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FBAR Reporting: What You Need to Know for the April 15 Deadline

It’s that time of year again: Foreign Bank and Financial Accounts (FBAR) reporting season. In case you’re new to your job or just started banking outside the US, here’s six things you need to know:

  1. Do You Need to File? If your US-based organization holds more than $10,000 or more in aggregate in a bank outside of the US, you are required to file an FBAR report by using Form 114A on or before April 15 every year.
  2. What Happens If Your Fail to File Correctly? Failure to comply with FBAR requirements can carry a civil penalty of $10,000 (adjusted for inflation) for each non-willful violation while each willful violation can be 50% of the maximum value of unreported accounts or $100,000, whichever is greater.  Furthermore, criminal content can result in jail time and a fine of up to $250,000.  FBAR reporting matters and should be on the radar of treasury professionals.
  3. What If I Changed Employers in the Prior Year? As a treasury professional, if you have signatory authority over your employer’s (or previous employer’s foreign bank accounts that meet reporting criteria) within a reporting year, including the ability to initiate, approve, or move funds from foreign bank accounts), then you must file your own FBAR report in addition to the employer’s (previous employer’s) filing. The information needed to file includes bank account numbers and detailed information related to the accounts dating back seven years.
  4. What Do I Need to File? The information needed to file an FBAR report includes the account number(s) or other identification number, type(s) of bank accounts, the highest balance of each account during the reporting year in USD, the name and address of the account owner and their taxpayer identification number (TIN) and the name and address of the foreign financial institution holding the account(s). Treasury professionals and organizations need to be cognizant of the formatting of information to successfully file an FBAR report leveraging the BSA e-filing system.  There are two formats that filers can leverage in filing an FBAR report.  One is to leverage a special file format called “FBAR XML” which was designed to loaded into the BSA e-filing system. The other involves using a “Smart PDF” form that can be downloaded from the FinCEN website, filled out and then uploaded into the BSA e-filing system. Before attempting to file a report, filers should leverage a test platform offered by FinCEN that allows filers to confirm they have the information necessary to successfully file an FBAR report.
  5. How Hard Is It To File? Pulling together the information needed for an FBAR report for any company used to be very difficult to obtain as signatory records and bank account documentation were scattered across the globe, and paper-based located in file cabinets, if it was even accessible. Global bank account reporting was difficult at best and for many accounts electronic balance and activity reporting was not an option. It often took organizations months to pull together the information for an annual FBAR filing. Solutions are now available that allow companies to streamline the FBAR filing process. Technology can be quickly implemented to automate the collection and organization of relevant data for FBAR report filing, including bank account numbers, month-end cash balances, and annual U.S. signer lists. Today, this automation can be achieved by utilizing the use of an electronic bank account management (eBAM) solution, or by implementing the BAM module(s) of an ERP.
  6. What Online Resources Can I Turn To For Help?
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