Report of Foreign Bank and Financial Accounts (FBAR) Requirements

​The Report of Foreign Bank and Financial Accounts (FBAR), officially known as FinCEN Form 114, is a critical compliance requirement for U.S. persons holding foreign financial accounts. This guide outlines the key aspects of FBAR reporting, including who must file, what information is required, deadlines, and potential penalties for non-compliance.​

Who Must File an FBAR

A U.S. person must file an FBAR if they have a financial interest in or signature authority over at least one foreign financial account, and the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.​

Definition of a U.S. Person:

  • U.S. citizens and residents
  • Entities such as corporations, partnerships, or limited liability companies created or organized in the U.S. or under U.S. laws
  • Trusts or estates formed under U.S. laws​

Note: Tax treaty provisions do not affect FBAR filing obligations.

What Accounts Are Reportable

Reportable foreign financial accounts include:​

  • Bank accounts (e.g., savings, checking, time deposits)
  • Securities accounts (e.g., brokerage accounts)
  • Mutual funds or similar pooled funds
  • Insurance policies with a cash value (e.g., whole life insurance)
  • Annuity policies with a cash value
  • Commodity futures or options accounts​

The location of the account determines its reportability. Accounts held at foreign branches of U.S. banks are considered foreign financial accounts, while accounts at U.S. branches of foreign banks are not.​

Information Required

When filing an FBAR, you must provide:

  • Your name, Social Security Number or ITIN, and address
  • The name and address of the foreign financial institution
  • The type of account (e.g., bank, securities, other)
  • The account number or other designation
  • The maximum value of the account during the calendar year, converted to U.S. dollars using the Treasury’s year-end exchange rate​

Filing Deadlines

  • Annual Due Date: April 15 of the year following the calendar year being reported.
  • Automatic Extension: If you fail to meet the April 15 deadline, an automatic extension to October 15 is granted; no specific request is required.

Recordkeeping Requirements

Keep records for each account reported on the FBAR for five years from the due date of the FBAR. Records should include:

  • Name on the account
  • Account number
  • Name and address of the foreign financial institution
  • Type of account
  • Maximum value during the year​

Penalties for Non-Compliance

Non-Willful Violations:

  • Up to $10,000 per violation.​

Willful Violations:

  • The greater of $100,000 or 50% of the account balance at the time of the violation.​

Criminal Penalties:

  • Fines up to $250,000 and/or imprisonment up to five years for willful violations.​

Penalties can be mitigated if the failure to file was due to reasonable cause and not willful neglect.​

Filing Exceptions

You are not required to file an FBAR if:

  • The accounts are jointly owned by spouses, and the filing spouse reports the accounts on a timely filed FBAR, and both spouses sign FinCEN Form 114a.
  • The accounts are owned by a governmental entity or an international financial institution.
  • The accounts are maintained on a U.S. military banking facility.
  • You are a beneficiary of a trust, and the trust, trustee, or agent is a U.S. person who files an FBAR reporting the accounts.​

Late Filing and Compliance Options

If you failed to file an FBAR, consider the following options:

Voluntary Disclosure Practice: For willful violations; involves a more comprehensive disclosure and potential penalties.​

Delinquent FBAR Submission Procedures: For non-willful violations with no tax underpayment.

Streamlined Filing Compliance Procedures: For non-willful violations; includes both domestic and foreign versions, depending on residency.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and completeness of the information, we make no guarantees regarding its applicability to your specific circumstances. For personalized legal guidance, please consult a qualified legal professional.