On December 11, 2020, the Financial Crimes Enforcement Network (FinCEN) issued Notice 2020-1 (the Notice) which extends until April 15, 2022 the deadline to file Reports of Foreign Bank and Financial Accounts (FBARs) (FinCEN Form 114) for certain officers, employees, or agents of a U.S. entity who have signature or other authority over foreign financial accounts owned by the U.S. entity.
The Notice explains that FinCEN extended the deadline because a March 10, 2016 Notice of Proposed Rulemaking (NPRM) — which proposes revisions to regulations implementing the Bank Secrecy Act (BSA) regarding FBARs — is not yet finalized. One proposed amendment under the NPRM would replace various separate exemptions to the requirement to file an FBAR under the current BSA regulations—which exemptions apply separately to certain officers or employees of, inter alia, certain U.S. banks, financial institutions, and entities with defined classes of equity securities—with a single, broader signature authority exemption. New proposed FBAR regulations would eliminate the requirement for an officer, employee, or agent of a U.S. entity to file an FBAR that reports accounts owned by the entity over which the officer, employee, or agent has signature authority solely due to his or her employment. Officers, employees, or agents will not be required to report signature authority over entity-owned foreign financial accounts for which they have no financial interest, if those accounts are already required to be reported on an FBAR by their employer or any other entity within the same corporate or other business structure as their employer. Instead, U.S. entities will be required to maintain, for a 5-year period, information identifying all officers, employees, or agents with signature authority over these accounts, and to provide this information to FinCEN on request.
Similar signature authority exemptions were first created as part of a final rule published by FinCEN on February 24, 2011 (the Final Rule) that amended the BSA regulations regarding FBARs. In response to questions that required additional consideration about the scope of the exemptions created by the Final Rule, FinCEN issued Notice 2011-1, which extended the FBAR filing deadline for U.S. persons as to whom the application of these exemptions was unclear. The March 10, 2016 NPRM is intended to clarify application of the Final Rule’s exemptions. Until the NPRM is finalized, however, FinCEN has decided to continue to extend until 2022 the filing deadline for U.S. persons who may be affected by the NPRM.
The extension announced in FinCEN Notice 2020-1 applies only to U.S. persons described in the March 10, 2016 NPRM. All other U.S. persons who possess an ownership interest, or signatory or other authority, over one or more foreign accounts with an aggregate balance exceeding $10,000 in a given year are required by law to file an FBAR. Failure to timely file an FBAR can result in civil penalties and, in willful cases, criminal prosecution. The FBAR filing deadline to report such accounts held in 2020 remains April 15, 2021 for everyone not affected by Notice 2020-1, with an automatic extension available until October 15, 2021.
A copy of FinCEN Notice 2020-1 can be found here.
