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Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Proposed Rules
Power Plants, which states that a
decision by a licensee to adopt a
combination of DECON and SAFSTOR
may be based on factors such as the
availability of waste disposal sites. The
petitioner believes that this wording
creates a loophole whereby a site
choosing the SAFSTOR option would
not be returned to unrestricted use
within a period of 60 years from the
time reactor operation ceases. The
petitioner requests that the NRC amend
its regulations to clarify that a licensee’s
choice of alternative decommissioning
strategy must result in the return of the
site to unrestricted use within 60 years
and that the NRC eliminate the
ENTOMB strategy as an option.
The petitioner believes that, if
implemented, the reporting and
financial assurance amendments
proposed would provide reasonable
assurance that funds will be available
when needed to clean up a plant site
and avoid costly legacy sites to be
cleaned up at taxpayer expense. With
respect to the proposal to clarify the
decommissioning strategies available to
licensees, the petitioner believes that
these proposed amendments assure that
portions of the facility containing
radioactive contaminants would be
removed or decommissioned to a level
that permits release of the property for
unrestricted use within 60 years after
the cessation of operations.
Dated at Rockville, Maryland, this 22nd
day of February, 2010.
For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
[FR Doc. 2010–3989 Filed 2–25–10; 8:45 am]
BILLING CODE 7590–01–P
DEPARTMENT OF THE TREASURY
31 CFR Part 103
RIN 1506–AB08
Financial Crimes Enforcement
Network; Amendment to the Bank
Secrecy Act Regulations—Reports of
Foreign Financial Accounts
Financial Crimes Enforcement
Network (FinCEN), Treasury.
ACTION: Notice of proposed rulemaking.
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AGENCY:
SUMMARY: FinCEN, a bureau of the
Department of the Treasury (Treasury),
is proposing to revise the regulations
implementing the Bank Secrecy Act
(BSA) regarding reports of foreign
financial accounts. The proposed rule
would clarify which persons will be
required to file reports of foreign
financial accounts and which accounts
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will be reportable. In addition, the
proposed rule would exempt certain
persons with signature or other
authority over foreign financial accounts
from filing reports and would include
provisions intended to prevent United
States persons from avoiding this
reporting requirement.
DATES: Written comments on the notice
of proposed rulemaking may be
submitted on or before April 27, 2010.
ADDRESSES: You may submit comments,
identified by RIN 1506–AB08, by any of
the following methods:
• Federal e-rulemaking portal: http://
www.regulations.gov. Refer to Docket
Number Fincen–2009–0008 and follow
the instructions for submitting
comments.
• Mail: FinCEN, P.O. Box 39, Vienna,
VA 22183. Include RIN 1506–AB08 in
the body of the text.
Inspection of comments: Comments
may be inspected, between 10 a.m. and
4 p.m., in the FinCEN reading room in
Vienna, VA. Persons wishing to inspect
the comments submitted must request
an appointment with the Disclosure
Officer by telephoning (703) 905–5034
(not a toll-free call).
FOR FURTHER INFORMATION CONTACT:
Regulatory Policy and Programs
Division, FinCEN (800) 949–2732 and
select option 1.
SUPPLEMENTARY INFORMATION:
I. Introduction
The provision of the BSA authorizing
reports of foreign financial accounts
reflects congressional concern that
foreign financial institutions were being
used to evade domestic criminal, tax,
and regulatory laws. The House report
on the bill leading to the enactment of
the BSA described the use of
undisclosed foreign financial accounts
for a wide range of abuses.1 Nearly four
1 The House report states:
Considerable testimony was received by the
Committee from the Justice Department, the United
States Attorney for the Southern District of New
York, the Treasury Department, the Internal
Revenue Service, the Securities and Exchange
Commission, the Defense Department and the
Agency for International Development about serious
and widespread use of foreign financial facilities
located in secrecy jurisdictions for the purpose of
violating American law. Secret foreign bank
accounts and secret foreign financial institutions
have permitted proliferation of ‘white collar’ crime;
have served as the financial underpinning of
organized criminal operations in the United States;
have been utilized by Americans to evade income
taxes, conceal assets illegally, and purchase gold;
have allowed Americans and others to avoid the
law and regulations governing securities and
exchanges; have served as essential ingredients in
frauds including schemes to defraud the United
States; have served as the ultimate depository of
black market proceeds from Vietnam; have served
as a source of questionable financing for
conglomerate and other corporate stock
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decades after the enactment of the BSA,
foreign financial accounts continue to
be used for many of the abuses
cataloged by Congress when it was
originally considering the enactment of
the BSA. For example, the Senate
Permanent Subcommittee on
Investigations has found that Americans
have continued to use complex schemes
to try to conceal their foreign financial
accounts in attempts to circumvent
United States law.2
Considerable effort has been made to
address these abuses. The Internal
Revenue Service (IRS), for example, has
several projects focused on the use of
offshore accounts to evade federal
income taxes.
II. Background
A. Statutory and Regulatory Background
The BSA, Titles I and II of Public Law
91–508, as amended, codified at 12
U.S.C. 1829b, 12 U.S.C. 1951–1959, and
31 U.S.C. 5311–5314 and 5316–5332,
authorizes the Secretary of the Treasury
(Secretary), among other things, to issue
regulations requiring persons to keep
records and file reports that are
determined to have a high degree of
usefulness in criminal, tax, regulatory,
and counterterrorism matters. The
regulations implementing the BSA
appear at 31 CFR Part 103. The
Secretary’s authority to administer the
BSA has been delegated to the Director
of FinCEN.
Under 31 U.S.C. 5314 the Secretary is
authorized to require any ‘‘resident or
citizen of the United States, or a person
in, and doing business in, the United
States, to * * * keep records and file
reports, when the resident, citizen, or
person makes a transaction or maintains
a relation for any person with a foreign
financial agency.’’ For this purpose,
foreign financial agency means ‘‘a
person acting for a person as a financial
institution bailee, depository trustee or
agent, or acting in a similar way related
to money, credit, securities, gold, or in
a transaction in money, credit, securities
or gold.’’ 3 The Secretary is also
acquisitions, mergers and takeovers; have covered
conspiracies to steal from the U.S. defense and
foreign aid funds; and have served as the cleansing
agent for ‘hot’ or illegally obtained monies. H.R.
Rep. No. 975 91st Cong. 2d Sess. 12 (1970).
2 See Tax Haven Banks and U.S. Tax Compliance,
Staff Report, Permanent Subcommittee on
Investigations, Senate Comm. on Homeland
Security and Governmental Affairs, (July 17, 2008);
Tax Haven Abuses: The Enablers, the Tools and
Secrecy, Staff Report, Permanent Subcommittee on
Investigations, Senate Comm. on Homeland
Security and Governmental Affairs, (Aug. 1, 2006).
3 See 31 U.S.C. 5312(a)(1) which excepts from the
definition of financial agency a person acting for a
country, a monetary or financial authority acting as
a monetary or financial authority or an international
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Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Proposed Rules
authorized to prescribe exemptions to
the reporting requirement and to
prescribe other matters the Secretary
considers necessary to carry out section
5314.
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B. Overview of Current Regulations and
Form
The regulations implementing 31
U.S.C. 5314 appear at 31 CFR 103.24,
103.27, and 103.32. Section 103.24
generally requires each person subject to
the jurisdiction of the United States
having a financial interest in or
signature or other authority over a bank,
securities, or other financial account in
a foreign country to ‘‘report such
relationship to the Commissioner of
Internal Revenue for each year in which
such relationship exists, and * * *
provide such information as shall be
specified in a reporting form prescribed
by the Secretary to be filed by such
persons.’’ Section 103.27 requires the
form to be filed with respect to foreign
financial accounts exceeding $10,000.
The form must be filed on or before June
30 of each calendar year for accounts
maintained during the previous
calendar year. Section 103.32 requires
records of accounts to be maintained for
each person having a financial interest
in or signature or other authority over
such account. The records must be
maintained for a period of five years.4
The form used to file the report
required by section 103.24 is the Report
of Foreign Bank and Financial
Accounts—Form TD F 90–22.1 (the
FBAR).5 The instructions to the FBAR
specify which persons must file as well
as the types of accounts that must be
reported. The instructions also provide
exemptions from reporting for certain
persons with signature or other
authority over the accounts.
The authority to enforce the
provisions of 31 U.S.C. 5314 and
sections 103.24 and 103.32 has been redelegated from FinCEN to the
Commissioner of Internal Revenue by
means of a Memorandum of Agreement
between FinCEN and the IRS dated
April 2, 2003.6 With this delegation,
FinCEN conferred upon the IRS the
authority to enforce the FBAR
provisions of the BSA and its
implementing regulations, investigate
possible violations, and assess and
financial institution of which the United States
government is a member.
4 This notice of proposed rulemaking would not
amend sections 103.27 and 103.32.
