Banking with an economic citizenship

This is Week TwentyFour 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: Ulaanbataar, Mongolia

In the last couple of years, I’ve worked with several former US citizens who have given up their US passports and renounced their citizenship. The main drive behind the decision to renounce was that it had become so untenable for them to do business as US citizens. Now, I’m not here to tell you that you need to do that. I have not renounced my US citizenship, despite having the ability to do so thanks to my economic citizenship and other second passports.

Whether you choose to renounce your citizenship or not, there tend to be several misconceptions about the whole process. For instance, I recently did an interview about the Nomad Passport Index with the Russian Sputnik Radio World Service based in Washington. Of course, the question came up about why the United States was ranked 35th in the index (largely due to the lack of freedoms in relation to the Foreign Corrupt Practices Act, OFAC, FATCA, and the restriction of having to pay taxes on your worldwide income).

When we posted the interview on YouTube, there were the usual nationalist folks who said “This guy is ridiculous. People are risking their lives to come to the United States every year.” While I have my arguments against such logic, there was one guy in particular whose argument shows just how much misunderstanding exists about the reasons people choose to renounce. The comment labeled every renunciant as a tax cheat and argued that the only reason people choose to renounce is because they’re rich and want to evade taxes.

Well, let me tell you something: unlike the anonymous people commenting on YouTube, going around burning bridges and releasing their vitriol on the world, I know people who have renounced their citizenship and I can assure you that tax alone is not the issue. For one, there are ways for the average person to reduce their tax burden to zero without ever giving up their citizenship. We do that every day here at Nomad Capitalist — I’ve done it myself and now I help other people do it.

If you’re making most of your money through business, unless you’re running some gargantuan mega-million dollar business, there’s probably a way you can reduce your tax — at the very least, you can reduce it to rates as low as 2-3 percent. On the other hand, if you’re an investor, it can be very difficult. Also, if you’re running a big international business or doing different international deals, having a US passport can be an issue.

This isn’t an issue just for US passport holders, either. If you’re Iranian or another nationality from a country that has sanctions, you can’t open a lot of bank accounts or do deals in different countries. For example, Georgia accepts certain sanctioned nationalities at their banks, but they won’t let them bank in US dollars because the US government won’t allow that. They control the flow of the dollar. So doing business that way can be difficult.

We’ve also talked before about how being Israeli can keep you out of certain countries, or at least bring on certain judgments, even if you can get into the country. Malaysia and Indonesia are two very moderate countries that won’t let Israelis in. In certain Arab countries, Jews from the United States can visit, but Israelis cannot. So any number of nationalities experience disadvantages, not only the United States.

With that in mind, if you do choose to renounce your US citizenship to avoid the issues that come with it, how will you know that your new passport will not bring on similar limitations? More specifically, how well do economic passports function when it comes to offshore banking?

Will banks believe your identity?

One of the first concerns people have when obtaining an economic citizenship is whether or not they will really be considered a citizen of country XYZ. Will you really be Dominican? Will you really be Comorian?

Here’s the answer to that question: you are what passport you have. That’s the nature of it. You may be an American by birth because that’s your culture and your traditions, but if you have Comoros citizenship, you are a Comorian.

When I went to a new country recently and presented my passport, I got asked: “I’m sorry, what is your nationality?” And, pointing to my passport, I said: “I’m that.” The natural instinct, even for me occasionally, is to say “I’m American.” That’s where I’m from. Well, no. If you’re using an Italian passport, you’re Italian. If you’re using a Dominica passport, you’re Dominican. That is why the question was kind of odd coming from the person, but I got through no problem.

However, people have this concern of whether or not the bank is going to believe them. From experience, I can tell you that it is possible to open bank accounts as an economic citizen. I recently did this in Azerbaijan. I wanted to see, not only could I use an economic passport, but also whether I could use an economic passport that I did not use to enter the country.

(This is an interesting question that comes up a lot because people oftentimes want to see your ID when you go to buy a SIM card or check into a hotel or any number of things. The only place where I’ve ever been called out on this was in India. Every hotel in India wants to check your passport to see your entry stamp. The country is very bureaucratic.)

In Azerbaijan, I went to open a bank account and took the Comoros passport. Now, do I look like I’m African? No. But I have a friend who’s a filmmaker who, when I told him I was getting Comoros citizenship, told me that he spent five years in the Comoros Islands as a child. Maybe he was naturalized! Who knows. Either way, he doesn’t look African either but has a legitimate claim beyond economic citizenship to the country.

