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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