5 The FBAR form currently available on both the
FinCEN and IRS Web sites allows users to complete
the form electronically and then print a PDF
document that can be mailed to the address on the
form.
6 See 31 CFR 103.56(g).
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collect civil penalties in connection
therewith. The delegation also conferred
upon the IRS the authority to: (1)
Respond to public inquiries and
requests for advice; (2) issue
administrative rulings; and (3) provide
related assistance to the public with
respect to compliance with FBAR
requirements. Finally, the delegation
conferred upon the IRS the authority to
revise the FBAR form and instructions,
and to propose to FinCEN revisions of
the applicable regulations for the
purpose of enhancing FBAR compliance
and enforcement.
A revised Form TD F 90–22.1 that
modified several aspects of the FBAR
form instructions was issued in October
2008. Most notably, the revised FBAR
form instructions broadened the
definition of ‘‘United States person’’ to
conform more closely to the FBAR’s
authorizing statute,7 and sought to
clarify the scope of foreign financial
accounts that trigger FBAR filing
requirements. In the ensuing months,
the IRS received a number of questions
and comments seeking guidance on
compliance with the revised FBAR
instructions. In response to these
comments, the IRS published guidance
indicating that until further notice, all
persons may rely on the definition of
‘‘United States person’’ found in the
prior version of the FBAR instructions
from 2000. The IRS also extended the
FBAR filing deadline for the 2008 and
earlier calendar years to September 23,
2009 for certain filers.8
In addition, the IRS published Notice
2009–62 on August 10, 2009, which
extended the FBAR filing deadline for
the 2008 and earlier calendar years to
June 30, 2010 for certain filers, and
requested comments from the public
regarding several FBAR-related issues.
Specifically, Notice 2009–62 requested
public comment regarding: (1) When a
person with signature or other authority
over, but no financial interest in, a
foreign financial account should be
relieved of filing an FBAR for the
account; (2) whether to expand the
filing exemption currently available to
officers and employees of banks and
certain publicly traded domestic
companies, where such officers and
employees have signature or other
authority over their employer’s
accounts; and (3) when an interest in a
foreign entity should trigger an FBAR
filing requirement.9
7 31
U.S.C. 5314.
2009–51, 2009–25 I.R.B. 1005.
crafting the proposed rule, FinCEN reviewed
the public comments received in response to Notice
2009–62.
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III. Section-by-Section Analysis
The proposed rule would include a
definition of United States persons and
definitions of bank, securities, and other
financial accounts in a foreign country.
FinCEN believes that inclusion of these
definitions will more clearly delineate
both the scope of individuals and
entities that would be required to file
the FBAR and the types of accounts for
which such reports should be made, so
that determining a person’s filing
obligations will be more straightforward
and predictable. In addition, the
proposed rule would exempt certain
persons with signature or other
authority from filing the FBAR. Finally,
the proposed rule would include
provisions intended to prevent United
States persons required to file the FBAR
from avoiding this reporting
requirement.
A. § 103.24(a)—In General
FinCEN proposes to amend 31 CFR
103.24 by using a new term ‘‘United
States person’’ to indicate persons that
would be required to file an FBAR.
B. Section 103.24(b)—United States
Person
FinCEN proposes to define a United
States person as a citizen or resident of
the United States, or an entity,
including but not limited to a
corporation, partnership, trust or
limited liability company, created,
organized, or formed under the laws of
the United States, any state, the District
of Columbia, the Territories and Insular
Possessions of the United States or the
Indian Tribes. This definition applies to
an entity regardless of whether an
election has been made under 26 CFR
301.7701–2 or 301.7701–3 to disregard
the entity for federal income tax
purposes. The determination of whether
an individual is a resident of the United
States would be made under the rules of
the Internal Revenue Code, specifically
26 U.S.C. 7701(b) and the regulations
thereunder except that the definition of
the term ‘‘United States’’ provided in 31
CFR 103.11(nn) will be used instead of
the definition of ‘‘United States’’ in 26
CFR 301.7701(b)-1(c)(2)(ii). FinCEN
believes that this approach is
appropriate because it provides for
uniformity regardless of where in the
United States an individual may be. In
addition, FinCEN believes this approach
takes into account that individuals may
seek to hide their residency in an effort
to obscure the source of their income or
location of their assets.10
8 Announcement
9 In
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10 See Tax Haven Banks and U.S. Tax
Compliance, Staff Report, Permanent Subcommittee
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Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Proposed Rules
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C. Section 103.24(c)—Types of
Reportable Accounts
FinCEN proposes to amend 31 CFR
103.24 by adding definitions of the
accounts subject to reporting. Section
5314 authorizes the Secretary to require
records or reports when a person ‘‘makes
a transaction or maintains a relation for
any person with a foreign financial
agency.’’ Although section 5314
authorizes the Secretary to address both
transactions and relations, FinCEN is
focusing in this rulemaking on relations.
FinCEN believes that when a person
maintains an account with a foreign
financial institution, the person is
maintaining a relation with a foreign
financial agency. For this purpose, an
account means a formal relationship
with such person to provide regular
services, dealings and other financial
transactions. The length of the time for
which service is being provided does
not affect the fact that a formal account
relationship has been established. For
example, in the case of an escrow
account, an individual may establish a
relationship with a financial institution
to service and maintain that account,
albeit for a short period of time.
However, an account is not established
simply by conducting transactions such
as wiring money or purchasing a money
order where no relationship has
otherwise been established.
FinCEN has chosen to define bank,
securities, and other financial accounts
with reference to the kinds of financial
services for which a person maintains
an account. FinCEN believes this is
necessary because while the BSA
provides guidance as to the definition of
a financial institution, financial
institutions under the BSA are largely
defined by reference to United States
law and terminology. For example, a
financial institution is defined in the
BSA to include an insured bank as
defined in section 3(h) of the Federal
Deposit Insurance Act.11 Accordingly,
the proposed amendment to section
103.24 would include definitions of
bank account, securities account, and
other financial accounts.
D. Section 103.24(c)(1)—Bank Account
The term ‘‘bank account’’ means a
savings deposit, demand deposit,
checking, or any other account
maintained with a person engaged in
the business of banking. This definition
includes time deposits such as
certificates of deposit accounts that
allow individuals to deposit funds with
on Investigations, Senate Comm. on Homeland
Security and Governmental Affairs at 8 (July 17,
2008).
11 See 31 U.S.C. 5312(a)(2)A.
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a banking institution and redeem the
initial amount, along with interest
earned after a prescribed period of time.
E. Section 103.24(c)(2)—Securities
Account
The term ‘‘securities account’’ means
an account maintained with a person in
the business of buying, selling, holding,
or trading stock or other securities.
F. Section 103.24(c)(3)—Other Financial
Account
The term ‘‘other financial account’’
appears in current section 103.24. While
FinCEN understands that the term
‘‘other financial account’’ is broad
enough to cover a range of relationships
with foreign financial agencies, FinCEN
believes that compliance will be
enhanced by more clearly delineating
the types of relationships that must be
reported.
Thus, the proposal would define
‘‘other financial account’’ to mean
• An account with a person that is in
the business of accepting deposits as a
financial agency;
• An account that is an insurance
policy with a cash value or an annuity
policy;
• An account with a person that acts
as a broker or dealer for futures or
options transactions in any commodity
on or subject to the rules of a
commodity exchange or association; or
• An account with a mutual fund or
similar pooled fund which issues shares
available to the general public that have
a regular net asset value determination
and regular redemptions.
The proposed definition includes an
account with a person that accepts
deposits as a financial agency. FinCEN
believes that it is necessary to include
this provision to ensure that deposit
accounts and similar relationships will
be covered despite differences in
terminology, operations of financial
institutions, and legal frameworks in
other countries.
The definition of other financial
account also includes an account that is
an insurance policy with a cash value or
an annuity policy. Life insurance
policies that have a cash surrender
value are potential money laundering
vehicles because cash value can be
redeemed by a money launderer.
Similarly, annuity contracts pose a
money laundering risk because they
allow a money launderer to exchange
illicit funds for an immediate or
deferred income stream or to purchase
a deferred annuity and obtain clean
funds upon redemption.
The definition of other financial
account specifically includes an account
with a mutual fund or similar pooled
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fund, or other investment fund. FinCEN
believes that these types of companies
fall within the definition of ‘‘investment
company,’’ which is a financial
institution under the BSA.12
Mutual funds and similar pooled
funds are offered to the general public
and typically are identifiable by the
ability of the account holder to redeem
shares on a daily or otherwise regular
basis. FinCEN believes that these types
of accounts present risks for money
laundering. As with other types of
financial accounts, money launderers
may use mutual fund accounts to layer
their funds by sending and receiving
money and wiring it quickly through
several accounts and multiple
institutions. Layering could also involve
purchasing funds in the name of a
fictitious corporation or an entity
designed to conceal the true owner.
