the amount of money you want to send. Fair enough, but you need to make sure that this is the case when you are sending funds to the UK otherwise your broker may receive less than you thought you were sending.

Also, not every bank in the world holds its own foreign currency accounts as a standalone institution. The way a payment generally works is that the currency you’re sending doesn’t actually leave the country in which it is used. Most big banks holds accounts in the major and indeed minor trading hubs of the world. For EUR it is Frankfurht, for USD New York, sterling London. If I want to send US dollars to South Africa, USD are not electronically wired directly to South Africa. They are credited to the USD account held by the South African bank I am sending to; their USD account is either held at their branch, or with a different bank, in New York and then paid out from the corresponding ZAR account of that SA bank, domestically.

In some instances the foreign bank you want to pay might not actually have their own branch in the country/currency you’re paying. So, this SA bank might only hold a USD account with another bank in the US. They hold an account with another bank which, in turn, credits them in their own currency. So, in a number of different instances you may have more than one bank performing routing services for another.

Unfortunately this can leave you vulnerable to fees being deducted from the amount being transferred…because the intermediary banks involved aren’t going to inform you of their fees prior to you sending funds. Their communications structure that exists between banks does not work like that.

Now, when one is sending money to a far flung account or even just one in the US (for instance) one can get a quotation on what amount of routing costs might be deducted from a payment and, on the clients acquiescence, one can pay to cover those costs at source, thereby ensuring that the full amount being sent arrives with the beneficiary. This is not really possible in the same way when sending money to the UK or to your currency broker because you don’t know which banks will be involved in the transmission/routing.

You can’t be certain, beyond a reasonable measure, that the full sum will arrive at its destination intact.

This tends to be why FX companies ask you, when sending money to the UK for conversion, to send money before you agree a contract for conversion with them. If you were to agree a rate and strike a deal and the amount of money that arrived was less than the contract stipulates then you find yourself in an embarrassing position.

You can’t very well send a top up as this in itself would be subject to an additional fee too and it just wouldn’t seem worth it. So, you could send fractionally more than you want to convert and then work out, for future reference, what might be taken off. You might be able to ask your sending bank to ‘cover all fees’ but, in this broker’s experience, this can be misinterpreted and doesn’t always have the desired result.

BANKING CO-ORDINATES:

Once you have become a registered client of an FX firm they may well be happy providing you with details of the appropriately denominated client trust account for you to send your funds to. You won’t need the details until such a time as you are ready to send funds…but it can’t hurt to have them at the ready.

On a slight aside: Fear not, an FX firm is not obligated to reveal anything to anyone about your tax arrangements, so, whilst it is unlikely you would even talk about that sort of thing with your FX broker, do not be put off using a non-banking firm because of any perceived declaration the broker might have to make. Your tax position, whether on or off shore, is your own business and a broker won’t need to ask you about that. Prime Cap has very strong ties to specialist international tax practices and practitioners...so if you would like some detail on that side of things then please simply ask your dealer when next you speak.

To send a payment with the EU (at the time of writing) you will need an IBAN and SWIFT code from your broker. These are the two crucial pieces of information. Frankly, other than for the purposes of referencing the debit on your account, the name of the account you're sending your funds to isn’t even needed to successfully execute a payment to the UK. For brokers like Prime Cap you'll be sending funds to the account of our transaction partner. The account will be in their name and not that of Prime Cap,

You would be well advised to put your own name or the unique client reference number you’re provided on registration as the reference on any payment you send. It is of course advisable to inform your broker as and when you make a payment to them and, if you are doing so through an online banking facility, take a screen shot of the execution page and provide this to the broker so that they can cross check it when they see funds in.

CLEARANCE:

Once your money arrives with a broker and, provided you are registered fully with them, they should be in touch to confirm receipt and discuss the rate of exchange at which they can convert your funds. Our online trading software will actually show you the balance held on account. You can straight away trade it if you want to, or simply call us to chat through the rate and what is going on across the markets.

A broker won’t be at liberty to ‘apply’ your funds to their internal system until you’re registered, so, if you are not already fully registered with them, you won’t be able to convert funds prior to the completion of the registration process.


Once the money is ‘in’ it is rather a simple process. You confirm the rate verbally or electronically with your broker. Your broker then buys the currency you want at the rate he quotes. Bear in mind that the contract the broker is using will tend to be a ‘SPOT’ contract unless you expressly want to be able to pay your GBP account the same day. Depending on the liquidity of the broker he may be able to pay funds out to you the same day or he may elect himself to execute a same day contract because he knows he doesn’t need to wait for you money to arrive.

You provide him with the relevant banking details. They could be in the UK or abroad because although you have sent funds to the UK you may be buying a currency other than GBP and your beneficiary may not be in the United Kingdom. Just because your broker is located in London doesn’t mean that puts any cap or limit on his ability to deal internationally for you.

#uk

Prime Cap Payments Limited (T/A Prime Cap | Prime Cap Payments | Prime Cap Global Payments) is registered in England and Wales No: 10755730. Registered address: 27 Old Gloucester Street, London, WC1N 3AXPrime Cap is partnered with, and a programme manager of, Ebury Partners UK Limited who provide Prime Cap's FX and payment services.  Ebury Partners UK Limited is authorised and regulated by the Financial Conduct Authority as an Electronic Money Institution (Financial Services Register No. 900797) and is registered in England and Wales (registered no. 7088713). Registered office: 3rd floor, 100 Victoria Street, Cardinal Place, London, SW1E 5JL.  Ebury Partners UK Ltd is registered with the ICO with registration numnber ZA345828.