How do I protect myself from a scam if I want to help a relative?
"For some reason can't transfer it directly to his account overseas (something to do with security codes, authorized payees and expired cards). Don't become someone's financial intermediary. Find out exactly why he can't transfer the money himself, and then if you want to help him, solve that problem for him. Helping him fix his issue with his expired card, or whatever the real problem is, would be a good thing to do. Allowing him to involve you in the transaction, would be a bad thing to do.  Possible problems which might be caused by becoming directly involved in the transaction: -The relative is being scammed themselves, and doesn't realize it / doesn't realize the risks, and either wants you to take the risk, or simply thinks there is no risk but needs administrative help. -The person contacting you is not the relative - perhaps they are faking that person's identity, and are using your trust to defraud you. -The person is committing some form of fraud, money laundering, or worse, and is directly trying to defraud you in order to keep their hands clean. -The transaction may be perfectly legal, but is considered taxable in one or more countries. By getting involved, you might face tax filing obligations, or even tax payment obligations. -The transaction may be perfectly legal and legitimate, but might accidentally get picked up as potential fraud by a financial monitoring system, causing the funds to be held, and your account to be flagged for further investigation, creating headaches for you until it becomes resolved. There are possibly other ways that this can go awry, but these are the biggest possibilities I can think of. The only possible 'good' outcome here is that everything goes smoothly, and it works exactly as well as if your relative's ""administrative problems"" were solved first, and the money went through his own account. Handwaving about why your account is needed and his is faulty is a big red flag. If it is truly just an administrative issue on his end, help him fix that issue instead." "What can I do to help him out, but at the same time protect myself from any potential scams? Find out why he can't do this himself.  Whether your relative is being sincere or not, if he owns both accounts then he should be able to transfer money between them by himself.  If you can find a way to solve that issue without involving your bank account, so much the better. Don't settle for ""something about authorized payees and expired cards.""  Get details, write them down.  If possible, get documents.  Then go to a bank or financial adviser you can trust and run those details by them to see what they have to say.  Even if there's no scam, if what he's trying to do is illegal (even if he doesn't realize it himself) then you want to know before you get involved.  You say you're willing to deal with ""other issues"" separately, but keep in mind that, even if there's no external scam here, those ""other issues"" could include hefty fees, censures on your own account, or jail time. Ask yourself: Does it make sense that this relative has an account overseas?  I don't have any overseas accounts, because I don't do business in other countries.  Is your relative a dual-citizen?  Does he travel a lot?  What country is the overseas account in?  How long has he had this account?  What bank is it with?  Where the money is going is just as important as how it gets there (ie: through your account.)  Arguably more so. Keep in mind that many scammers tell their marks not to share what's going on with anyone else.  (Because doing so increases the odds of someone telling them to snap out of it.)  It's entirely possible he's being scammed himself and just not telling you the whole story because the 419er is telling him to keep it quiet.  (Check out that link for more details on common scams that your relative may be unwittingly part of, btw.) Get as many details as possible about what he's doing and why.  If he's communicating with anyone else regarding this transfer, find out who.  If there are emails, ask his permission to read them and watch for anything suspicious (ie: people who can't spell their own name consistently, constant pressure to act quickly, etc.)" "Let's summarize your relative's problem: How is this possible? If both of those statements are true, then he should be able to explain exactly why those statements are true, and then you can explain it to us, and then we can all nod our heads and admit, ""Wow, that makes sense. Proceed if you want to."" But until that happens I suggest you take the advice I offered in the first paragraph of this answer." Since you mentioned that it is your close relative, he has never done enything dodgy and is wise with his money, then I would take it that you have some implicit trust in him. Now your options in this case are limited to either saying an outright no, which may impact familial ties adversely or to do as he has requested. One way could be to ask him for a mail requesting a short term loan and then transfer the money to his account. Then after a few days/weeks he repays the money back to your account. Now, this may or may not be 100% black & white depending on the legalities of your country but in most countries/cultures giving and taking of personal loans between friends/families is quite common. "Mostly ditto to @grade'eh'bacon, but let me add a couple of comments: Before I did anything, I'd find out more about what's going on. Anytime someone tells me that there's a problem with ""security codes or something"", I get cautious. Think about what the possibilities are here. Your relative is being scammed. In that case, helping him to transfer his money to the scammer is not the kind of help you really want to give. Despite your firm belief in your relative's integrity, he may have been seduced by the dark side. If he's doing something illegal, I'd be very careful about getting involved. My friends and relatives don't ask me to commit crimes for them, especially not in a way that leaves me holding the bag if things go wrong. Assuming that what is going on here is all legal and ethical, still there is the possibility that you could be making yourself liable for taxes, fees, whatever. At the very least I'd want to know what those are up front. As @Grade'eh'bacon, if he really has a problem with a lost password or expired account, by all means help him fix that problem. But become someone else's financial intermediary has many possible pitfalls."
