Many people think that it's illegal to send money by mail, but that's not true. The law only prevents illegal activities such as money laundering or mailing cash to defraud the tax man. You can send any amount of cash through the U.S. Postal Service, but USPS will insure currency only up to $50,000.
Sending Cash by Mail
People tuck cash into letters and greetings cards and send it through the mail every day. These activities are perfectly legal, and there's no limit on the amount of cash you can send through the USPS mailing system. When mailing cash, common sense should prevail. It's recommended that you use a certified mail service that tracks the item and requires a signature on delivery. Take care with packaging to ensure the money cannot be seen from outside the envelope and to protect the item during transit.
It is against the law to send cash via USPS for purposes that are illegal, for example, money laundering, tax evasion or purchasing tickets in a foreign lottery. If you mail money as part of a fraudulent scheme, you may be prosecuted under the federal mail fraud law. Mail fraud penalties are very stiff, and each offense can result in a 20-year prison sentence and fines of up to $250,000.
You can mail chain letters that ask for items of minor value, like recipes or postcards, but chain letters that ask for money are barred by federal law. If you're mailing money to 10 friends as part of a "get rich quick" scheme – even if it's just $5 – then you're committing a federal crime. USPS recommends that you write on the envelope, "I received this in the mail and believe it may be illegal," and hand the chain letter to your local postmaster.
Protecting Your Shipment
USPS will insure any cash that you send through the mail to its full value, subject to certain limits. For regular domestic mail, the maximum insured value is just $15. For registered mail items, the limit is $50,000. You must declare the full value of the cash you're mailing, even if it exceeds the insured amount. The Post Office will need proof of the currency's value before you mail the item, such as showing them the cash with evidence of the exchange rate if you are mailing foreign currency. Otherwise, a claim for loss reimbursement may be denied.
While it may be legal to send money by mail, it's not a good idea. If your letter is lost, stolen or damaged in transit, there's no way for you or the receiver to recover the money. Another problem with sending cash is if the recipient claims that he never received anything. How do you prove that the money arrived? Money orders or personal checks provide better security, especially if you use return receipt requested, which means the addressee has to sign for the mailed item. When transmitting a large amount of money, it's always safer to make a wire transfer.
There's no prohibition on mailing cash for legitimate purposes, but if you're attempting to evade tax or money launder, then you may be prosecuted under the federal mail fraud law.