As more Americans embrace expat life in countries like India, a growing concern is surfacing among US citizens abroad, the risk of having their US brokerage or bank accounts frozen or closed due to address verification requirements.
A social media post detailing the issues has now become viral on Reddit: “How can U.S. expats living in India maintain U.S. brokerage and bank accounts without a U.S. residential address? Assuming using a friend’s or family member’s address is not an option, what’s the solution? Many banks may freeze or close accounts if they find out the holder lives abroad with no U.S. residential tie.” This candid message resonates with thousands of Americans living overseas who are caught in a regulatory gray area. While U.S. citizens are still subject to tax reporting (under FATCA and other IRS regulations), many financial institutions require a valid U.S. residential address to maintain accounts—despite having no legal obligation to reside in the U.S. Financial institutions use these addresses not only for regulatory compliance but also to meet the requirements of the USA PATRIOT Act, Know Your Customer (KYC) policies, and to determine eligibility for certain investment products.”
“Usually no verification is needed”
Most of the netizens shared their perspective and experience on the post. A user said, “You can use a mail scanning service as the mailing address. If they need a permanent address you can use a friends or relatives. Usually no verification is needed.” Another added, ” interesting idea, especially if no verification is needed. plus it won’t put any burden on friends or relatives to having to deal with my mail, on the other hand, I won’t mind just contributing say couple of hundred dollars per month to friends or relatives just to open my mails as needed if they let me use their address. it will still be cheaper than renting an apartment.” A user however added, “Use a friends/family address. Even if a court summons you for something, all the friend/family has to do is say you are in India and the process server will serve you summons overseas with a suitably delayed date.” “There are some US brokers who will let you use Indian address. Check with Charles Schwab and TD Ameritrade. Some of our US Citizen NRI clients have accounts with them,” noted a user.
Why do US expats living in other countries keep US brokerage accounts?
U.S. accounts are regulated by agencies like the SEC and FINRA, providing strong consumer protections that may not be available in other countries. They also offer access to tax-efficient retirement vehicles such as IRAs and 401(k)s, which can provide tax-deferred or even tax-free growth. In contrast, investing in foreign mutual funds often triggers complex and punitive U.S. tax rules, particularly those involving Passive Foreign Investment Companies (PFICs). Maintaining investments in U.S. dollars also reduces the risks associated with currency fluctuations and avoids costly conversion fees.
From a tax filing perspective, U.S. based accounts simplify the process, as foreign accounts typically require additional reporting through FBAR and FATCA forms, increasing both the complexity and cost of tax compliance. Additionally, the U.S. financial market offers broader and often more affordable investment options compared to international platforms. When it comes to estate planning, U.S. accounts make it easier to set up trusts, designate beneficiaries, and potentially reduce estate taxes. Finally, for those considering a future return to the U.S., having investments already stateside avoids the logistical, financial, and tax complications of repatriating foreign-held assets.