Have you ever walked into a bank and asked how to open a bank account only to be rejected? If so, did the banker ask your nationality and then without knowing anything else tell you “no”?
This experience is more common than you might think. And the people that face these challenges often come from a diverse group of nations.
Unfortunately, at least when it comes to banking, one of the most challenging barriers to overcome is your citizenship. And unless you’re willing and able to give up your citizenship, you’re stuck with it.
In today’s article, we’re going to address how to open a bank account if you have experienced the scenario above. And if you haven’t already guessed, we refer to people from these nations as the Unlucky Passport Club.
If you’d like to get a head start on account opening as a non-resident then download our FREE Non-Resident Banking Starter Guide right now!
Read on to learn about the Unlucky Passport Club. And to find out how to open a bank account if you come from one of these countries.
The GlobalBanks team has used this term for years while assessing bank account opening challenges. Even after accounts are open, we have seen citizenship from these nations be unable to maintain accounts.
In some instances, we have even seen friends receive seven and eight-figure checks at their homes from large international banks. The reason? The bank decided they would no longer deal with people of their nationality.
But for a lot of people, the challenge of maintaining your account is a privilege. Because actually opening an account in the first place seems like an impossible feat.
Fortunately, when there is a need, there is usually a solution. And the banking industry is no different. Even in our time of enhanced due diligence and over-regulation, many jurisdictions and banks offer viable solutions.
With that in mind, here’s what the Unlucky Passport Club is about:
In the following section, we’re going to introduce the groups that make up the Unlucky Passport Club. We’ll also discuss the countries within each group, and why they are members. This information can help inform your account opening strategy when speaking with bankers. If you use it correctly, you will be able to open accounts successfully.
The first group in the club includes countries that are suffering from the aftermath of war. This can often include countries combating internal strife or nation-wide terrorism. Nations that are experiencing such tragedies are typically too risky for banks. The resulting social, economic, and political instability is troubling. For this reason, they become “hands-off” for many of the world’s banking institutions.
As a result, people from these countries are often stereotyped along with the unrest. This can even impact citizens of the nations who no longer live there. This includes citizens with residency outside of the country and even citizens who have never lived there.
Here are a few examples of the countries that fall into this category:
George W. Bush first popularized the term “axis-of-evil” in his 2002 State of the Union address. And needless to say, the term stuck.
At the time, he was primarily referring to Iraq, Iran, and North Korea. They were some of the most prolific sponsors of terror and ‘dirty’ weaponry of the day.
But, nowadays, it’s simply used as a buzzword to label anyone that the United States deems a threat. While the “axis-of-evil” is somewhat influx, it still includes members of President Bush’s original 3. But since then, it’s fair to say that both Syria and Venezuela have also made the list.
Not surprisingly, if you are a citizen of one of the “axis-of-evil” nations, account opening isn’t easy. In fact, you’re going to have a very small selection of banks and jurisdictions around the world to choose from.
Here are the countries that we currently consider to fall into this category:
Like many terms in banking, the term “tax haven” is often misused and applied to countries that are not tax havens. And in most cases, these are legitimate banking jurisdictions offering a lot of benefit to international citizens through offshore accounts. But, whether or not a country is a tax haven really depends on who you ask. And one of the most discerning lists of tax havens, at least in the past few years, seems to come from the European Union.
This list is comprised of countries that do not comply with information-sharing agreements. More specifically, the European Union is unable to track their citizens in these countries. Some countries may also have poor compliance procedures. And of course, there is the issue of opaque tax policy and being seen as a hub for tax evasion. Many bank introducers help clients open accounts in these countries, but as we’ve discussed before they are often not the best options.
Regardless of the reason, the outcome is almost always the same, difficult account opening for citizens. As countries get shunned, their citizens face account opening challenges. Fortunately, many of them have good banks locally – though it’s not always the case.
Here is the list of the 15 nations that the European Union currently has listed as blacklisted tax havens:
In addition to the European Union, the Financial Action Task Force (FATF) and Organisation for Economic Co-operation and Development have their own list of nations to watch. This is the true international watch-list. Its focus is on the policies that combat money laundering and terrorist financing.
While simply being from these countries shouldn’t be enough to flag you for banking purposes, it can. When opening accounts, you will be flagged by the bank, it’s part of your client profile.
If interested, you can review the most recent list of countries considered “high-risk” or “monitored” by the FATF on their website here.
Unfortunately, you don’t even need to be on a blacklist to join into the Unlucky Passport Club. You can gain entry by simply falling out of favor with international regulators or the nations that control them.
In the following list, we share some of the countries that have joined the ranks of the club. The result is that their citizens have difficulties banking internationally. Of course, this translates into challenges for business as well. In other words, inclusion on this list means being excluded from travel and trade in many parts of the world.
Lastly, there are the unrecognized nations of the world. These are nations or geographical areas that aren’t significantly recognized internationally. As these countries do not have formal political recognition, they are risky clients for banks. Without an easy means for verification, it’s difficult for banks to conduct due diligence. As a result, citizens of these countries have a tough time opening accounts.
If you are from any of the groups mentioned above, you might think to yourself that opening an account at a good bank is going to be impossible. Or in the best-case scenario, it’s going to be very expensive. Well, that will depend on a number of factors, including where you live and your source of income.
But at the end of the day, you shouldn’t look for a good bank by everyone else’s standards, you should look for a good bank for your specific situation.
Many banks around the world cater to international clients. In fact, there are well-managed, financially sound banks that open accounts for citizens of all nations listed above. You just need to know where to find them.
And then, finding banks that are:
To address the first three items, you need to have an honest discussion with yourself. Think about your client profile and your specific desires for banking. What are the challenges you face? What are the requirements you need to meet? Then, address any concerns for yourself and find banks that specifically cater to your needs.
This kind of inward reflection can help make your account opening much faster. You will eliminate applications at banks that aren’t interested in you or your business, and you will save time and money in the process.
If you’re ready to take the next step, which is identifying and opening accounts, you can get started with GlobalBanks IQ, our dedicated international banking intelligence platform.
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