A newbie seeking advise with a foreign bank account

[Mike Marris]

Hello guys!

I'm new here. As well as being new to the idea of having a personal bank account abroad. I have some dumb questions and I would be very grateful to all of you for share some knowledge with me, please.

I'm a EU national with tax residency outside EU (so I do not have ID card in EU). I was trying to find a bank (or EMI as last resort) that will allow me to have an account with a debit card so that I can transfer my own money there to keep if safe or spend online occasionally. Ideally I'm looking for USD or less preferably – EUR account (but ideally if I have both). Maximum minimum deposit that I can afford is few thousands and maximum annual maintenance fee for both account + card below $100. I need the account to support international transfers, preferably located in close proximity to EU / Asia (because in case of "emergency" traveling to Caribbean country will cost me more than my entire saving on the bank account). One crucial thing for me is that I am looking for 100% online opening, simply because I cannot travel at this point plus it will impose extra spendings which I do not really possess. And last requirement, I believe, is the ability to communicate with the bank in English. And I'm not about to hide anything from tax authorities or anything like this. I'm looking for clean and legal option.

At first I though that I'm not asking anything extraordinary, but once I have googled over 100 banks/EMIs from different jurisdictions and contacted over 20 of them and it was some big surprise for me to know that all of them either want me to have residency at their location. Some of them on top of that also require a local phone number and some other things. Even banks located at my country of EU-citizenship require me to have local ID which is not possible because I live outside. And majority of EMIs are not supported in my country of residence and they do not care about citizenship like at all.

1. I'm puzzled, why are they so bound to the residency? It looks like even citizens cannot open a bank account in their country if they are not residents. But I saw online websites like to advertise some exotic second citizenship solutions and they claim that such passport will give you opportunity to open bank accounts. It looks like a pure lie if it is residency that matters and not citizenship, isn't it?

2. If they are so strict about it, now I'm also puzzled, what if I become a resident in any of such countries and proceed with the account opening but later move to another country? Will they terminate my account because I'm not longer eligible? Or I will keep this account for as long as I want and the residency obsession only matters upon initial opening?

3. After reading your forum I'm starting to guess that banks are divided in two categories – those that work with local residents and offshore banks, right? And so far I was "getting lucky" reaching out the first group only? Is it correct to say that an offshore bank is a bank located abroad that allows accounts for foreigners that do not have residency or any documents issued by the authorities of the bank's location?

4. If I'm correct with my logic above, may I please ask you to recommend me some banks that you believe might be suitable for my purposes (without setting up a company, because I can't really afford extra costs)? I've been searching the forum, but majority of banks listed there are either for companies or still require local residency or not available for online account opening.

5. Last newbie question for today please – what is the real difference between current and saving accounts? I mean I always saw saving account as a term deposit, like you simply put your money there and cannot spend, because u earn interest. But recently I saw some UAE banks offering saving account with debit cards attached to it. Which to me makes them similar to current accounts. I'm curious if different banks use this term differently or it is just me who do not understand what saving accounts are?

Thank you so much for your attention to my post and patience reading it.

 

[JohnnyDoe]

That’s why btc exists…
Anyway, simply pretend to live in the EU country you are a citizen of. Create an utility bill from that country and with it you will be able to open an account with many EMIs.

 

[Vor]

1. tax reporting purposes since without knowing your residence they are unsure of where they should be exchanging CRS data. I have American accounts for example with the Residency listed as a US state as oppossed to the EU country I reside in, is this account being shared to my respective EU tax office? I highly doubt it due to the bank not knowing my residency here + lack of CRS in the US and a real lack luster FATCA reciprication. Long story short though tax residence is what they are looking for here so they can share everything with your local tax office.

2. Depends on the bank some will be stricer than others. If you open it in country A and move to country B but never update the address of residence and use a VPN they will likely just leave it as though in most cases unless your moving massive sums of money I wouldn't expect a rechechking of this sort of thing, at least it has never happened to me at an bank in Europe or America.

3. You are correct here in that most banks with exception of say their private wealth management divisions will strictly deal in either local resident banking or non-resident banking. Plenty of jurisdictions even have specific licenses that only allow banks to operate as one or the other but not both on the retail level, which for an account of your deposit size is retail banking.

4. Would need more details likely about your situation but I would imagine your looking at some sort of EMI like TransferWise could be a good option. You can also look at US banks if you were willing to spend say $200 forming a US LLC in New Mexico you can open Neo Banks like Brex and Mercury with relative ease.

5. Restrictions around savings accounts will vary by bank but generally speaking it's not meant to be spent from directly. One of my US banks for example allows unlimited transfers a month while another has a limit of 6 withdrawls from savings before you incur fees. No direct card from either for savings just the ability to transfer. Term Deposits lock up your funds while a savings account typically will never do that.

Hope this is able to help I would highly recommend looking at a TransferWise Borderless account you can hold USD, EUR, and more with no real issues assuming your money flows are not from high risk industries or shady. Lastly as long as your residency also isn't a restricted region like North Korea or Iran lol.

 

[Mike Marris]

Hope this is able to help

Thank you for sharing your experience with me! This is useful information. Looks like we will never be 100% sure if bank will decide to suspend transaction or entire account one day simply because they suddenly decide to recheck your residency or something.. Hah.

 

[Vor]

Thank you for sharing your experience with me! This is useful information. Looks like we will never be 100% sure if bank will decide to suspend transaction or entire account one day simply because they suddenly decide to recheck your residency or something.. Hah.

Ya no guarantee if your using accounts that are say meant for residents but then you become non-resident however like I said with those accounts just use a VPN and do not update the residency data and odds are you will never hear a peep at the dollar amounts your dealing in.

