Why Does Bank of America Require NRA Accounts? Exploring the Reasons and Considerations

Why Do U.S. Banks Require NRA Accounts? Exploring the Reasons and Choices Behind the Trend

In today’s increasingly integrated global economy, capital flows are no longer confined by national borders. More non-U.S. residents, companies, and institutions are seeking to invest, trade, and even establish long-term positions in U.S. financial markets. In this context, the Non-Resident Alien NRA account has become a topic of growing interest.

Recently, several major U.S. banks have intensified their scrutiny and tightened requirements for opening NRA accounts, prompting widespread discussion. An NRA account is a bank account established for individuals or entities classified as non-resident aliens-those without U.S. tax residency but who wish to hold assets in U.S. financial institutions. These accounts can be savings accounts, checking accounts, or brokerage accounts used for investment purposes.

However, in recent years, large U.S. banks such as JPMorgan Chase and Citibank have adjusted their procedures and raised the bar for opening such accounts, introducing more rigorous compliance checks.

I. A Necessary Measure Amid Tighter Financial Regulation

In recent years, the Financial Crimes Enforcement Network FinCEN, under the U.S. Department of the Treasury, has significantly strengthened enforcement of anti-money laundering AML and Know Your Customer KYC policies. In 2025, FinCEN issued a series of notices emphasizing enhanced monitoring of cross-border transactions, requiring financial institutions to conduct stricter identification of client identities, especially those from high-risk jurisdictions.

According to Bloomberg, in early 2025, a European private bank was fined millions of dollars by the U.S. Department of Justice for failing to properly handle suspicious transactions in its NRA accounts. This incident prompted U.S. banks to reassess their onboarding mechanisms for non-resident clients.

To avoid potential legal risks, some banks have begun raising the standards for opening NRA accounts, including requiring additional identity documentation, proof of fund sources, and undergoing more thorough background checks.

As reported by The Wall Street Journal in June 2025, with the global trend toward tax transparency-especially under the OECD's Common Reporting Standard CRS-U.S. financial institutions have become more cautious in managing overseas accounts. Although NRA accounts fall outside the scope of CRS, their associated tax reporting obligations remain complex. As a result, banks aim to reduce compliance costs by strengthening the account-opening process.

II. Tax Compliance as a Driver for Account Setup

Beyond regulatory pressures, the establishment of NRA accounts is also closely tied to U.S. domestic tax law. According to the Internal Revenue Service IRS, non-resident aliens earning investment income in the U.S., such as dividends, interest, or capital gains, are generally subject to a 30% withholding tax.

By investing through an NRA account, taxes can be automatically withheld by the bank holding the account, simplifying the tax process. If investors use regular or offshore accounts instead of an NRA account, they may face more complex reporting obligations. For example, U.S. brokers may not withhold taxes if they cannot verify the investor's non-resident status, leaving the investor responsible for self-reporting and paying any owed taxes to the IRS-or risk penalties and interest.

From a tax administration perspective, encouraging non-resident clients to open NRA accounts helps ensure tax collection while enhancing service efficiency and professionalism.

III. Global Investment Trends Driving Account Adoption

In recent years, as U.S. stock markets continue to rise and dollar-denominated assets gain appeal, more international investors seek direct participation in U.S. equities. Particularly in Asia, investors from Japan, South Korea, and Singapore are increasingly pursuing legal channels to allocate dollar assets.

Against this backdrop, the NRA account serves as a crucial bridge connecting international investors with the U.S. financial system. According to Statista, as of the second quarter of 2025, the number of international users on U.S. online brokerage platforms had increased by over 15% year-on-year, with a significant portion investing through NRA accounts. This indicates that despite tighter requirements, demand remains strong.

At the same time, fintech firms are developing financial products tailored to non-resident users, offering multilingual support, local currency settlement, and tax advisory services-further promoting the adoption of NRA accounts. For instance, Robinhood announced in 2025 an expansion of its international services and improvements to the NRA account onboarding experience, signaling continued growth potential in this area.

IV. Future Outlook and Recommendations for Investors

Looking ahead, as global financial regulations converge and digital transformation accelerates, the process of opening NRA accounts is expected to become more standardized and efficient. However, users must also be aware of their responsibilities, including accurate income reporting, cooperation with due diligence, and timely updates of personal information.

For non-U.S. residents considering opening an NRA account, it is advisable to choose reputable, well-established banks or brokerages and prepare all necessary documents, including identification and proof of fund sources, in advance. Consulting a professional tax advisor is also recommended to ensure compliance with U.S. tax laws while achieving investment goals.

In conclusion, the tightening of NRA account management by U.S. banks reflects both regulatory pressure and the broader trend of globalization in finance. Understanding these changes enables investors to better seize international opportunities while mitigating potential risks.