# Renunciation - a cautionary tale



## Bevdeforges (Nov 16, 2007)

Since we discuss the matter of renunciation for US nationals fairly often here on the forum, I thought I'd share my recent experience.

Have been trying to open an online bank account here in France. I have dual nationality, but most i.d. documents here list place of birth along with whatever else is considered necessary.

In filling out the form online to apply for an account, one of the first questions asked is country of birth. At bank #1, as soon as I entered the information, I got an error message explaining that due to FATCA they did not take American customers. (There was no where to indicate if you had renounced or even if Daddy was a diplomat and thus you weren't actually a citizen just for having been born there.)

On to bank #2. They asked for your nationality, and then other nationalities. When I entered US for my second nationality, they then asked for my tax i.d. number there. Ah, progress! They've accepted the application for processing, but I've found a site online that claims that this bank does not accept American customers due to the expense of having to track those with "American indice" for FATCA compliance. Haven't heard anything from them yet, so maybe things are changing. We'll see.

I have found an online bank that does accept US customers (in fact has fewer requirements than the rest of the online banks), but their fees aren't quite as cheap as the others (though they're a real bargain compared to bricks and mortar banks).

I suspect that the sign up drill for other sorts of financial offerings (insurance, retirement plans, etc.) online may start to screen for "American indices" in a similar manner, without allowing you to fudge your responses (since validating i.d. is normally required at a later stage) or even to indicate if you have indeed renounced or otherwise are not actually a US citizen.

Just one more factor to consider if you're thinking of renouncing. (To be clear, I'm all for renouncing if you can afford it and if it will serve your purposes.)
Cheers,
Bev


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## JustLurking (Mar 25, 2015)

Bevdeforges said:


> I suspect that the sign up drill for other sorts of financial offerings (insurance, retirement plans, etc.) online may start to screen for "American indices" in a similar manner, without allowing you to fudge your responses (since validating i.d. is normally required at a later stage) or even to indicate if you have indeed renounced or otherwise are not actually a US citizen.


I'm not sure if this is something new in France, or if you have only just noticed it because of a recent need to open some new local accounts, but what you describe has been reality at many, if not most, UK financial institutions for several years now.

It is rather disappointing to see that the 'filtering' process banks use to identify (and then perhaps refuse service to) US citizens is as flawed as it is, but it is probably not surprising. Expecting non-US banks to understand the full nuances of US citizenship transmission is really just one expectation too far. The FATCA 'indicia' (as defined by the bozos who put this asinine extraterritorial law together) do not include any notion of things like birth to a foreign diplomat in the US, and these FATCA 'indicia' are what the US, via IGAs in many cases, has told banks to work with, so of course they will use them. If 'indicia' are present, a bank can accept 'reasonable' self-certification of non-US taint, but unhelpfully, 'reasonable' is left to interpretation.

Mostly, if you run into a rejection through place of birth in an online account, you can contact the bank and may still open an account manually. They will probably ask for a copy of a CLN, W-8BEN, non-US passport, and so on. I suppose some banks may baulk even then, but usually things proceed okay once you are talking to a real person and have bypassed the simple-minded and inadequate online front-end screening.

Maybe this online screening process will become more fine-grained as CLNs become more widely seen and understood by non-US banks. To my mind though, this trend _adds to_, rather than _subtracts from_, the motivation to renounce. As a _real_ US citizen you face simply being barred from many local accounts. As a _former_ one who simply fails a step in a too coarse-grained front-end online screening system, you at least have a good shot at still being able to open this account by contacting a real person in the bank concerned.


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## Bevdeforges (Nov 16, 2007)

Actually, you may have missed my point (or maybe I didn't express it well). I've seen US expats (or accidentals) look to various online services (banks, insurance or investment accounts) if they have encountered difficulties opening accounts in "bricks and mortar" institutions.

The banks I've been looking at are the online-only versions, because they are low cost. However, the claim is that, because they want to maintain their low overhead, they don't want to have to deal with the necessity of checking out "American indices" at all. (Odd because most of the online only banks are subsidiaries of the big storefront banks who have plenty of US customers.)

