Financial Perspectives

This used to be really easy: pick a big bank, check that they opened accounts for non-residents, then pop your application in the post.

Post 9/11 though the Patriot Act is with us and it imposes such stringent “know your customer” regulations on the banks that it’s no longer possible to open an account online with any American bank if you are a foreigner and don’t live in America. However, that doesn’t mean that you can’t open accounts with American banks, just that you can’t do it online anymore.

So what are your options if you find yourself in need of an American bank account yet don’t actually want to visit America to open one?

There are three basic options that are known to work:

1. Form an American company and then open the account for it. This option is obviously a bit over the top if you’re only making $50 a month from your online empire although it’s probably the best way to go if you’re making a living online.

2. Try opening an account with a bank that operates both in America and your own country. The two most common options for this are HSBC and Citibank as they seem to operate in more countries than most.

3. Open a brokerage account with one of the brokers catering to non-residents.

In practice, the third option is by far the simplest for most people. Most American brokerage firms operating overseas cater exclusively for high net-worth clients (ie assets of $100,000 and more) but two offer accounts for the masses. Schwab has a minimum of $10,000, Etrade has a minimum of $1,000 although you can open it with zero cash upfront.

How come the brokers can manage to give you a bank account when nobody else seems to be able to? Simply because the brokerage outfits operate as integrated international organisations whereas the banks don’t (eg Citibank USA isn’t the same as Citibank UK).

The etrade account is free for the first 12 months. After that, it costs $40 per quarter unless you meet their requirements which are either 1) $10,000 balance or 2) $1000 in automated credits per month or 3) one share trade during the period. If you don’t have the $10k and don’t have the $1k going in, then it is cheaper to buy or sell some shares than pay the $40.

The second option isn’t quite so popular mainly because it isn’t as well known. The easiest way is if you have a premium account with either Citibank or HSBC in your own country as your relationship manager will be able to do it for you. These services are CitiGold and HSBC Premier but the downside is that the rough requirements for them is that you have $50,000 on deposit with them, or have an income of $75,000 or have a mortgage of $200,000 with them (roughly; the requirements vary depending on the country).

Next easiest (and more economical) is to phone Citibank or HSBC in America and they’ll open an ordinary account for you on presentation of the appropriate ID and, sometimes, a bank reference. Citibank seems more geared up for this: call their International Personal Banking people on 001-813-604-3000

That’s just saved you between $5 and $250 which is about the going rate to buy the relevant information as above. Swiss bank accounts are slightly more difficult but definitely not worth paying the $1000 or more that I’ve seen quoted to provide you with the information. I’ll be covering Swiss banks in a later article, but if you can’t wait, pop a comment on this post and I’ll pass the information on to you (free!), likewise for other countries.

Don’t forget though that the first question you should ask yourself is: why do I need an American bank account? Google will only make payments into an American account if you live there and Citibank offers a US$ account in the UK (and other countries) which will let you deposit US$ cheques free of charge. It’s really only Paypal that requires such an account and even then that’s only if you live in one of the countries for which they don’t support withdrawals direct to your bank account.

This is part of our series on international banking which covers how to open and use accounts in various jurisdictions around the world including France, Switzerland and various offshore banking centers such as the Channel Islands, Isle of Mann and Bermuda.

An updated version of this article is on our expat banking site which also includes access to the detailed opening instructions that many people have asked for.

Most French banks are what would be termed building societies in the UK and consequently the banking scene is fairly different in nature in France.

There are only two proper banks, Societe Generale and BNP Paribas. These both operate nationwide networks but their branches are largely confined to the towns so they may not be entirely practical if you live in an isolated village.

As in other countries the Post Office and co-operative movement operate their own banks offering some advantageous accounts which we’ll be covering separately.

The majority of banks are effectively small regional building societies. For example, the Credit Agricole you see in Normandy is a totally different outfit to that which you’ll see in Paris. Although it is possible to open an account in one region and operate it via the branches in another region, this will entail delays in having your deposits credited and limits the facilities you have access to. So, I can’t use the deposit machines in Perpignan with the card from my account in Normandy.

The other banks worth looking into are those of the various supermarkets. By and large these are re-branded versions of some of the banks covered above but not always, for example Auchan operates its own bank. Generally speaking, the charges for these accounts are lower.

The main postal banks are those operated by Axa (a full-service bank) and Ing (savings accounts only).

One difficulty that you will have in opening any of the accounts is that you are usually required to provide proof of income. If you are living in France, they will ask for proof of a French income and this can take several years to acquire so it’s generally better to open an account with one of the banks before you move here or very shortly after you get here.

Offshore banks are banks that operate in various tax havens around the world. The most familiar in the UK are the Channel Islands and the Isle of Mann but there are many based in small islands in the Carribbean.

If you’re moving abroad, it can be useful to have an account with one of these banks both to simplify your taxes a little and for the additional services that many of them offer to the expat community. None of the legitimate centres offer taxfree interest on your accounts these days but offer you two options for the interest on your accounts: 1) a withholding tax roughly equivalent to the tax that you would normally pay in your country of residence and 2) no tax but they report your income to the authorities in your country of residence.

Although no longer taxfree, the additional services that many of these banks offer can still make them worthwhile. Even the simplest of them are much more familiar with international bank transfers than a normal high street bank could be expected to be but most go beyond that offering multi-currency accounts, debit cards in a range of currencies and often expat advisory services.

On the whole, the range of services on offer increases in proportion to the increase in the minimum income that the banks ask for. A reasonable compromise with this seems to be Abbey International which offers accounts and debit cards in pounds, euro and dollars for an opening balance of £5000. If your needs are more modest, try the Co-Operative Bank in Guernsey (under Current Accounts, Offshore Banking).

Most people will think of Switzerland in terms of “offshore” banking, but is there anything special about it? The banks there are generally more aware of the needs of international clients but this generally comes at a price. By and large, unless you have fairly sizeable amounts of money (say £25,000 upwards) to deposit or invest, they probably aren’t worth it. Sadly, the Swiss Post Office no longer offers its excellent Yellow Account outside Switzerland (despite what you’ll read on some of the “open a Swiss account” sites).

We’ve included a list of the main banks operating in this arena in the directory which should let you choose the perfect combination of prices and services for you.