Opening a Bank Account as a Foreign Individual or Entity

1. Introduction

Bank accounts may be opened by individuals or by entities. By default, either group is usually required by the bank to to disclose a Social Security Number in the case of individuals or an Employer Identification Number in the case of an entity.

If you or your entity is an estate or trust, it files Form 1040NR as a nonresident alien if it is PRIVATE.  That means you or the entity it is not required to be enumerated if it is not engaged in the “trade or business” franchise per 26 C.F.R. §301.6109-1(b).  You or your entity need not have an SSN or EIN to file tax returns, and shouldn’t need one to open a bank account, but financial institutions may balk at opening an unenumerated nonresident alien (NRA) account. The following form is used to educate yourself and them during the application process:

W-8SUB, Form #04.231
https://sedm.org/Forms/04-Tax/2-Withholding/W-8SUB.pdf

2. Dealing with computer “corn-holing”

Banks invariably use computer software to manage their institution. This software is purchased usually from a huge milt-national third party provider such as Wolters Kluwin or others. Banks have very little say on what goes into their software. In many cases, this software is not designed to accommodate ALL legal possibilities, but only the conditions which are best for the bank and the expense of their customers. Banks therefore are forced to “work around” the limitations of the computer software in order to accommodate unusual situations, like those of FOREIGN account applicants.

Banks are also very sensitive and secretive about how their software works and about sharing their account application acceptance process documents used by their employees. The reason for this is that it may reveal a discriminatory approach that might be illegal in some states. Several states of have laws relating to “Fair Access to Financial Services” that prohibit discrimination in opening accounts. Procedures used by banks usually reflect the intent do discriminate, and especially if they are old and not updated to reflect Fair Access to Financial Service laws. Thus, they are often reluctant to reveal, printout, or give you a copy of these rules. They may even interfere with you standing behind them entering your data on their computer terminal for fear of being able to see, read, or take an image of the procedures with your smartphone.

For instance, the citizenship status field in most banking software may ask for your citizenship rather than your domicile, or equivocate POLITICAL Citizens* with CIVIL/DOMICILED Citizens**+D just like the IRS does. This can make it difficult to open a FOREIGN account as a human being, but less so as a business entity. Below is the procedure for dealing with this problem, documented in the W-8SUB, Form #04.231:

1. FAQ 10 says:
   “10. QUESTION:  My computer system does not allow me to enter people with U.S.A. passports as “foreign person” if you have a United States passport. How can I do it?
   ANSWER: See block 6 of the attached form.  Select “OTHER” for the country and then enter “USA”.
2. W-8 Block 6, Passport number and country of issuance says:
   “Nationality-American National per 8 USC §1502 (Customer Identification Program (CIP) designation:  Other-USA) See 31 CFR 1020.220(a)(2)(i)(A)(4)(ii).“

3. Providing proof of existence of the entity to the financial institution

When opening a bank account as a FOREIGN and PRIVATE entity, the bank will ask for court admissible evidence proving the existence of the FOREIGN entity in ADDITION to the W-8 withholding document. This will usually consist of:

1. Trusts
   1.1. The entire trust document in the case of a trust OR
   1.2. An “affidavit of trust” in the case of a trust, signed under penalty of perjury.
2. LLCs, corporations or partnerships
   2.1. The entity bylaws OR

To ensure the maximum privacy surrounding the entity, an “affidavit of trust” is greatly preferred.