The US passport remains a source of significant friction in retail and private banking outside the United States. Accounts do get opened, but the set of willing institutions is narrower, the document file is thicker and the investment menu is cut down. The decision comes down to three forks: where to keep the current account, where to keep the portfolio, and what of that has to be declared personally.
Concept
FATCA works through withholding. IRC §1471(a) requires a withholding agent to deduct 30% from a withholdable payment made to a foreign financial institution that has no agreement in force with the IRS. Under §1471(b)(1) that agreement obliges the FFI to run due diligence to identify US accounts, report on them annually, and withhold 30% on payments to recalcitrant account holders. For a small European bank with a dozen American clients, not having them is cheaper.
The grid below sets out the parameters each of the three forks turns on.
| FATCA mechanism | IRC §1471(a) — 30% withheld on a withholdable payment to an FFI with no IRS agreement |
|---|---|
| Depository de minimis | up to $50,000 in aggregate an individual's account is not a United States account (§1471(d)(1)(B)) |
| Depth of review | electronic US indicia search above $50,000; paper-file search above $1,000,000 |
| EU account right | Directive 2014/92/EU, arts. 15 and 16: basic payment account, decision within 10 business days |
| FBAR threshold | $10,000 in aggregate at any point in the year; due 15 April with automatic extension to 15 October |
| Form 8938 thresholds | from $50,000 / $75,000 for unmarried US residents to $400,000 / $600,000 for those living abroad |
| PFIC test | §1297(a) — 75% of gross income passive, or 50% of assets producing passive income |
| Cost of exit | CLN fee $450 (22 CFR 22.1); covered expatriate from $2,000,000 net worth under §877(a)(2)(B) |
What FATCA Actually Demands of a Bank
An individual's depository account falls outside the United States account category while the aggregate value of that holder's depository accounts at the institution stays at or below $50,000 (§1471(d)(1)(B)). Above that mark the electronic search for US indicia begins — US citizenship or residence, a US place of birth, a US address or phone number, standing instructions to a US account, a power of attorney held by someone with a US address. The enhanced procedure with a paper-file search starts above $1,000,000.
Two practical consequences follow. Refusal below the threshold is the bank's own call. And the bank does not always see the US connection: for accidental Americans — people born in the US and taken abroad as infants, children of American parents — no US indicium may sit in the file for years, until a place of birth in the passport triggers one.
Choosing the Channel: Bank or Broker
Three channels solve different problems and break in different ways. The comparison runs on identical criteria.
| Criterion | Retail bank in the country of residence | Private bank with a US desk | US-domiciled broker |
|---|---|---|---|
| Who is accepted | Residents of the country; US-person policy varies bank by bank | US persons with documented source of wealth | US persons, including those living abroad |
| Minimum | None or nominal | High, rarely disclosed | None or low |
| What can be held | Payments, deposits, mortgage | Mandate, deposits, lending against assets | Shares, bonds, US-domiciled ETFs |
| PFIC exposure | Arises on buying local funds | Removed by a 1940 Act fund menu | None on US-domiciled instruments |
| Onboarding file | KYC plus W-9 and FATCA self-certification | The same plus enhanced due diligence on source of wealth | W-9 and SSN |
| Where it breaks | Sudden closure on risk-appetite grounds | Entry threshold and mandate cost | Local payments and mortgages stay outside |
The working combination for most people: a current account where they live for daily life, a US-domiciled brokerage account for the portfolio, and a private bank only where the size justifies a mandate.
The Retail Account in the Country of Residence
Interactive Brokers requires a Form W-9 and an SSN from all US citizens, green card holders and other legal residents; place of residence does not affect that requirement. Charles Schwab runs a separate offering for Americans abroad — brokerage accounts "for eligible expats" with access to the US market and "simplified U.S. tax reporting due to all accounts being U.S.-domiciled dollar accounts". The eligibility conditions, minimums and country restrictions are not disclosed on the public pages, so the specifics have to be settled with the institution itself before the move.
Lists of "banks that definitely take Americans" circulating on forums go stale faster than they are published: US-person policy moves with the compliance budget and no bank publishes it.
The EU Right to a Basic Account
Directive 2014/92/EU (the Payment Accounts Directive) gives a consumer legally resident in the Union the right to open and use a payment account with basic features. Article 15 bars discrimination on grounds of nationality or place of residence. Article 16 gives the bank 10 business days to decide once the application is complete, makes refusal mandatory only where opening would breach anti-money-laundering rules, and requires the specific reason for refusal to be given in writing and free of charge, with the complaints route and the contacts of the competent authority and the ADR body. The limiting phrase is "legally resident in the Union": the protection covers an American living in the EU and stops at its border.
