Tips for Avoiding Rejection when Opening Offshore Bank Accounts

Tips for Avoiding Rejection when Opening Offshore Bank Accounts

Offshore Banking for Expatriates

Offshore Banking for Expatriates and Avoiding Frozen Assets: When a US Person expatriates from the United States, one of their biggest concerns is establishing banking and financial accounts and investments abroad. As a US Person, entering the foreign banking system has become much more complicated in recent years on account of FATCA (Foreign Account Tax Compliance Act). But, once a US person is no longer a US Person, establishing foreign bank accounts is much easier. Still, there are some pitfalls and roadblocks to be aware of.

Let’s review the basics of offshore banking for Expatriates.

Pre-Expatriation Foreign Accounts

If the Expatriate already has foreign accounts at overseas institutions that recognize the customer is a US person, the issue going forward will be simply — will the banks properly update their system?

If not, it could cause tax problems both domestically and abroad.

Thus, one of the easiest ways to circumvent this issue is to simply close the bank accounts at the current institution and then open new overseas accounts as a foreign person after the formal expatriation process is complete.

Move Offshore Accounts to a New Foreign Institution

Once a person has formally expatriated from the United States and it is time to open some new bank accounts as a foreign person — the Expatriate should also consider moving to a new financial institution.

That is because while the old institution may have no problem opening up new accounts for the Expatriate as a foreign person, it presumes that this institution will properly update its system — and the last thing the Expatriate wants is to be reported to the US government as a US person after they have already given up their US status.

Wait Until After Expatriation 

It is better to wait until after the person has completely expatriated before opening new accounts. That is because when opening new accounts, the Expatriate wants to firmly and confidently state that they are no longer a US person. But, until they have formally expatriated, they cannot do so without perjuring themselves.

While the chances of any collateral damage is relatively small (depending on which country and which institution), it may not be worth the potential (and unnecessary) headaches.

New Passport and DS-4083

Especially if the Expatriate is a US Citizen from birth (and even after the formal expatriation has occurred), the institution may still presume the customer is a US Person — no matter how much they try to convince them otherwise. Therefore, it is important to make sure that the Expatriate has their non-US Passport and a copy of the DS-4083 on hand to prove that they are no longer a US Person.*

* If the Expatriate was a US person only because they were a long-term resident and were not born in the United States or did not live in the US for the majority of their lives — this is generally not as big of an issue, especially if the foreign passport was issued many years ago.

Offshore Banking Does Not Have to be Dangerous

When a person expatriates from the United States and wants to open new foreign bank accounts, they should consider waiting until after the expatriation process is complete in order to avoid identifying as a US person. Different banks have different procedures, and it is important that the Expatriate has copies of their foreign country passport along with their loss of nationality document with them when opening the new accounts.

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