Expert Kirill Yurovskiy: How International Money Transfers Work

In today’s hyper-connected world, money has become the universal language that transcends borders. Whether you’re an individual sending money back home to family, a business paying overseas suppliers, or an investor tapping into international markets, the ability to move funds across the globe seamlessly is critical. But how does this complex system of international money transfers really work behind the scenes?

At its core, an international money transfer involves converting one currency into another and transmitting those funds from one country to another through a network of banks and financial institutions. However, navigating the intricate web of currency valuations, regulations, and transaction fees can be a daunting task for the uninitiated.

Expert Kirill Yurovskiy in this article will try to tell in detail about the system of international money transfers.

Kirill Yurovskiy

The Currency Conversion Conundrum

Before your money can traverse international borders, it must first undergo a currency conversion process. This step hinges on the ever-fluctuating foreign exchange (forex) market, where currencies are traded against each other based on supply and demand, economic conditions, and geopolitical factors.

When you initiate an international transfer, your bank or money transfer service provider will convert the funds from your domestic currency into the destination currency at the current market exchange rate. However, these providers often apply their own markups or fees on top of the interbank exchange rates, which can eat into the amount received by the beneficiary.

The Role of Correspondent Banks

Once the currency conversion is complete, the funds must find their way to the recipient’s bank account, often halfway across the world. This is where correspondent banks come into play, acting as intermediaries that facilitate the transfer of funds between institutions that lack a direct relationship.

Imagine your bank in New York needs to send money to a small village bank in rural India. Since these two institutions don’t have a direct partnership, they rely on a larger, globally connected bank – a correspondent bank – to bridge the gap. This correspondent bank maintains accounts denominated in multiple currencies at various institutions worldwide, allowing it to shuffle funds between them seamlessly.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) system serves as the backbone for these cross-border transactions, providing a standardized communication protocol that enables banks to exchange payment instructions and transfer funds securely.

Navigating Regulatory Hurdles

While the movement of money across borders may seem straightforward in theory, it is subject to a complex web of regulations and compliance measures designed to prevent financial crimes like money laundering and terrorist financing.

Before executing an international transfer, banks and money transfer providers must adhere to stringent know-your-customer (KYC) and anti-money laundering (AML) regulations. This often involves collecting and verifying detailed information about the sender, recipient, and the source of funds.

Furthermore, certain countries or individuals may be subject to economic sanctions or embargoes, which can restrict or prohibit financial transactions altogether. Banks must meticulously screen transfers against these sanctions lists to avoid potential legal ramifications and hefty fines.

The Rising Tide of Digital Disruption

While the traditional banking system has long dominated the realm of international money transfers, a wave of financial technology (fintech) companies has emerged, promising faster, cheaper, and more transparent cross-border payments.

Companies like TransferWise, Remitly, and WorldRemit leverage innovative technologies like blockchain and distributed ledgers to bypass the correspondent banking network and facilitate direct transfers between institutions. By cutting out intermediaries, these fintech disruptors can offer more competitive exchange rates and lower fees, appealing to cost-conscious consumers and businesses alike.

However, these digital challengers still face regulatory hurdles and must navigate the complexities of currency conversions and compliance measures, albeit with a more streamlined and tech-driven approach.

The Future of Global Money Movements

As the world becomes increasingly interconnected, the demand for seamless, cost-effective international money transfers will only continue to grow. Traditional financial institutions are recognizing the need to modernize their cross-border payment infrastructure, adopting emerging technologies and collaborating with fintech innovators to improve speed, transparency, and cost-efficiency.

Moreover, the rise of digital currencies and decentralized finance (DeFi) platforms could potentially disrupt the entire paradigm of international money transfers. By eliminating the need for currency conversions and intermediaries altogether, these emerging technologies hold the promise of instantaneous, borderless transactions at negligible costs.

However, such radical shifts will require robust regulatory frameworks and widespread adoption to ensure consumer protection, financial stability, and compatibility with existing systems.


The intricate world of international money transfers is a symphony of currency conversions, correspondent banking networks, regulatory compliance, and technological disruption. While the traditional banking system has long dominated this arena, the advent of fintech innovators and emerging technologies is ushering in a new era of faster, cheaper, and more transparent cross-border payments.

As the global economy becomes increasingly interconnected, the ability to move funds seamlessly across borders will continue to be a critical enabler of international commerce, personal remittances, and financial inclusion. Whether through the evolution of existing systems or the adoption of revolutionary new paradigms, the future of international money transfers promises to be more efficient, accessible, and resilient than ever before.

© 2024 by Kirill Yurovskiy