The Bank Secrecy Act (BSA) requires U.S. persons to report their foreign financial accounts to the Financial Crimes Enforcement Network (FinCEN) if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year. This report is known as the Foreign Bank and Financial Accounts Report (FBAR). Understanding the specific requirements of the FBAR is essential to ensure compliance and avoid significant civil and criminal penalties.
Who Must Report
The FBAR requirements apply to U.S. persons, which include U.S. citizens, residents, and entities such as corporations, partnerships, limited liability companies (LLCs), trusts, and estates created or organized in the United States. A U.S. person must file an FBAR if they have a financial interest in or signature authority over foreign financial accounts—such as bank accounts, securities accounts, or other financial accounts—with an aggregate value exceeding $10,000 at any time during the calendar year. Certain exceptions apply, such as accounts jointly owned by spouses under specific conditions, correspondent or nostro accounts, and accounts of governmental entities.
Information Required
U.S. persons must provide specific information on the FBAR, including their own identifying information:
- Name
- Address
- Social Security Number (SSN) or Taxpayer Identification Number (TIN)
For each foreign financial account, the following details are required:
- Name of the financial institution
- Account number
- Type of account
- Maximum value during the calendar year
- Address of the financial institution
Definition of Financial Interest and Signature Authority
A U.S. person must report foreign financial accounts if they have a financial interest in or signature authority over those accounts. A financial interest includes direct ownership, ownership through certain entities (e.g., owning more than 50% of a corporation or partnership), or beneficial interests in trusts under specific conditions. Signature authority refers to the ability to control the disposition of assets in the account through direct communication with the financial institution.
Reporting Deadlines
The FBAR must be filed by April 15 of the year following the calendar year being reported. An automatic extension to October 15 is available, and no specific request is needed for this extension.
Updating Information
The FBAR is an annual report based on the calendar year. Changes to foreign financial accounts, such as opening or closing accounts or changes in account values, should be reflected in the FBAR for the relevant calendar year. If a previously filed FBAR is found to be incorrect or incomplete, an amended FBAR can be filed to correct the information.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and completeness of the information, we make no guarantees regarding its applicability to your specific circumstances. For personalized legal guidance, please consult a qualified legal professional.