The internet is filled with rumors and misinformation. A popular claim? It’s “impossible” to open accounts with foreign financial institutions as a citizen of the United States, especially offshore. Well, that’s not true.
There are over six million US citizens who live overseas. Millions of them have offshore bank accounts. Millions.
Why is the internet overflowing with horror stories about how difficult it is to open a personal offshore account as a US citizen with a bank overseas?
The short answer:
Lawyers, accountants, and poorly informed bloggers want to sell you overpriced services, charging you thousands to open accounts at the one bank they work with that is “open” to US citizens.
Let’s get real, the whole “let’s scare American citizens about foreign bank accounts” trend started in 2010. It started when FATCA was unleashed on the world.
FATCA said that if foreign institutions want to access the US financial system, they need to snitch on their American clients and send all their account details to the IRS. Or, else!
This was a devastating blow to foreign institutions. Overnight, the cost of having American clients skyrocketed. And it meant that digital onboarding of foreign nationals with US passports became much more onerous.
Foreign banks had three options:
First Option: Foreign banks that chose to onboard American clients and refused to tell the US government were to be hit with massive penalties, crippling their business
Second Option: Foreign banks that agreed to comply with FATCA had to build a $50m-$100m+ system to tattletale on American clients.
Third Option: Foreign banks refusing to accept American clients and discarding any current American citizens it had as customers.
Certain banks decided it was cheaper (and safer) to get rid of their US clients than to comply with FATCA.
These banks (not all!) dropped their American customers, closed their accounts, and vowed to never accept US citizens again.
That’s when the internet exploded.
Every tax consultant, service provider, and life coach on the internet started screaming that opening foreign accounts for American citizens was near impossible – loaded with horrific tax landmines and scary reporting demands. Some even said it was illegal.
The mainstream media didn’t help. Most stories focused on how foreign banks were closing accounts and shedding themselves of US customers. Switzerland, Liechtenstein, Luxembourg, Cayman, and the Bahamas – all were getting rid of US depositors.
If you have a quick Google, you’d think that no bank in the world was opening foreign bank accounts for US citizens anymore. It was like US citizens became the pariahs of the banking world.
Here’s the truth…
It’s 100% legal for a US citizen to have a relationship with a foreign financial institution in both onshore and offshore jurisdictions. You just need to tell the IRS and report your foreign financial accounts properly. We’ve found hundreds of banks still willing to accept US clients.
Feel free to jump ahead to the areas most relevant to you by using the table of contents below.
Table of Contents
- What’s Different About Opening Foreign Bank Accounts for US Citizens?
- What are the Benefits of Opening Offshore Bank Accounts as a US Citizen?
- Where Can a US Citizen Open a Foreign Bank Account?
- Frequently Asked Banking Questions
- Do You Want Help Opening a Foreign Account as a US Citizen?
What’s Different About Opening Foreign Accounts for US Citizens?
The process for opening accounts for a US citizen is more intensive and involves more paperwork. The approval process is also longer than it is for a non-US citizen.
Anyone designated a “US Person” (aka anyone considered a US person for US tax purposes) is required to go to a special bank branch, division, or particular office. This means a US citizen can’t just waltz into any branch they want and apply for an account. You need to go to the one that deals with American citizens.
Even after you figure out which branch or office deals with American citizens, the fun doesn’t stop there.
Another quirk of opening an account in a foreign country as a US citizen is that at some banks you’ll need to track down a bank-specific employee and make an appointment in advance. Why? Sometimes, only specific employees are authorized to open accounts for individuals with American citizenship. If that authorized person isn’t there or is busy, you’re out of luck.
Special Requirements for Opening an Account Abroad as a US Citizen
Some financial institutions will also penalize American clients for being, well… American.
Just to get accepted as a client, some banks require American citizens to meet higher minimum deposit amounts. If the minimum balance to avoid fees is $10,000 for non-US citizens, the bank is likely to request an American to deposit $50,000 or more.
In private banking hubs, the differences in deposit amounts between US citizens and non-US citizens can be even more staggering. And, that’s just to get your foot in the door.
Deposit Requirements for Opening a Foreign Account as a US Citizen
Another surprise? Certain foreign financial institutions charge US citizens special (American-only!) opening fees. Why? It’s more expensive to open foreign accounts for US citizens than for non-US citizens. This is because there is more “work” involved. Stricter due diligence, more people, more reporting, special protocols, and FATCA compliance systems.
Some foreign financial institutions have even started rolling out quarterly, bi-annual, or annual fees for their American clients to recoup FATCA costs. Fees are anywhere from $100-$500 per year. These extra FATCA fees might be understood before opening an account. Other times, you’ll be left in the dark and won’t know about it until you see a $250 withdrawal on your account.
What Type of Accounts Can I Expect?
Depending on the foreign bank you’re dealing with, these fees have different names. They might go by due diligence fees, FACTA fees, or onboarding fees. They sometimes just appear as an account opening fee or annual maintenance fee.
Some banks don’t charge any additional fees at all. It just depends on which bank you choose.
Remember: American clients are more expensive to onboard and maintain as clients because of extra compliance and reporting required under FATCA. Some banks are just trying to pass on some of the costs.
This is why it’s so important to know which banks penalize (or “have special requirements for”) US citizens and which do not. Choosing the right foreign bank as a US citizen means lower fees, fewer surprises, faster account opening, and less of your cash being tied up.