Actually, a US person's best bet is probably with a "face to face" bank. One article I saw while researching this commented that many of the bank counselors (a big phenomena here in France) are simply misinformed about what to do when confronted with a "US person" and that it pays to elevate the request a level or two. That's something you can't do when trying to establish a fully online account.
Cheers,
Bev


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## JustLurking (Mar 25, 2015)

Bevdeforges said:


> Actually, a US person's best bet is probably with a "face to face" bank. One article I saw while researching this commented that many of the bank counselors (a big phenomena here in France) are simply misinformed about what to do when confronted with a "US person" and that it pays to elevate the request a level or two. That's something you can't do when trying to establish a fully online account.


Obviously I don't know the situation in France, but in the UK all of the 'online only' banks and financial institutions still offer a phone contact number for if/when things go wrong -- and mis-identifying a non-US citizen as a (tax-plague-carrying!) US citizen would certainly qualify as something going wrong -- and there is a person at the end of it with the ability to open accounts and so on. They also have a postal address to which a CLN copy or whatever can be sent.

Now, it may be that this person and all of their superiors will still refuse even 'proof' of non-US-ness such as a CLN, perhaps because of simple bank commercial policy. But so far there doesn't seem to be widespread evidence of this happening.

For rock-solidity, the US should really start issuing 'anti-passports' to anyone who asks for one. That is, a document that irrefutably states that someone is _not_ a US citizen. That would nicely cover the diplomat's child case, especially this would be someone who cannot obtain a CLN because they cannot renounce something they never had (for this person, the best approach might be to apply for a US passport, get rejected, and then use that rejection as proof of non-US citizenship). It is beyond ridiculous that we have reached the point where this sort of thing has become thinkable.

Anyway, as far as I can see your experience is more of "_a cautionary tale_" about *not* expatriating than it is about actual expatriation. Expatriating may not be the complete panacea for every US tax-taint disease, but if you want the freedom to use the full range of local accounts as available to all of your neighbours, colleagues and friends, it beats remaining a US citizen.


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## Bevdeforges (Nov 16, 2007)

The "cautionary tale" aspect is simply to be very clear about what you're hoping to achieve by renouncing before you spend the dosh to do so. I've gone through the exercise every few years since I got my French nationality, but the French-US tax treaty is very different from the UK one and renouncing would be signing up to pay even MORE US tax on pensions than I do now. (And not eliminate the tax side of receiving a pension from the US, though it would eliminate the need to file a return each year.)

A friend of mine in Germany recently renounced and for her it was the ideal solution with no unpleasant surprises - because she did her homework ahead of time.
Cheers,
Bev


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## lat19n (Aug 19, 2017)

But your original post was dealing with expatriation in general and not renunciation in particular right ?

As I write this we have relationships with 3 financial entities in Mexico. We have had more over the years but those accounts are now closed. 

We have a 'premium' level account with Bank #1 - our primary day to day bank. The balance requirements for such an account are not great. We have had that relationship with that bank for 6+ years. With that account I can do anything that a Mexican native can do - no limitations. But if we were to open a new account today there would be severe restrictions on what we would be allowed to do as US citizens due to FATCA.

Bank #2 is owned by Citibank. The account we have there is a small step above a basic account. The yields on investments and such at bank #2 are a fraction of those at bank #1. Bank #2 has never brought up FATCA since the day we opened the accounts. What is unusual (for me) is that we actually receive a W2 form (in English) from them each year - they are a Mexican bank.

Bank #3 is Mexico's equivalent of the US Treasury. When we opened that account the paperwork had a field asking where we paid our taxes and what our tax id was. They never asked for a W9. A while back I browsed the US-Mexico tax treaty and in an appendix it actually mentioned that bank #3 was exempt for reporting info to the US.


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## Bevdeforges (Nov 16, 2007)

My mistake - I meant to refer to renunciation rather than expatriation. (Serves me right posting first thing in the morning before my coffee has fully kicked in.)