Citizenship is more than just what you look like. And the bottom line is that a country gets to naturalize whoever the heck they want to. They get to choose who their citizens are. It’s not up to the border agents or the banks to make that determination. But does this theory hold up in practice? Well, that’s why I went to Azerbaijan…

Opening a bank account in Azerbaijan

Azerbaijan is known for being a little bit lax, but that’s not why I went there. I just wanted to see what would happen if I used the Comoros passport. And what happened? First, the banker had to call somebody and ask for help to know what to key in. That’s common with an economic citizenship, Comoros perhaps the most so. But most people probably haven’t heard of Malta or Dominica, either. I suppose Antigua and some of the other ones have more of a Caribbean ring to them, but people don’t know where a lot of these passports are located.

However, just as there was a little confusion when I entered Malaysia on my Comoros passport that was quickly cleared up after a look at the books, I found the same thing to be true with the banks. The banker attending me called the manager and they opened the account, no problem.

The only issue was that she asked me to sign the form stating that I’m not a US citizen and I said “I am”. They gave me a bunch of jumbled forms and I eventually came back and signed. Who knows what they’re doing with that now, but as a US citizen, I will report the account. As long as you are a US citizen, make sure you report your accounts.

Another reason to renounce

For many, that’s the reason why you may not want to be a US citizen. Reporting your accounts can get tiring. Many people think that banks will love you because you’re an American from a “first world” country. On the contrary, the worst thing that you can tell a banker is that you’re an American. But you’ve got to do it.

Now, a lot of banks don’t care. I work with US citizens and I am one myself and, from experience, I’ve found that you can still go around and open plenty of bank accounts. Some welcome you with open arms and others don’t really care. However, many banks do care and the list of banks willing to deal with all the extra paperwork required for Americans will probably shrink over the years. Right now, though, there are still a number of places where US citizens can open bank accounts.

That said, being an American is still the worse thing that you can be for banking. Now, just like the United States is well-known for having FATCA, anyone from a country that is well-known for their problems is going to have issues too. The banks are going to give you a serious look. And, unfortunately, banks stereotype. That may play in your favor if they tend to trust westerners more, but it’s something that happens and that you should be aware of. Do you look like a trustworthy person? That matters in banking too. Not just your passport.

But the big question is whether or not you can renounce your existing citizenship (or, if you’re Chinese, can you risk that your passport might be taken away) and still be fine in terms of banking, say as a Dominican citizen. Based on my experience, both in Azerbaijan and elsewhere, the answer is yes. You’ll be fine.

Are there exceptions? Sure. When I went to Montenegro with a Comoros passport, they said “We have no idea where this is from, we’ve got to look it up, we’ve got to call ten people…” But, quite frankly, that bank was quite difficult to begin with. That bank is having trouble taking Americans. And when I sent a friend of mine there to check it out, even though I got an account there as an American three years ago, he got hassled.

The right banks will want you

So the question should be, is that specific bank the kind of bank that wants to hassle everybody, or is it a bank that is open? Again, this is what we talk about here at Nomad Capitalist: “Go where you’re treated best.” Which is the easiest passport to get? I did the Comoros, even though I would have rather gone through the Dominica process, but they made it too difficult. I want to go where they make it easy.

To illustrate why, think of it this way: If you go out with a girl and she’s half an hour late and then on the date she’s a prima donna and she’s difficult, are you going to go out with her again? No! And it’s not going to get any better when you get in a relationship with her or marry her. And if your aren’t getting along with your girlfriend, marrying isn’t going to magically make everything beautiful. Whatever is happening is what is happening. And the same goes with your relationship with a country or a bank. If a bank is difficult, it’s difficult.

In my experience, there are plenty of banks that are open and that are just as open to Comorians or Dominicans as they are to Americans. And, in some cases, more so. So, is it possible to get a bank account as an economic citizen? My experience so far is yes. If I have new experiences, I will let you know.

Get your economic citizenship & 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.

Andrew Henderson

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The Nomad Capitalist team has helped hundreds of people create and execute holistic offshore plans to help them legally reduce their taxes, become dual citizens, and live the Nomad Capitalist lifestyle of success

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