Banking: account access, reporting and checks across borders

What this flag means

The banking flag is the country, or countries, where a person holds bank and financial accounts. Opening an account abroad is a decision by the bank under its own risk policy and its country's anti-money-laundering law, not a right that comes with a passport or a residence permit, except where a specific law grants one. Once the account is open, the bank applies automatic exchange rules that tie the account to the holder's tax residence, and the holder may have reporting duties of their own. The money in it is protected, if at all, by the deposit protection scheme of the country where the bank is licensed.

Expect residence to shape account access

Banks usually ask where you live, where you are tax resident and why you want an account in their country. The answers affect which accounts are offered, which documents are needed and whether the application goes ahead. Rules differ widely by country and by bank, and accounts for people who do not live in the country may be limited or unavailable.

The European Union has a specific rule for consumers. Directive 2014/92/EU gives consumers legally resident in the EU, including those with no fixed address and asylum seekers, the right to open and use a payment account with basic features. It also bars credit institutions from discriminating against consumers legally resident in the EU on grounds of nationality or place of residence when they apply for an account in the Union. The same directive requires a bank to refuse an application where opening the account would breach anti-money-laundering law. Outside rules like this one, acceptance is the bank's decision.

Understand CRS automatic exchange of information

The Common Reporting Standard (CRS) was developed by the OECD for the automatic exchange of financial account information between tax authorities. Under it, financial institutions identify the tax residence of their account holders and report accounts held by residents of other participating jurisdictions to their own tax authority, which passes the information to the country of residence.

In the EU, Council Directive 2014/107/EU brought the CRS into EU law, with due diligence and reporting rules described as fully consistent with the CRS, for taxable periods from 1 January 2016. For each reportable account, the information exchanged includes:

• Name, address, tax identification number, and date and place of birth of each reportable account holder.
• For certain entity accounts, the entity's details and those of its reportable controlling persons.
• The account number and the name and identifying number of the reporting financial institution.
• The account balance or value at the end of the year, or the closure of the account.
• Interest, dividends, other income and sale or redemption proceeds, depending on the type of account.

Know what FATCA means for US persons

FATCA is a US law. The IRS states that it generally requires foreign financial institutions and certain other foreign entities to report on assets held by US account holders, or face withholding on certain payments. Many countries have signed intergovernmental agreements with the United States on how this works. This is why banks around the world ask whether an account holder is a US person.

US persons have reporting duties of their own. A US person with a financial interest in, or signature authority over, foreign financial accounts whose combined value exceeded 10,000 US dollars at any time in the year must file an FBAR electronically with FinCEN, not with the tax return. Form 8938, a statement of specified foreign financial assets, is filed with the income tax return when its own thresholds are met. Filing one does not replace the other. See United States and Tax residency.

Prepare for identity and source-of-funds checks

Anti-money-laundering law requires banks to know who their customers are. UK regulations, as one example, require regulated firms to identify and verify the customer, identify the beneficial owner, assess the purpose and intended nature of the relationship, and monitor transactions on an ongoing basis, including the source of funds where necessary. The depth of the checks follows the firm's risk assessment.

Expect to be asked for documents and to be asked again over time. Having them ready makes the process clearer for both sides:

• A valid passport or national identity card, and sometimes a second identity document.
• Proof of address where you live, such as a recent utility bill or lease.
• Your tax identification number and a self-certification of tax residence.
• Evidence of where the money comes from, such as employment contracts, payslips, a property sale contract, company accounts or an inheritance document.
• For a company account, its constitutional documents and details of its directors and beneficial owners. See Company.

Verify deposit insurance for each country and bank

Deposit insurance protects deposits up to a limit if a bank fails. It is run country by country, and the limit, the currency, what counts as a deposit and how claims are paid all differ. Check the scheme of the country where the institution is licensed, and check that the institution is a member.

Two examples: in the EU, Directive 2014/49/EU sets the coverage level for the aggregate deposits of each depositor at 100,000 euros, with temporary higher protection for some deposits such as proceeds from the sale of a private home. In the United States, the FDIC states that deposits are insured to at least 250,000 US dollars at each FDIC-insured bank. Other countries set their own limits, and investment products may fall outside a deposit scheme.

Keep the bank's records in line with your residence

Under the CRS, the country that receives information about an account is the one tied to the tax residence the bank holds on file. When you move, your residence may change for tax purposes, and the bank may ask you to update your self-certification. Tell your bank when your circumstances change.

Where an account sits does not decide where you are tax resident. Your residence is decided by the tests described in Tax residency, and an account abroad can add reporting duties in the country where you live or hold citizenship.

Keep your banking data out of research tools

FlagSage never asks for, stores or processes online banking passwords, card numbers, account numbers or balances. The Exposure check and the Day ledger work with countries and days only. If any page or message claiming to be FlagSage asks for banking details, do not provide them.

Common misconceptions

Questions to take to a professional

1. Given where I live and where I am tax resident, what reporting duties would an account in this country create for me?
2. If I am a US person, which FBAR and Form 8938 duties would apply to my foreign accounts?
3. How does the bank's country exchange account information, and with which country would my account be reported?
4. Which deposit protection scheme covers this institution, up to what limit, in what currency, and which of my products count as deposits?
5. What documents would show the source of the funds I plan to move, and how should I keep them?
6. If my tax residence changes, what do I need to update with each bank, and when?

Questions people ask

Where this guide stops

Sources

• Automatic exchange of information (OECD)Official guidance
• Council Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxationPrimary law
• Foreign Account Tax Compliance Act (FATCA)Official guidance
• Report of Foreign Bank and Financial Accounts (FBAR)Official guidance
• Comparison of Form 8938 and FBAR requirementsOfficial guidance
• Directive 2014/92/EU on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic featuresPrimary law
• The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, regulation 28Primary law
• Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (recast)Primary law
• Deposit Insurance | FDIC.govOfficial guidance