"Government registering of financial institutions usually is to make the government safe (eg FINTRAC is watching for money laundering and financing terrorism) rather than to make it's customers safe.  Most governments have many levels of registrations and regulatory bodies. The most stringent requirements are usually obligatory only for banks, and they indeed often include precautions for insuring customer's deposits. Even this insurances have limits, eg in most EU countries the state guarantees deposits up to 100kEUR. If you deposit more and the bank flops - you lose everything over the limit. Companies like forex or currency exchanges usually make their best effort to avoid as many regulations as possible, just because it's costly. If a given company does have guarantee funds and/or customer insurance, it should be advertised and explained on their website. However the whole issue of trust is misguiding. You don't have to ""trust"" in your grocery store to shop there. There is no government guarantee that the vegetables sold will be tasty. If you buy and the product fells short of your expectations, you call it a loss and start shopping elsewhere. Financial services are no different than any other product. I recommend to your aunt to start small and see how it works. If a service turns out well, she can increase the amount sent through exchange and decrease amount sent through bank. But still, it's always prudent to send eg $1000 every week instead of $4000 once a month. It's more time consuming and cumbersome than having your bank do it - but it's the safety and convenience you're paying premium for." "Here are a handful of measures I take myself: I check my credit reports once in a while and look for anything out of the ordinary. If somebody calls me on the telephone claiming to be from my bank or credit card company, utility, etc. I ask for their number, check it, and call them back.  I don't give personal information to people merely claiming to be from a place I do business with. I never fill out ballots for free contests.  Most of the time these are scams.  When I get a call telling me ""you won a free cruise"" for a ballot I supposedly filled out at the mall, I say they're lying through their teeth.  For excitement, I'll sometimes buy a lotto ticket instead. I'm careful when I surf the web.  I don't give my personal information to web sites I can't trust.  If they look the least bit shady, I'm out.  Also, I use different passwords at different web sites.  I avoid using a password from a public terminal, but when I must, I change my password soon after. I'm careful when I download software.  I don't install anything I didn't get from a trusted source.  I pay for software when necessary, so finding a trusted source is not hard.  But, I've heard of people who – to save a buck – would download a pirated application from a shady warez site only to be ""gifted"" a trojan horse key logging or other spyware along with it. When I no longer need a bill, receipt, statement, etc. or any document containing personal information, I shred it, and I use a shredder that does a micro-cut, not just a strip- or cross-cut.  The micro-cut remains go in the green bin with wet and yucky organic waste. When I no longer need a hard drive, I use a secure wiping tool like Darik's Boot & Nuke before reusing.  If the drive isn't worth reusing, I'll wipe first then take apart with my Torx screwdriver.  Once I have the drive platter, I scratch the heck out of it.  Remains go to the community recycling depot. That's all I can think of right now; I probably missed a few :-) So, what do others do?  I'm curious, too." "Personally, I avoid making business deals with friends and relatives. There's just too much of a possibility that things can go wrong.  Let's assume that you're honest people and you have no intention of cheating your mother-in-law. Still, all sorts of things could happen that could make it difficult for you to repay the loan. You could lose your job. You could get some big medical expense. Etc. Then what happens? Then your financial problems become family problems. There's a strong temptation when people borrow from relatives to make paying the loan the lowest priority in their budget. ""I know I promised to pay \$X per month, but things are really tight right now and Mom should understand."" Maybe she does understand and can manage without it. But maybe not. And then it becomes a family fight. ""You promised you'd pay it back."" ""And we will, we're having a hard time right now. Can't you just give us a break?"" Etc. Or she might have some extra expense, and say, ""Hey, can't you pay a little more this month? I really need some extra cash."" ""I'm sorry, we're struggling just to make the regular payments, we can't."" ""Well I was willing to loan you all this money. The least you could do is pay me back when I need it."" Etc. You can end up ruining family relationships over money. Your wife can find herself in the position of having to choose whether to side with her mother or her husband. Etc. I'm sure plenty of people do things like this and it works out just great. But there are big risks. And by the way, apparently this was your idea, not your mother-in-laws. I wonder what her reaction is. Is she eager to help out her daughter and son-in-law and had nothing in particular to do with the money anyway? Or is she feeling very imposed on? It's one thing to ask relatives to let you borrow their car for the weekend. Asking someone to loan you $50,000 is a very big request. If one of my kids asked me to loan them $50,000 from my retirement fund, I'd consider that a very presumptuous request. (Unless they needed the