Here is a genuinely unfair situation, followed by the genuinely bad response to it.

The unfair part: an American moves abroad, dutifully updates their address with their US brokerage — and the brokerage responds by restricting the account. New purchases blocked, certain funds off-limits, sometimes an invitation to take the business elsewhere. The customer did the honest thing and got punished for it.

Why brokers do this

Nothing about it is personal, and little of it is even tax. A US brokerage serving a resident of another country is, from a regulatory standpoint, potentially doing business in that country — touching foreign securities registration rules, local investor-protection regimes, and cross-border sales restrictions that vary by country and that most retail-focused firms simply decline to manage. The clean corporate answer is a policy: US residential address required, or restrictions apply. Some institutions are stricter than others; some have expat-friendly channels. The variation itself is useful information — this is a shop-around problem, not a law of nature.

The workaround that converts an inconvenience into evidence

Faced with restriction, the tempting move is obvious: keep a US address on file. A parent’s house, a sibling’s apartment, a mail service. The account works normally; nobody seems harmed.

The problem is what that address becomes. The US enforcement machinery, when it examines foreign-account and foreign-income failures, distinguishes between honest mistakes and willful conduct — and the penalty gap between those categories is enormous (The Math Nobody Runs: What Compliance Costs vs. What Non-Compliance Costs). What separates them is evidence of concealment and awareness. A deliberately false address maintained with a financial institution is the kind of fact an examiner could view badly — alongside things like mail-holding arrangements and misdirected statements. It creates a durable record that the person knew their real residence mattered to the institution and chose not to disclose it.

This article is not saying every U.S. mailing address is false or improper; the issue is knowingly misrepresenting residence to preserve account access.

The bitter irony: the address fib usually has nothing to do with tax evasion — it’s about keeping a fund lineup. But intent is argued later, from documents, and the document says what it says. A person with an otherwise innocent foreign-account footfault (Checking “No” on the Foreign-Accounts Question — How One Checkbox Becomes Evidence Against You territory) plus a fake address is a much worse story than the footfault alone.

The honest paths

They exist, and they’re mundane: brokerages and account types that accept foreign-resident Americans (they exist; terms vary); restructuring holdings before the move while full trading access remains (The Documents to Capture Before You Move — Because They’re Harder to Get After); accepting a restricted-but-honest account that can hold and sell; and getting advice where the local country’s own rules on holding US funds add a second layer. All slower than typing a sibling’s zip code. All infinitely cheaper than explaining that zip code to an examiner someday.

The rule of thumb travels well beyond brokerages: in a cross-border life, every institution should know which country you actually live in. Inconvenience is recoverable. A bad fact pattern is much harder to unwind.

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