Most importantly, mutual funds can
also be used for integrating illegal
income into legitimate assets, allowing
illegal proceeds to appear to have a
legitimate source when the shares of the
fund are redeemed and deposited into a
bank account.
FinCEN recognizes that outside of
mutual funds and similar pooled funds,
individuals may invest in other types of
pooled investment companies, such as
private equity funds, venture capital
funds and hedge funds. Because these
kinds of funds are privately offered
funds, their characteristics vary greatly.
In addition, the lack of functional
regulation over these kinds of funds
makes it difficult to define and
distinguish certain types of these funds
from others. FinCEN is aware, however,
of pending legislative proposals that
would apply additional regulation and
oversight over the operations of some of
these investment companies.
Accordingly, FinCEN has determined
that, at this time, the proposal should
reserve the treatment of investment
companies other than mutual funds or
similar pooled funds. Treasury remains
concerned about the use of, for example,
hedge funds to evade taxes and FinCEN
will continue to study this issue.13
12 See
31 U.S.C. 5312(a)(2)I.
about the use of hedge funds to evade
taxes is discussed in The Report of the President’s
Working Group on Financial Market, Hedge Funds,
Leverage, and the Lessons of Long-Term Capital
Management (April 1999). ‘‘In the tax area, the fact
that a significant number of hedge funds are
established in offshore financial centers that are tax
havens has focused attention on whether offshore
hedge funds are associated with illegal tax
avoidance and are taking advantage of their offshore
situs for other inappropriate purposes.’’ Id. at 4.
FinCEN is also aware of pending legislative
proposals that would require United States
individuals to annually report to the IRS with
respect to foreign hedge funds and private equity
funds, for example.
13 Concerns
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Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Proposed Rules
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G. Section 103.24(c)(4)—Exceptions for
Certain Accounts
Paragraph (c)(4) includes exceptions
for certain accounts for which reporting
will not be required by persons with a
financial interest in or signature or other
authority over the accounts. The
following accounts are proposed to be
excepted from reporting.
• An account of a department or
agency of the United States; an Indian
Tribe; or any State or any political
subdivision of a State; or a whollyowned entity, agency, or instrumentality
of any of the foregoing is not required
to be reported. In addition, reporting is
not required with respect to an account
of an entity established under the laws
of the United States; of an Indian Tribe;
of any State; or of any political
subdivision of any State; or under an
intergovernmental compact between
two or more States or Indian Tribes that
exercises governmental authority on
behalf of the United States, an Indian
Tribe, or any such State or political
subdivision. For this purpose, an entity
generally exercises governmental
authority on behalf of the United States,
an Indian Tribe, a State, or a political
subdivision only if its authorities
include one or more of the powers to
tax, to exercise the power of eminent
domain, or to exercise police powers
with respect to matters within its
jurisdiction.
• An account of an international
financial institution of which the United
States government is a member is not
required to be reported.
• An account in an institution known
as a ‘‘United States military banking
facility’’ (or ‘‘United States military
finance facility’’) operated by a United
States financial institution designated
by the United States Government to
serve United States government
installations abroad is not required to be
reported even though the United States
military banking facility is located in a
foreign country.
• Correspondent or nostro accounts
that are maintained by banks and used
solely for bank-to-bank settlements are
not required to be reported.
The first three exceptions take into
account the governmental status and
functions of the entities and agencies.
The last exception for nostro accounts
takes into account the limited access to
the account.
H. Section 103.24(d)—Foreign Country
Foreign country includes all
geographical areas located outside of the
United States as defined in 31 CFR
103.11(nn).
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I. Section 103.24(e)—Financial Interest
Financial Interest When the United
States Person Is the Owner of Record or
Holder of Legal Title
A United States person has a financial
interest in each bank, securities, or other
financial account in a foreign country
for which he is the owner of record or
holds legal title regardless of whether
the account is maintained for his own
benefit or for the benefit of others. If an
account is maintained in the name of
more than one person, each United
States person in whose name the
account is maintained has a financial
interest in that account.
Financial Interest When Another Is
Acting on Behalf of the United States
Person
A United States person also has a
financial interest in each bank,
securities, or other financial account in
a foreign country for which the owner
of record or holder of legal title is a
person acting on behalf of that United
States person such as an attorney, agent
or nominee with respect to the account.
Other Situations Giving Rise to a
Financial Interest
Further, a United States person is
deemed to have a financial interest in a
bank, securities, or other financial
account in a foreign country for which
the owner of record or holder of legal
title is—
• A corporation in which the United
States person owns directly or indirectly
more than 50 percent of the voting
power or the total value of the shares,
a partnership in which the United States
person owns directly or indirectly more
than 50 percent of the interest in profits
or capital, or any other entity (other
than a trust) in which the United States
person owns directly or indirectly more
than 50 percent of the voting power,
total value of the equity interest or
assets, or interest in profits.
• A trust, if the United States person
is the trust settlor and has an ownership
interest in the account for United States
federal tax purposes. See 26 U.S.C. 671–
679 to determine if a settlor has an
ownership interest in a trust’s financial
account for a year.
• A trust in which the United States
person either has a beneficial interest in
more than 50 percent of the assets or
from which such person receives more
than 50 percent of the current income.
• A trust that was established by the
United States person and for which the
United States person has appointed a
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8847
trust protector that is subject to such
person’s direct or indirect instruction.14
Finally, a United States person that
causes an entity to be created for a
purpose of evading the reporting
requirement shall have a financial
interest in any bank, securities, or other
financial account in a foreign country
for which the entity is the owner of
record or holder of legal title. The term
‘‘evading’’ as used in the anti-avoidance
rule is not intended to apply to persons
who make a good faith effort to comply
with the regulations implementing
section 5314.
The definition of financial interest
includes certain instances where a
United States person’s ownership or
control over the owner of record or
holder of legal title rises to such a level
that the person should be deemed to
have a financial interest in the account.
FinCEN believes that these rules are
necessary to ensure that these financial
interests of United States persons are
reported on the FBAR regardless of how
the interest is held or structured. Lastly,
FinCEN has included an anti-avoidance
rule to capture reporting in instances
where persons seek to evade the
requirement to file an FBAR through the
use of devices such as transfer
companies. Such devices have been
documented in reports by the Senate
Permanent Subcommittee on
Investigations as methods by which
United States persons have tried to hide
ownership of foreign financial
accounts.15
J. Section 103.24(f)—Signature or Other
Authority
FinCEN has included in proposed
section 103.24 provisions that would
address signature or other authority over
14 As described by the Senate Permanent
Subcommittee on Investigations (PSI), Committee
on Homeland Security and Governmental Affairs, in
its 2006 report, Tax Haven Abuses: the Enablers,
the Tools and Secrecy, Senate Hearing 109–797,
109th Cong., 2d Sess. (August 1, 2006),
arrangements such as ‘‘trust protectors’’ have been
employed by United States taxpayers to achieve
substantial control over assets held in offshore
trusts. In some cases trust protectors serve to
safeguard trust assets from misappropriation.
However, many offshore trusts are established with
the intention of maintaining client control. In such
cases trust protectors can serve as conduits of the
client’s instructions to the trustees, with the
trustees merely rubber stamping the protectors’
directions. Such an arrangement permits greater
client control while maintaining the appearance of
trustee independence.
15 The PSI reported the use of transfer companies,
single purpose companies used solely to disguise
the transfer of funds from an entity controlled by
a taxpayer to the account of another entity
controlled by the taxpayer. See Tax Haven Banks
and U.S. Tax Compliance, Staff Report, Permanent
Subcommittee on Investigations, Senate Comm. on
Homeland Security and Governmental Affairs, at 4,
65 (July 17, 2008).
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a bank, securities, or other financial
account in a foreign country.
Signature or Other Authority In General
Current section 103.24 requires
reporting by United States persons with
signature or other authority over bank,
securities, or other financial accounts in
a foreign country. The proposal would
continue this requirement and would
define signature or other authority.
Signature or other authority means
authority of an individual (alone or in
conjunction with another) to control the
disposition of money, funds, or other
assets held in a financial account by
delivery of instructions (whether
communicated in writing or otherwise)
directly to the person with whom the
financial account is maintained.
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Exceptions for Signature or Other
Authority
FinCEN is including in the proposed
rule certain exceptions for United States
persons with signature or other
authority over reportable accounts.
These exceptions generally apply to
officers and employees of financial
institutions that have a federal
functional regulator, and certain entities
that are publicly traded on a United
States national securities exchange, or
that are otherwise required to register
their equity securities with the
Securities and Exchange Commission.
FinCEN believes that such relief is
appropriate in light of the federal
oversight of these entities. These
exceptions apply, however, only where
the officer or employee has no financial
interest in the reportable account. These
institutions would still be obligated to
report their financial interest in these
reportable accounts. FinCEN is
proposing the following exceptions.