Do You Want to Explore All Your Offshore Banking Options?
What Are the Benefits of Opening Offshore Bank Accounts as a US Citizen?
A foreign bank account is an excellent way to diversify and grow your wealth, protect your assets, and safeguard your money from risk.
Moving some savings or an emergency fund to another country that is subject to a different legal system just makes good financial sense. It’s also basic risk management.
No matter what happens, you always have access to cash. Funds in a foreign account can’t be frozen and seized in seconds by a bureaucrat or creditor at home.
It’s important to note that for individuals who live in a litigious country, financial predators are everywhere. Having an emergency fund abroad to safeguard your nest egg is crucial.
Disgruntled business partners, ambulance chasers, cybercriminals, overreaching government agencies, court orders, injunctions, even just being wrongfully accused, or having a frivolous lawsuit filed against you results in your account being frozen or seized.
Here are additional benefits of opening an account offshore as a US citizen.
Asset Protection
At home, your local bank account can be frozen, garnished, and seized in seconds. It just takes a phone call or a mouse click. Having an account in a different country outside the reach of financial predators ensures that you’ll always have access to emergency funds and be able to defend yourself – no matter what happens.
For asset protection purposes, US citizens often prefer foreign financial institutions that do not have branches in the US. Some will choose jurisdictions that do not recognize foreign judgments and court orders. Others find that having any bank in any jurisdiction outside their home country is sufficient.
Diversify & Grow Wealth
With a foreign bank account, you can diversify your wealth. On one hand, you can diversify your wealth with different currencies, new investment products that don’t exist in your home country, higher interest rates on fixed deposits (or CDs for Americans), etc.
You can also diversify by holding assets or cash in different geographies, legal systems, and regulatory regimes.
Many non-Americans already use foreign bank accounts as diversification tools to protect themselves from political risk, predatory laws or regulation changes, economic volatility, currency fluctuations, and corruption in their home countries.
Lower Fees & Convenience
For US citizens, expats, entrepreneurs, and retirees living, working, or traveling abroad – foreign bank accounts are cheaper and more convenient. Lower transfer fees, local debit cards, and local atm withdrawals all mean fewer fees each month to manage your banking activities.
Where Can a US Citizen Open a Foreign Bank Account?
While FATCA has limited the number of banking options available to American citizens, opening an account offshore is still possible.
Generally speaking, to find foreign financial institutions that accept you as a US citizen, it’s usually best to look outside of traditional offshore banking hubs like Switzerland, Liechtenstein, Luxembourg, the Caribbean, etc.
It’s also worth noting that foreign financial institutions that are heavily reliant on remote opening and international clients, tend to shun American citizens. These banks are usually small. Many either couldn’t afford to comply with FATCA or didn’t want to take on the extra risk. They find it easier to not accept US citizens altogether.
The GlobalBanks team keeps tabs on banks around the world that accept US citizens.
This has helped us uncover some gems (including the offshore hubs listed above) that very few people know about in countries that have traditionally shunned American clients in the past.
We monitor and keep track of their opening policies, compliance quirks, required paperwork, and all the intricacies that are important to our members. We also glean insights from bank employees and share our own first-hand account opening experiences and the experiences of past customers. All of this helps you make better banking and investment decisions.
Individuals who are constantly rejected by banks because they are American, don’t worry! There are plenty of other banking options for American clients out there.
In fact, there are still several great banking jurisdictions with multiple banks that are still willing to accept US citizens. You just need to know where to look, how to approach them, and what to say once you get inside.
Frequently Asked Banking Questions
Below are a few of the most common questions we receive from people exploring foreign bank accounts for US citizens. If you have further questions about banking offshore, don’t hesitate to contact us directly.
Can I Have a Foreign Bank Account as a US Citizen?
Yes, you can have a foreign bank account as a US citizen as long as you choose a bank that accepts US citizens, submit the proper documents, and have a suitable client profile. That said, not all foreign financial institutions accept US citizens and residents. So, bank selection will be critical when it comes to successfully opening accounts.
Do US Citizens Have to Report Foreign Bank Accounts?
Yes, a US citizen has to report foreign bank accounts after they meet certain reporting criteria. Generally speaking, account reporting is triggered when the total accumulative balance of all foreign bank accounts reaches USD 10,000 in value at any point during the calendar year. If you’re wondering whether you need to report, you should speak with a qualified CPA to assist you with this.
Can the IRS Check Foreign Bank Accounts?
Yes, the IRS receives information about foreign bank accounts in at least two ways. First, foreign institutions are required to report accounts held by US citizens and residents directly and secondly, US citizens and residents are required to report their foreign accounts after they meet certain reporting criteria (see above).
Do You Want Help Opening a Foreign Account as a US Citizen?
If so, you can access GlobalBanks Insider and start the process of applying for an offshore account in a few clicks.
GlobalBanks Insider is a dedicated account opening solution that involves direct support from our team and direct introductions to the banks of your choosing. It gives you instant access to the…
+ Direct support from a team of banking experts
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+ Answers to your most pressing questions and challenges
+ Expert insights on which banks to choose & why
+ Plus, FULL access to our entire suite of account opening tools and intelligence!
And “yes!” GlobalBanks Insider is designed to help foreign and non-resident individuals and companies open bank accounts.
Use this link to see how GlobalBanks Insider can help you successfully open accounts.
