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I am legally residing and working in the US under an H1B visa and so far haven't had any issues opening bank accounts. All I was ever asked for was proof of US address and a valid Social Security Number. Turns out that the two major US online banks (Capital One and Ally) apparently only allow US citizens or permanent residents (I guess that means Green Card holders) to open accounts. Ally in particular told me that they don't offer any ability to wire money abroad.

Why do online banks have this permanent residency requirement in place?

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    For what it means Charles Schwab Bank allows non permanent residents to use it. I used it for a number of years on a work visa before I became a permanent resident. However this site frowns upon product recommendations so I wont post this as an answer. Most online banks make the requirement as most non permanent residents lack an SSN and are also much more difficult to perform ID verification in compliance with the patriot act. It isnt illegal, just a little more onerous. This ID verification is much easier if they can see your ID in person as in a brick and mortar bank. – Vality Sep 27 at 23:21
  • @Vality people who are in the US under all manner of work visas (e.g. H1b) do have an SSN while not being permanent residents. – Marcus Junius Brutus Sep 27 at 23:25
  • I'm aware of this. I used to work under an L1 work visa so am intimately aware of the situation. However this is why I gave two reasons. One being many folks not having an SSN and the second it being harder to verify non immigrant visa holders for the purposes of the patriot act without seeing their documents in person. – Vality Sep 28 at 3:09
  • I believe they have to see ones passport in order to open an account if one is not a green card holder or citizen. – Vality Sep 28 at 3:09
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Why do online banks have this permanent residency requirement in place?

First, not all banks have this requirement, but a great many do. When I was a non-permanent-resident worker I got an account at a local credit union specializing in people in my industry.

But your question is why banks have a residency requirement. Let's follow the chain of logic:

  • Banks are in the business of providing banking services.
  • Criminals are particularly in need of financial services such as money laundering.
  • Prosecution is a disincentive to crime.
  • Foreign national criminals can, they hope, escape the consequences of crimes committed in the United States by fleeing to a different country.
  • Online banking, not tied to any particular geographic location, is particularly attractive to money launderers. See in particular the "wire money abroad" portion of your question.

Or, let's look at it from another direction:

  • Having a credit history, or otherwise being established in a country -- having a solid record of employment, payment of debts, and so on -- is evidence against the proposition that a potential customer will engage in financial crimes.
  • Recent immigrants who are temporary workers have no such history.

In short: a temporary resident with no financial history is, comparatively, a huge risk of resulting in an expensive prosecution compared to a permanent resident with a long history of good behaviour.

Now, you might reasonably point out that the vast majority of H1B visa holders by definition have legitimate jobs that were vetted by the immigration process, and you'd be right. But banks are in the business of managing risks, and some of them have decided that the benefits to them of banking slightly-higher-risk customers does not make up for the increased risk.

Put another way: big banks are already making tons of money all the time. They don't want or need your business.

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