• An officer or employee of a bank
that is examined by the Office of the
Comptroller of the Currency, the Board
of Governors of the Federal Reserve
System, the Federal Deposit Insurance
Corporation, the Office of Thrift
Supervision, or the National Credit
Union Administration need not report
that he has signature or other authority
over a foreign financial account owned
or maintained by the bank if the officer
or employee has no financial interest in
the account.
This exception is available to officers
or employees of banks examined by the
federal banking agencies. Officers or
employees can avail themselves of this
exemption without receiving notice
from the bank that the bank has filed an
FBAR with respect to the reportable
accounts over which it has a financial
interest.
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• An officer or employee of a
financial institution that is registered
with and examined by the Securities
and Exchange Commission or
Commodity Futures Trading
Commission need not report that he has
signature or other authority over a
foreign financial account owned or
maintained by such financial institution
if the officer or employee has no
financial interest in the account.
This exception is available to officers
or employees of financial institutions
such as securities broker dealers or
futures commission merchants which
are registered with and examined by,
the Securities and Exchange
Commission or Commodity Futures
Trading Commission. Again, officers or
employees of such financial institutions
can avail themselves of this exemption
without receiving a notice from the
employer.
• An officer or employee of an
Authorized Service Provider need not
report that he has signature or other
authority over a foreign financial
account owned or maintained by an
investment company that is registered
with the Securities and Exchange
Commission if the officer or employee
has no financial interest in the account.
‘‘Authorized Service Provider’’ means an
entity that is registered with and
examined by the Securities and
Exchange Commission and provides
services to an investment company
registered under the Investment
Company Act of 1940.
This exception has been included to
address the fact that mutual funds do
not have employees of their own.
Instead, the day-to-day operations of
such a fund are performed by
individuals who are employed by fund
service providers, such as investment
advisors. Officers or employees of an
Authorized Service Provider which is
registered with and examined by the
Securities and Exchange Commission
may avail themselves of this exemption
without receiving notice from the
employer provided that the fund they
service is also registered with the
Securities and Exchange Commission.
FinCEN believes that this exception is
appropriate in light of the requirement
that both the service provider and the
fund are registered with the Securities
and Exchange Commission.
• An officer or employee of an entity
with a class of equity securities listed on
any United States national securities
exchange need not report that he has
signature or other authority over a
foreign financial account of such entity
if the officer or employee has no
financial interest in the account. An
officer or employee of a United States
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subsidiary of such entity need not file
a report concerning signature or other
authority over a foreign financial
account of the subsidiary if he has no
financial interest in the account and the
United States subsidiary is named in a
consolidated FBAR report of the parent
filed under proposed paragraph (g)(3) of
31 CFR 103.24.
This exception is available to officers
and employees of entities which are
listed upon a United States national
securities exchange, regardless of
whether the entity is domestic or
foreign. Officers and employees of a
United States subsidiary of such listed
entities are also covered by this
exception if the United States subsidiary
is named in a consolidated FBAR report
of the parent.
• An officer or employee of a United
States corporation that has a class of
equity securities registered under
section 12(g) of the Securities Exchange
Act need not report that he has
signature or other authority over the
foreign financial accounts of such
corporation if he has no financial
interest in the accounts.
This exception applies to officers and
employees of United States corporations
whose size in terms of assets and
shareholders 16 requires them to register
their stock with the Securities and
Exchange Commission and makes them
subject to reporting under the Securities
Exchange Act.
K. 103.24(g)—Special Rules
FinCEN is proposing special rules to
simplify FBAR filings in certain cases.
• 25 or more foreign financial
accounts. A United States person having
a financial interest in 25 or more foreign
financial accounts need only provide
the number of financial accounts and
certain other basic information on the
report, but will be required to provide
detailed information concerning each
account when so requested by the
Secretary or his delegate. Similarly, a
United States person having signature or
other authority over 25 or more foreign
financial accounts need only provide
the number of financial accounts and
certain other basic information on the
report, but will be required to provide
detailed information concerning each
account when so requested by the
Secretary or his delegate.
• Consolidated reports. An entity that
is a United States person and owns
directly or indirectly more than a 50
percent interest in an entity required to
16 Currently, these are corporations which have
more than $10 million in assets and more than 500
shareholders of record. See 15 U.S.C. 78l(g) (2006)
and the regulations thereunder.
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report under this section will be
permitted to file a consolidated report
on behalf of itself and such other entity.
• Participants and beneficiaries in
certain retirement plans. Participants
and beneficiaries in retirement plans
under sections 401(a), 403(a) or 403(b)
of the Internal Revenue Code as well as
owners and beneficiaries of individual
retirement accounts under section 408
of the Internal Revenue Code or Roth
IRAs under section 408A of the Internal
Revenue Code will not be required to
file an FBAR with respect to a foreign
financial account held by or on behalf
of the retirement plan or IRA. 17
• Certain trust beneficiaries. A
beneficiary of a trust described in
proposed paragraph (e)(2)(iv) is not
required to report the trust’s foreign
financial accounts if the trust, trustee of
the trust, or agent of the trust is a United
States person that files an FBAR
disclosing the trust’s foreign financial
accounts and provides any additional
information as required by the report.18
In addition, FinCEN anticipates that
in the case of United States persons who
are employed in a foreign country and
who have signature or other authority
over foreign financial accounts owned
or maintained by their employer, the
instructions to the FBAR form will
prescribe a modified form of reporting
for such persons.
IV. Proposed Changes to the FBAR
Instructions
The changes proposed by this notice
of proposed rulemaking, if adopted as a
final rule, would also require changes to
the instructions to the FBAR. A draft of
revised changes to the FBAR
instructions appears as an attachment at
the end of this notice of proposed
rulemaking.
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V. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601 et seq.), FinCEN
certifies that these proposed regulation
revisions will not have a significant
17 This proposed exemption is not intended to
affect the filing requirements with respect to
qualified pension plans or individual retirement
accounts. FinCEN believes that, in most cases, such
entities (which are subject to a number of statutory
requirements and limitations) are in a better
position to be aware of the presence of a foreign
financial account). An IRA is an individual
retirement account described in section 408 of the
Internal Revenue Code (i.e., a traditional IRA, IRA
annuity, SEP IRA, SIMPLE IRA, or deemed IRA) or
a Roth IRA (including a Roth IRA annuity or a
deemed Roth IRA) described in section 408A of the
Internal Revenue Code.
18 FinCEN believes that, in most cases, the trust
or its trustees are in a better position than the
beneficiaries to be aware of the presence of a foreign
financial account and the information needed to file
the FBAR as well as whether individual
beneficiaries exceed the 50 percent threshold.
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economic impact on a substantial
number of small entities. The proposed
rule revises an existing rule that
requires reports to be made to Treasury
with respect to certain foreign financial
accounts. Because this proposal clarifies
the existing rules and narrows the scope
of individuals and entities subject to
reporting and recordkeeping
requirements, we will reduce regulatory
obligations overall.
The proposed rule will not affect a
substantial number of small entities.
The proposed rule applies to United
States persons, a term which includes
entities of all sizes, if they have
reportable accounts under this rule.
However, we expect that small entities
will be less likely to have reportable
foreign financial accounts or to have
many such accounts unlike larger
entities, which have a broader base of
business operations.
In any event, the proposed rule will
not have a significant economic impact
on small entities. As explained above,
the proposed rule revises an existing
rule that requires reports to be made to
Treasury with respect to certain foreign
financial accounts. Filing the reports
will require entities to transfer basic
information that they will have received
on account statements from the foreign
financial institution at which the
account is opened and maintained.
Those statements will provide the entity
with the information about the account
needed to file the FBAR. No special
accounting or legal skills would be
necessary to transfer the basic
information required to be reported,
such as the name of the foreign financial
institution, the type of account, and the
account number, to the FBAR.
Furthermore, the proposed rule
continues a simplified reporting method
for persons with a financial interest in
25 or more foreign financial accounts
and extends the relief of this simplified
reporting method to persons with
signature or other authority over 25 or
more foreign financial accounts. FinCEN
requests comments on the accuracy of
the statement that the regulations in this
document will not have a significant
economic impact on a substantial
number of small entities.
VI. Paperwork Reduction Act Notices
The reporting requirement contained
in this proposed rule (31 CFR 103.24) is
being submitted to the Office of
Management and Budget for review in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
3507(d)). This proposed rulemaking
seeks to clarify the scope of existing
definitions and related rules. By making
requirements clearer for reporting
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8849
persons, there is a potential that certain
reporting persons may see an increase in
the collection and reporting of
information, but any such potential
increase may likely be offset by the
corresponding exceptions and
clarifications in the proposal. Moreover,
to the extent that we have clarified the
existing rules and narrowed the scope of
individuals or entities subject to
reporting or recordkeeping
requirements, we will have reduced
regulatory obligations overall.19
Comments concerning the estimated
burden and other questions should be
sent to the Desk Officer for the
Department of the Treasury, Office of
Information and Regulatory Affairs,
Office of Management and Budget,
Paperwork Reduction Project (1506),
Washington, DC 20503 with a copy to
FinCEN and the IRS SBSE by mail or
comments may also be submitted by email to oira_submission@omb.eop.gov.