Article 19 sets out an exhaustive list of grounds for unilateral termination of a basic account contract: deliberate use for illegal purposes, no transaction for more than 24 months, incorrect information supplied at opening, loss of legal residence in the Union, opening of a second account with the same set of services. US citizenship, FATCA compliance cost and "risk-appetite review" appear nowhere on it.
A parallel channel is data protection. By decision 79/2025 of 24 April 2025 the Belgian data protection authority found the transfer of accidental Americans' data to the IRS to breach the GDPR, confining itself to a reprimand and an order to comply; the file has reached the Court of Justice (Case C-804/25, pending). The French Conseil d'État dismissed a parallel challenge in 2019.
If the Bank Closes the Account
The sequence is fixed by the rules and works without a negotiating position.
| Step | Provision | What it gives |
|---|---|---|
| Demand the reason in writing | Article 16 PAD | The specific reason, immediately and free of charge, plus the complaints route and the contacts of the supervisor and the ADR body |
| Check the notice period | Article 19 PAD | Two months for grounds (b), (d), (e); immediate closure is lawful only under (a) and (c) |
| Open a basic account before closure bites | Article 16 PAD | Holding another account normally lets a bank refuse — except where the consumer declares he has received notice of closure |
| Complain to the supervisor and ADR | EBA/GL/2023/04 of 31 March 2023 | Guideline 10 — no blanket refusal for entire customer categories; guideline 14 — the reason must be documented and produced to the supervisor |
| Move the balances | Directive 2014/49/EU | EUR 100,000 per depositor per bank across the EU; in Switzerland CHF 100,000 per client per bank |
One caveat on the fourth row: EBA/GL/2023/04 governs ML/TF risk management, so guideline 10 applies to FATCA de-risking only by analogy and is not a directly effective rule against it.
The Investment Side: PFIC and the Way Out
The restriction on non-US funds rests on IRC §1297(a): a foreign corporation is a PFIC where 75% or more of its gross income for the year is passive, or at least 50% of the average percentage of its assets produce passive income. Practically every UCITS, European ETF or local mutual fund clears at least one test.
The default §1291 regime spreads an excess distribution — the amount by which distributions exceed 125% of the average over the three preceding years — across the days of the holding period, taxes the amounts landing on prior years at that year's top rate, and adds interest under §6621. A sale is taxed the same way. A QEF election under §1295 needs an annual PFIC Annual Information Statement, which non-US funds generally do not produce; mark-to-market under §1296 is available only for marketable stock. The form is set out at Form 8621, the interaction with the CFC regime at CFC and PFIC stacking.
The exit is simple and structural: hold the portfolio in a US-domiciled account and buy US-domiciled ETFs, which are not PFICs by construction. Local insurance wrappers and unit-linked policies that fail the §7702 tests are not life insurance contracts for US purposes: §7702(g) taxes the income on the contract as ordinary income each year, and the PFIC question is then answered on the underlying funds.
The SEC-Registered Swiss Arm
The second route suits those who need Swiss custody. Registration under the Investment Advisers Act of 1940 turns a Swiss bank into a lawful supplier of investment advice to a US person and gives US law priority wherever it protects more. From 2018 the SEC stopped processing applications from Swiss advisers, citing its inability to reach their records on examination; the moratorium ended on 10 June 2025 after the SEC and FINMA settled the delivery of books and records and on-site visits.
A publicly verifiable price list exists exactly where there is SEC registration and a Form ADV Part 2A disclosure duty. The figures cited come from brochures dated March 2026.
| Parameter | Vontobel Swiss Financial Advisers AG | Pictet North America Advisors SA |
|---|---|---|
| Entry threshold | USD 2,000,000 — Minimum Relationship Size, generally required across the programmes; the SFA Managed Prime mandate requires CHF 25,000,000 | No hard minimum; the brochure cites "approximately USD5,000,000" |
| Discretionary mandate | Wrap fee of 0.50%–1.65% a year | Marginal 0.85% (up to CHF 2m) → 0.45% (CHF 25–50m), minimum CHF 4,250 per quarter |
| Instruments | US and international exchange-listed equities; corporate, municipal, sovereign and supranational debt; a limited selection of funds registered under the Investment Company Act of 1940, plus ETFs and ETNs; no private funds or private-placement interests | Equities, corporate debt, commercial paper, certificates of deposit, municipal and government securities, mutual and exchange-traded fund shares, precious metals, derivatives and alternatives such as funds of hedge funds |
| Part 2A brochure | 31 March 2026, CRD 130668 | 20 March 2026, CRD 142512 |
One correction to the lists circulating on forums: UBS Swiss Financial Advisers has not existed under that name since 1 August 2022, when Vontobel closed the purchase and renamed the entity, the CRD number unchanged.
