Expats: Here’s why to close your US bank accounts and go offshore

Written by Andrew Henderson
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Updated August 11, 2016
Dateline: Chisinau, Moldova

Let me tell you a little story about banking in the United States…

I’ve been fascinated by the small Eastern European country of Moldova ever since reading that it is perhaps the “unhappiest country on Earth” in a great book called The Geography of Bliss.

Moldovans are ethnic Romanians who broke away from their Balkan brothers. However, the younger generation now wishes that they hadn’t and could be part of the European Union.

One thing that I’ve learned from traveling all over the place is that a country is rarely as bad (or as good) as its press. The “most miserable country” seems miserable in part because someone told you so.

While Moldova isn’t exactly an offshore banking safe haven, I stopped into a bank today to ask a quick question.

“If I open an account here, can I send money to other countries?”

The response from the only banker in the office that spoke decent English was a broken, “Why wouldn’t you?”

Here in Moldova, people of means know the importance of international diversification. They are advocates of flag theory without knowing it. What’s happened in their country over the years demands it of them.

Miserable or not, Moldova beats the United States in one category: they let their bank depositors send their money overseas without many hassles.

Penalties for being offshore

A consulting client of mine called me the other day to tell me that their US bank had been shut down because they had tried to wire money overseas.

She is literally shut out. No access. No online banking. Nothing.

This has happened to me before, so I asked what happened. Turns out, all she did is try to spend roughly $20,000 of her own money to an account — in her own name, mind you — in another country.

She opened an offshore bank account and wanted to send some money to it. Her US bank said ‘not so fast’.

US banks are the worst when it comes to letting you send money overseas. We covered some of these issues at our recent Passport to Freedom conference in Cancun. The entire US system has been set up to make it extremely difficult to get your money out.

The lady I was speaking to is an expat in Asia and plans to spend more time as a perpetual traveler in the next year. She has no permanent address and no plans to return to the United States.

Until she does, however, her accounts are on lockdown. She can’t get to them via online banking, can’t wire money, and can’t pay her credit card bills.

This isn’t how responsible, “first world” banking institutions work. This is how antiquated thieves steal your money under the guise of “security”.

Big Bank Bureaucracy

If this sounds like the act of some unaccountable bureaucrat, it essentially is. The 100,000-strong workforce of the largest US banks are a bunch of unaccountable idiots working for banks that have basically become part and parcel with the government they serve.

Think about it: a bank customer tries to send a wire transfer from her bank’s online dashboard. She had to log in to access online banking, and then receive a verification phone call to add a new wire recipient.

All it took in her case was some $3/hour Filipino at a call center to say that she was “uncooperative” with answering security questions from a blocked phone number, and… BOOM… out of business. At least until you buy a plane ticket and disrupt your life, just to set foot in some bank branch.

When this happened to me, I used much more difficult methods to get my money out and to other accounts. It was a pain, but it eventually worked.

Fortunately, I was able to pay my credit cards via wire transfer from a foreign bank. I have a “no US” policy in that I won’t visit or even transit through the United States, so if a bank demanded I return to the United States to “verify my identity”, I’d graciously refuse.

It isn’t the 1940s anymore.

Part of my five magic words — “Go where you’re treated best” — revolves around finding the countries and banks that not only offer stable institutions and sound policymaking but also ease.

Maintaining a simple checking account shouldn’t require you to verify 19 pieces of data, answer how tall your drivers’ license says you are and buy a fax machine to send in some forms.

Yet, that’s exactly how US banks (and, sadly, some Canadian ones, too) operate these days. They don’t care about making it easy, and they don’t care if you travel or live overseas. To them, the idea of living outside of the so-called promised land is something no one would do.

While banks in Hong Kong, for instance, realize plenty of foreigners come there to park their money, the United States is the world’s largest tax haven for foreigners, and they STILL don’t get it.

If you are a US citizen or resident who is living overseas and has accounts back home, I have a simple suggestion…

Close them.