Please submit comments by one method
only. Comments are welcome and must
be received by April 27, 2010.
Amendment to the Bank Secrecy Act
Regulations—Reports of Foreign Bank
and Financial Accounts
In accordance with requirements of
the Paperwork Reduction Act of 1995,
44 U.S.C. 3506(c)(2)(A), and its
implementing regulations, 5 CFR part
1320, the following information
concerning the collection of information
of the Amendment to the Bank Secrecy
Act Regulations—Reports of Foreign
Bank and Financial Accounts is
presented to assist those persons
wishing to comment on the information
collection.
Description of Affected Filers:
Individuals and certain entities that
maintain foreign financial accounts
reportable under 31 CFR 103.24.
Estimated Number of Affected Filing
Individuals and Entities: 400,000.
Estimated Average Annual Burden
Hours per Affected Filer: The estimated
average burden associated with the
recordkeeping requirement in this
proposed rule will vary depending on
the number of reportable accounts. We
estimate that the recordkeeping burden
will range from five minutes to sixty
minutes, and that the average burden
will be thirty minutes. The estimated
average burden associated with the
reporting requirement (FBAR form
completion) will also vary depending on
the number of reportable accounts and
whether the filer will be able to take
19 This proposed amendment to 31 CFR 103.24
clarifies the filing requirement for certain foreign
persons thereby reducing the overall burden of BSA
recordkeeping and reporting requirements.
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advantage of the exceptions provided in
this proposed rule. We estimate that the
average reporting burden will range
from approximately twenty minutes to
one hour and that the average reporting
burden will be approximately 45
minutes. The reporting burden is
reflected in the burden listed for
completing TD–F 90–22.1 (See OMB
Control Number 1506–0009/1545–
2038). The burden associated with
reporting a financial interest in or
signature or other authority over a
foreign financial account to the
Commissioner of Internal Revenue is
reflected in the burden for the
appropriate income tax return or
schedule.
Estimated Total Annual Burden:
500,000 hours.
VII. Unfunded Mandates Act of 1995
Statement
Section 202 of the Unfunded
Mandates Reform Act of 1995
(‘‘Unfunded Mandates Act’’), Public Law
104–4 (March 22, 1995), requires that an
agency prepare a budgetary impact
statement before promulgating a rule
that may result in expenditure by state,
local, and tribal governments, in the
aggregate, or by the private sector, of
$100 million or more in any one year.
If a budgetary impact statement is
required, section 202 of the Unfunded
Mandates Act also requires an agency to
identify and consider a reasonable
number of regulatory alternatives before
promulgating a rule. FinCEN has
determined that it is not required to
prepare a written statement under
section 202 and has concluded that on
balance the proposals in the Notice of
Proposed Rulemaking provide the most
cost-effective and least burdensome
alternative to achieve the objectives of
the rule.
List of Subjects in 31 CFR Part 103
Administrative practice and
procedure, Banks, Banking, Brokers,
Currency, Foreign banking, Foreign
currencies, Gambling, Investigations,
Penalties, Reporting and recordkeeping
requirements, Securities, Terrorism.
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Amendment
For the reasons set forth above in the
preamble, 31 CFR Part 103 is proposed
to be amended as follows:
PART 103—FINANCIAL
RECORDKEEPING AND REPORTING
OF CURRENCY AND FOREIGN
TRANSACTIONS
1. The authority citation for part 103
is revised to read as follows:
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Authority: 12 U.S.C. 1829b and 1951–
1959; 31 U.S.C. 5311–5314 and 5316–5332;
title III, sec. 314, Pub. L. 107–56, 115 Stat.
307.
2. Section 103.24 is revised to read as
follows:
§ 103.24 Reports of foreign financial
accounts.
(a) In general. Each United States
person having a financial interest in, or
signature or other authority over, a
bank, securities, or other financial
account in a foreign country shall report
such relationship to the Commissioner
of Internal Revenue for each year in
which such relationship exists and shall
provide such information as shall be
specified in a reporting form prescribed
under 31 U.S.C. 5314 to be filed by such
persons. The form prescribed under
section 5314 is the Report of Foreign
Bank and Financial Accounts (TD–F 90–
22.1), or any successor form. See
paragraphs (g)(1) and (g)(2) of this
section for a special rule for persons
with a financial interest in 25 or more
accounts, or signature or other authority
over 25 or more accounts.
(b) United States person. For purposes
of this section, the term ‘‘United States
person’’ means—
(1) A citizen of the United States;
(2) A resident of the United States. A
resident of the United States is an
individual who is a resident alien under
26 U.S.C. 7701(b) and the regulations
thereunder but using the definition of
‘‘United States’’ provided in 31 CFR
103.11(nn) rather than the definition of
‘‘United States’’ in 26 CFR 301.7701(b)–
1(c)(2)(ii); and
(3) An entity, including but not
limited to a corporation, partnership,
trust, or limited liability company
created, organized, or formed under the
laws of the United States, any State, the
District of Columbia, the Territories and
Insular Possessions of the United States,
or the Indian Tribes.
(c) Types of reportable accounts—(1)
Bank account. The term ‘‘bank account’’
means a savings deposit, demand
deposit, checking, or any other account
maintained with a person engaged in
the business of banking.
(2) Securities account. The term
‘‘securities account’’ means an account
with a person engaged in the business
of buying, selling, holding or trading
stock or other securities.
(3) Other financial account. The term
‘‘other financial account’’ means—
(i) An account with a person that is
in the business of accepting deposits as
a financial agency;
(ii) An account that is an insurance
policy with a cash value or an annuity
policy;
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(iii) An account with a person that
acts as a broker or dealer for futures or
options transactions in any commodity
on or subject to the rules of a
commodity exchange or association; or
(iv) An account with—
(A) Mutual fund or similar pooled
fund. A mutual fund or similar pooled
fund which issues shares available to
the general public that have a regular
net asset value determination and
regular redemptions; or
(B) Other investment fund.
[RESERVED].
(4) Exceptions for certain accounts.
(i) An account of a department or
agency of the United States, an Indian
Tribe, or any State or any political
subdivision of a State, or a whollyowned entity, agency or instrumentality
of any of the foregoing is not required
to be reported. In addition, reporting is
not required with respect to an account
of an entity established under the laws
of the United States, of an Indian Tribe,
of any State, or of any political
subdivision of any State, or under an
intergovernmental compact between
two or more States or Indian Tribes that
exercises governmental authority on
behalf of the United States, an Indian
Tribe, or any such State or political
subdivision. For this purpose, an entity
generally exercises governmental
authority on behalf of the United States,
an Indian Tribe, a State, or a political
subdivision only if its authorities
include one or more of the powers to
tax, to exercise the power of eminent
domain, or to exercise police powers
with respect to matters within its
jurisdiction.
(ii) An account of an international
financial institution of which the United
States government is a member is not
required to be reported.
(iii) An account in an institution
known as a ‘‘United States military
banking facility’’ (or ‘‘United States
military finance facility’’) operated by a
United States financial institution
designated by the United States
Government to serve United States
government installations abroad is not
required to be reported even though the
United States military banking facility is
located in a foreign country.
(iv) Correspondent or nostro accounts
that are maintained by banks and used
solely for bank-to-bank settlements are
not required to be reported.
(d) Foreign country. A foreign country
includes all geographical areas located
outside of the United States as defined
in 31 CFR 103.11(nn).
(e) Financial interest. A financial
interest in a bank, securities or other
financial account in a foreign country
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means an interest described in this
paragraph (e):
(1) Owner of record or holder of legal
title. A United States person has a
financial interest in each bank,
securities or other financial account in
a foreign country for which he is the
owner of record or has legal title
whether the account is maintained for
his own benefit or for the benefit of
others. If an account is maintained in
the name of more than one person, each
United States person in whose name the
account is maintained has a financial
interest in that account.
(2) Other financial interest. A United
States person has a financial interest in
each bank, securities or other financial
account in a foreign country for which
the owner of record or holder of legal
title is—
(i) A person acting as an agent,
nominee, attorney or in some other
capacity on behalf of the United States
person with respect to the account;
(ii) A corporation in which the United
States person owns directly or indirectly
more than 50 percent of the voting
power or the total value of the shares,
a partnership in which the United States
person owns directly or indirectly more
than 50 percent of the interest in profits
or capital, or any other entity (other
than an entity in paragraphs (e)(2)(iii)
through (v) of this section) in which the
United States person owns directly or
indirectly more than 50 percent of the
voting power, total value of the equity
interest or assets, or interest in profits;
(iii) A trust, if the United States
person is the trust settlor and has an
ownership interest in the account for
United States federal tax purposes. See
26 U.S.C. 671–679 and the regulations
thereunder to determine if a settlor has
an ownership interest in a trust’s
financial account for a year;
(iv) A trust in which the United States
person either has a beneficial interest in
more than 50 percent of the assets or
from which such person receives more
than 50 percent of the income; or
(v) A trust that was established by the
United States person and for which the
United States person has appointed a
trust protector that is subject to such
person’s direct or indirect instruction.
