Generally, each U.S. person who has a financial interest in, or signature or other authority over, a bank, securities or other financial account in a foreign country must report that relationship if the aggregate value of those financial accounts exceeds $10,000 at any time during the calendar year. The required reporting is done on Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (the FBAR), which must be received by the Department of the Treasury on or before June 30 for accounts maintained during the previous calendar year.

On May 31, 2011, the Financial Crimes Enforcement Network (FinCEN) issued FinCEN Notice 2011-1 FBAR Filing Requirement—Extended Filing Date Related to Exceptions Described in 31 CFR 1010.350(f)(2). Notice 2011-1 was issued to provide administrative relief in connection with exceptions described in 31 CFR 1010.350(f)(2), relating to certain exceptions concerning signature or other authority. It was revised on June 6, 2011, to clarify the scope of the relief.

The Notice followed FinCEN's publication on Feb. 24, 2011, of a final rule that amended the Bank Secrecy Act (BSA) regulations regarding reports of foreign financial accounts (the Final Rule).1The Final Rule addressed the scope of the persons who are required to file reports of foreign financial accounts and further specified the types of accounts that are reportable.

The Final Rule also provided filing relief in the form of exceptions for officers or employees with signature or other authority over certain foreign financial accounts. These exceptions apply only where the officers or employees have no financial interest in the reportable account. The exceptions appear at 31 CFR 1010.350(f)(2)(i)-(v).2

Following the release of the final rule, FinCEN received questions concerning the application of the exceptions by the June 30, 2011 compliance date to the following individuals:

  1. 1 an employee or officer of an entity under section 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of a controlled person3 of the entity; or
  2. 2 an employee or officer of a controlled person of an entity under section 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of the entity or another controlled person of the entity.

As published on May 31, 2011, Notice 2011-1 provided that, in light of these questions, FinCEN is granting an extension of the filing date to June 30, 2012 to allow these individuals additional time to file FBARs based on their signature or other authority in situations (1) through (2) above. For all other individuals with an FBAR filing obligation, the deadline remains June 30, 2011.

On June 6, 2011, FinCEN re-issued Notice 2011-1 with a minor revision to clarify the scope of the administrative relief provided in Situation (2) of the Notice. The language of Situation (2) was modified to provide:

  1. an employee or officer of a controlled person of an entity under section 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of the entity, the controlled person, or another controlled person of the entity. [Emphasis added.]

FinCEN stated that the revision makes it clear that the Notice applies to officers and employees of a controlled person, as defined in the Notice, when they have signature or other authority over (but no financial interest in) the foreign financial accounts of the controlled person.

Footnotes

1. Amendments to the Bank Secrecy Act Regulations–Reports of Foreign Financial Accounts, 76 FR 10234 (Feb. 24, 2011).

2. 31 CFR 1010.350(f)(2)(i)-(v) provide as follows: (2) Exceptions—(i) An officer or employee 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 Administration need not report that he 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; (ii) An officer or employee of a financial institution that is registered with and examined by the Securities and Exchange Commission or Commodity Futures Trading Commission need not report that he has signature or other authority over a foreign financial account owned or maintained by such financial institution if the officer or employee has no financial interest in the account; (iii) An officer or employee of an Authorized Service Provider need not report that he has signature or other authority over a foreign financial account owned or maintained by an investment company that is registered with the Securities and Exchange Commission if the officer or employee has no financial interest in the account. "Authorized Service Provider" means an entity that is registered with and examined by the Securities and Exchange Commission and that provides services to an investment company registered under the Investment Company Act of 1940; (iv) An officer or employee of an entity with a class of equity securities listed (or American depository receipts listed) on any United States national securities exchange need not report that he 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 a United States subsidiary of a United States entity with a class of equity securities listed on a United States national securities exchange need not file a report concerning signature or other authority over a foreign financial account of the subsidiary if he has no financial interest in the account and the United States subsidiary is included in a consolidated report of the parent filed under this section; and (v) 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 need not report that he has signature or other authority over the foreign financial accounts of such entity or if he has no financial interest in the accounts. These exceptions are also included in the recently revised TD F 90-22.1 (See, "Exceptions" on page 6 of TD F 90-22.1 (Rev. March 2011)).

3. For purposes of this notice, a controlled person is a United States or foreign entity more than 50 percent owned (directly or indirectly) by an entity under § 1010.350(f)(2)(i)-(v).

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.