Is it possible to get a debit card for a non-US-citizen nephew without foreign transaction fees?

Question

Here is my predicament: I am a US citizen, and I have a nephew in Russia, who is not a US citizen, and whom I would like to support financially. I have easily been able to make him an associated user on one of my credit cards, and get him a credit card issued in his name, without him being a US citizen. However, for certain purposes, he also needs to withdraw cash at ATMs. This is where we run into a problem.

I've called a number of banks that provide debit cards without foreign transaction fees on ATM withdrawal, and none of them have any provisions for adding associated users to the debit cards who are not US citizens (basically the only way to issue another card with my nephew's name on it is to make him a joint account holder, which requires citizenship). I've also looked into reloadable prepaid debit cards, but they all seem to have hefty transaction fees (3% and then some).

So, two questions.

1. Is there a solution here that would allow me to provide him with a debit card in his name that I could fund, that wouldn't have foreign transaction fees associated with it (I'd probably be okay with a small fixed ATM fee).

2. If I get a card in my name, and give it to him to use to withdraw money from ATMs, is that legal? What problems might that cause?

Answer 1

There's no requirement of US citizenship to open a bank account in the US. Any person, citizen or not, can do that. I don't know where this assumption of yours come from, but it is false.

So the easiest solution is to open a bank account for your nephew next time he visits the US and get him an ATM card from that account. You can then deposit money to that account as much as you want (beware of the gift tax consequences).

If he doesn't want to travel to the US and cannot open a US bank account remotely from Russia (which is probably the case), then follow the @BrenBarn's suggestion: have him open a bank account in Russia and just wire money there.

Having a foreigner tapping freely into your own personal bank account may cause legal issues both with regards to gift tax and money laundering provisions that require you to certify that the money on the account is yours only.

Also, check if there's an issue for a Russian resident to have control over foreign accounts (there's definitely such an issue for a US resident, Russians are generally not far behind when it comes to government oppression).

Answer 2

Is there a solution here that would allow me to provide him with a debit card in his name that I could fund, that wouldn't have foreign transaction fees associated with it (I'd probably be okay with a small fixed ATM fee).

There are separate issues here. There is no law limiting bank accounts to U.S. citizens, but most banks will not open an account for a non-citizen outside their declared service area. There are substantial legal liabilities to the bank in allowing it, whether a citizen or non-citizen.

The difficulty will be compliance with the Patriot Act. This is an extension of the older "Know Your Customer" doctrine. It is improbable that the bank could comply with the Act without the potential customer being physically present. You would have to check with your bank in advance as to their policies. Banks are not required to accept a customer outside their policies.

As to waiving the foreign transaction fee, that is very improbable. Although a handful of institutions do this in specific cases it is uncommon because the bank isn't actually charging the fee, they are passing it along. With a credit card they collect interest and waiving the fee can be thought of as a reduction in interest income, that isn't possible on a debit card.

You would want to make sure you have a scrupulously honest nephew. You could be held criminally liable for any actions he takes at both the state and the federal level. U.S. law is global. A citizen who commits a crime in any country of the world can be charged for it in the United States. By being on the account you can acquire any liabilities that are created as an accomplice.

This is a bigger issue at the federal level because 4,000 federal laws do not require criminal intent. Some do not require you to even know the action happened. Unlike state law which generally requires you intended to commit a crime and had to be aware of it, federal law often does not. It is also not adequate that the action is legal in Russia if it would be illegal in the United States.

If I get a card in my name, and give it to him to use to withdraw money from ATMs, is that legal? What problems might that cause?

It is legal, but you are now strictly liable for its use. See the above answer. It would probably get shut down anyway when they phone you and asked: "are you in Russia right now?" The bank is still liable for you giving away the card. The bank may close out all your accounts and submit a currency transaction report on you to the Treasury for possible money laundering.

Wire the money. Plan out how much and when, but just wire it.