International Money Transfers

A client asks you to transfer $500,000 in sale proceeds to a bank account in another country. They provide the account details but say nothing about currency. You arrange the transfer, and the funds are converted to the local foreign currency. The client calls the next day: they wanted the money sent in Australian dollars.

Even small exchange rate movements can produce losses of thousands of dollars when funds are converted back to the client's preferred currency. The LPLC regularly receives claims from clients seeking to recover the shortfall, including the exchange rate spread and transaction costs, from the practitioner who arranged the transfer.

The error follows a predictable pattern. A client provides bank account details for an overseas transfer but does not specify the currency. The practitioner assumes the client wants the funds converted to the local currency of the recipient account, because that is the most common arrangement. The practitioner arranges the transfer without confirming. The client later says they wanted the funds sent in Australian dollars.

This arises most often when paying proceeds of sale of property or a business, settling litigation, or distributing a deceased estate.

The assumption is understandable. Converting Australian dollars to the local currency is standard practice for most international transfers. But standard practice is not the same as the client's instructions, and proceeding without written confirmation creates a file that is difficult to defend.

Practitioners using Property Exchange Australia Limited (PEXA) for property settlements should note that PEXA's international transfer function, offered through a third-party foreign exchange provider, does not support transfers in Australian dollars. If the client's instructions are to send funds in Australian dollars, practitioners must arrange the transfer outside PEXA.

When taking initial instructions on an international payment

Confirm in writing the currency in which the client wants the funds sent. Do not proceed until the client has responded. Use wording such as:

"Please confirm whether you would like the funds transferred in Australian dollars (AUD) or converted to [insert foreign currency]. We will not arrange the transfer until we receive your written instructions on this point."

Provide the client with a written statement that the practice does not give financial advice on currency conversion, exchange rates, or the amount to be received in foreign currency. Use wording such as:

"[Firm name] does not provide financial advice on currency conversion, exchange rates, or the amount that will be received in foreign currency. Exchange rates, fees, and commissions vary between providers and change daily. You may wish to make your own enquiries or seek independent financial advice before instructing us to proceed."

When instructing the bank or transfer provider

Act promptly to arrange the transfer after receiving instructions about the currency. Any delay may impact the exchange rate and the money ultimately received.

Give clear written instructions to the bank or money transfer service specifying the currency for the transfer. Confirm those instructions match the client's written instructions on the file.

Before settlement or distribution

If the matter involves a property settlement or estate distribution, check the file for the client's written currency confirmation before requesting settlement figures or authorising payment. If no written confirmation is on the file, do not proceed until it is obtained.

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