How to Open Foreign Bank Accounts for US Citizens - GlobalBanks (2024)

The internet is filled with rumors and misinformation. A popular claim? It’s “impossible” for US citizens to open offshore bank accounts. Well, that’s not true.

There are over six million US citizens who live overseas. Millions of them have offshore bank accounts. Millions.

So, why is the internet overflowing with horror stories about how difficult it is to open a foreign bank account as a US citizen?

The short answer: Lawyers, accountants, and poorly informed bloggers want to sell you overpriced bank account introduction services, charging you thousands to open bank accounts at a selection of banks that are “open” to US citizens.

But let’s get real. The whole “let’s scare Americans about foreign bank accounts” trend started in 2010. It started when FATCA was unleashed on the world.

FATCA said that if foreign financial institutions want to access the US financial system, they need to snitch on their American clients and send all their bank account details to the IRS. Or, else!

This was a devastating blow to foreign banks. Overnight, the cost of having American clients skyrocketed.

Foreign banks basically had three options:

First Option: If a foreign bank had American clients and didn’t tell the US government, they’d be hit with massive penalties, crippling their business

Second Option: If a foreign bank agreed to comply with FATCA, it had to build a $50m-$100m+ system to tattletale on American clients.

Third Option: A foreign bank could simply stop accepting American clients and discard any current Americans it had as customers.

Certain banks decided it was cheaper (and safer) to get rid of their US clients than to comply with FATCA.

So, these banks (not all!) dropped their American customers, closed their accounts, and vowed to never accept US citizens again.

And, that’s when the internet exploded.

Every tax consultant, service provider, and life coach on the internet started screaming that opening foreign accounts for US citizens was near impossible – loaded with horrific tax landmines and scary reporting requirements. 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.

But, here’s the truth…

It’s 100% legal for US citizens to have foreign bank accounts. You just need to tell the IRS and report it properly. In fact, 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

1. What’s Different About Opening Foreign Bank Accounts for US Citizens?
2. Benefits of Having an International Bank Account as a US Citizen
3. Where Can a US Citizen Open a Foreign Bank Account?
4. Frequently Asked Questions
5. Do You Want Help Opening Bank Accounts?

What’s Different About Opening Foreign Bank Accounts for US Citizens?

Well, there are a few differences.

For example, the account opening process for a US citizen is more intensive and involves more paperwork. And the approval process may be longer than it is for non-US citizens.

In addition, anyone designated a “US Person” (aka anyone considered a US person for US tax purposes) might also have to go to a special bank branch, division, or particular office.

This means US citizens can’t just waltz into any branch they want and apply for a foreign bank account. You need to go to the one that deals with Americans.

And even after you figure out which branch or office deals with Americans, the fun doesn’t stop there.

Another quirk of foreign account opening for US citizens 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 Americans. If that authorized person isn’t there or is busy, you’re out of luck.

Special Requirements for Opening a Foreign Account as a US Citizen

Some foreign financial institutions will also penalize American clients for being, well… American.

For example, at some banks, just to get accepted as a client, US citizens will have to meet higher minimum deposit requirements. For instance, if the minimum balance to avoid fees is $10,000 for non-US citizens, the bank might require an American to deposit $50,000 or more.

In private banking hubs, the differences in deposit requirements 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 banks will charge US citizens special (American-only!) account opening fees. Why? It’s more expensive to open foreign accounts for US citizens than for non-US citizens. For example, there’s 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 can be anywhere from $100-$500 per year. These extra FATCA fees might be clear prior to account opening. Other times, you’ll be left in the dark and won’t know about it until you see a $250 withdrawal on your account.

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. In other instances, they might just appear as an account opening fee or annual maintenance fee.

Of course, some banks won’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. So, 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.

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Benefits of Having an International Bank Account 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’ll 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.

If you 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 – can result in your bank account being frozen or seized.

Here are some other benefits of opening offshore and foreign bank accounts 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 a foreign bank 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 offshore banking options available to US citizens, opening a foreign bank account is still possible.

Generally speaking, to find foreign financial institutions that accept US citizens, 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 banks that are heavily reliant on remote account opening and international clients, tend to shun Americans. These banks are usually small. Many either couldn’t afford to comply with FATCA or didn’t want to take on the extra risk. So 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, paperwork requirements, and all the intricacies that are important to our members. And we also glean insights from bank employees. Of course, we also share our own first-hand account opening experiences. And share the experiences of past customers. All of this helps you make better banking and investment decisions.

So, if you are constantly rejected by banks because you 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 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 online offshore banking, 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, meet the bank’s account opening requirements, 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, US citizens have 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 banks are required to report accounts held by US citizens and residents directly and secondly, US citizens and residents are required to report their foreign bank accounts after they meet certain reporting criteria (see above).

Do You Want Help Opening Bank Accounts?

If so, you can access GlobalBanks IQ and start the process of applying for an offshore bank account online in a few clicks.

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In fact, GlobalBanks IQ even helps non-resident, foreign & offshore entities open bank accounts.

To learn more about opening accounts with GlobalBanks IQ, just click here now. Or, contact us directly with any questions!