For many Americans who move abroad long-term, one of the first steps in settling in is opening a local bank account. Opening a local account makes things easier like paying rent, setting up utilities, avoiding international fees, and receiving income. However, many U.S. citizens are taken back and confused when a foreign bank denies their application.
Rest assured it’s not a personal decision. It’s rooted in how U.S. tax law affects banks around the world. There are valid reasons why, what you can do about it, and things to keep in mind with an account abroad.
Why Foreign Banks Say “No”
The main reason foreign banks turn Americans away is the Foreign Account Tax Compliance Act (FATCA). This was enacted in 2010, FATCA requires foreign banks to report U.S. account holders’ information directly to the IRS.
For banks, this means:
- Extra compliance costs to set up reporting systems.
- Increased risk of penalties if they make mistakes.
- More paperwork and internal procedures for just a handful of U.S. customers.
Rather than deal with the hassle, some banks take the simpler route of denying applicants from the U.S. altogether.
What to Do If a Bank Refuses You
If you’re denied while trying to open a foreign bank account, don’t stress right away. Typically it’s not a personal deny, and more to do with the U.S. regulations that are required to be followed. There are a few different things you can try.
- Try banks with international ties – Some banks like Charles Schwab, Capital One, or Citi have strong international networks. These accounts can help you access funds overseas without opening a local account
- Try another local bank – Larger institutions with international operations may be more willing to accept you
- Ask about special accounts – Certain banks offer expat-specific services with higher fees, but a higher chance of approval
- Look into fintechs or digital banks – Services like Wise or Revolut let you manage money in different currencies, transfer money internationally, and spend abroad with minimal fees
- Joint or family accounts – If you have a spouse or business partner abroad, they may be able to open the account with you and add you as an authorized user
Don’t Forget the Tax Side
Even if you’re able to open an account abroad, remember that the U.S. government wants to know about it. As a U.S. citizen or green card holder, you will likely need to file:
- FBAR (FinCEN Form 114): Required if your combined foreign accounts exceed $10,000 at any point
- FATCA Form 8938: Required if your foreign financial assets are above certain thresholds (varying by filing status and residence)
Failing to report your foreign bank accounts can lead to serious penalties such as large fines and tax delinquency status. The safest move is to track all of your foreign accounts carefully and to be sure to stay compliant.
Tips to Make Banking Abroad Easier
- Contact banks ahead of your move to ask about requirements.
- Get together extra documentation like proof of address, visa status, and U.S. tax identification.
- Consider opening both a U.S. account and foreign account for optimal flexibility.
- Work with a tax and financial advisor to fully understand expat rules.
It’s Not The End of The Road
Being denied a foreign bank account is frustrating, but it’s not the end of the road. If you do some thorough research and planning, you’ll be sure to set yourself up for success. Even if you get denied, don’t give up — there are other options out there to help you manage your funds abroad. When it comes to moving abroad long-term, planning will be the recipe to success.
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