An initiative from State Department Federal Credit Union and American Citizens Abroad is taking steps to make it easier for expats to open accounts at U.S.-based financial institutions.

The impetus for the partnership was foreign legislation which restricts U.S.-based financial services providers from serving American clients who don’t live in the U.S. This foreign legislation, along with the Patriot Act’s “Know Your Client” regulations, has created a kind of “banking lockout” for Americans living overseas. Consequently, U.S. financial institutions were compelled to close the overseas-based citizens’ accounts because they could no longer provide a U.S. residential address.
Indeed, it is difficult to maintain or even open a simple checking account in the U.S. if one lacks a U.S. address. Even if a person living overseas uses their family’s stateside address, that could be considered fraudulent.

“Unfortunately this is not a problem that is easily fixable through Congressional action or legislation,” said Anne Hornung-Soukup, ACA’s director, in a statement. “The lockout of Americans resident overseas from U.S. financial institutions is happening because of foreign legislation, not U.S. legislation.”

Anne Hornung-Soukup, ACA
Anne Hornung-Soukup, ACA’ director

An account designed by ACA and State Department FCU is aimed at helping U.S. citizens overseas open up banking accounts without needing a stateside residential address. ACA recently released a video explaining the program.

Mary Louise Serrato, executive director at ACA, told Credit Union Journal her organization worked to find a solution to this problem and allow Americans overseas who did not have a U.S. residential address to continue to have access to U.S. financial products -- as many in the community still have a need for U.S.-based financial services. Hence, the partnership with SDFCU.

“Since we serve so many State Department employees worldwide, we have already invested the additional resources and are experienced with the regulations associated with serving American citizens living abroad,” said Michael Morris, SDFCU’s director of member engagement. "We have seen positive results as far as a slow, but steady, stream of new ACA members [are] joining SDFCU through this partnership.”

This partnership, Morris added, has helped to confirm SDFCU’s belief that some U.S. citizens living overseas need a U.S.-based financial institution and the “ability to conduct certain transactions in U.S. dollars.”

Morris further said that SDFCU is “always evaluating” how they can help U.S. citizens as well as SDFCU members living overseas. So far the credit union has fewer than 300 accounts through the partnership and ACA is promoting the offering. ACA, noted Morris, is “in our field of membership and handles the bulk of promoting this relationship to its members as a benefit of membership in ACA.”

In addition, SDFCU developed this relationship with ACA and was “well-prepared” to work with this audience, since the credit union has “already been serving members overseas as part of serving employees of the Department of State.”

Potentially huge market
According to Morris, Americans living overseas face a variety of challenges, including: students attending U.S. educational institutions that only accept tuition payments electronically in U.S. dollars; and difficulties when submitting U.S. tax payments and receiving U.S. tax refunds. This account aims to solve some of those problems. For example, said Morris, an overseas US citizen who has an elderly family member living in the U.S. can have their mortgage or utility bills managed online and paid electronically from the account.

It is not entirely clear how many American citizens currently live overseas – but they are potentially a huge market.

According to one ACA report, he Federal Voting Assistance Program estimates somewhere between 4.5 million to 6.5 million Americans reside in foreign countries. However, the U.S. State Department pegs the figure even higher – at some 9 million.

As for regulatory matters, the National Credit Union Administration said that a federal credit union whose field of membership includes Americans living abroad (who would otherwise be eligible for membership) can accept U.S. citizens without receiving additional NCUA permission.

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