US BANKING VERSUS THE PATRIOT ACT
In recent years Americans residing abroad are finding themselves increasingly cut off from maintaining or opening accounts with financial institutions located in the United States. A prevailing attitude within such institutions is that the Patriot Act prohibits them from accepting clients from other countries due to increased due diligence provisions found in the Act. American Citizens Abroad has provided guidelines on steps to be taken by any US person encountering such disfranchisement.
The State Department has drafted a form letter which explains how US banks should treat accounts linked to a foreign address. The State Department has offered to provide a signed copy (via fax or email if so desired) to any US Citizen who would like to have one. The name of the requesting individual will be indicated as the addressee in the letter. This person can then present this letter from the State Department to the individuals or financial institutions with whom they may be having difficulty opening or maintaining an account.
To request a signed copy of the letter, the US citizen overseas should write to:
Overseas Citizens Services Office of Policy Review and Inter-Agency Liaison U.S. Department of State SA-29, 4th Floor 2201 C Street, NW Washington, DC 20520, USA
The text of the State Department letter is as follows:
Dear [your name],
This letter is in response to the concern you expressed regarding the USA PATRIOT Act and your access to banking in the United States. The Department of State has been contacted by numerous individuals alleging that, under the USA PATRIOT Act, their U.S. bank accounts have been closed or that they have been prohibited from opening an account due to foreign citizenship or a foreign address. The USA PATRIOT Act does not prohibit foreign citizens or individuals with foreign residences from opening or maintaining a U.S. bank account.
Such activity is done frequently and is necessary in a global economy. Notably, however, the USA PATRIOT Act does require financial institutions to complete enhanced security procedures in certain circumstances. For example, under Section 326 of the Act, financial institutions must implement reasonable procedures for (1) verifying the identity of any person seeking to open an account; (2) maintaining records of the information used to verify the persons identity, and (3) determining whether the person appears on any list of known or suspected terrorists or terrorist organizations. In addition, foreign individuals are generally required to provide a government issued number that is similar to a social security number.
Enhanced due diligence is also required under Section 312, which requires financial institutions to take reasonable steps to determine the owner and the source of funds deposited into private banking accounts that financial institutions maintain for non-U.S. persons and conduct enhanced scrutiny of such accounts maintained for senior political figures.
In developing their customer identification procedures under Section 326 or in the enhanced due diligence procedure under Section 312, a financial institution may request information of a customer that had not been previously solicited. However, the USA PATRIOT Act does not prohibit foreign persons or those with foreign addresses to open or maintain bank accounts in the United States. Please feel free to present this letter to your bank, should you face any difficulties with interpretation of the USA PATRIOT Act.
Letter from client residing in France
I have not been able to persuade (US bank) to retain our account and have to find an alternative bank before the end of this month. (Client's monthly pension deposits were made into this bank account.) A formal letter from the bank, quotes: The ability of (US bank) to support clients who reside outside of the US depends on the specific securities laws and regulations of each country. Our records indicate that you reside in a country where (we) are generally not permitted to offer financial products and services. While (we) or certain of its predecessor firms may have previously permitted your account, our current decision to exit certain foreign account relationships, like yours, is a result of our firm's continuing commitment to ensure that our international business practices are consistent with the laws, regulations and regulatory expectations in countries where our clients reside.
Note that at the time this client was being cut off from banking privileges with this US bank, Barron Harper (me) who also resided in France and who also chanced to maintain an account with the same US bank as the client was never denied his account. Another client who resided in Spain was unable to prevent her US bank from closing down her account without making an exhaustive trip to Washington state to meet personally with US bank officials.
USA PATRIOT Act
The purpose of the USA PATRIOT Act is to deter and punish terrorist acts in the United States and around the world, to enhance law enforcement investigatory tools, and other purposes, some of which include: