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Where you keep your money when you move abroad has taken on new importance with the implementation of the Foreign Account Tax Compliance Act (FATCA) by the U.S. Internal Revenue Service.
Many American expats have been having a difficult time opening and maintaining bank accounts abroad primarily because FATCA requires all foreign financial institutions to provide annual reports to the IRS on accounts held by Americans living abroad with more than $200,000 in their accounts. The high cost and complexity of compliance with FATCA is driving many foreign banks that serve expats to turn them away.
What should you do? In our new article “Planning Your Banking Needs Before You Move Abroad” we ask international banking consultant Jane Hennessy to sort through the options and provide her views on the best banking approach for you to take.
Hennessy says that you should start developing a plan that keeps two key considerations in mind: flexibility and security.
Flexibility means easy, hassle-free access to your money no matter where you are living. It also means the ability to transfer your money internationally and have access to cash both in the U.S. and your new country. Security is simply how safe your money is wherever you have it deposited.
Many financial experts recommend that you consider keeping a U.S.-based account for its convenience and flexibility and to ensure financial history continuity if you plan to return to America.
Hennessy agrees: “I think people should think long and hard about keeping their U.S. account. You may come back someday and need your credit history maintained.”
Hennessy explains that with integrated global banking systems and online banking, it’s very easy to use a U.S.-based bank from anywhere in the world.
She offers many pointers on choosing both international banks and local banks, but whichever banking option you choose be sure to look for the flexibility and security that best meets your needs. And, start your planning well in advance of your move abroad.
You can find out more details on FATCA’s impact in our article “FATCA Impacts American Expat Local Banking.”