 

[Mike Marris]

Ya no guarantee if your using accounts that are say meant for residents but then you become non-resident however like I said with those accounts just use a VPN and do not update the residency data and odds are you will never hear a peep at the dollar amounts your dealing in.

But they will be basically reporting my transactions to the local tax authority like I'm their tax resident, and tax authority may actually alert one day that they do not "see me" as the resident. Am I wrong?

just use a VPN and do not update the residency data

Yeah this sounds like a robust solution, but recently trends be like:

 

[Vor]

But they will be basically reporting my transactions to the local tax authority like I'm their tax resident, and tax authority may actually alert one day that they do not "see me" as the resident. Am I wrong?


Yeah this sounds like a robust solution, but recently trends be like:

View attachment 3931

Their is usually pretty strict privacy laws in a lot of places related to the Tax Office turning over data about you to a private enterprise(the bank) so I doubt they would alert the bank. It's a bank compliance issue not a tax colleciton issue for the tax authority.

Bunq is a crap bank anyways nothing lost. Also even if more banks started doing that doesn't matter all they are doing is blacklisting known VPN IP's so you could get a dedicted IP address to yourself and problem solved.

 

[Jerry1911]

Yeah this sounds like a robust solution, but recently trends be like:

Buy a cheap Optiplex PC and set it up your parents house. Problem solved. You will have your own personal VPN with a residential IP.

If needed, configure dynamic DNS.

 

[Larin]

Hello and welcome to the forums!

To your questions:

1. I'm puzzled, why are they so bound to the residency? It looks like even citizens cannot open a bank account in their country if they are not residents. But I saw online websites like to advertise some exotic second citizenship solutions and they claim that such passport will give you opportunity to open bank accounts. It looks like a pure lie if it is residency that matters and not citizenship, isn't it?

Banking is an extremely tightly regulated industry. Banks today have extensive KYC (know your client) and compliance requirements imposed by regulators all over the world. One of the basic requirements is to know where your client lives, for compliance and reporting purposes. Thus, if you open a bank account in country A, but you reside in country B, the bank in country A will have to treat you as a non-resident and in some cases be in compliance with the laws and regulations in both country A and B. Many banks simply do not have the resources to do this. This is an oversimplification, as there are many exceptions, but in general its just an extra headache for the banks and the market for such services is just too small in most countries.

2. If they are so strict about it, now I'm also puzzled, what if I become a resident in any of such countries and proceed with the account opening but later move to another country? Will they terminate my account because I'm not longer eligible? Or I will keep this account for as long as I want and the residency obsession only matters upon initial opening?

Technically, you do indeed have to report every change of address, including when you move abroad and it would be up to the institution to decide how to proceed. Many may indeed choose to close the account. This for example became a major issue for UK expats living in Europe post Brexit, where major UK banks, such as Lloyds, started to close down their accounts. Lloyds becomes latest bank to strip European expats of British current accounts - but Spanish customers remain in the dark - Olive Press News Spain
This is largely due to the fact that UK banks lost so-called passporting rights and would have had to become compliant with the regulations of every single EU country where they had clients, adding far too much cost. https://www.moneysavingexpert.com/news/2020/09/thousands-of-british-expats-face-uk-account-closures/

3. After reading your forum I'm starting to guess that banks are divided in two categories – those that work with local residents and offshore banks, right? And so far I was "getting lucky" reaching out the first group only? Is it correct to say that an offshore bank is a bank located abroad that allows accounts for foreigners that do not have residency or any documents issued by the authorities of the bank's location?

This is not exactly correct. I would suggest you think of it in terms of the different products that banks offer. Some 'products' (ie accounts) meant only for the local population. For example HSBC offers chequing accounts for those living in the UK. However, other products may be offered for those expats (ex. HSBC expat Banking For Expats Including Savings & Mortgages - HSBC Expat). So, in your case, you are looking for financial institutions that offer products that would suit your requirements.

4. If I'm correct with my logic above, may I please ask you to recommend me some banks that you believe might be suitable for my purposes (without setting up a company, because I can't really afford extra costs)? I've been searching the forum, but majority of banks listed there are either for companies or still require local residency or not available for online account opening.

Barclays, HSBC, Santander and others offer expat accounts from what I've seen, but there are others. Just search for 'expat accounts'.
I have also had positive experience opening a bank account in Portugal remotely, although through a lawyer. It is my understanding that Portuguese banks are quite open foreigners, although the process is not easy if you do it fully online.
I believe there are other countries where you may be able to open an account remotely, but I am not familiar enough to suggest any. Perhaps, others will be more helpful here.

5. Last newbie question for today please – what is the real difference between current and saving accounts? I mean I always saw saving account as a term deposit, like you simply put your money there and cannot spend, because u earn interest. But recently I saw some UAE banks offering saving account with debit cards attached to it. Which to me makes them similar to current accounts. I'm curious if different banks use this term differently or it is just me who do not understand what saving accounts are?

I am not familiar enough with the history of banking to be able to say how this different emerged, but I suspect with the increase in interest rates the differences between these types of accounts will become more apparent again.

Generally speaking, savings accounts will have a higher interest rate attached to them and will have some restrictions to the number, or amount of withdrawals one can do. However, I have seen savings accounts that paid the same 0% interest and behaved very much like current accounts. But, again, I suspect that's more due to the historically low interest rates that we've enjoyed over the last 20 decades, where in some cases it actually cost banks to hold on to cash.

 

[Mike Marris]

Hello and welcome to the forums!

Thank you! That makes a lot of sense.