Royal Bank, the US Government and the almighty dollar

Yesterday I briefly heard about Canadian dual citizens who had their American funds bank accounts closed by Royal Bank. It was suggested that the customers only found out afterwards. Furthermore, it is being reported that US government policy is the impetus for this activity, though I can’t quite understand why any reasonable person or institution would follow along (partly because none of the stories I have read have given any details about the US policies).

Mainly I am not quite sure why the US cares about this practice right now so much that they are causing banks to take this action. Many foreign nationals have been using US currency for years, without the consent of the US government. I would guess that many individuals will continue to do so in the future, even with the implementation of this crack down. Additionally, I am not quite sure how a country can control what happens to its currency once it leaves its borders. If Royal Bank, or any other bank for that matter, would like to offer accounts in foreign currencies it would seem to be up to the bank and the institution issuing their charter, not the country from which the currency originates (though maybe the international and inter-connected nature of the current banking system has caused this to change).

It would be interesting to know if the same rules are being followed in the US. In many ways I would find it hard to believe that the US is able to disallow dual citizens (people who are full US citizens) access to banking services, even if they wouldn’t want them to access these services. It seems somewhat hypocritical to expect more from banks located in foreign nations, though I guess they can boss these banks around without worrying about the constitutionality of the whole thing.

It seems that there is also an element of sloppy reporting in all of this. It was not initially reported that not all dual citizens were not having their US funds accounts shut down. The implication was that it was affecting everyone, something that is clearly not the case (as I haven’t had mine shut down). In stories that came out today it was reported that individuals would be able to have these accounts if they could demonstrate that they resided in Canada (a potentially temporary and possibly meaningless measure).