Proposed Rule Summary

FinCEN 31 CFR Part 1010
Bank Secrecy Act – Reports of Foreign Financial Accounts (FBAR)

Prepared by the NASCUS Legislative and Regulatory Affairs Department
April 2016

The Financial Crimes Enforcement Network (FinCEN) is proposing to amend the regulations implementing the Bank Secrecy Act (BSA) regarding Reports of Foreign Bank and Financial Accounts (FBAR).

FinCEN will accept written comments on the proposed rulemaking until May 9, 2016. The proposed rule can be accessed here.

The rule proposes to do the following:

  • Expand and clarify the exemptions for certain U.S. persons with signature or other authority over foreign financial accounts.
    • Proposal would eliminate the requirement for officers, employees, and agents of U.S. entities to report on accounts owned by the entity over which the officer, employee, or agent has signature authority solely due to their employment when those accounts are already required to be reported by their employer, or any other U.S. entity within the same corporate or other business structure as their U.S. employer. 
    • The proposed exemption is intended to address instances in which employees have “over-lapping” signature authority with respect to U.S. parent and subsidiary accounts within the same corporate or other business structure with some exception.
    • “Over-lapping” signature authority occurs when an officer or employee of a parent entity also has signature authority over the foreign financial accounts of the parent’s controlled subsidiary entity and vice versa.
  • Remove the special rules permitting limited account information to be reported when a U.S. person has financial interest in or signature authority over 25 or more foreign financial accounts.
    • All U.S. persons would be required to report detailed account information on all foreign financial accounts for which they have a financial interest or signature authority.
    • In addition to the filer’s identifying information, filers would be required to provide account number, the name and address of the foreign financial institution, the maximum value of the account during the calendar year or the type of account.
  • Make additional administrative changes. 
    • Revisions to the signature authority exemption provision and the special rules provision require certain other revisions to the regulation text for consistency and order throughout Sections 1010.350, 1010.306 and 1010.420.

FinCEN also requests comments on the following questions:

  • Whether expanding the signature authority exemption provision as proposed will reduce burder, and if so, by how much?
  • Whether it should allow entities and individuals to rely upon the provisions of this proposed rule, if finalized, with regard to FBAR filings properly deferred pursuant to FinCEN Notices 2011-1; 2011-2; 2012-1; 2012-2; 2013-1; 2014-1; and 2015-1
  • Whether removing the special rules provisions regarding reporting on 25 or more foreign financial accounts will increase burden on impacted entities and individuals.  And, if so, by how much?
  • Will technological costs be incurred to implement systems to transfer account information to the BSA E-filing system for the FBAR reporting
  • If technological modifications are necessary to report 25 or more foreign financial accounts, FinCEN requests comment on the estimated timeframe to implement those modifications.
  • Whether the amendments in this proposed rule regarding broadening signature authority exemptions combined with the removal of the special rules regarding 25 or more foreign financial accounts will increase or decrease burden on those entities and individuals impacted by both amendments to the FBAR regulation? And, if so, by how much?