Does the bank’s nationality decide whether your account is foreign?

The IRS looks at where your account is held, rather than the bank’s nationality. An account at a foreign bank’s US branch is not foreign for FBAR purposes, while an account at a US bank’s overseas branch is. Choose the location according to what you need the account to do.

When do you file your FBAR and which exchange rate do you use?

FinCEN Form 114 is due April 15 after the calendar year, with an automatic extension to October 15 that requires no request. The method described converts each foreign account’s highest balance using the Treasury Reporting Rates of Exchange for the last day of the year; keep those balance records and confirm the method with your preparer.

Should you buy local investment funds through your foreign bank?

Foreign banks may offer local funds that can fall within passive foreign investment company rules. A US person holding such shares files Form 8621 when specified distributions, gains on disposal or elections occur. Ask your CPA about the investment product and reporting before buying through the account.

Opening a Foreign Bank Account While Living in the US: Options That Still Work. FNC

In short

You can lawfully hold a foreign bank account while living in the United States, but an FBAR is required when your combined foreign accounts exceed $10,000 at any time in the year. Bank acceptance remains a separate decision, even in countries with FATCA agreements. Prepare your purpose, source of funds and tax information, and plan for Form 8938 and Schedule B requirements alongside the account application.

You can hold a bank account abroad while you live in the United States. It is lawful, and it is reportable. The harder part is practical: a bank that accepts a US client takes on FATCA reporting for that account, and each bank decides whether it wants to. ¹ The routes most likely to work combine three features: a FATCA agreement in the bank's country, a genuine reason for you to bank there, and reporting that is in order from the first deposit.

This is general information. Your CPA and counsel confirm the details for your case.

Your reporting duties start with the first account

Under the FBAR rules, every US person with a financial interest in, or signature authority over, a bank, securities or other financial account in a foreign country must report it for each year the relationship exists. ² The filing is FinCEN Form 114, due April 15 after the calendar year, with an automatic extension to October 15 that you do not need to request. ³

The threshold is low and cumulative. You file once the combined value of your foreign accounts exceeds $10,000 at any time in the year, and if two accounts together cross that line, both are reported. ⁴ Convert each account's highest balance to dollars using the Treasury Reporting Rates of Exchange for the last day of the year. ⁵

Form 8938 is a separate filing with your tax return and a different threshold. If you live in the US and are unmarried or file separately, it applies once your specified foreign assets exceed $50,000 at year end or $75,000 at any time. On a joint return, the figures are $100,000 and $150,000. ⁴ Your return also asks about foreign accounts directly: Schedule B must be completed if you had a financial interest in, or signature authority over, an account in a foreign country. ⁶

Why banks ask more of US clients

The reason is FATCA. It generally requires foreign financial institutions to report on assets held by their US account holders, or face withholding on certain payments. ¹ For a bank, a US client means an extra reporting obligation for the life of the account, so expect questions about your citizenship and tax status at onboarding.

The same rule works in your favor in countries that have formalized it. Treasury's list shows Model 1 intergovernmental agreements in force with Georgia since 18 September 2015, the United Arab Emirates since 19 February 2016 and Panama since 25 October 2016. Switzerland has a Model 2 agreement in force since 2 June 2014 and has signed a Model 1 agreement. ⁷ An agreement does not oblige any bank to accept you. It does mean that banks there report US accounts through a settled framework, which is a better starting point than a jurisdiction without one.

Options that still work

A bank in a FATCA-agreement country where you have a real connection is the most durable route. A residence permit, a business, property or regular income there gives the bank a clear reason for the account. Expect to explain its purpose, the source of the funds and the transactions you plan.

Location matters more than the bank's name. The IRS treats an account as foreign based on where it is held, not on the nationality of the bank. ⁵ An account at a foreign bank's US branch is therefore not a foreign account for FBAR purposes, while an account at a US bank's branch abroad is. If what you need is a relationship with a foreign institution rather than money held abroad, ask whether a US branch serves that purpose.

Be careful with what the account holds. Foreign banks often offer local funds. A US person who holds shares in a passive foreign investment company, which can include foreign funds, files Form 8621 when it receives certain distributions, recognizes gain on a disposition, or makes or reports certain elections. ⁸ Ask your CPA before you buy any investment product through a foreign bank.

What it costs to get the reporting wrong

FinCEN's inflation-adjusted maximum civil penalties for FBAR violations are $16,536 for a non-willful violation and $165,353 for a willful one. ⁹ Those are 2025 levels. Under OMB Memorandum M-26-11, there is no 2026 inflation adjustment, so agencies continue to use them. ¹⁰ These are maximums, not automatic assessments, but they show the stakes.

What this means for you

A foreign account is a reasonable part of an international plan when it has a purpose, sits in a jurisdiction with a working FATCA framework, and is reported correctly. Choose the country for the connection you have or intend to build, and treat the FBAR, Form 8938 and Schedule B as part of opening the account.

What to do this month

Decide what the account is for: savings in another currency, a base for a future move, or business receipts.
Check whether your shortlisted country has a FATCA agreement in force on Treasury's list.
Prepare documents showing your identity, tax status, source of funds and reason for the account.
Set a reminder to record each account's highest balance during the year for your FBAR.

Common mistakes to avoid

Assuming a small balance means no FBAR, without adding up every foreign account.
Treating Form 8938 and the FBAR as the same filing.
Buying a foreign fund through the bank without asking about Form 8621.
Choosing a bank because it is well known rather than because you have a reason to bank there.

The FNC angle

Banking is often where an international plan succeeds or stalls, so FNC starts with the purpose of the account and the jurisdiction that fits it, and with how the account works alongside any residency or company you hold. One of FNC's completed engagements combined a Panama SA company and residency card with a Georgian account. Your CPA handles the reporting and tax treatment. Our part is to make the account application coherent from the start.

General information only, not personal tax, legal or investment advice. Rules depend on your circumstances and the applicable year. No outcome is guaranteed.

Opening a Foreign Bank Account While Living in the US: Options That Still Work