(3) Anti-avoidance rule. A United
States person that causes an entity,
including but not limited to a
corporation, partnership, or trust, to be
created for a purpose of evading this
section shall have a financial interest in
any bank, securities, or other financial
account in a foreign country for which
the entity is the owner of record or
holder of legal title.
(f) Signature or other authority—(1) In
general. Signature or other authority
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means authority of an individual (alone
or in conjunction with another) to
control the disposition of money, funds
or other assets held in a financial
account by delivery of instructions
(whether communicated in writing or
otherwise) directly to the person with
whom the financial account is
maintained.
(2) Exceptions—(i) An officer or
employee of a bank that is examined by
the Office of the Comptroller of the
Currency, the Board of Governors of the
Federal Reserve System, the Federal
Deposit Insurance Corporation, the
Office of Thrift Supervision, or the
National Credit Union Administration
need not report that he has signature or
other authority over a foreign financial
account owned or maintained by the
bank if the officer or employee has no
financial interest in the account.
(ii) An officer or employee of a
financial institution that is registered
with and examined by the Securities
and Exchange Commission or
Commodity Futures Trading
Commission need not report that he has
signature or other authority over a
foreign financial account owned or
maintained by such financial institution
if the officer or employee has no
financial interest in the account.
(iii) An officer or employee of an
Authorized Service Provider need not
report that he has signature or other
authority over a foreign financial
account owned or maintained by an
investment company that is registered
with the Securities and Exchange
Commission if the officer or employee
has no financial interest in the account.
‘‘Authorized Service Provider’’ means an
entity that is registered with and
examined by the Securities and
Exchange Commission and that
provides services to an investment
company registered under the
Investment Company Act of 1940.
(iv) An officer or employee of an
entity with a class of equity securities
listed on any United States national
securities exchange need not report that
he has signature or other authority over
a foreign financial account of such
entity if the officer or employee has no
financial interest in the account. An
officer or employee of a United States
subsidiary of such entity need not file
a report concerning signature or other
authority over a foreign financial
account of the subsidiary if he has no
financial interest in the account and the
United States subsidiary is included in
a consolidated report of the parent filed
under this section.
(v) An officer or employee of a United
States entity that has a class of equity
securities registered under section 12(g)
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8851
of the Securities Exchange Act need not
report that he has signature or other
authority over the foreign financial
accounts of such entity if he has no
financial interest in the accounts.
(g) Special rules—(1) Financial
interest in 25 or more foreign financial
accounts. A United States person having
a financial interest in 25 or more foreign
financial accounts need only provide
the number of financial accounts and
certain other basic information on the
report, but will be required to provide
detailed information concerning each
account when so requested by the
Secretary or his delegate.
(2) Signature or other authority over
25 or more foreign financial accounts. A
United States person having signature or
other authority over 25 or more foreign
financial accounts need only provide
the number of financial accounts and
certain other basic information on the
report, but will be required to provide
detailed information concerning each
account when so requested by the
Secretary or his delegate.
(3) Consolidated reports. An entity
that is a United States person and which
owns directly or indirectly more than a
50 percent interest in one or more other
entities required to report under this
section will be permitted to file a
consolidated report on behalf of itself
and such other entities.
(4) Participants and beneficiaries in
certain retirement plans. Participants
and beneficiaries in retirement plans
under sections 401(a), 403(a) or 403(b)
of the Internal Revenue Code as well as
owners and beneficiaries of individual
retirement accounts under section 408
of the Internal Revenue Code or Roth
IRAs under section 408A of the Internal
Revenue Code are not required to file an
FBAR with respect to a foreign financial
account held by or on behalf of the
retirement plan or IRA.
(5) Certain trust beneficiaries. A
beneficiary of a trust described in
paragraph (e)(2)(iv) of this section is not
required to report the trust’s foreign
financial accounts if the trust, trustee of
the trust, or agent of the trust is a United
States person that files a report under
this section disclosing the trust’s foreign
financial accounts.
Dated: February 23, 2010.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement
Network.
Note: The following attachment will not
appear in the Code of Federal Regulations.
Attachment: Draft instructions to the Report
of Foreign Bank and Financial Accounts—
Form TDF90–22.1(FBAR)
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General Instructions
Form TD F 90–22.1 (the ‘‘FBAR’’) is used
to report a financial interest in or signature
authority over a foreign financial account.
The FBAR must be received by the
Department of the Treasury on or before June
30th of the year immediately following the
calendar year being reported. Unlike the
filing date for an income tax return, the June
30th filing date for the FBAR may not be
extended.
Who Must File an FBAR.
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The following persons are required to file
an FBAR:
A United States citizen;
A United States resident;
An entity, including but not limited to, a
corporation, partnership, or limited
liability company created or organized in
the United States or under the laws of the
United States; and
A trust or estate formed under the laws of the
United States.
See definition of United States below.
If the person has:
A financial interest in or signature
authority over any foreign financial account
and the aggregate value of the financial
account(s) exceeds $10,000 at any time
during the calendar year. See Part II, Item 15,
regarding the $10,000 threshold.
The tax treatment of an entity does not
determine whether the entity has an FBAR
filing requirement. For example, an entity
that is disregarded for purposes of Title 26
of the United States Code must still file an
FBAR, if otherwise required to do so.
Similarly, a trust for which the trust income,
deductions, or credits are taken into account
by another person for purposes of Title 26 of
the United States Code must file an FBAR,
if otherwise required to do so.
See Exceptions below.
General Definitions
Financial Account. A financial account
includes, but is not limited to, a securities,
brokerage, savings, demand, checking,
deposit, time deposit, or other account
maintained with a financial institution (or
other person performing the services of a
financial institution). A financial account
also includes a commodity futures or options
account, an insurance policy with a cash
surrender value (such as a variable annuity
or a whole life insurance policy), an annuity,
and shares in a mutual fund or similar
pooled fund (i.e., a fund with a regular net
asset value determination and redemptions).
Foreign Financial Account. A foreign
financial account is a financial account that
is located outside of the United States. For
example, an account maintained with a
foreign branch of a United States bank is a
foreign financial account. An account
maintained with a United States branch of a
foreign bank is not a foreign financial
account. An insurance or annuity policy that
is purchased outside of the United States, as
defined in 31 CFR § 103.11(nn), from a nonUnited States issuer is a foreign financial
account.
Financial Interest. A person has a financial
interest in each financial account for which
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(1) the person is the owner of record or
holder of legal title, regardless of whether the
account is maintained for that person’s
benefit or for the benefit of another person;
or
(2) the owner of record or holder of legal
title is one of the following:
(a) An agent, nominee, attorney, or a
person authorized to act on behalf of the
person with respect to the account;
(b) A corporation in which the person
owns directly or indirectly: (i) more than 50
percent of the total value of shares of stock
or (ii) more than 50 percent of the voting
power of all shares of stock;
(c) A partnership in which the person
owns directly or indirectly: (i) an interest in
more than 50 percent of the partnership’s
profits (distributive share of partnership
income taking into account any special
allocation agreement) or (ii) an interest in
more than 50 percent of the partnership
capital;
(d) A trust, if the person: (i) is the trust
settlor; and (ii) has an ownership interest in
the trust for United States federal tax
purposes. See 26 U.S.C. §§ 671 through 679
to determine if a person has an ownership
interest in a trust for a year for United States
federal tax purposes;
(e) A trust, if the person has more than a
50 percent beneficial interest in the assets or
income of the trust for the calendar year, as
determined under all of the facts and
circumstances, including the terms of the
trust and any accompanying documents;
(f) A trust that was established by the
person and for which the person has
appointed a trust protector that is subject to
such person’s direct or indirect instruction;
or
(g) Any other entity, if the person owns
directly or indirectly more than 50 percent of
the voting power, total value of equity
interest or assets, or interest in profits.
Person. A person includes an individual
and all legal entities including, but not
limited to, limited liability companies,
corporations, partnerships, trusts, and
estates.
Signature Authority. Signature authority is
the authority (alone or in conjunction with
any other individual) to control the
disposition of money, funds, or other assets
held in a financial account by delivery of
instructions (whether communicated in
writing or otherwise) directly to the financial
institution (or other person performing the
services of a financial institution), with
which the financial account is maintained.
See Exception for Signature Authority.
