Recent news regarding the treatment of cryptocurrency in El Salvador has seen my inbox receiving lots of messages. Typically, they meander through an explanation of their circumstances before asking the key question, How to Open a Bank Account in El Salvador. Subsequently, I’ll try and address this question for you and also why you might still want to consider banking somewhere else.
Firstly, banking for foreigners in El Salvador is possible but you will have to provide quite a bit of documentation and also, quickly discover, that the country is largely corrupt and provides little in the way of safety for your funds.
To open an El Salvadorian bank account, it is highly likely that you will need a reasonable level of Spanish and that you will need to attend in person with the following documents:
- Your Passport
- Notarized Proof of Address
- Source of Funds Documentation
- Proof of Residency Visa
The Current Status of El Salvador
Let’s be completely frank about the status of El Salvador. The country is effectively a failed state with significant levels of gang-related crime. In fact, crime is so bad currently that the El Salvadorian President has just imposed a 30-day state of emergency due to a massive increase in murders.
The country has been averaging around 50 to 60 murders a day which is typically gun crimes and linked directly to warring gang factions. For a country with a 6.5 million population (roughly the size of New Zealand), this is a horrendous homicide rate.
As is the case with these sorts of thorny crime issues, corruption is normally at the heart of it when the government is unable, or unwilling, to use force to stem the tide of murders and illegal activities. This has been a pattern that has continued, ad nauseum, throughout much of Central and South America over the past few decades.
Subsequently, the present status of El Salvador is effectively “unsafe” and I would advise you not to consider, as a foreigner, traveling there simply to open a bank account. No such facility is worth getting killed or assaulted over.
El Salvadorian Banking Stability
Statistics show only around 16% of the country’s citizens have and use banking facilities on a regular basis. In short, El Salvador is a nation awash in cash, and most of its citizens disregard and distrust traditional banking.
Subsequently, the financial sector is definitely not what you would call buoyant, and I would have serious concerns over the trustworthiness of the various banks within the country. Considering the rampant crime and corruption, it isn’t unthinkable to believe that bank staff would be under pressure from the gangs.
Historically we have seen bank nationalizations and difficulties repatriating funds in countries that have experienced significant economic slumps. This presents another difficulty in placing trust within the El Salvadorian banks given the relative, pressure on the nation’s general economy.
Ultimately, I don’t believe that you could suggest that El Salvador has the level of government and financial stability that is required for someone looking to offshore their operations.
New Cryptocurrency Regulations
Seemingly, what has driven interest in El Salvador was their announcement in late 2021 that Bitcoin would be treated as legal tender. As you can imagine, the crypto crowd vaunted this news, and much was made of El Salvador is the “First” country to make the move.
However, the reality is that their crypto plans of an economic resurgence have largely crumbled. El Salvador tried everything from introducing Crypto Bonds to denominating bank accounts in Bitcoin. The reality is that many of these ideas failed due to a lack of implementation.
Even on the ATM front, there were only 2 Bitcoin ATM’s within the country (as of Feb 2022) and, despite their being new crypto travelers, most vendors accepting the currency have not seen much of an uptick in sales.
In short, El Salvador trumpeting their Bitcoin success to the world appears to really be a failing economy grasping at straws to avoid the impacts of inflation and a lack of growth. Bitcoin has failed to ignite much in the way of tourism for the country as its problems run much deeper than a change of legal tender.
List of El Salvadorian Banks
There are approximately 14 licensed banks within the country made up of 12 privately owned and 2 state-owned institutions. However, over 95% of the banking sector is transacted by the largest 5 privately owned banks.
El Salvador – Bank Licenses in Private Ownership
- Banco Agricola S.A.
- Banco Cuscatlan
- Banco Davivienda Salvadoreno
- Scotiabank El Salvador S.A.
- Banco America Central S.A
- Banco Abank
- Banco Azul
- Banco G&T Continental El Salvador S.A.
- Banco Promerica S.A.
- Banco Atlantida
- Banco Industrial S.A.
- Citibank N.A. Sucursal El Salvador
El Salvador – Bank Licenses in Government Ownership
- Banco Hiptecario
- Banco de Fomento Agropecuario
How to Open a Bank Account in El Salvador –Which Banks Open Accounts for Foreigners
At this stage, probably your best chance is to approach the largest bank, Banco Agricola (www.bancoagricola.com), and inquire about accounts for foreigners.
Given the overall lack of English, you will need a reasonable level of Spanish, and that you will need to attend in person with the following documents:
- Your Passport
- Notarized Proof of Address
- Source of Funds Documentation
- Proof of Residency Visa
- Potentially a Bank Reference Letter (For info on this please see: What is a Bank Reference Letter and How to Get One
The proof of residency visa is likely to be the biggest hurdle for most individuals. However, from my understanding, there are no absolutes, and it is up to the discretion of the bank branch as to who they choose to onboard as clients. I actually suspect it would be relatively easy to sidestep this requirement if needed.
However, the biggest issue is that you will likely need to travel to El Salvador to effect an account opening. Their banks are really not set up for non-resident banking and they have little in the way of support for English language customers.
Despite lots of online advertising offering account opening services, I am yet to see a single case of someone using an introduction service and receiving a bank account in El Salvador. I would also be VERY wary of anyone purporting to be an El Salvadorian Lawyer who can assist you with a bank account.
How to Open a Bank Account in El Salvador and Why You Should Bank Elsewhere
I’ve really already covered this in my stability section, but it would be unwise to place large amounts of money into a bank account in that jurisdiction. I’m really not denigrating the citizens, as I’m sure there are some great people, but the country itself is a corrupt and gang crime-ridden location.
Additionally, the financial links between drug gangs and the country also mean that wire transfers and transactions into/out of the local banks are likely to be viewed with plenty of suspicions. 2022 is really not the year where you can bank in jurisdictions with poor reputations and expect to remain connected with the broader financial world.
Subsequently, whenever you seek offshore banking facilities you should always be assessing the following points:
- Safety and Political Stability
- Financial Sector Stability
- Access and Travel to the Country
- Jurisdictional Reputation
- Ease of Banking and prevalence of correspondent banking facilities
Unfortunately, El Salvador really fails most of these key factors and I would, therefore, advise you consider banking in another jurisdiction. You wouldn’t consider banking in Syria right now….so why bank in ANY subprime jurisdiction.
This is especially the case when there are other countries offering decent banking services nearby such as Panama, Belize, the Caribbean Islands, etc. Subsequently, do yourself a favor and look further abroad for a reputable location.
Further Resources
El Salvador Banking Regulator
Superintendencia del Sistema Financiero, SSF
Banco Agricole S.A.
Steven James
