banking currency is-x-legal money-laundering
On the legality of replacing international transfers with intranational ones
<p>Here is a fictional story based on <a href="https://money.stackexchange.com/q/125991">this question</a>.</p>
<p>Andrey is a Russian programmer residing in Germany who makes regular wire transfers to his father, Boris, who resides in Russia. Chris &amp; Dasha, a married couple, also reside in Germany. Dasha is Russian and would like to wire money from her Russian bank account to her husband's German bank account.</p>
<p>Pictorially, we have two <strong>inter</strong>national transfers.</p>
<p><a href="https://i.stack.imgur.com/BmBwa.png" rel="noreferrer"><img src="https://i.stack.imgur.com/BmBwa.png" alt="two international transfers" /></a></p>
<p>However, if Andrey and Chris became acquainted, we could have two <strong>intra</strong>national transfers instead, as depicted below. Boris and Chris would receive the same amounts as before.</p>
<p><a href="https://i.stack.imgur.com/MxEoZ.png" rel="noreferrer"><img src="https://i.stack.imgur.com/MxEoZ.png" alt="two intranational transfers" /></a></p>
<p><strong>Would this be legal?</strong> I am interested not only in the pair of jurisdictions Germany-Russia, but also UK-Russia, US-Russia, or <strong>X</strong>-<strong>Y</strong> in which jurisdictions X and Y are chosen so that this thought experiment is interesting (in some sense).</p>
<p>Some thoughts and other (subsequent) questions:</p>
<ul>
<li><p>If Andrey and Chris do know each other, Andrey's transfer to Chris can perhaps be viewed as a <strong>donation</strong> to an acquaintance. However, Dasha does not know Boris. Could her transfer be viewed as a donation as well?</p>
</li>
<li><p>If Andrey and Chris do <strong>not</strong> know each other but only know <strong>of</strong> each other, Andrey's transfer to Chris is somewhat equivalent to Dasha's transfer to Boris, though subject to the laws of Germany.</p>
</li>
<li><p>It certainly is <strong>not</strong> the case that these intranational transfers are payment for goods or services. If they cannot be viewed as donations either, could they be viewed as <strong>money laundering</strong>?</p>
</li>
</ul>

<p><strong>Would this be legal?</strong></p>
<p>Probably at this scale. Not necessarily extrapolated to a large commercial operation involving more parties.</p>
<p>At some point it becomes a payment system and a financial enterprise that becomes subject to financial regulation.</p>
<p><strong>Could her transfer be viewed as a donation as well?</strong></p>
<p>This is not a donation transaction and efforts to characterize it in that fashion would probably be disregarded by authorities.</p>
<p><strong>Could they be viewed as money laundering?</strong></p>
<p>The core element of money laundering is an effort to conceal the source of the funds for some purpose. It isn't clear if that would or would not be a motive.</p>
<p><strong>Other considerations</strong></p>
<p>A fairly common way to handle this kind of situation that is similar to what you suggest is called correspondent banking. Each side has an account in Russia and an account in Germany. Most day to day transfers happen by directing that money go from one German account to another German account, or from one Russian account to another Russian account.</p>
<p>The big benefit of correspondent banking, aside from being transparent, is that it avoids currency exchange risks, fees and considerations for small, ordinary transactions.</p>
<p>Of course, it simply isn't difficult or expensive to simply wire money from Russia to Germany, and vice versa, now and then. There are not strict currency controls, although there are some potential disclosure requirements. One reason for you, or authorities to worry about characterization of the transactions as money laundering is that if you have nothing to hide, simple wire transfers would be the usual and ordinary way of handling matters.</p>

<p>With a legal contract in both countries,</p>
<ul>
<li>listing the purpose (transfer of funds) and accounts being used ;</li>
<li>togeather with a tax consultant (Steuerberater) protocoling the money transfers ;
<ul>
<li>who would satisfy queries from the banks (that it is not money laundering) and tax authorities (that it is not income)</li>
</ul>
</li>
</ul>
<p>would probably be doable since it would then be transparent.</p>
<p>The details would be dependent on the Jurisdiction of each party participating.</p>
