As our world becomes more interconnected, more and more individuals are interested in living abroad. With the rise of remote work, this option is no longer just limited to global corporate employees or retirees. However, accessing U.S. bank accounts from overseas can present challenges, sometimes requiring a Virtual Private Network (VPN) to securely log into online banking services. Additionally, maintaining a U.S. bank account typically requires having a physical U.S. address on record. This is due in part to the Patriot Act, which ramped up regulation on financial institutions in an effort to reduce financial crime. While many find that a U.S. bank account still needs to be in place to pay for expenses back home, having a separate bank account in the country where you are residing is helpful to pay for local expenses. Additionally, many banks still charge foreign transaction fees for international transfers, which can add up if you need to make frequent transactions in the country where you are residing from your U.S. bank account.
With the country as politically polarized as it is today, some emotions are running high. Some individuals have expressed concern over accessing their assets under various administrations, leading to an interest in opening a bank account elsewhere as a risk management strategy. Opening a bank account in a country where you are not a resident is difficult and generally requires significant assets. For example, one global bank we consulted indicated that the minimum amount for their Swiss bank accounts is $4 million. There is additional flexibility for investment accounts abroad, where the minimums are closer to $2 million.
Another important factor to consider is banking fees and interest rates. In the U.S., bank accounts typically offer a modest interest rate. However, in other regions, particularly Europe, negative interest rates—such as
-0.50%—are not uncommon. The shift from earning interest or maintaining a stable account balance to potentially losing funds simply by keeping money in the bank can be a challenging adjustment for many Americans.
When we hear “offshore bank accounts,” many of us conjure up images of mansions in the Cayman or British Virgin Islands. Historically, offshore bank accounts have been used as a means to protect funds from taxation—a practice that continues in some countries today. However, the Patriot Act and other regulatory laws, such as the Foreign Account Tax Compliance Act, have made this more and more difficult for Americans. Under these laws, banks are required to report account balances and other information to the IRS for proper taxation, making a “secret” bank account difficult to maintain.
For those living abroad, your host country generally makes the most sense. For those exploring offshore accounts for other reasons, there are other factors to consider. For example, “How stable is the government? What are their tax laws? What is their currency? How have they treated account holders in the past?” Switzerland has the most storied history, but there are other options, such as Panama. Even as online banking becomes more accessible, you may need to physically go to a branch to open the account.
In the U.S., wire transfers often can be done on the same day while ACH transfers usually take one business day. International transfers can take much longer. Not only do funds need to transfer, but currency may need to be converted. When considering an international bank account, it’s important to think beyond transfer speeds and currency conversion—accessibility and long-term convenience should also factor into your decision. If your desire for this bank account is to use in case of emergency, will you be able to access those funds remotely? If you need to go in-person, is it a country you are interested in establishing a long-term relationship with?
As mentioned, shielding assets from the U.S. government has become increasingly difficult. In the wake of 9/11 and the 2008 financial crisis, there were several laws passed that created regulatory requirements on reporting of assets held by Americans abroad. Even if a bank account is held in a different country, the U.S. government will still have record of it.
Like many financial decisions, there is no one-size-fits-all answer to opening a bank account abroad. If this is something you are considering, we encourage you to have an open dialogue with your advisor about your reasons for this account. They can discuss pros and cons with you and ensure there are no unintended consequences.
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