This advice is for Torontonians or Canadians who can make it to Toronto for a day.
Part of the mandate of this site is to give information specific to Canadians. When a lot of sites give information relevant to Americans, it can lead you to spending extra time and money that is no necessary. Opening a bank account is one of those areas that are much easier for Canadians who either live in Toronto, or are able to make a day trip there.
Most advice online will tell you to use a lawyer to open an account. I believe this is the case because they want to get money for referrals, or just don’t have experience with Canadian clients. I followed their advice, assuming that using a lawyer was necessary. I paid the lawyer a fair amount of money and wasted more than 5 months waiting for them to try bank after bank without success. Finally I figured out that there are a half million Portuguese living in Canada, why don’t I go down to Little Portugal on Dundas St, and ask some locals!
My first stop was the LCBO, asking if there where any Portuguese banks in the area. The staff didn’t know, but I discovered that that location hosted a massive Portuguese wine collection, so I bought a few bottles. Update: this location closed recently. Next stop, the butcher, O Nosso Talho. After taking a number and waiting 45 minutes for the ancient woman in front of me to finish her argument over which chicken breast she wanted, (this was good preparation for Portuguese business culture), I bought a few items, and then casually asked if there were any Portuguese banks in the area. I was told that there was a branch of MontePio a block away, as well as a branch of Caixa on University street across from the embassy. Success!
After spending a tonne of money on lawyers and delaying my Visa application by almost half a year, I was able to open an account at both banks in person in Toronto in under a week with minimal fuss. All they required was a copy of my passport, and active NIF which I got from NIF Online, and a copy of my driver’s license. Perhaps one of the banks asked for a paystub, but nothing more. Note: You do not need a Portuguese address or phone number to open an account, a Canadian address and phone number will do just fine.
Caixa
MontePio
Which is better?
Honestly, both are different and good in their own way. Caixa is a public (government run) bank, whereas MontePio is private. However, Caixa’s website and mobile app are translated to English, whereas MontePio site and app are Portuguese only, making Caixa the winner for me personally. Regardless, the good thing about having two options is that if one gives you trouble, try the other one, all without leaving Toronto.
Why are Portuguese banks don’t want to open accounts for Americans
FATCA (Foreign Account Tax Compliance Act)
The Foreign Account Tax Compliance Act is a US law passed in 2014 that requires all global financial institutions to report information on American citizens to the IRS. Foreign banks must identify, document, and report U.S. citizens and U.S. tax residents. Noncompliance results in a 30% withholding tax on U.S.-source payments. Over 100 countries have been forced to sign FATCA agreements, often against their will under intense pressure. Many international banks choose to avoid U.S. clients entirely to reduce cost and legal exposure.
Canada does not have a law like FATCA. Not only does Canada have no such law, Canada has no apparatus to enforce such a law, In fact, no country other than the USA does. Most of the the world other than the USA agree to use the OECD CRS (Common Reporting Standard), which has no penalties for banks failing to report and no draconian unilateral enforcement like FACTA.
CBT (Citizenship-Based Taxation)
Americans living abroad must file annual IRS returns and FBAR reports if they hold foreign financial assets. Banks fear becoming entangled in U.S. tax reporting obligations and potential IRS penalties. Enhanced due diligence (EDD) is required for “U.S. persons” under FATCA. Portuguese banks are required to monitor US citizens for changes in their situation, and collect and retain IRS forms like W-8BEN or W9 forms, and face the constant threat of audits from US tax authorities
Canada’s taxation is based on residency, not citizenship. Therefore, the moment that a Canadian becomes a Portuguese tax resident, usually after 6 months of residency in Portugal, Canadians are released from having to file Canadian taxes in many cases. This means that Portuguese banks do not need to produce Canadian tax forms or have to be familiar with Canadian tax law. This is how all nations agree to operate, with the exception of the United States and Eritrea.
Summary
Portuguese banks (and all international banks) are understandably hesitant to open bank accounts for American citizens, even if they hold multiple citizenships. Make it clear when opening an international bank account that you are Canadian and have no ties to the USA, and doors will open for you. If you are opening an account in Canada at one of the two locations in Canada, the tellers will understand this situation, and may ask you to sign a declaration that you are not a dual US citizen or “U.S. person” and do not have significant ties to the USA. Don’t be surprised if you see this.