The side effect is a clash with Swiss FinSA: US funds produce no KID, so Vontobel SFA warns outright that it may not advise on buying US ETFs and US mutual funds for a client who has not opted into Professional Client status. That leaves a discretionary mandate, or an opt-out into Professional Client at the cost of part of the Swiss protection.
Foreign Pension Accounts
A foreign pension plan is usually not qualified under US law, so by default it reads as a foreign trust or as an employees' trust under §402(b), with current taxation of contributions and growth. Deferral comes from the pensions article of the applicable tax treaty where it covers the particular plan type; the US–UK treaty and several others do, but coverage is uneven and has to be checked against the text. The account remains a foreign financial account for FBAR and Form 8938 either way. Treaty mechanics for US plans after a move are at Roth and treaties; the wider map of US duties is at US person tax status and worldwide income.
The Account Holder's Own Reporting
The bank's FATCA report does not replace the holder's filings. The FBAR is required where the aggregate value of foreign financial accounts exceeds $10,000 at any point in the calendar year, and the duty arises even with no money of one's own on the account: "financial interest in or signature or other authority" means a signatory on someone else's account, an employer's corporate account included, files alongside the owner. It is due 15 April, with an automatic extension to 15 October and no request needed.
Form 8938 goes with the return on thresholds that depend on filing status and residence: $50,000 at year end or $75,000 at any time for unmarried US residents, $100,000 / $150,000 on a joint return, and $200,000 / $300,000 and $400,000 / $600,000 respectively for those living abroad. Assets held outside an account at a financial institution go on the 8938 but not on the FBAR.
Crypto stays outside the FBAR for now. FinCEN Notice 2020-2 says a foreign account holding virtual currency is not reportable on the FBAR and announces an intention to amend the regulations; as of 2026-08-26 no final rule has issued. None of that affects the income reporting duty or Form 8938.
When Giving Up the Status Is Cheaper
The fee for administrative processing of a request for a Certificate of Loss of Nationality has fallen from $2,350 to $450: the State Department's final rule was published in the Federal Register on 13 March 2026, amends 22 CFR 22.1 and takes effect 30 days after publication. No refund of amounts already paid is provided for.
The tax side has not become cheaper. A covered expatriate is anyone who trips one of three tests: net worth of $2,000,000 under §877(a)(2)(B), average annual net income tax over the five prior years above $211,000 for 2026, or inability to certify five years of compliance on Form 8854. For a covered expatriate the deemed sale of all property the day before expatriation is reduced by $910,000 (Rev. Proc. 2025-32). Mechanics at expatriation and the exit tax. Until the CLN issues the person remains a US person: the bank keeps reporting, and he keeps filing the FBAR and Form 8938.
Q/A
Is a foreign bank obliged to refuse an American?
No. FATCA requires identifying accounts and reporting on them; it does not require refusal. An individual's depository accounts up to $50,000 in aggregate are not United States accounts at all under §1471(d)(1)(B). Refusal is the bank's commercial decision, and in the EU a legally resident consumer has a right to a basic account under Directive 2014/92/EU.
How do I hold a portfolio without falling into PFIC?
Hold it in a US-domiciled account and buy US-domiciled instruments: American ETFs and mutual funds are not PFICs by construction. The alternative for anyone who needs Swiss custody is an SEC-registered arm, whose menu is confined to registered securities.
Does the bank's FATCA report replace my FBAR?
No, they are parallel channels. The bank reports the account to the IRS, while the holder files the FBAR where foreign accounts exceed $10,000 in aggregate at any point in the year and Form 8938 on its own, higher thresholds. Divergences between them are a known examination trigger.
Do I have to put a crypto wallet on the FBAR?
As of 2026-08-26, no, provided the account holds no other reportable assets: FinCEN Notice 2020-2 says so directly and promises a change to the regulations, but no final rule has issued. That does not remove the duty to report income from crypto transactions.
Does an account where I am only a signatory count?
For the FBAR, yes. The duty arises on "financial interest in or signature or other authority", so signing authority over an employer's or a parent's account abroad triggers a filing even where none of the money on the account is the signatory's own.
What do I do if the bank closes my account over US citizenship?
Ask for the reason in writing, test the ground against the exhaustive list in Article 19 PAD, open a basic account at another bank citing the closure notice received, and file a complaint with the supervisor and with the data protection authority in parallel. The general sequence is at when a bank closes an account.