FBAR: Foreign Bank and Financial Account Reports

Created by J.P. Morgan Treasury Services

 

What is FBAR?

  • Part of the Bank Secrecy Act of 1970, FBAR reporting requires U.S. persons with a financial interest in or signature authority over a foreign bank, brokerage or other financial account to report that account if the aggregate value of all such financial accounts exceeds $10,000 for a given signer anytime during the year.
  • FBAR Form TD-F 90-22.1 for calendar year 2011 must be received by Treasury by June 30, 2012.
  • On February 14, 2012, Treasury extended the filing deadline for the 2011 FBAR filing for one year to June 30, 2013, for certain individuals with only signature authority over accounts. This extension applies to the 2010 FBAR report, as well as filings for prior years that were properly deferred.
  • Employee signatories who have left the company must still file an FBAR for the year in which they were an account signatory even if not still employed at the firm.
 

Who is impacted by FBAR and how?

  • All U.S. persons, inclusive of individuals, corporations, partnerships and trusts, who have both financial interest in an account and/or signature or other authority over a foreign account.
  • A financial interest in an account includes a direct ownership interest in a foreign account or a U.S. person's ownership or control of a foreign entity is more than 50 percent (and the foreign entity owns accounts that would be reportable if owned directly by the U.S. owner).
  • Signature authority is the ability to control the disposition of assets in the account by delivery of a document containing his or her signature to the person (e.g., a bank) who maintains the account, whether that authority is alone or in conjunction with another.
  • "Other authority" is comparable to signature authority by which a U.S. person either alone or in conjunction with another can control the disposition of assets through direct communication to the person who maintains the account.
  • Affected persons should make every effort to comply with the statute as the penalties are potentially severe. Civil penalties for non-willful failure to file are $10,000; for willful noncompliance the maximum penalty is the greater of $100,000 or 50 percent of the account.
  • Criminal penalties include a $250,000 fine and up to five years imprisonment; if the noncompliance is in tandem with criminal activity or other U.S. law violations the maximum penalty is $500,000 and 10 years imprisonment.
 

What can you do?

Corporates should make every effort to keep accurate records for both past and current employees as this will help ease FBAR compliance. You should ensure you have visibility and control over foreign financial accounts. Corporates may also take steps to reduce the number of accounts that they need to report on by rationalizing their bank accounts and leveraging SEPA. Companies should consider designating non-U.S. persons as signers on foreign financial accounts as only U.S. persons are required to file an FBAR. You should always engage legal and tax advisors to ensure your FBAR form is complete and your company and employees are in compliance with the legislation. See the resources below for additional information on FBAR reporting requirements and assistance with completing FBAR form TD-F 90-22.1:

 
 

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