Opening A Local Bank Account

You’re going to need a bank account in the country where you decide to relocate—an operating account, out of which you’ll pay your local living expenses.

Should you open this local operating account before you arrive in your new country? You may not be able to. It’s harder and harder to open a non-resident account most everywhere in the world. Most any bank you approach as a non-national these days is going to want you to produce some proof of some connection to the country before they’ll allow you to open an account with them.

In some countries, proof that you own a real estate investment property can work. Short of that, you’re going to have to show that you have a local address (most widely accepted proof of this is a utility bill at a local address—a phone, electricity, or cable bill, for example, for the address where you say you’re residing) or that you’re in the process of applying for a residency visa (this doesn’t always work, but some banks are happy with this as proof of connection sometimes).

If you want to open a local operating account in advance of taking up (and being able to prove) local residence, one alternative we’ve found is through digital German bank N26. This is an online-only bank, but the requirements are minimal and accounts are almost instantly set up. We know plenty of people with these accounts, and they claim them to be lifesavers because it’s becoming more common for certain kind of payments to be exclusively accepted through bank transfer. Our daughter and her husband moved to France in 2018 and weren’t able to get local bank accounts open until mid-summer 2019. In the interim, they wouldn’t have been able to join a gym or do a number of other things without a European bank account. Luckily, they had the N26 account to use.

The point is that, depending on where you’re going and your circumstances, it may be necessary for you to wait until you’re physically resident in your chosen destination overseas before you’ll be able to open a local bank account there. That said, you want to start the process as soon as you’re able.

The first thing to understand about opening a bank account in another country is that, like most everything else, it’s probably not going to be accomplished the way it would be accomplished “back home.”

In the United States, for example, opening a checking account at your neighborhood bank is a straightforward process. You walk in, sit down with an account representative, answer a few questions, fill out some forms, and, in no time, you’ve got a bank account. That’s not how it works in most of the rest of the world. The U.S. wars on terror, offshore havens, offshore banking, drugs, and money laundering have created stress on banks worldwide to comply with U.S. “Know Your Client” standards. As a result, these are increasingly onerous and more onerous for the American abroad than for anyone else. It is ever-more-challenging worldwide to obtain an account as a non-national, but it is especially difficult in certain hot zones.

Furthermore, some countries view opening a bank account not as a right but as a privilege.

Every country’s requirements are different, and every bank processes the requirements in its own way. Bottom line, you’re going to have to jump through hoops. Depending on the jurisdiction, the process can take weeks or longer.

Generally speaking, you’ll need two banking references. If you have only one bank account currently, you might be able to substitute a letter from a credit card company for the second bank reference. You’ll also need at least one local professional reference, from an attorney or accountant, for example, in the country. The attorney helping with your residency visa work or the purchase of real estate (if you’re buying) should be happy to help.

You’ll need two forms of photo identification, typically your passport and a second ID, such as your home country driver’s license. And, again, you’ll need proof of local residence (your local utility bill).

Armed with those documents, make an appointment to meet with a bank representative. Yes, you need an appointment. Most banks are going to want to see you in person. Better is an introduction or personal referral from someone already doing business with the bank. During your meeting (it will seem more like a job interview), expect lots of questions.

Why are you opening this account? How much money will you be depositing initially? Where is that money coming from? How much money do you expect to receive into the account on an ongoing basis? What will be the sources of those funds? How much will you be withdrawing from the account each month?…

The paperwork involved will be far greater than for opening a U.S. bank account (to continue our comparison). Expect reams of forms, required signatures, even fingerprints. This is all part of creating your file. Once your file (or dossier, as it’s called in France) has been compiled, it must be reviewed. You’ll be told this review process will take a week, but in many countries it can take much longer. Don’t be afraid to contact the bank every day to check on the status of your file, lest they lose track of it.

Opening a corporate account is an even greater challenge. For this, you’ll need considerably more documentation, and you may have to schedule a personal interview with each of the company’s named officers. Your file in this case will be reviewed by a committee. The committee’s job is to ask for more documentation. No matter how much paperwork you’ve provided, it won’t be enough. Week after week, you’ll receive additional requests for further material—additional reference letters, corporate financial statements, financial information on the principals involved with the business, etc. Expect the entire process to take at least two to three months in most countries, even if you’re proactive and following up regularly.

While we recommended that you have more than one “international” banking relationship (so that you can diversify available cash over more than one bank and so that you can obtain ATM, debit, and credit cards from more than one institution), one local operating account should suffice.

How do you choose which local bank?

Sometimes, you may not have a choice. Only one bank may be willing to open an account for you. However, if you do have options, here’s how to consider among them…

You want a local bank that:

• Will give you an ATM or debit card. Not all local banks offer this service…
• Offers online access…
• Provides customer service. Any customer service will do… because you’ll be appalled by the traditional lack of it…
• Will allow you to keep your money in some currency other than the local one (if that’s what you want to do). Ask if you could have a U.S. dollar or euro account, for example. You may want to exchange money into the local currency as soon as you transfer it into the country… or not, depending on which way the exchange rate is moving…

If you’re an American and this local operating account is your only foreign bank account, you can avoid having to file an annual FBAR (see Days 12 and 13) with the U.S. IRS if you keep the balance below US$10,000 at all times.

No matter who you are, we recommend that you keep the balance in your local bank account below US$10,000 at all times. Remember, this is an operating account, not a place to park capital. Keep only one or two months’ of local expenses in the account at any time. That way, should something happen with the bank (things can happen…), your exposure is limited.

Finally, note that bouncing a check in some countries is a far more serious infraction than it is in the United States, and, everywhere in the world, it’s costly. You’ll pay a penalty to your own bank and to whomever tried to cash your check but couldn’t.

Bounce a check in France, and your account will almost certainly be closed, and it could take months (the worst case we’ve heard about was three years) to get it reopened. If you set your local bills to be paid by direct debit (as you can do with most any bank in Europe), make a habit of checking your local account balance online at least twice monthly, say on the 1st and the 15th, to make sure you have as much money in it as you think you do.