Expats Find a Home for Their Money at State Department's Credit Union
The State Department’s credit union opens its doors to Americans overseas.
Americans who live abroad have an unusual and costly problem: Financial institutions are reluctant to take their money. But with a new account created by the State Department Federal Credit Union and the nonprofit American Citizens Abroad, they now have a place to do their banking.
A federal law that went into full effect in 2014, which was designed to deter money laundering and tax evasion, imposes tough reporting requirements on foreign financial institutions that hold U.S. assets.
Rather than risk a stiff penalty—30% withholding on their transactions in the U.S.—for violating the rules, many foreign banks have refused to do business with American expatriates. Making matters worse, some U.S.–based financial institutions have restricted services or closed accounts for Americans who don’t have a permanent U.S. address.
The SDFCU has experience working with expats; for years, it has offered accounts to Americans who work at embassies and other locations abroad. Under an agreement reached with ACA last year, any member of the association is eligible to open an SDFCU account (membership in ACA costs $70 a year, $55 for seniors). You don’t need a U.S. address to open an account, and you don’t have to be a federal employee.
Expats who open the new accounts may conduct transactions all over the world in U.S. dollars, says Mike Morris, director of member engagement for SDFCU. In addition, account holders can pay their U.S. taxes electronically, and retirees can arrange for direct deposit of their Social Security benefits.