- Written by Mike Fraiman
The Expat's Guide to Opening a Bank Account Abroad
Living an expat's life is a dream for many—but nothing drags that dream down to earth like tackling personal finances in a foreign country.
By Ryan Murdock
The last time I opened a bank account in Canada, it took me 15 or 20 minutes. I just walked in off the street on an impulse and filled in an application. I only had to show them my driver’s license as proof of identity. And the best part is, the bank was in the grocery store, and they gave me points when I bought bananas with their debit card.
I remember laughing about that at the time, but now I look back on it as a sort of Golden Age of Banking.
You see, opening an account abroad, especially in a new country, is a much more complicated and time-consuming ordeal. Increasingly strict global regulations against money laundering, combined with “know-your-customer” policies and laws, are mostly responsible for this.
It’s not uncommon for the process to take up to eight weeks, so you would be well advised to get the paperwork started long before you make your move.
What will you need?
Specific requirements vary, but here are a few of the typical documents you’ll be asked to provide:
- Application form, in which you must outline the expected amount of incoming and outgoing funds each month, as well as your source of funds
- Certified copy of your passport or government-issued photo ID
- Certified copy of a recent utility bill, or some other form of proof of address
- Bank reference letter—this ranges from uncommon to totally unheard of in Canada, and it may take you some time to obtain one
- Professional reference from someone like a lawyer, doctor or accountant who has known you personally for at least three years
- Occasionally, proof that you’ve paid all due income taxes in the country you’re moving from in order to transfer funds
Sounds like an enormous pain, right? But even if you jump through the hoops and meet all these requirements, there’s no guarantee that the bank will accept you and open your account.
If you’re an American citizen, you may find it very difficult to open an account in any foreign bank at all.
Many banks abroad are turning away U.S. passport holders simply because they don’t want to get involved in the complex and expensive reporting requirements that have been imposed on them by the U.S. tax authorities under their new FACTA legislation. It’s simpler to just have nothing to do with American clients.
Given all of these complications, I recommend applying to several different banks at the same time, because one or all could turn you down, and you might avoid months of delays by having several irons in the fire.
If you get accepted at more than one bank, I suggest using one account as your primary one, and maintaining the other with a small amount of funds as a backup. Or you might hedge your risks even more by dividing your funds between two different financial institutions.
Think that sounds like overkill? Do a search for “Cyprus” or “Greece” and “bank failure,” and imagine suddenly having to get by with the money you have in your pocket right now.
Elevate Your Finances to the Next Level
Okay, so let’s move on and assume that you’ve successfully opened a bank account in your new expat country of residence. What next?
It’s a good idea to familiarize yourself with the fee structure of your new bank, because things can work quite differently abroad.
For example, wire transfer is a common form of payment in Europe, and you can set up your own wires to other EU countries using your online banking access for as little as a couple euros. But try sending yourself a wire from North America, and you’ll find yourself having to go to a teller, who will charge you up to CAD$80 for the privilege.
If you’re only planning to stay abroad for a few years, you might decide that it’s simpler to just keep your existing account in your home country and draw on that for living expenses. But high ATM foreign-withdrawal fees would likely make this impractical or unaffordable for most. And you’ll probably want to maintain a local account simply to pay regular household bills.
Prevention is the Best Financial Medicine
So what can you do to make this long and painful process easier?
First, get that paperwork done early. And keep certified spares of everything—proof of identity, reference letters, and proof of address—in case you need to do it all again.
Next, do some research to see if you can hack the process just a little.
If your current bank has branches abroad, you might be able to transfer your account to your new country simply by filing a request. You can do this with certain credit cards, like American Express.
It’s also a good idea to check if any of the major banks in your expat destination have foreign branches in your home country. You might be able to open an account from home before you fly out.
That was the case for me. Toronto has a large Maltese expat community, and at the time of my move, the Bank of Valletta maintained a business office in a suburb of Toronto. I simply sent them an email, explained that I was relocating to Malta, and asked if they could help me establish an account.
It was a very simple matter of gathering the required documents and driving over to meet them in person. The head of the office even sat down and filled out the application form for me as we chatted about life in Malta, and all the places they thought I should see.
The entire process took less than two weeks. And I even had an ATM card before I moved abroad. Had I waited and attempted to open an account at a local branch in Malta, it would likely have taken up to two months.
Have you opened an account abroad? Do you have a horror story to share with our readers? Please post it to the comments below. I promise I will sympathize with you, and curse the bankers on your behalf.