Maybe I should change the heading for this thread....
Cheers,
Bev


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## underation (Oct 25, 2018)

JustLurking said:


> It is rather disappointing to see that the 'filtering' process banks use to identify (and then perhaps refuse service to) US citizens is as flawed as it is, but it is probably not surprising. Expecting non-US banks to understand the full nuances of US citizenship transmission is really just one expectation too far. The FATCA 'indicia' (as defined by the bozos who put this asinine extraterritorial law together) do not include any notion of things like birth to a foreign diplomat in the US, and these FATCA 'indicia' are what the US, via IGAs in many cases, has told banks to work with, so of course they will use them. If 'indicia' are present, a bank can accept 'reasonable' self-certification of non-US taint, but unhelpfully, 'reasonable' is left to interpretation.


I suspect what a bank wants to know is: were you born in the US; if so, what is your SSN.

The right answers to the IGA questions allow a bank to accept a person born in the US but don't necessarily make it safe to do so. US citizens have been known to lie.

The UK IGA protects the banks from the threat of the FATCA 30% withhoding, but doesn't protect them from Swiss-bank-type consequences if it turns out the accountholder is indeed a US citizen and gets in serious trouble with the IRS. There is no reason a foreign diplomat's son or daughter can't grow up and acquire US citizenship.




> Mostly, if you run into a rejection through place of birth in an online account, you can contact the bank and may still open an account manually.


Yes, probably, if you have a CLN or are willing to sign a W-9 and provide your SSN.




> To my mind though, this trend _adds to_, rather than _subtracts from_, the motivation to renounce. As a _real_ US citizen you face simply being barred from many local accounts. As a _former_ one who simply fails a step in a too coarse-grained front-end online screening system, you at least have a good shot at still being able to open this account by contacting a real person in the bank concerned.


Yes - the ones who get in touch probably have a CLN or are US citizens who are willing to sign the W-9. Or, once in a blue moon, may have a (verifiable) diplomat for a parent.


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## underation (Oct 25, 2018)

JustLurking said:


> For rock-solidity, the US should really start issuing 'anti-passports' to anyone who asks for one. That is, a document that irrefutably states that someone is _not_ a US citizen. That would nicely cover the diplomat's child case, especially this would be someone who cannot obtain a CLN because they cannot renounce something they never had (for this person, the best approach might be to apply for a US passport, get rejected, and then use that rejection as proof of non-US citizenship). It is beyond ridiculous that we have reached the point where this sort of thing has become thinkable.


Has there been even a single case of a UK bank refusing an account to the child of a diplomat, even after the applicant explains the reason for the US place of birth?

A CLN is in effect an "anti-passport". Expensive, but effective.


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## Bevdeforges (Nov 16, 2007)

The argument the online banks are putting forth here in France is that online banking (i.e. where there is no bricks and mortar bank involved) is supposed to be "low cost." Most of the online banks offer free accounts or extremely low fees for "holding" your account for you because they have such low overheads. (Basically no need to support physical buildings and banks of human "counselors" staffing the branches.)

The online banks contend that having to screen for "US indices" and do the additional reporting and tracking of W-9s W-8s and whatever else is a "considerable" cost for them. The issue is that most of the online banks are affiliated with bricks and mortar banks and at least theoretically could piggy back on the IT systems their parent banks use.

The one online bank that does openly accept Americans (and charges all customers a nominal user fee) states that it shares the IT resources of their parent bank for this purpose. The other online banks seem to prefer to steer US customers to their (more expensive) parent bank. 
Cheers,
Bev


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## underation (Oct 25, 2018)

Bevdeforges said:


> The argument the online banks are putting forth here in France is that online banking (i.e. where there is no bricks and mortar bank involved) is supposed to be "low cost." Most of the online banks offer free accounts or extremely low fees for "holding" your account for you because they have such low overheads. (Basically no need to support physical buildings and banks of human "counselors" staffing the branches.)
> 
> The online banks contend that having to screen for "US indices" and do the additional reporting and tracking of W-9s W-8s and whatever else is a "considerable" cost for them. The issue is that most of the online banks are affiliated with bricks and mortar banks and at least theoretically could piggy back on the IT systems their parent banks use.
> 
> The one online bank that does openly accept Americans (and charges all customers a nominal user fee) states that it shares the IT resources of their parent bank for this purpose. The other online banks seem to prefer to steer US customers to their (more expensive) parent bank.


