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Many people choose to open a foreign bank account, whether for personal or business reasons. If you do business overseas or travel a great deal, you may find it to be necessary. It can be very helpful to have a foreign bank account if you spend a lot of time traveling. However, you should proceed with caution whenever choosing to store your money in a bank in another country, because the rules and regulations are different in each location.
U.S. Laws about Foreign Accounts
While it is not illegal to have a foreign account, it is required by the IRS that you disclose any income (interest earnings, dividends, etc) that you receive from that account. In addition, particularly since the establishment of the Department of Homeland Security, transactions must be reported to the Department of Treasury any time you move $10,000 or more in or out of the country. Be aware of the banking and tax laws that apply to your account. Be sure you remain in compliance in your home country as well as in the country in which you establish the account.
Foreign Banking Laws
The laws and regulations governing banks are determined by individual governments. Therefore, if you open a bank in France, you would have different regulations than you would if you opened a bank in England or Jordan. Wherever you choose to open your bank account, make sure you know the rules governing the account. Don't assume that every country offers the same type of FDIC protection you have with your American account. Do your homework and do not open an account in a politically unstable country; foreign accounts have been seized in unstable political climates, leaving you without your money.
In addition to the reporting laws in this country, there will also be reporting laws in the country where you open your account. Choose a trustworthy, reputable bank. Talk personally with the bankers to ensure that you are following the necessary rules. Depending on the amount of money you will have in the account, you may be wise to seek the assistance of an experienced tax or finance attorney to assist you.
Ongoing Changes
Governments continues to develop new regulations. Using an offshore account as a tax shelter or fund diversion is not legal in most cases, so be careful of the purpose of your account.
Foreign Bank Basics: Know the Rules and Regulations
