Many times, we need to send money abroad for various purposes such as embassy fees, university application fees, prepayment of university or school tuition, purchasing or renting property before migration, and sending money to our loved ones abroad.
Similarly, there are occasions when we need to receive money from abroad, such as when our spouse or relatives are outside the country and wish to transfer funds to us.
In normal circumstances, all of these transactions are conducted through bank transfers. Just like transferring money domestically, you would typically visit a bank branch, initiate the transfer to an international account, and collect the receipt. However, Iran is not in normal circumstances. Due to banking sanctions imposed by many major European and Asian countries, we cannot have any direct financial transactions with these countries
In this situation, how can one send money abroad?
Although there are various methods available for this purpose, the best, safest, and most convenient way is to use money transfer services at exchange offices. Yes, Iranian exchange offices not only convert currencies but also have extensive activities in transferring money abroad.
In this article from Hafez Exchange, we intend to discuss more about the topic of money transfers at exchange offices and highlight important points surrounding this issue. Stay tuned with us
The concept of money transfer through exchange offices:
Due to banking restrictions, direct transfer of money between Iran and foreign countries is not possible. Therefore, exchange offices have become entities that undertake this task.
Individuals who need to send money abroad have various solutions available, with the best option being the use of exchange services.
Exchange offices operate similar to banks. They are private economic entities with branches in various countries, including Iran. Their activities, both domestically and internationally, are fully licensed and thus not affected by international sanctions.
Money transfer through exchange offices works as follows: You deposit an amount into the account of an Iranian branch, and another branch in the destination country sends an equivalent amount in dollars (or any other official currency) to your recipient. It doesn’t matter if the recipient is an individual, institution, or organization.
Interestingly, the recipient doesn’t necessarily have to collect the transferred money from the foreign branch of the exchange office and deposit it into their bank account themselves. The exchange office, acting as your legal representative, handles this process. For example, if you intend to pay your university tuition fees (e.g., in Canada) before departure, after receiving your payment in Iranian rials, Hafez Exchange will directly deposit the equivalent amount in dollars into the university’s bank account and provide you with the receipt.
Today, Iranian international exchange offices have greatly expanded, facilitating financial exchanges between Iran and nearly any other country
Also read: Cryptocurrency regulations in Canada
Types of money transfers in exchange offices:
Money transfers, or commonly referred to as currency transfers, in exchange offices are generally divided into two types:
- Inward Currency Transfer (Import): When someone from outside the country sends money through an exchange office or any other method to an Iranian recipient, the money received by you is classified as an inward currency transfer. As the recipient, after identity verification and confirmation of details, you can receive the inward currency transfer from the exchange office.
- Outward Currency Transfer (Export): If you intend to send money from Iran to a recipient outside the country, your transfer is categorized as an outward currency transfer. In this case, you need to visit your chosen exchange office branch, complete the necessary forms, verify your and the recipient’s identity information, and send the money as an outward currency transfer to the foreign recipient (individual or organization). In the transfer form, you must specify details such as the destination country, currency type, exact amount, and complete recipient information.
Note: The terms “export” or “import” of currency transfers are not exclusive to exchange office transactions but apply to all methods of financial transactions with foreign entities
Types of currency transfers in exchange offices can also be categorized based on the speed and timing of transfer:
- Telegraphic Transfers (T/T): In this method, dollar transfers are executed quickly and move between the sender and receiver in the shortest possible time. While these transfers are fast, their security may not be fully guaranteed.
- Demand Drafts (D/D): These dollar transfers are internationally moved with high and guaranteed security. The main difference from T/T transfers is that D/D transfers take a slightly longer time to send.
For instance, using digital currencies and online exchange services for transferring money as cryptocurrency, this transfer is considered direct and performed rapidly. But in bank and exchange service applications, having to first receive the money and then convert and move it can extend this process by several days.
Therefore, if you seek a secure method, we recommend you opt for indirect currency transfers. However, if quick money transfer (same day) is important to you, direct currency transfers will be more advantageous.
Currency transfers at exchange offices are typically categorized as indirect currency transfers, with the transfer process usually taking between 1 to 2 business days at most
“Functioning of Money Transfer in Exchange Offices
Money transfer in exchange offices operates much like services offered by banks. Exchange offices, as independent businesses, maintain multiple international accounts and have branches in various countries including Iran and abroad. To initiate a money transfer in an exchange office, you simply deposit the desired amount into their Iranian branch account. Subsequently, the foreign branch withdraws an equivalent amount in dollars or another currency from its treasury.
Since both branches belong to the same business entity, it’s natural that they have shared access to accounts. Moreover, as a legally recognized business in the financial sector, exchange offices have access to various methods of transferring money and execute these transactions promptly.
It’s important to note that the banking services offered by exchange offices are not limited solely to transferring money abroad; they also facilitate deposits into accounts for you.
For example, consider needing to transfer funds to a seller’s bank account in Canada for purchasing real estate. Due to the absence of direct bank exchanges between Iran and Canada, you cannot directly deposit the amount into the recipient’s account. In such scenarios, the exchange office acts as an indirect intermediary. In this role, they legally represent you by depositing the transferred amount from your Iranian account into the recipient’s bank account.
