The Treasury Department’s Financial Crimes Enforcement
Network (FinCEN) announced March 1 that it would seek to revise and
clarify rules regarding the filing of Form 114, Report of Foreign
Bank and Financial Accounts (FBAR).
If finalized, the proposed regulations (
RIN 1506-AB26) would amend the FBAR regulations by eliminating
the current signature authority filing requirement exemptions and
adding a simplified and expanded exemption. The proposed exemption
would eliminate the requirement for officers, employees and agents
of U.S. entities to report foreign financial accounts (FFAs) for
which they have no financial interest, if those accounts are
already required to be reported by their employer or any other
entity within the same corporate or other business structure as
their employer. Entities or employers would be required to
maintain identifying information for all officers, employees or
agents with signature authority over those accounts for a period of
five years, and make such information available to FinCEN upon
request. In situations where a consolidated FBAR is filed by a U.S.
parent entity, the entity would be responsible for maintaining all
identifying information for all officers, employees and agents for
each entity within the consolidated filing.
The exemption for employees to report their signature authority
over foreign financial accounts of their employer would not extend
to U.S. persons in instances in which no entity within their
employer’s corporate or other business structure has an
obligation to report such accounts.
The change would provide an expanded filing exemption to officers
and employees of entities not included within the prior exemption,
which was limited to employees of certain federally regulated
entities. The proposed changes also expand the exemption to include
“agents” to incorporate entities and individuals, such
as authorized service providers and their employees, within the
scope of the proposed exemption.
This change could also affect officers or employees with
“overlapping” signature authority, which may occur when
an officer or employee of certain federally regulated parent
entities also has signature authority over the FFAs of the
parent’s controlled subsidiary entity, and vice versa.
Current regulations, if literally interpreted, exempts the
individual from reporting only if he or she is actually “an
officer or employee of” the federally regulated entity
holding the account, and not situations in which the individual may
have signature authority over accounts held by affiliated corporate
or other business entities that do not employ that individual.
Since 2011, however, FinCEN has issued annual notices delaying the
FBAR filing deadline for such individuals with overlapping
authority. The proposed regulations do not make it clear how FinCEN
proposes to handle FBARs that have been previously extended under
these annual notices. The current due date for such filings under
FinCEN Notice 2015-1 is April 15, 2017.
In addition, the proposed regulations would remove provisions that
limit the information required to be reported in situations where a
filer has 25 or more FFAs. As a result, U.S. persons with 25 or
more FFAs would be required to provide the detailed account
information that is already being provided by those U.S. persons
with fewer than 25 FFAs.
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