In the many details to consider before an international assignment, global banking is never at the top of an assignees’ concerns during pre-departure planning. Yet, setting up a new bank account in a host country is critical to accessing their funds while on assignment and part of a seamless relocation.
Unique Procedures, Documents, Challenges
Each country and bank have unique procedures and document requirements. Even within the same family of banks, assignees may face differing interpretations of rules just depending on whom they speak with on a given day. Common challenges can include the following:
New accounts may need to be opened in person.
Employees may have hurdles to overcome before opening local accounts and often need specific identification. While a passport typically works, some banks require two forms of I.D., of which, only one can be foreign. Documents depend on the bank or account type, but may include a:
- credit history report
- receipt from the immigration bureau stating that a permit is in process
- bank reference or recent financial statement from one’s home bank
- employment contract or letter from the employer, including salary and contract length
- proof of address - a utility bill or rental contract
- certificate of registration with the local police
Unfamiliarity with services assignees may want.
Sometimes local banks may give a more personalized level of service to local customers, but those banks may not have the necessary experience to manage services needed by assignees as the larger global banks. Assignees will be faced with many unique situations local customers will not experience, such as currency conversions and split payrolls, to name a few of the stumbling blocks.
Unique country requirements.
Some nations have strict regulations for accounts. Brazil, for instance, requires a local payment of some portion of the salary. Typically, a company will have an associated bank that can make getting the account set-up and having local payroll deposits go much smoother. It is important to note that at assignment’s end, a bank account cannot be shut down until proof of all local payments and any final taxes have been settled. Without having final taxes settled, any account credits due would require another, more difficult method to claim them.
Services only in the local language.
Due to the complexity of global banking, NEI recommends assignees work with an in-country bank with resources to speak your language as sometimes services may only be offered in a host country’s language.
Something that can affect U.S. citizens is FACTA – the U.S. IRS Foreign Account Tax Compliance Act – which was passed by Congress to address offshore tax evasion and became effective in 2014. Over 400,000 global banking institutions have agreed to pass data to the IRS, but some foreign banks may refuse banking, loan, or mortgage services to American customers rather than risk FACTA non-compliance consequences.
Please note: If assignees work with a non-compliant bank, their money is subject to a withholding tax on all U.S. sourced income to foreign entities.
Know What to Ask
Depending on each assignee’s circumstances and location, employees may want to ask key questions that affect their banking choice including:
- Are they FACTA compliant?
- What foreign transaction fees are charged?
- Are there maintenance or annual account fees?
- Will fees be waived with a minimum balance?
- Do fees vary based on account type?
- Does the bank offer a credit card?
- What is required before I can close my account?
Assignees often keep an account open in the home country and choose to transfer a portion of their salary back regularly. If the goal is to repatriate at the assignment’s end, the account can be used to pay bills assignees have (such as loans or a mortgage) to prepare for their return.
NEI Working Relationships
NEI recommends taking advantage of the experience, breadth of services and global reach of proven global banking partners. We have working relationships in place to assist employees and families – anywhere in the world – with understanding conversion rates and changing currency rates, opening bank accounts, applying for credit cards, splitting deposits, receiving local payments, paying bills online, setting up direct deposits, sending wires, fund transfers, and more.
Our best advice is to start planning for your banking needs early in case you meet a few of the afore mentioned challenges. For more information about our international assignment management support services, please reach out to your NEI representative.