Updated
GL-F-04
Glossary · Taxes and residency
FATCA - the law that makes banks worldwide ask about your US ties
A US law: every bank in the world is required to report to the IRS about the accounts of US citizens and residents. A bank that does not comply is cut off from the dollar system. That is why when opening an account they ask are you connected to the US.
01 / In 30 seconds
The short answer
- What it is
- A US law: banks worldwide report Americans’ accounts to the US tax authority
- Where it applies
- Any bank where an account is held by a person with a US connection
- Who it concerns
- Citizens, green card holders, US place of birth, US address or phone
- Difference from CRS
- FATCA concerns only the US and reports to the IRS; CRS is a multilateral exchange
- Can you prepare
- Yes: establish any US connection in advance and prepare the forms
02 / In plain words
What FATCA means
FATCA (Foreign Account Tax Compliance Act) is a US law that obliges banks all over the world to report to the US tax authority (IRS) on Americans’ accounts. Put simply: wherever in the world a US citizen or tax resident opens an account, their bank is obliged to report it to America.
The mechanism is tough: a bank that refuses to comply with FATCA risks losing access to the dollar system — for an international bank that is effectively a death sentence. So banks err on the side of caution and, when opening an account, almost always ask: “Do you have a US connection?” — citizenship, a green card, place of birth, a US address or phone number. FATCA is, in essence, “CRS before CRS”, only for one country — the United States.
The conclusion for the client: any US connection — even a place of birth in an American city — will come up when an account is opened, and it is better to state it frankly from the outset. The United States taxes its citizens worldwide regardless of where they live, and FATCA is the tool that enforces this.
A case from practice
A client was born in the United States but left as a child and has lived their whole life in another country. When opening an account with a European bank, they state their place of birth — the US — on the FATCA form. The bank requires a US tax number (SSN/ITIN) and Form W-9, because under FATCA such a client is regarded as having a US connection, even without an active passport.
Where FATCA comes up
- Opening an account abroad
- Holding US citizenship or a green card
- Place of birth in the US
- A US address or phone in your details
- Investing through foreign structures
- Compliance at international banks
03 / What it covers
Indicators of a US connection under FATCA
Identity
- US citizenship
- Green card
- Place of birth in the US
Contact details
- A US address
- A US phone number
- A power of attorney to a person in the US
What is required
- SSN/ITIN tax number
- Form W-9
- Confirmation of status
Consequences
- The bank’s report to the IRS
- Account refused without the forms
- US tax worldwide
04 / How it works
How FATCA works
The bank asks about a US connection
The account-opening form: citizenship, place of birth, addresses.
Checking indicators (place of birth, etc.)
The bank checks the US indicators against your documents.
Collecting forms (W-9, tax number)
Form W-9 and an SSN or ITIN if there is a US link.
The bank’s report to the IRS
The bank reports the account to the IRS every year.
The account is opened taking the status into account
The account is open and your US status is disclosed.
05 / Key facts
What you need to know
01What it is
Bank reports to the IRS
Banks around the world report the accounts of US citizens and tax residents to the US tax authority.
02Who is affected
Any US connection
Citizenship, a green card, a US place of birth, a US address or phone number.
03Why banks are strict
A risk to the bank itself
A bank that does not comply with FATCA risks losing access to dollar payments.
04Difference from CRS
US only
CRS is an exchange among 100+ countries. The US uses FATCA and does not take part in CRS.
Common mistakes
Hiding a US birthplace or a former green card
Declare the US link on the bank form: it will surface from your documents anyway.
Thinking an unused US passport does not matter
A US citizen remains a US taxpayer until formally renouncing citizenship.
Going to the bank without a W-9 and tax number
Prepare the W-9 form and an SSN or ITIN in advance.
06 / Expert advice
How to prepare in advance
Find out frankly in advance whether you have a US connection under the FATCA criteria — citizenship, a green card, place of birth, an address or phone number. If there is a connection, the required forms (W-9) and a tax number are prepared, and the obligations to the US tax authority are dealt with. Then FATCA will not become a reason for refusing an account.
What we do for you. BRIDGES GLOBAL establishes in advance whether you have a US connection under the FATCA criteria and prepares you for the bank’s questions: we tell you which forms and documents will be needed so that a US connection (if there is one) does not become a reason for refusing an account.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
Yes. A US place of birth is one of the indicators of a connection with America. Under FATCA the bank will most likely ask you to confirm your US tax status or your renunciation of citizenship.
FATCA is a US law on the accounts of persons with a US connection, and the report goes to the IRS. CRS is a multilateral exchange between 100+ countries. The United States operates under FATCA and does not take part in CRS.
As a rule, a US tax number (SSN or ITIN) and Form W-9. Without them the bank may refuse to open an account or close one already open.
Only through formal renunciation of US citizenship, with the tax procedures observed. It is a separate and lengthy process that is worked through individually.
Yes. A green card holder is regarded as a US tax resident, so their accounts abroad also fall under FATCA.
Sooner or later it will come up (place of birth in documents, IP address, transfers), and that risks the account being closed and problems with the IRS. Frank disclosure from the outset is safer.
Related terms
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