How Banks Can Freeze Your Accounts Without Warning

3 Principles to Protect Your Money When You Move Overseas

One of my faults is a low tolerance for frustration… especially when that frustration is due to U.S. corporations’ arrogance towards their clients living and working abroad. 

I returned to Cape Town with my family in March this year. Since then, I’ve spent at least a week’s worth of working time trying to address issues with American companies. 

The first issue involved my personal-finance software, Quicken. I’ve been using the product since the 1990s, most of the time while living and working abroad. But as soon as I arrived in Cape Town in mid-March, it rejected my login credentials as invalid. 

I eventually realized that Quicken’s call center employees—all in the Philippines—had been instructed not to tell customers what was actually happening, but rather to string them along with hours of fruitless attempts to reset log-ins. Each call involved multiple escalations to different support levels. Each time, I was able to log in once, only to find myself back to square one the next time. 

Eventually, I wrote an angry letter to their CEO’s office via a link on their website. That time, I received a reply informing me that under its new ownership, Quicken had adopted a subscription model and could not be used anywhere outside of the United States or Canada. Using a virtual private network to spoof a U.S. IP address would also lead to a security lock on the account. 

I’m not sure what ticked me off more: that they had made this change without informing their customers, or that their call center employees knew this and wouldn’t admit it, forcing me to waste precious hours of my life. 

A second round of frustration came as I tried to disentangle my family’s mobile phones from AT&T. Our handsets were all bought for cash, not on installment. That meant we should have been free to have them unlocked so they could be used on a foreign cell service without any issue. 

I was able to unlock my own iPhone without too much trouble. But AT&T’s internal systems insisted that my wife’s and daughters’ phones couldn’t be unlocked for some unknown reason. Again, after hours on long distance calls late into the evening, it transpired that AT&T had completely mixed up the records of our accounts, and had both phones listed as being on installment plans that had never existed. 

Even then, promises to see to the matter were never met. So, I did what any aggrieved customer would do and filed a complaint against AT&T with the Better Business Bureau. That did the trick, since I got a frantic and apologetic letter from their CEO’s office less than 24 hours later, along with a promise to unlock the phones at once. 

As troubles go, these incidents are small beer. Just last week, however, I heard from two colleagues who’d had similar experiences, but from a much more consequential quarter—their U.S. banks. 

In one case, a colleague logged on to his U.S. bank accounts to find them all frozen. There was no explanation given, and no warning. There was just an error message that told him to visit a branch. That was a bit problematic because he lives in Europe. 

It turned out that the bank had conducted a periodic security sweep and detected that his registered U.S. address with them was actually a commercial address. That flagged him under “know your customer” rules as a potential terrorist or money launderer. Like me, he’s spending hours on the phone with call center employees ill-equipped to deal with his inability to access his hard-earned money. 

Another colleague related a story from a few years back. He contacted his U.S. brokerage for some mundane matter. When he told them that he was calling from his home in Europe, they immediately froze his accounts while he was on the phone with them. They told him they could only restore access if he proved that he had a U.S. residential address. That involved confirming that he had received a physical piece of mail with a code that he had to call back and read to them. 

Issues like these are becoming more common in the expat community for three reasons: 

First, the U.S. government imposes ever more onerous know-your-customer rules on U.S. financial institutions. What started out as a response to terrorist financing after 9/11 has become a free-for-all, with the IRS, the Treasury Department, the Department of Homeland Security, and other agencies insisting that Americans can only have financial services under conditions they set. Those conditions are clearly not designed to suit the more than 10 million Americans living abroad. 

Second, U.S. financial institutions increasingly earn the bulk of their revenue and profits from activities other than retail banking and brokerage. With so much money sloshing around in the economy thanks to the Federal Reserve, they make far more by investing on their own account or engaging in wholesale money movement.  

By contrast, people like you and I are irritations, not worth the consideration of adequate information or service when we run into trouble. We’re just not worth enough profit to them. 

Third, similar issues are emerging in the digital economy. Rules on the export of technology, fears of liability, and other risk management considerations are causing many U.S. service providers to crack down on people who try to interact with them from abroad. The rules governing this are set by corporate lawyers whose job is to limit the exposure of their employers… not meet the needs of clients. 

Is this a reason to avoid diversifying abroad? Absolutely not. I’d say it’s one of the main reasons to do exactly that. Nevertheless, here are three key principles to keep in mind if you’re planning a life in a new country… 

1. Keep a healthy reserve of funds in a foreign account—at least 3-4 months’ living expenses. Don’t rely on transferring money to yourself every month. You never know when your U.S. bank is going to throw a curveball at you. 

2. Many U.S. banks have no problem with expat clients. The trick is to make sure you’re doing business with them before you leave. Contact your U.S. bank and other accounts and tell them you’re moving overseas. Ask them for a statement in writing of how this might affect your relationship with them. If there are any doubts, move to another bank. For example, before our move, my wife and I logged on to all our key accounts and changed our physical addresses and telephone numbers to our foreign ones. If the bank rejected that, we closed our accounts and moved them somewhere else.  

3. You don’t have to learn from your own mistakes; you can learn from other people’s. Most of us at International Living have ample experience of these matters. Part of our job is to investigate them and identify actionable solutions, as I’m doing here. Don’t just read about sandy beaches and palm trees when looking into living abroad. Inform yourself of the issues you may face so you can avoid them all together. 

Of course, it’s impossible to identify every problem you might face once you’re living abroad. But if you do your homework, you can limit them to software glitches and temporary issues with your cellphones rather than the catastrophe of not being able to access your life savings.