money for life-saving surgery for my grandchild or some such.)" I would recommend against loans from family members. But if you decide to go down that path take care of the basics: This is a business decision so treat it like one. I would add that the situation you describe sounds extremely generous to your family member. I'd look at standard loan agreements (ie. in the marketplace) and model your situation more on them - if you do this, even with you paying a premium, you'd never come up with something as generous as what you have described. Most modern bank accounts can be set up to automatically pay bills for anyone, even someone who has no control over the account. This account would be in a trustee's name for the untrustworthy party. An automatic transfer could be set up from the source account to the irresponsible party's bank account to pay their allowance. It would be wise to remove all overdraft capability from the recipients account, but the whole system might help them learn some responsibility. There are more formal legal structures for forming a long term care-taking trust (with spendthrift provisions to protect the trust from legal action). The trust would need to be maintained by a trustee, resulting in maintenance fees on the principle. It might also help to know if there are legally recognized factors that impair the beneficiaries ability to take care of themselves (substance abuse, depression, age, mental impairment, etc.), but depending on state law, trusts can be designed very flexibly to cover the lifetime of an heir and even their heirs. Go to the police. This is fraud and is illegal. Sure, this will hurt your friend but better now then when he starts abusing of his position to fraud even more people... Original comment by Bakuriu sorry for not giving credit "I would write them a check or give them cash money. There are payment receipt forms available online, you can print one of have them fill it out and sign it. Just google ""private party receipt"".  Money transfer (via bank account or Paypal) is also an option, but in my opinion it's more convenient to meet up and handle it in person. If you want, you can have them meet you at a notary public's office (your local bank branch should have one) and have the receipt notarized. I don't think it's a scam, but make sure you are paying the right person." "It's pretty easy for foreign scammers to get a US phone number or email.   A domestic bank account is a little harder.  Very likely the direct contact  is a US citizen or a legal immigrant.  The Nigerian may be completely made-up to throw you off the scent.  And that person can be found, dunned, or deported, and there's even a small chance of reversing the bank transfers. It's also hard for foreign scammers to sound American on the phone, again suggesting a domestic scam or one with domestic agents.  If you or your son is willing to do a serious amount of skill-building and legwork, you can uncover evidence by filing a lawsuit.  Once you have done so, you can use the legal processes of discovery to force banks etc. to give you information they would never give willingly.  There are countless details.  Lawyers get paid to get the details right.   Suing actual people can backfire, they can countersue.  But since you do not know their real name, you would probably be filing a ""John Doe"" lawsuit.  ""John Doe"" is a placeholder: the idea being that you will later, through discovery, uncover the defendants' real names.  For a novice exploring the legal system for the first time, there's a big advantage - John Doe never countersues or quashes, he never gets in your way or wastes your time... heck, he never even shows up in court! And when you collect evidence via discovery, you can take that to law enforcement or immigration.   It goes without sayi-- well, there's no need to go into that.  Just realize you did goof, and make sure you learn the lessons." "With regard to your edit (although I didn't downvote): one way to reduce the security risk is to separate the payment from the ability to drain your account.  A considerable part of the security risk is inherent in giving people a number which is directly linked to a bank account where you keep all your money.  If you don't want that risk, don't do that.  Instead of (or in addition to) trying to reduce the chance of fraud, you can reduce the impact of fraud, even if it occurs, by not paying for things using the details of an account where you have all your money.  Trying to protect against fraud while keeping all your money in the account is sort of like carrying around thousands of dollars in cash in your wallet and then worrying about how to defend against robbery.  Yes, you can carry a weapon or hire a bodyguard, but it's probably simpler to just not carry that much money in the first place. You already mentioned one solution with your option #1, which is to just keep a small amount of money in a separate account and use that for online payments.  Assuming you can easily transfer money in and out of this account via online banking, this effectively is what you say you want in your edit: you log in to your bank online, but rather than ""informing it"" you're about to make a payment, you just transfer money in.  You'll probably have to keep a small amount of money in the account to keep it open, but if this is an important issue for you, that shouldn't be that big a deal. Another solution is a credit card.  With a credit card, you simply make the payment online.  In the US, if the merchant (or someone else stealing the info) makes fraudulent charges, the credit card company assumes the liability and the consumer suffers only the inconvenience of having to get a new card issued.  I don't know what the UK laws are regarding credit vs. debit fraud, but some sites I found seem to suggest that credit cards have fraud protection in the UK as well.  This is probably worth looking into if you are concerned about fraud." "You cant! There is the risk that between the time you get the check and the time you get to the bank that you will be murdered, have a heart attack, stroke, or aneurysm too.  