Why Do Foreign Banks Refuse to Open Accounts for Americans, and What Can You Do?

Many foreign banks refuse to open accounts for U.S. citizens because FATCA requires them to identify U.S. account holders, report their data to the IRS, and face a 30% withholding penalty on U.S.-source payments if they do not comply. For smaller banks, the compliance cost of serving even one American customer can outweigh the revenue from that account.

• FATCA compliance burden: Banks must implement due diligence systems to screen for U.S. indicia (birthplace, phone number, address, standing instructions to a U.S. account)
• 30% withholding risk: Non-compliant banks face 30% withholding on U.S.-source interest, dividends, and certain other payments
• Intergovernmental Agreements (IGAs): Most countries signed IGAs requiring local banks to report, but some smaller institutions opt out of serving Americans entirely
• Cost-benefit calculation: One U.S. account can cost a bank thousands in annual compliance overhead

Practical steps to open and keep a foreign bank account:

If your bank threatens account closure:

Provide your W-9 and any requested documentation promptly. Banks close accounts when they cannot confirm FATCA status, not because serving Americans is illegal. If your current bank will not cooperate, HSBC Expat, Citibank International, and several digital banks (Wise, Revolut) continue to serve U.S. citizens.

Remember that any foreign account you open triggers FBAR reporting once aggregate balances exceed $10,000, and Form 8938 reporting at higher thresholds.

For more information, see our guide on opening an offshore/foreign bank account.