It may take Americans only a few minutes to open a checking or savings account today by filling out a quick online application. But for many foreign nationals living in this country, it isn’t quite as straightforward and often requires a bank branch visit.
It’s perfectly legal for non-U.S. citizens to open bank accounts in the U.S. But, according to Libby Dawson, a wealth advisor at Worldview Wealth Advisors, which frequently works with foreign clients, all financial institutions must know who their customers are and trace their transactions.
That means financial institutions must verify the identification of a customer when they open a new deposit account — like a checking, savings or certificate of deposit (CD) — as well as loans and other extensions of credit. This becomes more difficult for banks when the customer is not a U.S. citizen, which is why foreign nationals may undergo more scrutiny, especially if they don’t have a Social Security number (SSN), which is a universal form of identification in the U.S.
For example, the bank may need to record a nonresident alien’s passport number or some other government paperwork to verify their identity. However, one problem foreign nationals may run into is that many online bank account applications do not offer a place to input a passport number or other ID. They may ask you to come into a branch to verify your identity in person instead.
Resident alien vs. Nonresident alien
Resident aliens can usually finish the application process online just like any other American citizen, because they are considered U.S. residents for tax purposes.
But nonresident aliens wouldn’t be able to do that; an error message would likely tell the person to visit a local branch or call for assistance. Because online banks don’t have physical branches for a customer to walk into and sit down with a customer service representative, it’s not as simple for these banks to verify the identity of someone who does not have an SSN.
MagnifyMoney recently reviewed four online savings accounts — Discover, Ally, Marcus by Goldman Sachs® and Capital One 360. Each of these banks required a SSN and physical U.S. address to sign up for their savings account. Discover and Ally did not allow nonresident aliens to open accounts at all even if they had a SSN.
For this reason, it may be better for nonresident aliens to stick to banks that have physical locations. Large banks are less likely to have roadblocks for noncitizens than smaller local banks, said Ken Tumin, founder and editor of DepositAccounts.com, a fellow LendingTree company.
How to open a bank account as a non-U.S. citizen
Resident alien: Open an account online with a major bank
MagnifyMoney reviewed bank account applications for eight major U.S. banks. We found that if you are a resident alien who has an SSN, then you can open an account online with a major U.S. bank easily, just like any U.S. citizen.
But small local banks may not allow non-U.S. citizens — resident aliens and nonresident aliens — to apply online. For example, at Hills Bank, a community bank in Iowa City, Iowa, we found its online application informed the applicant that if they aren’t a U.S. citizen or U.S. person, they can’t continue.
If you are a resident alien and hope to open a bank account online, your best shot would be large U.S. banks that operate throughout the country. In a typical online application, you will need to enter your personal information, including name, address, phone number and your SSN.
Nonresident alien: Visit a bank branch
If you are a nonresident alien, most likely you will have to visit a bank branch to get a checking or savings account with the assistance of a bank clerk. Some banks may ask for immigration documents in lieu of other identification, but it can still be tricky.
The challenge is that bank clerks may not know your status and which documentation is needed to open an account for you, Dawson explained. So you may be required to provide all forms of paperwork that the bank needs to open an account for all non-U.S. citizens, even if you are a resident alien.
“They are going to follow whatever they see in terms of their own system, but at the end of the day, it’s often not until the paperwork is actually processed that you know for sure if everything has been done the way that they needed to be done,” Dawson said.
What documents do you need?
At the very least, banks are required by law to verify the information below from each person before opening an account:
- Date of birth
- Physical address
- Identification number (SSN, for instance)
But for non-U.S. citizens, banks must also verify one or more of the following identification numbers:
- Your Taxpayer Identification Numbers (TIN)
- Your passport number and country of issuance, alien identification card number
- Your government-issued ID issued from your home country
Before you visit the bank, make sure to check on the bank’s website or call for information about required verification documents for foreign nationals, because each bank has its own set of policies and procedures in place to comply with the requirements above. Some banks may require more paperwork to be able to set up an account for you. Some common secondary documents are: 1) proof of your actual address, such as your lease or utility bills; 2) your I-20 that verifies your student status (if applicable); 3) your driver’s license or state ID, if you have one.
Who am I? Determine your status
Not all foreign nationals are nonresident aliens. This means some noncitizens can apply for a bank account online. We know, we know — it’s confusing. (It took the author of this article more than five years living in the U.S. to finally figure out which type of alien she is.)
If you are not sure whether you are a resident alien or a nonresident alien, here’s how to figure out your status.
Have your passport handy.
It’s less straightforward to determine whether a non-green card holder — international students and expats on work visas — is a resident. According to the IRS, to qualify as a resident alien, you must be physically in the U.S. for at least:
- 31 days during the current year, and
- 183 days during the three-year period that includes the current year and the two years immediately before that, counting:
- All the days you were present in the current year, and
- 1/3 of the days you were present in the first year before the current year, and
- 1/6 of the days you were present in the second year before the current year.
But, there are special categories of foreign nationals who are exempt from the substantial presence test, which means their stays in the U.S. do not count as residents when they are on certain visas.
An “exempt individual” is:
- An individual temporarily present in the U.S. as a foreign government-related individual under an “A” or “G” visa, other than individuals holding “A-3” or “G-5” class visas.
- A teacher or trainee temporarily present in the U.S. under a “J” or “Q” visa.
- A student temporarily present in the U.S. under an “F,” “J,” “M,” or “Q” visa.
- A professional athlete temporarily in the U.S. to compete in a charitable sports event.
The exemption time frames defer by visas. For example, if you are an international student, you are an exempt individual for five calendar years when you are on an F visa, meaning you are a nonresident alien. But starting year six, you will be considered a resident alien if you meet the substantial presence test above.
A nonresident alien is a non-U.S. citizen who is not a lawful permanent resident (aka a green card holder) during the calendar year and does not meet the substantial presence test in the section above.