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…
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.