How to close your US bank accounts

Just as you should never close certain accounts in Hong Kong for fear that you might never get another one open, use the knowledge that US banks are getting more provincial by the day to close up shop and move to greener pastures now.

Otherwise, you might have a really hard time moving your money out later. You can open all the offshore bank accounts you want, but if the money you want to put in those accounts is stuck somewhere else, they won’t do you much good.

The only reason to keep a US bank account is to pay US expenses like rent or a mortgage. But if you’re living overseas, why do you need a bank account to pay rent or mortgage?

End your lease or sell your house, especially now that the dollar is strong and most US real estate prices can’t stay at current levels forever.

My only US expenses are the odd credit card, and I only use credit cards that allow payment by wire transfer, such as an American Express Platinum card. AmEx is the type of company that realizes its cardholders are global citizens and may have overseas bank accounts.

If you need a US bank account to pay a credit card, a mortgage, or an investment, I would advise against that transaction. We no longer live in the 20th century and New York is no longer the center of the financial universe.

If a company can’t accept you sending their money from overseas, they don’t deserve it. A company that thinks Singapore is a character from Jersey Shore doesn’t deserve your business.

Take any company’s refusal to deal with customers who don’t have US bank accounts the same way you would a potential relationship partner on the rebound.

All I can say is that if you remain tethered to the US banking system, you may never get any of your money out.

If you’d like to have me help you with setting up your offshore affairs (or you’d just like to complain that your bank blocked your wire transfer), my team and I have set aside a limited number of consultations to help people take action. All the details are here.

Andrew Henderson
Last updated: Dec 28, 2019 at 4:57AM

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16 Comments

  1. baw

    A while back the New Zealand Government was selling some shares electricity companies.

    They made it very clear in the prospectus that these documents and shares were not to be sold to the US. This was due to the regulatory requirements which the USA imposed.

    And this was for very legit companies owned by the government of one of the least corrupt nations on the planet.

    The speed of a countries growth may be inhibited if it binds itself in regulation. And I don’t see why the USA should meedle in my countries affairs or block it’s own citizens from buying these shares.

    Reply
    • Darrell

      One word: Bitcoin.

      Reply
  2. Robb Gorringe

    Andrew,

    Love your stuff & subscribe to your email list. Currently living abroad, and I’m getting closer to moving my money there as well. Nice article.

    Robb

    Reply
  3. Nomad Capitalist

    Ostensibly, yes, although I imagine that if you were sent to the 7th circle of hell, you’d find an HSBC USA branch.

    Reply
    • P Kennedy

      Oh, is THAT their problem? I tried to open bank accounts with HSBC-UK, HSBC-Canada, and then HSBC-USA. I finally succeeded with HSBC in Buffalo, NY, only to have had this mysterious wiping out of my entire accounts in one fell swoop, recently, after being with them for about, oh I’d say 10 years now.

      Reply
  4. Nomad Capitalist

    While telling people that “[Insert name of country US persons wouldn’t be seen dead in] is the fraud capital of the world”.

    Reply
    • P Kennedy

      Yeah, that country is [Canada, France, the UK, Belgium, Switzerland, Holland]…

      Reply
  5. P Kennedy

    I’ve used Bank of America overseas before – now that was 12 years ago, so now they have a “travel alert” option on your account page on your online banking, so there’s hope that it works this next time too. I can’t close the accounts because they’re my father’s and mine and they still generate interest into my accounts and there is no way on Earth I would ever qualify to open an account in my name with my farked-up credit that generates any decent % of interest whatsoever. So I guess, I’m glad it’s Bank of America.

    Reply
  6. P Kennedy

    Yeah, like whatever happened to my HSBC accounts. HSBC is worldwide and I had been counting on that one to use overseas. I remember depositing a check and then all of a sudden my entire balance of both accounts were somehow wiped out.