And they are probably more likely than the bank going out of business between the time you deposit the money and get access to it. Prior to accepting the check I would do the following: Get a lawyer that specializes in finance and tax law.  There are some steps you can take to minimize your tax exposure.  There is little you can do about the immediate tax on the winnings but there are things you can do to maximize the return of your money.    You will want to do what you can to protect that money for yourself and your family.  Also create or revise your will.  This is a lot of money and if something happens to you people from your family and ""friends"" will come out of the woodwork trying to claim your money.  Make sure your money goes where you want it to in the event something happens to you. Get a financial planner.  This money can either make you or break you.  If you plan for success you will succeed.  If you trust yourself to make good decisions with out a plan, in a few years you will be broke and wondering what happened to your money. Even at 1% at 20million dollars that is 200k a year in interest... a pretty good income by itself.  You do not have to save every penny but you can plan for a nice lifestyle that will last, if you plan and stick to your plan. Do research and know what bank you are going to deposit the money in.  Talk to the bank let them know of your plans so they can be ready for it.  It is not every day that they get a 20 million dollar deposit.  They will need to make plans to handle it.  If you are going to spread the money out among several banks they can prepare for that too. When choosing that bank I would look for one where their holdings are significantly more than you are depositing.  I would not really go with one of the banks that was rescued.  They have already shown that they can not handle large sums of money and assuming they will not screw it up with my money is not something I would be comfortable with.  There were some nice sized banks that did not need a bail out.  I would choose one of them." I think there are two options: You invest for very close friends, who trust you completely. In this case, I don't see why you need legal formalities. Just take their money, invest, and return the profits (or losses) to them. They'll know that you invest it as well as you can (rather than spend it on your dream vacation), simply because they trust you. And in case they never get to see most of their money back - they'll know that you've tried your best, and won't be upset with you. You invest for people who trust you, but not 100%. In this case, don't take their money. If you lose (and in Forex, you most likely will) then you'll lose not only money, but also your friends. Even if the legal documents would prove that you were honset, and that they knew what they're getting into, they'll still be mad at you. Am I right to worry about both of these? Of course. Who carries $75K in cash for no good reason? Your friend got the cash from somewhere, didn't he? If its legit - there's paper trail to show. Same for your parents. If you/they can show the legit paper trail - there's nothing to worry about, the hassle, at worse, is a couple of letters to the IRS. If the money is not legit (your friend is selling crack to the kids in the hood and your parents robbed a 7/11 to give you the money, for example) - there may be problems. "This is the biggest blunder I see in money handling.  ""Oh I'm a good person and everyone knows my intentions are good.  And they're really happy with me right now, so it'll stay that way forever, right?  So I can just do anything and they'll trust me.""  And then in hindsight 10 years later, the person realizes ""wow, I was really stubborn and selfish to just assume that.  No wonder it blew up.""  Anyway, to that end, your requirement that all the money be in one account and ""this will simplify taxes"" is horsepuckey.  No one will believe a legitimate financial advisor needs that, but it's exactly what a swindler would do. And that's the problem.  If anything goes wrong, their trust in you will be forgotten, some will say you intended to scam all along, and the structure will be the first thing to convict you.   Money makes everyone mistrusting.  Ironically, the concept is called a ""trust"", and there's a wide body of law and practice for Person X responsibly handling the money of Person Y.  The classic example is Person Y is a corporation (say, a charity) and Person X is on the Board of Directors.  It's the same basic thing.   The doctrine is:" Yes, it is a scam.  Think about it: Why would a stranger offer to give you money? Why would she need you to pay her own employees? She wouldn't. It is a scam.  You have more to lose than just the $25 that is in the account. Just as has happened to your dad before, you will be receiving money that is not real, but paying real money out somewhere else.  One more thing: If your dad has fallen for these scams so many times that he can't get a bank account anymore, why are you still taking financial advice from him? The price of the loan may be justified if you're considered a high-risk applicant for some reason (e.g. you're putting very little money in initial payment), and if it includes all the associated expenses. What is more relevant to your situation is that you're probably better off renting. Think about it: your $300'000 house will require some repairs in those 30 years (let's estimate those at $100'000). That means in 30 years you'll build $200'000 of equity spending $720'000 on it. Of course this assumes that the value of the house will remain constant. You're effectively be throwing away $520'000, or more than $1'400 a month. If you can rent a place for $1'400 a month or less, you'll build more equity by renting that place for 30 years and saving the excess money in a bank account. If you consider the interest that money in your bank account will earn you (e.g. 3% annually), you'll build more than $200'000 equity in 30 years even if you spend as much as $1'650 on your rent and save only $350 a month.