Bank accounts in the United States and the fintech lie

Although fintechs have turned traditional banking and the old methods of sending and receiving money upside down, there is still a barrier to cross: international bank accounts. And that is the premise with which many promote themselves today, but can a fintech open a bank account in the United States without the need for the user to travel to the country? There is a lot of fine print that casts doubt on such offers. Legally it is not possible, but that argument serves to find the objective: to attract customers on a recurring basis. 

In this article we will show you how these fintechs work and why they do not really fulfill their promise to help you have your own account.

What is a fintech and why is it false that they offer their own account in a US bank?

Fintech (Finance and Technology) can be defined as companies that use technology to provide fast, efficient and practical financial services. They represent an alternative to traditional payment methods and, given the versatility of their operations, they are part of daily commerce throughout the world.

A fintech is characterized by innovation and by 'democratizing', in a certain way, the payment methods for products and services. There are some like PayPal that fulfill their role as a payment gateway very well, but there are others linked to accounting, real estate, payment infrastructure, personal finance, credit and more. 

In Venezuela they are especially famous for facilitating the sending and receiving of currency. And it is in this scenario where more and more financial platforms are emerging that seek to connect users with US banks, all in order to provide them with a solution to send and receive transfers and operations with Zelle. In fact, there are fintechs such as Reserve that allow their users to receive transfers from Zelle and —at the time— even rent Zelle accounts. 

Now, these fintechs —considered “neobanks”— try to fulfill the function of a traditional bank, but they really aren't. Therefore, It is not possible for a fintech to allow you to have your own account in the United States. We will explain the reasons in two phases:

1: The Patriot Act (USA Patriot) comes into play

The main reason that prevents a foreign citizen from having a bank account in the United States falls on the "Act to Unite and Strengthen America by providing the appropriate and required tools to prevent and hinder terrorism", or also known as the Patriot Act (USA Patriot).

This legal instrument, approved by Congress in 2001 after the September 11 attack on the Twin Towers, seeks to expand the State's capacity to combat terrorism and money laundering. And as expected, it brought changes to the banking sector and to financial services companies.

Specifically, in chapter II of section 326 of the USA Patriot a requirement is made to banks: they must have an account opening procedure or a “customer identification program”. 

What does this mean? Basically, every citizen, whether resident or foreigner, goes to a bank and provides key information to open an account: names, address, date of birth, Social Security number (SSN) or Personal Taxpayer Identification Number (ITIN). . All these data must be valid and verified.

Banesco USA emphasizes on its website the importance of complying with the USA Patriot:

“To help the government combat terrorist financing and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. what does this mean to you? When you open an account, we will ask for your name, address, date of birth (for individuals) and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents."

In other words, the USA Patriot does NOT prohibit a foreign citizen from having a bank account in the United States, but it does propose these requirements as a way to have one. The main one, as you can see, is that he must personally go to a bank headquarters and deposit all those documents.

So why do some fintechs promise a foreign citizen to have a Zelle account in the US? What mechanism do they use? Let's see its working method:

2: An account that looks like your own, but isn't

With all the clear rules and with the USA Patriot involved, it is impossible for a fintech or a group of managers to promise to help you create your own account at Bank Of America, Wells Fargo or JP Morgan without leaving Venezuela.

However, we must clarify something: these fintech are not illegal. They operate under the authorization of the Financial Crime Control Network of the United States (FinCEN), at least that is the case of Wallbit Pay, a platform whose main slogan is to help people "open your own bank account In U.S.A".

Taking Wallbit Pay as an example, its website highlights that it is possible to create an account from any Latin American country for free by providing only your passport and some personal information.

The fintech has a bank account at Provident Bank and ensures that user money is insured by the Federal Deposit Insurance Corporation (FDIC), an agency that guarantees the recovery of funds in case a bank goes bankrupt. .

The truth is that platforms like Wallbit Pay – which, we repeat, are not illegal – create a kind of 'virtual wallet' instead of a bank account as such. In this wallet, the user will be able to make money movements, just as if it were a common bank.

However, the supposed bank account does not belong to the user: really is from the platform. When a person wants to inject funds, he will have to do it to their own account. 

When completing the operation, this platform will be in charge of subsequently paying the money in the user's virtual wallet. Simply put, they lend their account so that users can receive currency payments, save, and send funds to other wallets or bank accounts.

In summary, the user is not 100% owner of an account, he simply has one available to be able to move his money in a virtual wallet that does belong to him, and which pretends to be a bank, but it is not.

In addition to Wallbit Pay, another similar platform that offers its own accounts in the US is Globalf. The neobank Facebank, based in Puerto Rico, also offers the creation of a digital bank account in the USA.

Are there other ways to have an account in the US without using a fintech?

Outside the fintech environment and from a country other than the United States, it is possible to have a bank account, but it does not apply to everyone. There are so-called 'offshore accounts', which allow the opening of accounts from another country. One of the main requirements is to be a client of a banking institution in the country in which you reside.

For example, in the case of Venezuela, it would apply to institutions such as Banesco and Mercantil, which have branches in the United States. However, it is not an easy process and the user must be very well informed.

Tips when choosing a fintech to receive and send dollars

If you want to save in a foreign bank or simply have an account to send and receive dollars, it is worth looking for the safest and most reliable option. Therefore, before choosing a fintech take these tips into account:

• Read carefully the terms and conditions in the registration process.
• Check their fees, commissions and minimum opening amount (if any).
• Look for opinions from other users who already use that fintech.
• Review how their customer service and support methods are working. 
• Make sure fintech works without restrictions in your country.
• Check if the fintech you choose is the custodian of your personal data. Prioritize safety.

We must clarify that the purpose of this article is not to discredit fintech companies that connect with financial services in the United States. We seek to inform and clarify any questions that our readers may have.