    Actually, this applies not just to banking from overseas but trying to bank from the “Heartland” if your life and all of your accounts, etc, are based on either the West Coast or the East Coast. My accounts are based in San Francisco and other stuff is based in Boston and I’m in “the Four Corners area” and having a bat-crap awful time getting anything done, getting anything sent, getting anything in the mail, I mean, I had to re-order another of my own birth certificates from Canada and Bank of America put a freeze on my debit card and made me log in to online banking and verify “potentially suspicious charges.” Geez. I mean, I”m technically still IN the States and I have Bank of America getting suspicious at charges I make TO other countries. Done from what they consider “the middle of nowhere.” So I’m glad there’s a way to notify the bank that you will be overseas via online banking — but I didn’t realise before coming out here to this Fourth World Country with “Lawyers Without Borders” that the banks on the Coasts treat THIS like it’s “overseas” or somehow, WORSE. I do realise that it’s about whether or not your bank thinks that a scammer or terrorist has hacked into your account. I remember one time, in Providence, I had to go in to a branch (it was a Saturday) because my debit card and my savings ATM card had BOTH stopped working all of a sudden – I couldn’t put gas in the car, couldn’t get cash out of an ATM machine, nothing – and argue this case in front of someone in person, and they brought up something they thought was suspicious – that I had lived in Montreal for 2 years like, at the time, 10 years ago!!! I keep forgetting that the US side of what is, after all, North AMERICA, acts like Canada is not only not “America” but is to be viewed with increased suspicion. If you’ve been in Canada and then come back to the States, your bank will treat you like a terrorist. ??

    Reply
  7. P Kennedy

    I’ve had the same problems with Western Union transfers WITHIN this country getting blocked, but it was by Western Union’s online site and not, yet, through Bank of America. Yet.

    Reply
  8. Jerry Hutcheson

    It is nerve wracking to think that I will not be able to get my money out when t he time has come for me to leave. I am not ready yet but I will be soon.

    Reply
  9. Ken Morris

    This is an interesting opinion for how strongly critical it is of US banks. What, just close your account(s) and don’t deal with them anymore?

    Reply
  10. Joe Expat

    As a seasoned expat (over two decades abroad), I can tell you unreservedly that closing your US accounts is one of the most bone-headed moves you can make! The US has the most competitive, advanced and rewarding financial system in the world. And, you can easily avoid all the hassles mentioned in the article by keeping accounts under a US address and notifying the institutions to turn off the overseas fraud protection because you travel abroad all the time. Simple!

    Reply
  11. Mike R

    JPM is about to close out my father’s IRA because he lives overseas (S Korea) and is not a US resident anymore (is French), any suggestions on where to transfer the IRA to in order to not get hit with withholding taxes once JPM liquidate the IRA?

    Reply
  12. Rob P.

    I’m a newbie expat and still have my bank and credit card accounts in the US. I have a mail forwarding service/address, but read that does not work for banks and credit cards. They somehow know. And it could lead to account problems. So I am using my brother or sister’s address in the US for financial matters. The biggest reason being is that my pension check needs to keep being deposited in the US or the IRS will take their unfair share before it gets into my account. Anybody else dealing with this around a monthly pension auto-deposit? (And the IRS with their sticky fingers)

    Reply
  13. Guy Triggs

    “If you are a US citizen or resident who is living overseas and has accounts back home, I have a simple suggestion… Close them.” This is extremely bad advice. It should have gone: “If you are cutting your ties off to the U.S. and will have no assets or obligations there, i.e. become like the author of this article, then close the U.S. bank accounts as part of that process.” Otherwise, for most people with a leg in the U.S., closing the bank accounts would be, as someone else said, the dumbest thing you can do. Also the nightmare situations described in the article are merely episodic. If episodes are arguments, I can say I only had to write a personal check (for some $70k) and deposit it at a local (i.e. foreign) bank. The money went through. Never had to apprise the U.S. bank in advance etc. I must have made hundreds of online logins and dozens of calls into several U.S. banks from abroad for several years without any bank hindering any activity. If you have to choose a simple advice, this is the one for you: Keep your U.S. bank accounts.

    Reply

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