9.20.2019

A Non-US Address May Get Your US Bank Account Closed

A Non-US Address May Get Your US Bank Account Closed




Patriot Act Requirements


When you apply for a new bank account you might see a Patriot Act notice similar to this one:
Federal law requires that we obtain, verify and record information that identifies each person who opens an account, including joint owners. Within this application, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents. Approval of your application may be delayed pending further verification of your identity.
It's worse when you are living abroad and your US bank tells you that they must terminate your account because you do not have a US address. One bank in which I held an account, upon learning that I lived overseas, did not close my account, but told me that I would need to obtain a US mailing address soon or they would have no choice but to close the account. Not all banks are this accommodating.

Rules for US banks, as they pertain to private accounts, can be found under Section II of the USA Patriot Act Section 312 Fact Sheet:
(3) What are the general due diligence requirements of the private banking portion of the final rule?

U.S. financial institutions covered by the final rule are required to establish and maintain a due diligence program that includes policies, procedures, and controls that are reasonably designed to detect and report any known or suspected money laundering or suspicious activity conducted through or involving any private banking account that is established, maintained, administered, or managed in the United States.

Specifically, financial institutions covered by the final rule must take reasonable steps to: (1) determine the identity of all nominal and beneficial owners of the private banking account; (2) determine whether any such owner is a senior foreign political official and, thus, is subject to enhanced scrutiny (described below); (3) determine the source(s) of funds deposited into the private banking account and the purpose and expected use of the account; and (4) review the activity of the account to ensure that the activity is consistent with the information obtained about the source of funds, the stated purpose and the expected use of the account, as needed to guard against money laundering, and to report any suspicious activity.
It may be too burdensome for some banks to maintain your account under the current federal requirements, because their processes are totally focused on Continental US clientele.

Using A US Bank Credit Card Overseas


It is highly advisable to simply maintain a US address with the help of family, a friend or with a mail forwarding service. Be sure that the bank knows if you will be using a credit card overseas because they may disable the card otherwise due to their assumption that it is fraudulent activity.   

Some card companies, like Capital One, do not require you to submit any travel notification:
You don't need to notify us about your travel plans anymore thanks to the added security of your Capital One chip card. You can use your card abroad the same as you use it at home. Please check that your email and phone number are up to date in case we need to reach you. Safe travels!
This is due to the use of an EMV chip.  Any credit card that uses the EMV chip should operate in the same way. You may be able to ask your bank to upgrade your old cards to this new standard. 

Some US Banks Do Permit Accounts With A Foreign Address


If you attempt to open an HSBC checking account online you will see this notice under "what you need to apply":
"Current U.S. residential address and a U.S. residential address for the past two years ."
If you attempt to apply for an HSBC credit card you will receive this message:
"You must have a current U.S. address to apply online. Please call 1-800-975-4722 or visit your local HSBC branch to apply."
The message above seems to imply that if you call the 800 number, then you may be able to apply even though you no not have a US address, but I cannot be sure.


HSBC does have checking and credit card options for those who have only a foreign address.

They also allow one to open new accounts from outside the United States.

Citibank has a couple of options:
International Banking and
Global Executive Banking
You need to study the Marketplace Addendum for International Personal Banking and Global Executive Banking to determine if the fee structure and other factors work for you

The hands down winner, IMHO, is Pentagon Federal. For starters, the Penfed website is just plain easier to navigate and find what you need than either Citibank or  HSBC. When you go to the Penfed link you will discover they have a ton of ways that you can be eligible for membership. If all else fails, then there is that last option in the drop-down list:
"None of the above apply, but I would like to join PenFed"
If you are commercially attractive, i.e. have an income and decent credit score, then you probably have a good chance of being granted a membership.

If you have IRAs that need to be rolled over Penfed is very adept at doing that. 

Rates are low for CDs at this time, but Penfed rates are relatively competitive.

Navy Federal seems to be a bit more restrictive in its membership, which will not be an issue if you have a government/military connection, as many expats in the Philippines do. The foreign address issue will probably not be an issue either, as Navy Federal has locations and customers outside of the US. In this last point I am just making the assumption based upon what I know for a fact about Penfed. It just seems to make sense that these military/government oriented financial institutions are well used to customers with OCONUS addresses.

I have had accounts at Armed Forces Bank in the past, but I cannot say for sure if they allow non-government/military customers to have accounts with them. I presume that they do being a bank and not a credit union and I would also make the previous assumption about a foreign address not being a problem.

I had an account with Navy Federal years ago and the location that I used was not on a military base, though many are. The AFB where I opened my accounts was on a military reserve and it looks like most AFB locations are also located on military posts. This may not be a problem, because I have done business with Pentagon Federal for decades and never once have I set foot in a physical building.

The only bank that I would actually recommend from the above is Penfed. 

Penfed is an excellent credit union, in my opinion. 

The Bottom Line


Your bank may attempt to talk to you about this matter before they ever close your account, but they might just suddenly close the account without warning. If this happens you can contact the bank and if that fails, then you can contact the Treasury Department to file a complaint.

If you go to the Treasury Department website you will find a link to another government site called Help Me With My Bank. At HelpMeWithMyBank.gov you will find potentially bad news:
The bank closed my checking account and did not notify me. Is this legal?
Yes.
Generally, banks may close deposit accounts for any reason (e.g., inactivity or low usage) and without notice. Federal banking laws and regulation do not address the closing of deposit accounts.This issue is governed by the Deposit Account Agreement you received when you opened your account. Review that Agreement, and contact your bank directly for more information.  
Even though this is the case you still might be able to prevail by filing a complaint:
If you need to file a complaint against a credit union, then you you study mycreditunion.gov.

The complaint process does not look like fun. The bottom line is that to avoid Patriot Act snafus and bank account closures or threats of closure simply maintain a US address through a trusted friend/relative or via mail forwarding service. The MFS that I use is a gem and costs between $0 and $50 per year depending upon what I need to do with it. Others may run somewhat more than that for the basic address parking and whether or not you want it to receive post mail. 

FYI: it cost me $100 to ship a credit card through my MFS. Yeah, that's steep, but well worth the peace of mind in knowing that it will get to me.

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