International Banking for US Investors: A Compliance-First Guide
FBAR, FATCA, and the legal ways to bank offshore. What you need to know before opening that international account.
December 15, 2025
8 min read
Important: This guide is for educational purposes only. Consult with a qualified tax professional before opening international accounts. Penalties for non-compliance are severe.
Opening an international bank account is completely legal for US citizens. But the reporting requirements are extensive, and the penalties for non-compliance are draconian. Here's what you need to know.
Why Bank Internationally?
Legitimate reasons for international accounts include:
Holding currency for overseas property purchases
Receiving income from international clients or employers
Managing investments in foreign markets
Expat life—living abroad and needing local banking
Currency diversification as a hedge
What's NOT legitimate: hiding assets from the IRS, evading taxes, or circumventing US sanctions. These are serious federal crimes.
FBAR: The $10,000 Threshold
If your foreign financial accounts exceed $10,000 in aggregate value at any point during the year, you must file FinCEN Form 114 (FBAR) by April 15 (with automatic extension to October 15).
FBAR Requirements
What's Reported
• Bank accounts
• Securities accounts
• Mutual funds
• Some insurance policies
• Accounts you have signature authority over
Penalties for Non-Filing
• Non-willful: up to $10,000 per violation
• Willful: greater of $100,000 or 50% of account balance
• Criminal penalties possible
FATCA: Form 8938
In addition to FBAR, you may need to file Form 8938 (Statement of Specified Foreign Financial Assets) with your tax return. The thresholds are higher:
US residents: $50,000 on last day of year, or $75,000 at any point
US expats: $200,000 on last day of year, or $300,000 at any point
Yes, this means you may file both FBAR and Form 8938 for the same accounts.
Where Can Americans Bank?
FATCA has made it harder for Americans to open foreign accounts. Many banks refuse US clients due to compliance costs. Those that accept Americans include:
HSBC Expat (Jersey): Specifically designed for international clients, FATCA-compliant
Interest income: Taxable as ordinary income, regardless of where earned
Foreign tax credit: Avoid double taxation with Form 1116
Currency gains: Selling foreign currency for more than you paid is taxable
PFIC rules: Foreign mutual funds have punitive tax treatment
Compliance Checklist
☐ Keep records of all foreign accounts
☐ Track maximum balance for each account annually
☐ File FBAR by deadline if threshold exceeded
☐ File Form 8938 with tax return if required
☐ Report all interest income on Schedule B
☐ Work with a CPA experienced in international taxation
Getting Started
If you have legitimate needs for international banking:
1. Consult a tax professional before opening any account
2. Choose a FATCA-compliant institution that accepts Americans
3. Maintain impeccable records of all transactions
4. File all required forms on time, every year
Bottom Line
International banking is legal, but compliance is non-negotiable. The reporting requirements are extensive, and the penalties for errors are severe. Work with professionals, keep meticulous records, and never attempt to hide accounts from the IRS.
Ready to Explore International Banking?
We partner with compliant institutions that accept US clients.