A new type of bank launched in Europe today aimed at expats and immigrants.
Monese, www.monese.com, registered in London and Estonia, is able to offer cutting edge banking services to the whole of Europe. Customers download an app and can then open an account in less than 3 minutes, providing a photo of their passport and a selfie to verify their identity.
The current account is controlled from the app and includes a Visa debit card, multiple currency accounts (currently just British Pounds and Euros, though they tell me that US dollar accounts will be launched in the coming months), and ultra low cost international money transfers. The account is effectively a UK account, however cash withdrawals and deposits and debit card transactions (both in the real world and online) are priced the same worldwide (plus a 0.5% currency exchange charge if outside Europe). Aside from the small transaction charges, the account is free, including unlimited deposits by bank transfer.
Monese doesn't pay interest, as it doesn't invest depositors' money like a normal bank. In fact it isn't technically a bank at all, but is instead classified as an Electronic Money Institution by the UK's financial regulator. This lends certain advantages, such as having less barriers to opening accounts (and so being able to offer accounts to people who normal banks might not accept), however it is also prohibited from offering credit or loans, and from lending or investing deposits. These aren't necessarily disadvantages though, as in the event of a financial crisis there would be no losses of customers' money.
So for the million dollar question: what about US expats and FATCA? Does the Monese model at last provide a solution for US expats living in Europe and struggling to open bank accounts? And indeed, not being a bank, is Monese obligated to provide US expats details to the IRS under FATCA legislation? We contacted Monese to find out.
First up, the good news: there's no hindrance to US citizens opening accounts with Monese provided that they are residents of a European country when they apply. To be clear, US citizens can open an account with Monese in under 3 minutes in the same way that anyone else can.
This in itself may be a huge relief and a breakthrough for many US expats living in Europe who have experienced problems dealing with local banks since the FATCA rules came into force. While there are certain limits to Monese accounts, they effectively function as a normal checking account, so it's enough to get you up and running when you arrive.
While not a bank, Monese is still a financial institution, and as such it is still subject to FATCA reporting. However the positive of being able to open an account easily will for most expats outweigh the reporting side, which all 'normal' banks do anyway.
My last observation on Monese is that it is worth noting that it is at the forefront of an emerging industry. A similar German venture is due to launch before the end of the year, and it can only be a matter of time before the model is copied in other regions, notably the far East, with its sophisticated financial markets. This can only be good news for expats everywhere.