This is Week Six of the 26 week series #MyEconomicCitizenship. Each week I give you a glimpse into my life as I share the ups and downs experienced in pursuit of a second passport through economic citizenship. Each feature includes my weekly journal walking you through the process of obtaining economic citizenship, followed by an in-depth look at some of the most important topics people considering economic citizenship should understand. The series is presented by Nomad Capitalist in partnership with Peter Macfarlane & Associates, whom I worked with to obtain my passport. To read the entire series, just click here.
Dateline: Maseru, Lesotho
A couple of weeks ago we took a look at what would happen to your benefits if you were to renounce, and this week we continue along that line and examine what will happen to your finances. To begin, this post is largely for the people who plan to renounce their citizenship — US or otherwise — but we’ll also discuss how getting a second passport will affect your financial situation.
In fact, let’s start with that.
US banks for second passport holders
Having a second passport, in and of itself, does not inherently change anything about your situation. If you are banking in the United States and you have a US passport, you should keep using your US passport. It shouldn’t change anything. Even if you are a US citizen with seven other citizenships, to the US government and US banks you’re still a US citizen.
[Side note: One thing I do tell people when they get a second passport is to keep it to themselves. There’s nothing wrong with sharing it, but don’t do so unnecessarily. Don’t go bragging to your bank. Don’t walk into Chase Bank in Salt Lake City and say you hate the United States and that you’re going to renounce your citizenship because you just got a Dominican passport. Don’t do that. No need to be shy, but don’t bring it into conversations where it’s not needed.]
Now, wherever you are a citizen, they will always view you as a citizen of that country. That’s why you have to enter that country on that country’s passport. If you’re US and Canadian, you enter the US as an American. You don’t enter the US as a Canadian, you’re not allowed. The same rule applies in most of the world.
It’s also the same for the financial institutions that you deal with. While there’s no need for you to tell your bank that you have other citizenships if they ask you should tell the truth. I would never encourage you to lie to your bank. You should always tell a bank the truth.
However, the only time I’ve ever been asked if I have other nationalities that I can recall is when I was applying for global entry (the US “trusted traveler” program that my United card paid for so that its elite members could allegedly bypass the security lines at three different US airports). In all my travels and experiences, that was the only time I can recall ever being asked “Do you have any other nationalities?”
So if you’re asked, volunteer. If you’re not asked, don’t.
The bottom line is that when you get a second passport, you don’t need to shut any of your accounts down. Nothing particularly changes.
Using a second passport to open offshore accounts
What does happen, however, is that when you get new accounts you can choose what passport to use. Now, the difficult thing when you’re a US citizen is that you really should be honest and tell them that you’re a US citizen.
I’ve heard of guys who use little tricks, but I wouldn’t recommend them. For example, I know a guy who got Irish citizenship and it just so happened that the county he was from in the US had the same name as a county in Ireland. When he was asked where he was born, he just put the county.
I never know what to put on my passport, but when asked I put Ohio, USA because I don’t think they care so much about Cleveland. But I guess passports accept a lot of different answers and this guy tried to pull one over on people so that when he went somewhere with his Irish passport he could claim that he was not American — or at least they’d never suspect he was because they’d just automatically assume that he was born in the Irish version of the county.
I don’t really recommend doing that.
After all, if you’re still a US citizen then you’re under the requirement to declare any foreign bank account. If you open a bank account with a Dominican passport — or whatever other passport you have — and you’re a US citizen, you should declare it. This is especially true if you were born in the US, which is most of us. Most of us don’t get US passports without being born there.
So you should declare and you should fill out the forms. You’re required to, anyway. Remember, the US government doesn’t care what other citizenships you have, and that includes when it comes to opening (and reporting) bank accounts. You have to declare that you’re a US citizen. You even have to report your bank accounts, whether the bank has your US passport or not.
I wouldn’t play games with the bank… and there’s no way to play games with the IRS and the Treasury department.
How will renouncing citizenship affect my finances?
Now, let’s talk about what happens if you are no longer a US citizen. The first plus is that there are going to be banks that will be more open to taking you. For example, some banks in Switzerland are more open to taking non-US citizens. I’ve even seen banks in Hong Kong (where it’s becoming very difficult) be more open to non-US citizens.
For instance, I’ve seen situations where two guys go in and it’s easier for the non-American than it is for the American to open an account. I saw that when I went with three other non-Americans to Singapore last year. I was not opening an account, but I noticed that the more free and easy-going their countries were the easier and faster it was for them to open their accounts.
But what happens to your accounts back home if you renounce your US citizenship? To be perfectly clear, this is not legal advice. I am not a lawyer, banker or accountant. However, the impression that I’ve received from asking numerous people is that if you renounce your passport — and it could be a US passport or most others — it doesn’t necessarily mean you have to close your accounts.
For example, if you open a bank account or credit card in the US with a social security number and you have a credit report, you don’t lose your social security number. Remember from a couple weeks ago: you don’t lose Social Security benefits if you renounce. It’s still yours. You still have a number. You still have a credit report.
Furthermore, if you have existing credit cards there’s no need to close your account because you renounced your citizenship. For example, I’ve got a US-based American Express card and I think the US has the best American Express cards out there. I don’t want a Malaysian American Express card. I want a US American Express card. From consulting with American Express I’ve learned that as long as you still have a social security number and a credit report and you still pay the bill on time, you should be fine.
Other banks have told me the same thing.
Applying for new credit after renouncing
Again, that’s just me asking a bunch of different people. Who knows what it really is. The real issue is applying for new credit. Here’s the deal: there are a lot of banks and credit cards in the US and in other countries that ask whether or not you’re a US citizen or resident. If you renounce your US citizenship, you’re not likely to become a US resident. If that’s the case, you’ll have a tough time getting approved for more credit.
There may be some banks that will offer you new credit, however, your choices will be limited in both quantity and quality. For example, Bank of America had a big thing where they were accepting “illegal aliens”. They were opening credit cards for them, BUT they had to have a credit score. But who wants a credit card from Bank of America anyway? It’s a horrible bank.
So, yes, you may be able to get new credit from certain banks, but you won’t have access to the best options — especially if you’re trying to get US credit cards that earn better miles. In a nutshell, you may be able to keep your existing accounts, but it’s more difficult getting new accounts.
Get your own economic citizenship and second passport
My goal in doing this series is to help as many people as possible become global citizens by obtaining second citizenship. I live this stuff, in part, so that I can better help individuals like you reduce taxes, obtain a second passport and experience more freedom.
If you’d like to work with me directly to create a wholistic global citizenship strategy, then click here. We’ll go through an entire deep dive process to determine exactly what you need — from passports to residency to where you’re going to live — all so we can get you to your end goals.
If you’re just interested in getting a passport and already know which passport is the right choice for you, then you can go directly to Peter MacFarlane & Associates’ website and contact them by clicking here.
If you’re still determining which approach you should take, feel free to keep reading this series to garner all the knowledge you need to form a vision and actionable plan for the future.