In this way, although exchange offices are not banks, they effectively handle bank remittances on your behalf.”
Also read: Guide to transferring money to Canada using cryptocurrency
Advantages of Money Transfer via Exchange Offices:
- High Security: Money transfers through exchange offices benefit from very high security as they operate under legal frameworks and licenses.
- Reasonable Speed: Although indirect, money transfers via exchange offices typically offer acceptable speed. While some unreliable exchange offices might take up to 4 or 5 business days, reputable ones like Hafez Exchange can complete transfers within 1 to 2 business days.
- Tracking Capability: When using exchange office services, you can track the status of your transfer in real-time using a tracking code.
- Geographical Flexibility: Exchange offices usually have few geographical restrictions, allowing money to be transferred to most foreign countries.
- No Daily Transfer Limits: Exchange offices generally do not impose daily transfer limits.
Disadvantages of Money Transfer via Exchange Offices:
- Commission Fees: Exchange offices charge commission fees for dollar transfers to foreign countries. While they have fixed rates for these services, most calculate their fees as a percentage of the transferred amount.
- Exchange Rate Fluctuations: Transferring money via exchange offices can take several days, during which exchange rates may fluctuate. The amount paid to the recipient by the exchange office is calculated based on the current exchange rate. For example, if the dollar price goes up within 2 days, the value of the paid amount in Iranian rials will decrease, or vice versa.
- Documentation Requirements: For money transfers via exchange offices, you always need to provide identification documents and accurate recipient information on specific forms. Preparing these documents (which may vary depending on the type of transfer) is not always straightforward.
Steps to Send Money via Exchange Office for International Transfer:
To send money abroad through an exchange office, you generally need to follow these steps:
- Check the Latest Exchange Rates: Obtain the latest buying or selling rates for the currency you wish to buy or sell on the official website of your chosen exchange office.
- Submit or Attach Photos of the Sender (Yourself) and the Receiver: Provide or attach photos of the sender (yourself) and the recipient on the relevant forms.
- Provide Receiver’s Details or Bank Account Number: Write down the recipient’s details or their bank account number in the destination country.
- Fill Out Forms Introducing the Exchange Office as Your Financial Representative Abroad: Complete forms that designate the exchange office as your financial representative abroad.
Ensuring Security and Data Protection in Money Transfers
One of the greatest advantages of money transfers through exchange offices is the guarantee of security throughout the transfer process. By choosing a reputable exchange office, you can rest assured that your money will securely reach its destination and settle into the recipient’s bank account. However, this assurance holds true only if you select an established, reputable, and fully legal exchange office.
Exchange offices are private commercial entities operating under international laws. This status enables them, as legal entities with licenses both domestically and internationally, to engage in economic activities without the constraints of international sanctions.
While the primary service of exchange offices remains currency exchange, they now also offer additional services such as money transfers and more.
The possession of legal licenses and insurance by these entities ensures that money transfers through exchange offices are the safest method for transferring funds between Iran and foreign countries, and vice versa.
Exchange offices are also obligated, as financial representatives, to protect all your personal information and guarantee its security. Without initial customer confirmation, an exchange office will never share personal information of either party with any other individual or organization.
Legal and Financial Considerations in Money Transfers
From a legal perspective, there are procedures and regulations that must always be observed when dealing with exchange offices:
- Presentation of identification and identity verification of both the sender and recipient is mandatory for every transaction. Therefore, you should always have your identification card and a copy of the recipient’s identification card with you.
- Legally, exchange offices are required to convert money at the current exchange rate. For example, if you deposited the equivalent amount in rials into the exchange office’s account two days ago, they will calculate it based on today’s dollar rate and transfer it to the recipient’s account accordingly.
- From a legal standpoint, the fee charged by exchange offices for currency exchange and transfer is an official charge that the customer is obligated to pay.
Additionally, it’s important to note that in most foreign countries, currency transfers are exempt from taxes because they are not considered part of the individual’s income. However, this exemption typically applies when the recipient is a family member (child or other relatives) and promptly reports the receipt of funds to the tax authority to avoid it being categorized as income.
Also read: Money transfer taxes in Canada
Frequently Asked Questions
What are the ways to transfer money abroad?
Apart from exchange offices being considered the best, safest, and one of the fastest methods for transferring money to/from abroad, other methods include using international financial systems like PayPal, Western Union, and others, as well as digital currencies. However, due to sanctions, the security and efficiency of these methods are not comparable to using exchange services.
Is direct bank transfer possible to Iran?
No, due to global sanctions against Iran, there are no direct banking relationships between Iran and major countries worldwide.
What are the fees for money transfer through exchange offices?
Fees vary between exchange offices, but on average, reputable offices charge between 2% to 5% of the total transfer amount as fees.
What are the limits on transferring money from Iran?
If you intend to carry cash as a traveler, you can only take up to 5,000 euros per flight from Iran. International financial systems and credit cards typically have a daily maximum transfer limit of around 10,000 dollars. In contrast, money transfers through exchange offices have no restrictions and no specific maximum limit.
Summary
In this article, we have provided useful information about money transfer through exchange offices. Using exchange services is considered the best method for transferring money abroad, offering numerous advantages. We hope this article has been helpful to you