United States. For FBAR purposes, the
United States includes the States, the District
of Columbia, all territories and possessions
(for example American Samoa, the
Commonwealth of the Northern Marianas
Islands, the Commonwealth of Puerto Rico,
Guam, and the United States Virgin Islands),
and the Indian lands as defined in the Indian
Gaming Regulatory Act. References to the
laws of the United States include the laws of
the United States federal government and the
laws of all places listed in this definition.
United States Resident. A United States
resident is an alien residing in the United
States. To determine if the filer is a resident
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of any place listed in the definition of United
States, apply the residency tests in 26 U.S.C.
§ 7701(b).
Exceptions
Certain Accounts Jointly Owned by
Spouses. The spouse of an individual who
files an FBAR is not required to file a
separate FBAR if the following conditions are
met: (1) all the financial accounts that the
spouse is required to report are jointly owned
with the filing spouse; (2) the filing spouse
reports the jointly owned accounts on a
timely filed FBAR; and (3) both spouses sign
the FBAR in Item 44. See Explanations for
Specific Items, Part III, Items 25–33. If the
filer’s spouse is required to file an FBAR for
any account that is not jointly owned with
the filer, the filer’s spouse must file a
separate FBAR for all accounts, including
those owned jointly with the filing spouse.
Consolidated FBAR. If a person is named
in a consolidated FBAR filed by a more than
50 percent owner, the person is not required
to file a separate FBAR. See Explanations for
Specific Items, Part V.
Correspondent/Nostro Account.
Correspondent or nostro accounts (which are
maintained by banks and used solely for
bank-to-bank settlements) are not required to
be reported on an FBAR.
Governmental Entity. A foreign financial
account of any governmental entity is not
required to be reported on an FBAR by any
person. For purposes of this form,
governmental entity includes: (1) a college or
university that is an agency or
instrumentality of, or owned or operated by,
a governmental entity; and (2) an employee
retirement or welfare benefit plan of a
governmental entity.
International Financial Institution. A
foreign financial account of any international
financial institution of which the United
States is a member is not required to be
reported on an FBAR by any person.
IRA Owners and Beneficiaries. An owner
or beneficiary of an IRA is not required to file
an FBAR with respect to a foreign financial
account held in the IRA.
Participants in and Beneficiaries of TaxQualified Retirement Plans. A participant in
or beneficiary of a retirement plan described
in Internal Revenue Code § 401(a), 403(a), or
403(b) is not required to file an FBAR with
respect to a foreign financial account held by
or on behalf of the retirement plan.
Signature Authority. Signature authority
over a foreign financial account need not be
reported on an FBAR by an individual with
no financial interest in the foreign financial
account in the following situations:
(1) An officer or employee of a bank that
is examined by the Office of the Comptroller
of the Currency, the Board of Governors of
the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Office of
Thrift Supervision, or the National Credit
Union Administration need not report
signature authority over a foreign financial
account owned or maintained by the bank.
(2) An officer or employee of a financial
institution that is registered with and
regulated or examined by the Securities and
Exchange Commission or Commodity
Futures Trading Commission need not report
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signature authority over a foreign financial
account owned or maintained by the
financial institution.
(3) An officer or employee of an
Authorized Service Provider need not report
signature authority over a foreign financial
account that is owned or maintained by an
investment company that is registered with
the Securities and Exchange Commission.
Authorized Service Provider means an entity
that is registered with and examined by the
Securities and Exchange Commission and
provides services to an investment company
registered under the Investment Company
Act of 1940.
(4) An officer or employee of an entity
whose class of equity securities is listed on
any United States national securities
exchange need not report signature authority
over a foreign financial account in which the
entity has a financial interest. An officer or
employee of a United States subsidiary of
such entity need not report signature
authority over a foreign financial account of
the subsidiary.
(5) An officer or employee of a United
States entity that has a class of securities
registered under section 12(g) of the
Securities and Exchange Act need not report
signature authority over a foreign financial
account of such corporation.
Trust Beneficiaries. A trust beneficiary
with a financial interest described in section
(2)(f) is not required to report the trust’s
foreign financial accounts on an FBAR if the
trust, trustee of the trust, or agent of the trust:
(1) is a United States citizen, a United States
resident, an entity created or organized in the
United States or under the laws of the United
States, or a trust formed under the laws of the
United States; and (2) files an FBAR
disclosing the trust’s foreign financial
accounts.
United States Military Banking Facility.
An FBAR need not be filed for a financial
account maintained with a financial
institution located on a United States
military installation, even if that military
installation is outside of the United States.
Filing Information—Do NOT file with
Federal Income Tax Return
When and Where to File. The FBAR is an
annual report and must be received by the
Department of the Treasury on or before June
30th of the year following the calendar year
being reported.
File by mailing the FBAR to:
Department of the Treasury, Post Office Box
32621, Detroit, MI 48232–0621
If an express delivery service is used, file
by mailing to:
IRS Enterprise Computing Center, ATTN:
CTR Operations Mailroom, 4th Floor, 985
Michigan Avenue, Detroit, MI 48226
The FBAR may be hand delivered to any
local office of the Internal Revenue Service
for forwarding to the Department of the
Treasury, Detroit, MI. The FBAR may also be
delivered to the Internal Revenue Service’s
tax attaches located in United States
embassies and consulates for forwarding to
the Department of Treasury, Detroit, MI. The
FBAR is not considered filed until it is
received by the Department of the Treasury
in Detroit, MI.
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No Extension of Time to File. There is no
extension of time available for filing an
FBAR. Extensions of time to file federal tax
returns do NOT extend the time for filing an
FBAR. If a delinquent FBAR is filed, attach
a statement explaining the reason for the late
filing.
Verification of Filing. Ninety days after the
date of filing, the filer can request
verification that the FBAR was received. An
FBAR filing verification request may be made
by calling 1–800–800–2877 and selecting
option 2. Up to five documents may be
verified over the phone. There is no fee for
this verification. Alternatively, an FBAR
filing verification request may be made in
writing and must include the filer’s name,
taxpayer identification number, and the filing
period. There is a $5.00 fee for verifying five
or fewer FBARs and a $1.00 fee for each
additional FBAR. A copy of the filed FBAR
can be obtained at a cost of $0.15 per page.
Check or money order should be made
payable to the United States Treasury.
The request and payment should be mailed
to:
IRS Enterprise Computing Center/Detroit,
ATTN: Verification, P.O. Box 32063,
Detroit, MI 48232
Record Keeping Requirements. Persons
required to file an FBAR must retain records
that contain the name in which each account
is maintained, the number or other
designation of the account, the name and
address of the foreign financial institution
that maintains the account, the type of
account, and the maximum account value of
each account during the reporting period.
The records must be retained for a period of
five years from June 30th of the year
following the calendar year reported and
must be available for inspection as provided
by law. Persons filing an FBAR should retain
a copy for their records.
Explanations for Specific Items
Part I
Item 1. The FBAR is an annual report.
Enter the calendar year being reported.
To amend a filed FBAR, check the
‘‘Amended’’ box in the upper right hand
corner of the first page of the FBAR, make the
needed additions or corrections, attach a
statement explaining the additions or
corrections, and staple a copy of the original
FBAR to the amendment. An amendment
should not be made until at least 90 calendar
days after the FBAR is filed. Follow the
instructions in ‘‘When and Where to File’’ to
file an amendment.
Item 2. Check the appropriate box
describing the filer. Check only one box.
Individuals filing based on signature
authority, check box ‘‘a.’’ If filing a
consolidated FBAR, check box ‘‘d.’’ To
determine if a consolidated FBAR can be
filed, see Part V. If the type of filer is not
listed in boxes ‘‘a’’ through ‘‘c,’’ check box ‘‘e’’
and enter type of filer. Persons that should
check box ‘‘e’’ include, but are not limited to,
trusts, estates, limited liability companies,
and tax-exempt entities (even if the entity is
organized as a corporation). A disregarded
entity must check box ‘‘e’’ and enter its type
of person and the term ‘‘(D.E.).’’ For example,
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a limited liability company that is
disregarded for United States federal tax
purposes would enter ‘‘limited liability
company (D.E.).’’
Item 3. Provide the filer’s taxpayer
identification number. Generally, this is the
filer’s United States social security number
(SSN), United States individual taxpayer
identification number (ITIN), or employer
identification number (EIN). Numbers should
be entered with no spaces, dashes, or other
punctuation throughout the FBAR. If the filer
does NOT have a United States taxpayer
identification number, complete Item 4.
Item 4. Complete Item 4 only if the filer
does NOT have a United States taxpayer
identification number. Item 4 requires the
filer to provide information from an official
foreign government document to verify the
filer’s nationality or residence. Enter the
document number followed by the country of
issuance, check the appropriate type of
document, and if ‘‘other’’ is checked, provide
the type of document.
