Alerts and Updates

Final Rules to Amend the Bank Secrecy Act Regulations Regarding Reports of Foreign Financial Accounts (FBARs)

February 25, 2011

For more information on events impacting U.S. persons with undisclosed foreign financial accounts, please also see the January 24, 2012, Alert, "New 2012 Offshore Voluntary Disclosure Program; Taxpayer Advocate Criticizes IRS "Bait & Switch"; Current Offshore Enforcement Initiatives."

The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department, on February 24, 2011, issued its final rules to amend the Bank Secrecy Act regulations regarding the Report of Foreign Bank and Financial Accounts (FBAR) of the U.S. Internal Revenue Service (IRS).

The final rulemaking:

  • clarifies whether an account is foreign and therefore reportable as a foreign financial account and also addresses the treatment of custodial accounts;
  • revises the definition of signature or other authority to more clearly apply to individuals who have the authority to control the disposition of assets in the account by direct communication (whether in writing or otherwise) to the foreign financial institution;
  • clarifies that officers or employees who file an FBAR because of signature or other authority over the foreign financial accounts of their employers are not expected to personally maintain the records of the foreign financial accounts of their employers; and
  • clarifies that filers may rely on provisions of this final rule in order to determine their filing obligations for FBARs in those cases where filing was properly deferred under prior Treasury Department regulations.

The full text of the final regulations can be found at www.federalregister.gov/articles/2011/02/24/2011-4048/amendment-to-the-bank-secrecy-act-regulations-reports-of-foreign-financial-accounts#p-3. According to FinCEN, the IRS will soon publish instructions for completing the FBAR form in accordance with the new final regulations.

For Further Information

If you have any questions, please contact Thomas W. Ostrander, the author of this Alert; Hope P. Krebs or Stanley A. Barg in Philadelphia; Jon Grouf in New York; Anthony D. Martin in Boston; any member of the International Practice Group; Michael A. Gillen of the Tax Accounting Group or the attorney in the firm with whom you are regularly in contact.

As required by United States Treasury Regulations, the reader should be aware that this communication is not intended by the sender to be used, and it cannot be used, for the purpose of avoiding penalties under United States federal tax laws.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.