Extension Of FBAR Filing Deadline For Certain Officers And Employees With Signature Or Other Authority

All U.S. persons that have a financial interest in, or "signature or other authority over,"1 a bank, securities or other financial account in a foreign country must report such relationship on the Report of Foreign Bank and Financial Accounts ("FBAR") by June 30 of the following calendar year. On February 14, 2012, the U.S. Department of the Treasury's Financial Crimes Enforcement Network ("FinCEN") extended until June 30, 2013 the deadline to file the initial FBAR for employees and officers of: (i) certain exempted entities (described below) that have signature or authority over, but no financial interest in, one or more foreign financial accounts; and (ii) investment advisers registered with the Securities and Exchange Commission ("SEC") who have signature or authority over, but no financial interest in, certain foreign financial accounts.2 FinCEN previously had extended the filing deadline to June 30, 2012 for these individuals, but indicated that additional time was needed to address questions and concerns about FBAR obligations for such persons.

Officers and Employees of Exempted Entities

Under amended FBAR rules published in 2011, officers or employees of certain entities are exempted from reporting that such individuals have signature or other authority over accounts owned or maintained by the entity.3 These exceptions include:

  • An officer of a bank that is examined by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, or the National Credit Union Association need not report that he or she has signature or other authority over a foreign financial account owned or maintained by the bank, if the officer or employee has no financial interest in the account.
  • An officer or employee of a "financial institution"4 that is registered or examined by a federal banking regulator, the SEC or the Commodity Futures Trading Commission need not report that he or she has signature or other authority over a foreign financial account owned or maintained by the financial institution, if the officer or employee has no financial interest in the account.
  • An officer or employee of an "Authorized Service Provider"5 to a registered investment company need not report that he or she has signature or other authority over a foreign financial account owned or maintained by the investment company, if the officer or employee has no financial interest in the account.
  • An officer or employee of an entity whose equity securities are registered with the SEC or listed on any United States national securities exchange need not report that he or she has signature or other authority over a foreign financial account of such entity, if the officer or employee has no financial interest in the account.
  • An officer or employee of an entity that has a class of equity securities registered (or American depository receipts in respect of equity securities registered) under Section 12(g) of the Securities Exchange Act of 1934 need not report that he or she has signature or other authority over a foreign financial account of such entity, if the officer or employee has no financial interest in the account.

The Notice extends the FBAR filing deadline to June 30, 2013 for:

  • An employee or officer of an entity listed in the exceptions above (a "Covered Entity") who has signature or other authority over, and no financial interest in, a foreign account of a "controlled person" of the Covered Entity; and
  • An employee or officer of a controlled person of a Covered Entity who has signature or other authority over, and no financial interest in, a foreign account of the Covered Entity, the controlled person or another controlled person of the Covered Entity.

For purposes of the Notice, a "controlled person" is a United States or foreign entity that is more than 50% owned (directly or indirectly) by a Covered Entity (e.g., a wholly-owned subsidiary).

Officers and Employees of Investment Advisers

Because the Authorized Service Provider exemption noted above applies only to officers and employees of investment advisers registered with the SEC that provide services to registered investment companies, industry participants expressed concern that the exemption was unnecessarily narrow. In response to these concerns, FinCEN extended the FBAR filing deadline for officers and employees of investment advisers registered with the SEC and who have signa-ture or other authority over and no financial interest in foreign financial accounts of persons that are not investment companies registered under the 1940 Act.6 The Notice extends the FBAR filing deadline to June 30, 2013 for such individuals.

Dechert will continue to monitor developments in this area and will issue future DechertOnPoints as developments warrant.

Footnotes

1 "Signature or other authority" means the authority of an individual (alone or in conjunc-tion with others) to control the disposition of money, funds, or other assets held in a financial account by direct communication (whether in writing or otherwise) to the person that maintains the financial account. 31 C.F.R. § 1010.350(f)(1).

2 FinCEN Notice 2012-1 (Feb. 14, 2012) (hereinafter the "Notice").

3 FinCEN, Amendment to the Bank Secrecy Act Regulations – Reports of Foreign Financial Accounts, 76 Fed. Reg. 10234 (Feb. 24, 2011). For additional information, please refer to "Recent Changes to FBAR Reporting Obliga-tions," available at http://www.dechert.com/Recent_Changes_to_FBAR_Reporting_ Obligations_03-07-2011/.

4 For purposes of this exception, a "financial institution" is a defined term under the Bank Secrecy Act ("BSA") implementing regulations. See 31 C.F.R. § 1010.100(t). Importantly, the definition of "financial institution" in the BSA regulations includes broker-dealers and mutual funds, but does not include registered invest-ment advisers.

5 "Authorized Service Provider" means an entity that is registered with and examined by the SEC and provides services to an investment company registered under the Investment Company Act of 1940 (the "1940 Act"). 31 C.F.R. § 1010.350(f)(2)(iii).

6 For example, employees of an SEC-registered investment adviser with signature or other authority over, but no financial interest in, a foreign financial account of a privately offered fund or a separate account would be covered by the Notice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.