Global banking, in the great scheme of international relocation support, is not typically at the very top of your assignees’ list of concerns when it comes to pre-departure planning and decision-making, yet it’s a critical box to have ticked to ensuring the satisfaction and productivity of your assignees. What they may not realize are the difficulties that they might encounter when trying to set up a foreign account and how important it is to have that account set up to ensure that they can access their money while abroad.
Whether opening a bank account, transferring funds or issuing new credit cards, NEI recommends taking advantage of the experience, breadth of services and global reach of an experienced international banking partner. Our working relationships are 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 on line, setting up direct deposits, sending wires, fund transfers and more.
That being said, it is important to understand the types of challenges your assignees may encounter—especially if this is their first assignment abroad.
New accounts usually need to be opened in person. This does not mean that they should wait until they arrive to begin researching their options. Employees may have to jump through many administrative hurdles before opening local bank accounts and often will need specific identification.
A passport will typically work, but some banks require two forms of I.D. – only one of which can be foreign. Your assignees should research what is specifically required to open an account and prepare accordingly to avoid a prolonged and frustrating experience.
Other documents that could be required, depending on the bank and account type, include:
§ A receipt from the immigration bureau stating that a permit is in process
§ A bank reference or recent financial statement from one’s home bank
§ A credit history report
§ An employment contract or letter from the employer, including salary information and the length of the contract
§ Proof of address, such as a utility bill or rental contract
§ A certificate of registration with the local police
Inconsistent practices and frequent changes to the rules. Each country and each bank has its own unique procedures and document requirements for banking. Often within the same bank, your assignees could be faced with differing interpretations of rules depending on with whom they speak. It will help for them to keep the name of the person who assisted them and try to work with that person consistently.
Your assignees cannot rely on a co-worker’s experience to determine what you will need, nor can they expect that what was researched earlier will still be applicable when they arrive in country.
Services may only be offered in the local language. Due to the complexity of banking abroad, NEI recommends that you work with a bank that speaks your language.
Local banks may not be as familiar with services that your assignees may need. Sometimes local banks give preferential treatment to local customers, yet those banks may not have the necessary experience that a large, global bank has to successfully manage your account. Your assignees will be faced with many unique situations that local customers will not experience, such as currency conversions, split payrolls, etc.
FACTA compliance. FACTA refers to the U.S. IRS Foreign Account Tax Compliance Act. If your assignees are working with a bank that is not FACTA compliant, their money is subject to a 30% withholding tax on all U.S. sourced income to foreign entities. Though 77,000 institutions have agreed to pass data to the IRS, many other foreign banks are refusing to offer banking services to U.S. connected customers rather than risk FACTA consequences of accidental non-compliance. In a 2014 survey, 13% of 6,552 Americans reported being unable to open an account because of FACTA.
Country requirements. Some countries have very strict regulations on what must happen before an account can be closed. Use Brazil as an example: the country requires local payment of some portion of the salary. Typically, the company will have an associated bank that can make getting the account set-up and having the payroll deposits go much smoother.
However, at the end of the assignment, the account cannot be shut down until all local payments have been completed and any final taxes have been settled. Without having the final taxes settled, any credits typically due require another, arduous method to claim.
Know What Questions to Ask
Depending on each assignee’s unique circumstances and the location, a myriad of factors could exist and should be taken into consideration for opening bank accounts. When planning for the assignment abroad, employees will be confronted with many questions that affect choices.
Listed below are a few questions to consider:
▪ Are local services in a language the employee understands?
▪ What kind of banking services does one need and is online banking offered?
▪ Is the move permanent or temporary and for how long?
▪ Will the employee maintain assets in the home or host country or both?
▪ Will the employee repatriate to the home country location post-assignment?
▪ 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 the account type?
▪ Does the bank offer a credit card?
▪ What is required before I can close my account?
“Money Makes the World Go ‘Round”
No matter what type of banking your assignees decide is best, they will likely also 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 that your assignees have (such as loans or a mortgage) to prepare for their return.
It is important that your assignees 1. plan ahead and 2. consider all of the options for banking needs to access their money seamlessly, manage their ongoing finances and focus on their assignment goals without worry. Global banking and cash flow may not be the first item on their families’ minds during pre-departure planning, but it is key element to assignee satisfaction and productivity