Ecuadorian banks tighten the rules for foreign accounts

Although no Ecuadorian bank has closed the accounts of U.S. expats to avoid new IRS reporting requirements, they have added tougher rules for opening and maintaining accounts.

Almost all banks require that foreigners opening a checking or savings account be legal residents of Ecuador. In the past, it was possible for a well-connected local attorney, facilitator or real estate agent to help foreigners skirt the rule, but no longer.

In addition to showing a cedula, or national identification card, most banks also require an empadronamiento issued by immigration authorities, confirming that a foreigner does, in fact, reside in Ecuador. The empadronamiento replaces the old censo card that foreigners living in the country were required to carry until six years ago.

Although these rules apply to all foreign account holders, officials at two banks say they plan to add new requirements specifically for U.S. citizens living in Ecuador. “One of them will be requiring that they provide us with a copy of their U.S. income tax return,” said a bank officer at Banco Pichincha. “This will be for the purpose of complying with the new Fatca law,” he said. The requirements will apply to current account holders as well as to those opening new accounts.

Beginning last year, Banco Pichincha and several other banks began deactivating accounts that have seen no activity for three months. Accounts can be reactivated but it requires a personal visit by the account holder to the bank

Account requirements at financial cooperatives are less stringent, according to Cuenca attorney Andrea Jaramillo. “Most of them will open an account with just a passport,” she says. She advises, however, that account holders not keep more than about $25,000 in an account, below the threshold of government bank insurance coverage.

The new rules are developed independently by each bank, the Pichincha official said. “There has been some misunderstanding that these are government rules. They are not,” he said. “Each bank can deviate from its own rules if it wants.”