The Bank Secrecy Act (BSA) gave the U.S. Department of the Treasury authority to collect information from United States persons (USP) who have financial interests in, or signature authority or other authority over, bank, securities, or other financial accounts in a foreign country. This authority was delegated to the Financial Crimes and Enforcement Network (FinCEN) and redelegated to the Internal Revenue Service (IRS) by Memorandum of Agreement. This authority includes investigating possible civil violations, assessing, and collecting civil penalties, and issuing administrative rulings.
REQUIREMENT:
The BSA requires a USP to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) for each calendar year during which the aggregate amount(s) in the foreign account(s) exceeded $10,000, valued in United States (U.S.) dollars, at any time during the calendar year. The provision also requires maintenance and retention of FBAR records for a period of five years.
WHO MUST FILE:
A United States Person, including a citizen, resident, corporation, partnership, limited liability company, trust, and estate, must file an FBAR to report:
- A financial interest in or signature or other authority over at least one financial account located outside the United States if,
- The aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
WHAT IS THE PURPOSE OF FBAR?
An FBAR is an information report required to be filed for each calendar year during which a USP had a financial interest in, or signature authority or other authority over, a bank, securities, or other financial account(s) in a foreign country and the aggregate amount(s) in the account(s) exceeded $10,000, valued in U.S. dollars, at any time during the calendar year. The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is a tool used by the U.S. government to identify persons who may be using foreign financial accounts to circumvent U.S. law. Information contained in FBARs can be used to identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
WHEN IS THE DUE DATE OF FBAR?
The annual due date for filing and FBAR to report foreign financial accounts is April 15th. FinCEN grants filers failing to meet the FBAR annual due date of April 15th an automatic extension to October 15th each year. Specific requests for this extension are not required.
WHERE TO FILE A FBAR?
The FBAR must be electronically filed through FinCEN’s BSA E-Filing System at BSAefiling.fincen.treas.gov. This form is not filed with the filer’s federal income tax return.
WHAT INFORMATION MUST BE INCLUDED ON THE FBAR?
For each account you must report on an FBAR, the following information must be included:
- Name on the account
- Account number
- Name and address of the foreign bank
- Type of account, and
- Maximum value during the year
WHAT ARE THE FBAR PENALITES?
Failure to file an FBAR when required to do so may result in civil monetary penalties, criminal penalties, or both. The assertion of penalties depends on facts and circumstances.
If you have any questions or would like more information regarding the FinCEN 114 requirements, or if you are not certain whether this report applies to you, please contact us via email or phone call.
Sincerely,
De Angel & Compañía, CPA, LLC
