Report of Foreign Bank and Financial Accounts (FBAR) Penalties

The Report of Foreign Bank and Financial Accounts (FBAR), officially known as FinCEN Form 114, is a critical compliance requirement under the Bank Secrecy Act (BSA). It mandates that U.S. persons disclose their financial interests in or authority over foreign financial accounts exceeding $10,000 in aggregate value at any point during the calendar year. This measure aims to enhance transparency and combat illicit activities such as tax evasion, money laundering, and terrorism financing. Non-compliance can lead to substantial civil and criminal penalties.​

Civil Penalties

Failure to file an accurate and timely FBAR can result in significant civil penalties:​

  • Non-Willful Violations: Penalties can reach up to $10,000 per violation. However, if the IRS determines that the violation was due to reasonable cause and not due to willful neglect, these penalties may be waived.
  • Willful Violations: Penalties are more severe, reaching the greater of $100,000 or 50% of the account balance at the time of the violation, per violation.

Criminal Penalties

Willful failure to file an FBAR or filing a false FBAR can lead to criminal charges:​

  • Monetary Fines: Up to $250,000.​
  • Imprisonment: Up to 5 years, or both.​

If the violation is part of a pattern of illegal activity involving more than $100,000 in a 12-month period, penalties can increase to a fine of up to $500,000 and/or imprisonment for up to 10 years.

 

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.