Banking for expats in recent years has become a rather tiresome problem. In the United States, especially, banks have recently tightened their requirements for accessing and sending money, all in the name of Wars on “Terror, Drugs, Money Laundering, etc… ad nauseum.” Uncle Sam is also wanting to make certain that everyone pays their taxes.
One result of these rules is that it is quickly becoming a real hassle to deal with banks in the United States. Accessing your money can become quite complicated when you are living overseas, and resolving problems is no longer very simple, often requiring in-person visits or mountains of paperwork. Wait a minute. Wasn’t the Internet supposed to make things simpler? Well, not with banking. With the US government, money in overseas accounts is money you are hiding. It is money that could be used for nefarious purposes. No matter the fact that you live abroad. No matter the fact that you have daily living expenses. YOU now need to prove that you aren’t doing anything wrong. It is not just in the United States, though. Many banks in the world now refuse outright to open accounts for US passport holders, or are closing accounts. Why? The reporting requirements demanded by the US government are tedious, expensive to implement, and often violate the local laws where the banks are located.
So, you decide to move, and you need someplace to keep your money. In the Philippines, many banks either forbid foreigners to open accounts, or make it difficult for foreigners, especially non-resident foreigners, to open accounts.
There are a number of reasons behind this:
- Foreigners who are non-resident are viewed as liable to abscond the country, leaving the bank holding debts.
- There are no credit bureaus here, so foreigners have a difficult time proving credit worthiness (Before anyone gives me any grief on this, banks in the USA usually require good credit to open even a savings account).
- If you are non-resident (Like on a tourist visa), the assumption is that you have accounts elsewhere, so no need to open one here.
- The reporting requirements demanded by the US government require more expense than the bank deems beneficial to acquiring a customer.
So, it can be difficult to open an account here. Most banks in the Philippines, for permanent residents, will open an account once ample proof of income is provided. You can often also be added as a co-holder to a spouse’s account. As opposed to the USA, bank managers in the Philippines have an enormous amount of pull: A personal referral to a bank manager can open doors that are otherwise closed. Likewise, policies at one branch can vary from another branch of the same bank, depending on the strength of that relationship with the person referring the foreigner (If the referrer has a lot of business with the branch, THAT is taken into great weight in the unknown foreigner’s benefit, or detriment).
So, what do you do?
My suggestion is often thought of as being only for the rich. The “James Bond” world of numbered offshore accounts, and so on: The reality is quite different. Offshore banking can be for everyone, but you need to keep perspective.
Twenty years ago, I opened my first account in the Bahamas. It took all of 15 minutes, my passport, and $100. Those days are long gone now. However, here’s some facts:
- The “secrecy” so often trumpeted is largely history now. Yes, some jurisdictions still offer numbered accounts, but courts have recently been requiring many of the old offshore banks to disclose ownership. In other words, if you are hiding from the tax man or other authorities, they eventually will find it.
- There are “semi-secret” banking locations that survive. Singapore, Hong Kong, and Macau are the three closest to the Philippines. (Singapore requires residency to open an account). The Philippines is not secret, but the banks here usually are not very cooperative with foreign officials unless ordered by the Philippine courts.
- High net worth is not mandatory, but it certainly helps.
- Most offshore banks offer ATM and Internet access to your funds.
So what brought this article on? Well, I’m not hiding anything. However, I was having great difficulty in receiving my salary here… Even with Philippine accounts. So, my solution was simple: Hong Kong.
I opened what is known as a Multi-Currency Savings Account with Standard Chartered bank in Hong Kong. Effectively, I can receive wire transfers in any currency, and I can then shift to a savings account in Hong Kong Dollars, or any other currency, at VERY minimal rates (Only a couple of basis points above Interbank rate). I have Internet banking that allows me to instantaneously issue a TT (wire) to anyone in the world, in any currency (So I can remit to Rebecca’s account, in Pesos, and she has the amount in her account next day). They gave me an ATM card for cash access, in addition.
What was nice was that I received the direct phone number to a personal banker. Any problems, I have a name to talk to, with the authority to fix things (They checked personally on my incoming wire transfers, with a phone call).
To set up the account, I needed a passport, and proof of residence (Anywhere… Not just Hong Kong). Easy. Took thirty minutes. The minimum was that you need to open the account with HK$10,000 minimum (Around US$1,000). BIG difference from many of the “Premier ” accounts with people like HSBC or Citibank.
Banks in Hong Kong can vary with access to foreigners. Some will open an account, but others will not. Some want personal referrals from other customers. Yet, as one of the premier banking centers in the world, there are hundreds of banks from which to choose… Just research a bit online and via Skype before you go.
This could be an attractive option for foreigners living here, especially those living on non-resident status. A quick visa run to Hong Kong is all it takes.