A group lobby for expat Americans says its initiative to help members obtain a bank account is bearing fruit, ending a period when such access had become increasingly difficult for even wealthiest individuals.
With an estimated six to eight million expat US citizens and Green Card holders living outside the US and struggling, as has been seen in recent years, to get access to foreign financial services, a way to overcome this process has been gaining traction, its advocates say.
According to American Citizens abroad, a non-partisan body lobbying on behalf of expats, it has unlocked a barrier. Since the start of March this year, ACA and the State Department Federal Credit Union have partnered on offering an SDFCU Account available through ACA.
According to an email sent by ACA to its members in October about the facility and updating members about progress, the account is the same as held by Americans working in its embassies, consulates and other diplomatic missions. A person who wants to open such an account can reside full- or part-time abroad. Crucially, they don’t have to have an address in the US.
“More and more people have come through the gate,” Charles Bruce, ACA legal counsel, told this publication in a call. ACA acts as the introducing party and its membership has certainly been boosted by the possibility of members having access to this facility.
“At present, the problem for Americans is to open or even to maintain an account,” he said. An expat/Green Card holder lacking a US residential address - as can be the case in many instances - is a particular headache, he said. The new facility gives an American citizen a nifty solution to this problem. Also, when a person has such an account, it makes opening other financial accounts much easier, he continued.
“The springboard effect is very important,” said Bruce. A central benefit is that once an account is opened, a person can begin to accumulate a credit history, which makes subsequent financial affairs easier to manage. It is a virtuous circle, Bruce continued.
Such banks feared that new legislation (the FATCA Act) to enforce the US worldwide system of tax will make this group an unprofitable burden because of compliance costs. Some firms, such as Royal Bank of Canada, however, have made a point of continuing to cater to expats. Other firms operating in this space include Maseco, London & Capital, and the wonderfully-named Where Americans Are Welcome, the latter being a firm located in Switzerland.
The issue of financial service access for expats has created unintentionally ironic moments. A few weeks ago, the US ambassador to Switzerland, Susan LeVine, urged Swiss banks to be more accepting of US clients. The Alpine state has been affected by the FATCA legislation; it has also been the focus for US efforts to shut secret offshore bank accounts, leading to heavy fines on firms doing business in the US, such as Switzerland’s largest bank, UBS.
Regardless of such developments, ACA’s Bruce said the facility his members have access to is a game-changer. The initiative with the State Department Federal Credit Union is working. “We are seeing people sign up to it daily,” he said, although he could not give specific numbers.
The new deal will solve some of the problems but of course work remains to be done to make the life of expat Americans easier, he continued.
Under the system as it operates, the SDFCU account can be opened online; a number of financial planning and investment alternatives are available, including “Share Certificates,” similar to Certificates of Deposit and IRAs and other types of tax-advantaged deferred compensation accounts. Tax payments and refunds can be made and received electronically. Similarly, Social Security payments can be received automatically.
The challenges posed by the US worldwide system of tax - contrasting in most cases with a territorial approach in countries such as the UK - haven’t gone away, but it may be that a lobby group for Americans outside the US has taken an important step in resolving what has been a problem (and boosting its own membership rolls).