Americans in France face bank closures linked to new EU ruling

Americans in France who bank with Chase have started receiving letters saying their accounts will close by the end of the year, because of a new EU directive affecting non-European financial institutions.

Customers of the US bank in France started receiving letters on October 1 saying Chase plans to close their accounts in December. The decision is tied to the Capital Requirements Directive VI (CRD VI), which places more restrictions on American banks servicing customers with a European address.

The directive does not ban US banks from serving Americans in Europe. Rather, these institutions are likely making a “commercial choice” to close the accounts, said Hassan Kohen, a Paris-based lawyer.

“CRD VI adds a new layer of uncertainty to the cost of serving clients abroad,” Mr Kohen told The Connexion.

That is because the directive, which takes effect on January 11, 2027 in France, exacerbates problems already created by the 2010 Foreign Account Tax Compliance Act (FATCA), a US law that obliges American citizens to report their foreign financial accounts and assets to the US government.

This law led many European banks to refuse American clients.

While European banks have become familiar with FATCA reporting in recent years and seem more willing to take on Americans, the services they offer are often limited to checking and savings accounts, said Marylouise Serrato, executive director of American Citizens Abroad (ACA).

The latest directive is therefore “adding to the problem,” she said.

“It’s limiting the ability of a US person to maintain a US bank account, and they may be limited or even locked out of having a foreign bank account,” she said.

It was not immediately clear how many Chase customers in Europe were affected, or whether other American banks have taken similar steps.

ACA has heard from roughly 80 Americans about the bank closure issue, and Chase was the only bank mentioned, Ms Serrato said. Chase said its primary deposit products, including checking and savings accounts, are affected by the closures.

Bank of America is not affected because its clients are US-based, the bank said. Schwab, Fidelity and Wells Fargo did not immediately respond to a request for comment.

One American expat living in France, who asked to remain anonymous for privacy reasons, told The Connexion that receiving the letter from Chase left her “in complete shock”.

Before moving to France in 2020, she had done extensive research to ensure her financial situation was compatible with living permanently in Europe.

“The options that I had, that I found, were keeping things open with Chase,” she said. “They said it wasn’t a problem to have a French phone number and mailing address attached.”

The letter “completely blindsided” her, she said.

She must now begin the lengthy process of working out which other platforms, such as the Internal Revenue Service or Venmo, are linked to the account before deciding how to transfer her money before time runs out.

The directive includes a grandfathering clause, which means contracts signed before July 11, 2026 are exempt from some aspects of the new law.

This appears to relate to commercial banking clients rather than consumers, according to Chase. Credit cards attached to the closed accounts are also affected.

Mr Kohen, who also practices tax law, said accounts opened before July 11 keep the rights acquired under that contract.

However, “whether a given bank relies on that protection is another question,” he said. “Neither text obliges a bank to keep a client it no longer wishes to serve.”

What to do

Ms Serrato said Americans can join ACA to gain access to the State Department Federal Credit Union (SDFCU). It offers US-based checking, savings, loan and credit card accounts to State Department employees, contractors and immediate family members, as well as members of affiliated groups such as ACA or Democrats Abroad. Members do not need to live in the US to open or keep an account.

They can also use Wise or Revolut, multi-currency financial apps, for everyday banking services.

Mr Kohen said there are three realistic options for Americans in this situation. 

The first is to ask the bank in writing whether it can keep the account open because of the date of the contract.

The second is to move the money to a US institution that knowingly accepts clients living abroad. For a brokerage account, the securities can be transferred as they are, without selling them.

The third is to use a French bank account. French banks can close an open-ended account if they wish, with at least two months’ notice. However, anyone living in France who has no bank account in the country has a legal right to open one. If a French bank refuses, because of FATCA, for example, it must give a written refusal. The person can then ask France’s central bank to name an institution that must open an account with basic banking services.

You could also register the account with the address of a relative in the US. That is not unlawful if the bank knows where the person actually lives, Mr Kohen said.

However, it becomes risky when the address is presented as the person’s residence.

“That is a false statement on file, and if the bank discovers it, it can close or freeze the account at a worse moment,” he said.

Finally, a closed account must still be declared on the French Form 3916, an informational tax declaration of foreign accounts, Mr Kohen said.

If money from the previous US account lands in a French account, it must be reported on the FBAR, the US form for declaring foreign bank accounts to the US Treasury, if the total value of the person’s foreign accounts exceeds $10,000 at any time during the year. It may also appear on Form 8938.

In the immediate period following receipt of a letter, Mr Kohen said there are three steps to take. 

First, open the account that will receive the money before the closure date, and give the US bank written transfer instructions rather than waiting for a cheque. 

Second, keep the letter, the final statements and proof of the balances, as these will be needed for tax returns. 

Third, check that your US accounts, including the one being closed, were declared on Form 3916 in previous years. If any were left out, correct this before the tax authority raises it.

If you have moved to France from the US and recently received a closure letter from your bank, we would love to hear about your experience. Share your thoughts with us at feedback@connexionfrance.com