Are French banks required to justify refusing to open an account? UK banks, as far as I'm aware are not. They can't close a pre-existing account but can very easily reject an application for a new account.


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## Bevdeforges (Nov 16, 2007)

underation said:


> Are French banks required to justify refusing to open an account? UK banks, as far as I'm aware are not. They can't close a pre-existing account but can very easily reject an application for a new account.


Actually, no, the French banks don't have to give a reason for refusing to open an account. The online banks do require you to have an existing account - either in France or, for a couple of banks, one elsewhere in the EU - in order to make the initial deposit to open the account. 
Cheers,
Bev


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## underation (Oct 25, 2018)

What it comes down to (here in the UK):

With a US birthplace and a CLN, you can open an account with most banks though it may take a little more discussion.

With a US birthplace and no CLN, you can open an account with some banks provided you’re willing to sign the W-9, provide your SSN, and accept the reporting.

Renouncing is unquestionably the best way back to normal banking, but those who can’t or don’t want to renounce can probably manage without.


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## Nononymous (Jul 12, 2011)

When one opens a new account at a UK bank, is place of birth recorded, or checked on ID documentation? Or is one simply expected to answer honestly any questions about citizenship?

In Canada it's all "self-certification" of citizenship with no supporting info required, so extremely easy to lie, and banks make no effort to verify or validate answers. ID requirements in most cases are a drivers license without birthplace.


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## underation (Oct 25, 2018)

Nononymous said:


> When one opens a new account at a UK bank, is place of birth recorded, or checked on ID documentation?


Yes.



> In Canada it's all "self-certification" of citizenship with no supporting info required, so extremely easy to lie, and banks make no effort to verify or validate answers. ID requirements in most cases are a drivers license without birthplace.


Maybe Canadian banks don't need to worry. UK banks do.


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## Bevdeforges (Nov 16, 2007)

The issue, as I understand it, is that in some countries (definitely France and possibly many other EU countries) your formal identification consists of your name, date of birth and place of birth. Those appear on your national i.d. card, which you need to open a bank account here. 

What's almost funny, though, is that in France we don't have a "taxpayer i.d. number" and I've seen one or two instances where the US asks for the TIN for a foreign national or for my "foreign taxpayer i.d. number" - I just leave it blank. 
Cheers,
Bev


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## underation (Oct 25, 2018)

Bevdeforges said:


> The issue, as I understand it, is that in some countries (definitely France and possibly many other EU countries) your formal identification consists of your name, date of birth and place of birth. Those appear on your national i.d. card, which you need to open a bank account here.


I think the issue in the UK is that it's not in a UK bank's interest to open an account of any kind without finding out whether the applicant is a US citizen.


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## Bevdeforges (Nov 16, 2007)

underation said:


> I think the issue in the UK is that it's not in a UK bank's interest to open an account of any kind without finding out whether the applicant is a US citizen.


Actually, if you read through one of those bilateral agreements concerning FATCA and the "financial institutions" there is some specific mention of the "due diligence" the banks (and others) are supposed to comply with to identify potential US persons - one of which is requesting the W-9 and W-8 forms (or an equivalent) and another is periodically checking their customer files for evidence of US personhood, like a US birthplace or account address or phone number in the US. 

There are, however, also lists of specific types of accounts that the banks do NOT have to report to the IRS. The bilateral agreements make somewhat interesting reading if you're looking to assess your risk factors.
Cheers,
Bev


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## underation (Oct 25, 2018)

Bevdeforges said:


> Actually, if you read through one of those bilateral agreements concerning FATCA and the "financial institutions" there is some specific mention of the "due diligence" the banks (and others) are supposed to comply with to identify potential US persons - one of which is requesting the W-9 and W-8 forms (or an equivalent) and another is periodically checking their customer files for evidence of US personhood, like a US birthplace or account address or phone number in the US.


Banks here do actually need to know whether their customers are US citizens. Not just for FATCA due diligence but for KYC, AML, anti-terrorist financing, etc. 



> The bilateral agreements make somewhat interesting reading if you're looking to assess your risk factors.


It's the bank that has to make a risk decision, when processing an application to open an account.


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