Item 5. If the filer is an individual, enter
the filer’s date of birth, using the month, day,
and year convention.
Items 9, 10, 11, 12 and 13. Enter the filer’s
address. An individual residing in the United
States must enter the street address of the
individual’s United States residence, not a
post office box. An individual residing
outside the United States must enter the
individual’s United States mailing address. If
the individual does not have a United States
mailing address, the individual must enter a
foreign residence address.
An entity must enter its United States
mailing address. If the entity does not have
a United States mailing address, the entity
must enter its foreign mailing address.
Item 14. If the filer has a financial interest
in 25 or more foreign financial accounts,
check ‘‘Yes’’ and enter the number of
accounts. Do not complete Part II
(Continuation of Separate Accounts) or Part
III (Joint Accounts) of the Report.
If filing a consolidated FBAR, only
complete Part V, Items 34 through 42, for
each person included in the consolidated
FBAR.
Note: If the filer has signature authority
over 25 or more foreign financial accounts,
only complete Part IV (for signature
authority), Items 34–43, for each person for
which the filer has signature authority, and
check ‘‘No’’ in Part I, Item 14.
The filer must retain the detailed account
information otherwise required by the FBAR
for five years from June 30th of the year
following the calendar year reported. The
information must be available for inspection.
See Filing Information, Record Keeping
Requirements.
Part II
Enter information in the applicable parts of
the form only. If there is not enough space
to provide all account information, copy and
complete additional pages of the required
Part as necessary. Do not use any
attachments unless otherwise specified in the
instructions.
Item 15.
Determining Maximum Account Value.
Step 1. Determine the maximum value of
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each account (in the currency of that
account) during the calendar year being
reported. The maximum value of an account
is a reasonable approximation of the greatest
value of currency or nonmonetary assets in
the account during the calendar year.
Periodic account statements may be relied on
to determine the maximum value of the
account provided that the statements fairly
reflect the maximum account value during
the calendar year. For Item 15, if the filer had
a financial interest in more than one account,
each account is to be valued separately.
Step 2. In the case of non-United States
currency, convert the maximum account
value for each account into United States
dollars. Convert foreign currency by using
the Treasury’s Financial Management Service
rate (this rate may be found at
www.fms.treas.gov) from the last day of the
calendar year. If no Treasury Financial
Management Service rate is available, use
another verifiable exchange rate and provide
the source of that rate. In valuing currency
of a country that uses multiple exchange
rates, use the rate that would apply if the
currency in the account were converted into
United States dollars on the last day of the
calendar year.
If the aggregate of the maximum account
values exceeds $10,000, an FBAR must be
filed. An FBAR is not required to be filed if
the person did not have $10,000 of aggregate
value in foreign financial accounts at any
time during the calendar year.
For persons with a financial interest in or
signature authority over fewer than 25
accounts that are unable to determine if the
aggregate maximum account values of the
accounts exceeded $10,000 at any time
during the calendar year, complete Part II, III,
IV, or V, as appropriate, for each of these
accounts and enter ‘‘value unknown’’ in Item
15.
If a foreign financial account is jointly
owned by two or more persons, each person
must report the entire value of the account.
Item 16. Indicate the type of account.
Check only one box. If ‘‘Other’’ is selected,
describe the account.
Item 17. Provide the name of the financial
institution with which the account is held.
Item 18. Provide the account number that
the financial institution uses to designate the
account.
Items 19–23. Provide the complete mailing
address of the financial institution where the
account is located.
If the foreign address does not include a
state (e.g., province) or postal code, leave the
box(es) blank.
Part III
Enter information in the applicable parts of
the form only. If there is not enough space
to provide all account information, copy and
complete additional pages of the required
Part as necessary. Do not use any
attachments unless otherwise specified in the
instructions.
For Items 15–23, see Part II.
Item 24. Enter the number of joint owners
for the account. If the exact number is not
known, provide an estimate. Do not count the
filer when determining the number of joint
owners.
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Items 25–33. Use the identity information
of the principal joint owner (excluding the
filer) to complete Items 25–33. Leave blank
items for which no information is available.
A spouse having an interest in a jointly
owned account with the filing spouse is the
principal joint owner. Enter the term
‘‘(spouse)’’ on Line 26 after the last name of
the joint spousal owner.
If the filer’s spouse is required to report
only jointly owned financial accounts that
are reported on the filer’s FBAR, the filer’s
spouse need not file a separate FBAR but
must also sign the filer spouse’s FBAR to
fulfill his or her reporting obligation. See
Items 44–46 on page one. If the filer’s spouse
is required to file an FBAR for any account
that is not jointly owned with the filer, the
filer’s spouse must file a separate FBAR for
all of the accounts, including those owned
jointly with the other spouse.
Part IV—Signature Authority
Enter information in the applicable parts of
the form only. If there is not enough space
to provide all account information, copy and
complete additional pages of the required
Part as necessary. Do not use any
attachments unless otherwise specified in the
instructions.
25 or More Foreign Financial Accounts.
Filers with signature authority over 25 or
more financial accounts must complete only
Items 34–43 for each person on whose behalf
the filer has signature authority.
For Items 15–23, see Part II.
Items 34–42. Provide the name, address,
and identifying number of the owner of a
foreign financial account for which the
individual has signature authority but no
financial interest. If there is more than one
owner of the account for which the
individual has signature authority, provide
the information in Items 34–42 for the
principal joint owner (excluding the filer). If
account information is completed for more
than one account of the same owner, identify
the owner only once and write ‘‘Same
Owner’’ in Item 34 for the succeeding
accounts of the same owner.
Item 43. Enter filer’s title for the position
that provides signature authority (e.g.,
treasurer).
A United States person who is employed
in a foreign country and who has signature
authority over a foreign financial account
that is owned or maintained by the
individual’s employer should only complete
Part 1 and Part IV, Items 34–43 of the FBAR.
Part IV, Items 34–43 should only be
completed one time with information about
the individual’s employer.
Part V—Consolidated FBAR
Enter information in the applicable parts of
the form only. If there is not enough space
to provide all account information, copy and
complete additional pages of the required
Part as necessary. Do not use any
attachments.
Who Can File a Consolidated FBAR. An
entity that owns directly or indirectly more
than a 50 percent interest in a legal entity
that is required to file an FBAR is permitted
to file a consolidated FBAR on behalf of itself
and such other legal entity. Check box ‘‘d’’ in
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Part I, Item 2 and complete Part V. If filing
a consolidated FBAR and reporting 25 or
more financial accounts, complete only Items
34–42 for each person included in the
consolidated FBAR.
For Items 15–23, see Part II.
Items 34–42. Provide the name, taxpayer
identification number, and address of the
owner of the foreign financial account as
shown on the books of the financial
institution. If account information is
completed for more than one account of the
same owner, identify the owner only once
and write ‘‘Same Owner’’ in Item 34 for the
succeeding accounts of the same owner.
Signatures
Items 44–46. The FBAR must be signed by
the filer named in Part I. If the FBAR is being
filed on behalf of a partnership, corporation,
limited liability company, trust, estate, or
other legal entity, it must be signed by an
authorized individual. The authorized
individual’s title is entered in Item 45. An
authorized official of the person filing the
consolidated FBAR must sign the FBAR.
An individual must leave ‘‘Filer’s Title’’
blank, unless the individual is filing an
FBAR due to the individual’s signature
authority. If an individual is filing because
the individual has signature authority over a
foreign financial account, the individual
should enter the title upon which his or her
authority is based in Item 45.
A spouse included as a joint owner, who
does not file a separate FBAR in accordance
with the instructions in Part III, must also
sign the FBAR (in Item 44) for the jointly
owned accounts. See the instructions for Part
III.
Penalties
A person who is required to file an FBAR
and fails to properly file may be subject to
a civil penalty not to exceed $10,000. If there
is reasonable cause for the failure and the
balance in the account is properly reported,
no penalty will be imposed. A person who
willfully fails to report an account or account
identifying information may be subject to a
civil monetary penalty equal to the greater of
$100,000 or 50 percent of the balance in the
account at the time of the violation. See 31
U.S.C. § 5321(a)(5). Willful violations may
also be subject to criminal penalties under 31
U.S.C. § 5322(a), 31 U.S.C. § 5322(b), or 18
U.S.C. § 1001.
[FR Doc. 2010–4042 Filed 2–25–10; 8:45 am]
BILLING CODE 4810–02–P
DEPARTMENT OF EDUCATION
34 CFR Subtitle B, Chapter II
[Docket ID ED–2010–OESE–0001]
RIN 1810–AB08
Teacher Incentive Fund Program
AGENCY: Office of Elementary and
Secondary Education, Department of
Education.
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| File Type | application/pdf |
| File Title | Document |
| Subject | Extracted Pages |
| Author | U.S. Government Printing Office |
| File Modified | 2010-02-25 |
| File Created | 2010-02-25 |