Today with the dollar exchange with the Loonie at an advantage, banking in US Dollars makes little sense; maybe.First, if you believe that the roles will again reverse this is a good time to buy US Dollars.However if you are just planning on letting that money sit you might be better advised to invest it where it will gain higher returns than bank interest.The real advantage to holding a US Dollar account is if you are frequently travelling to the US, studying, or working in the USA.Banking on profit from currency exchange is not going to work for you.
There are a few other things Canadians need to know before engaging in US Dollar Banking.First of all, even if it is a Canadian Bank operating in the USA the bank is subject to the rules, regulations and laws of the USA.That said, your money deposited here is transferred to the US institution, not held on Canadian soil.This makes no difference if you are dealing with a chartered bank or a Credit Union; all US dollar transactions have to go through a US bank.
Here are a few of the rules to establish an account:
-Prove Canadian Citizenship, Residency, or First Nations Status.Any of these requires a minimum of two pieces of identification issued by government.They can be Birth Certificate, Passport, Citizenship/Residency Card or Certificate of Indian Status.The second piece of proof required can be one of the following: Social Insurance Number, Old Age Security Card, Provincial Health Card, Canadian or US Driver’s License, Citizenship and Immigration Form IMM 1000 (prior to June 28, 2002) or IMM 1442 or IMM 5292.
-Occupation
-Date of Birth
-Stated purpose of the account and anticipated account activity
-Source of funds for the initial deposit
-Statement that the account is for personal use or third party use.If for a third party, the qualifying information required for personal use must also be disclosed about the third party.
There are also additional considerations anyone wanting to bank in US Dollars should know.First of all, Canadian Privacy Law does not exist outside Canada.Therefore requests by US Authorities about you have to be honoured.By opening a US account, you are also agreeing to forego your Canadian rights to privacy.
Deposit amounts equal to US$ 10,000 or greater must have the source of those funds declared and possibly verified at the discretion of the bank and or law enforcement.
Violation of US Law by a Canadian, even if in Canada can put you at risk for sanctions or legal prosecution.Think about that when booking your holiday trip to Cuba.
So, opening a US Dollar account has its advantages but also disadvantages.It is your call but before doing so, make sure you are fully informed.There could be more at stake than just your money.