Foreign Bank Account Report – FBAR

Service note: We prepare and file FBARs for clients. The step-by-step submission workflow is described on our service page Report of Foreign Bank and Financial Accounts (FBAR). This guide focuses on the substantive rules: what the FBAR is, who must file, what is reported, deadlines, penalties, and key definitions.

What the FBAR is. The Foreign Bank and Financial Accounts report (FBAR) is an annual information filing under the U.S. Bank Secrecy Act. It is submitted electronically as FinCEN Form 114 through the Treasury’s BSA e-Filing system and is legally separate from your U.S. income tax return. While the Internal Revenue Service (IRS) assists with enforcement, the FBAR program is administered by the Financial Crimes Enforcement Network (FinCEN) under Title 31 of the U.S. Code.

Purpose and policy background. FBAR reporting promotes financial transparency by helping U.S. authorities detect unreported foreign income and deter the use of offshore accounts for illicit purposes. For compliant taxpayers, the FBAR is primarily a disclosure obligation: it does not itself assess tax, but failure to file can carry significant civil—and in egregious cases criminal—consequences.

Who must file. A “U.S. person” must file an FBAR for a calendar year if, at any time during that year, the aggregate maximum value of all foreign financial accounts over which the person had a financial interest or signature or other authority exceeded $10,000. “U.S. person” includes U.S. citizens, U.S. tax residents, and domestic entities such as corporations, partnerships, LLCs, trusts, and estates.

What is a foreign financial account. Reportable accounts typically include bank and securities/brokerage accounts held at institutions located outside the United States, as well as certain pooled funds (e.g., mutual funds) and insurance or annuity contracts with a cash or surrender value at foreign institutions. For FBAR purposes, the “United States” includes the states, the District of Columbia, Indian lands, and U.S. territories/possessions; accounts located there are generally not foreign.

Key definitions in practice. You have a financial interest if you are the owner of record or holder of legal title, or if an agent or nominee holds the account on your behalf. You may also be deemed to have a financial interest in accounts owned by an entity you control, under anti-avoidance rules. Signature or other authority means the authority to control the disposition of account assets by direct communication with the institution—even if you do not own the funds. Limited exceptions apply for certain officers/employees of regulated financial institutions and publicly traded companies. Joint accounts are generally reportable by each joint owner. Domestic entities file for their own reportable accounts, and in some circumstances consolidated filings are permitted within a group.

Measuring values and currency conversion. The filing threshold is based on the combined highest (maximum) values of all foreign accounts during the year, even if the peak balance occurred for only a single day. Determine each account’s maximum in the local currency from statements and convert that figure to U.S. dollars using the U.S. Treasury’s published year-end exchange rate; FBAR is reported in whole U.S. dollars.

When it is due. The FBAR for a given calendar year is due on April 15 of the following year, with an automatic extension to October 15—no separate extension request is required. The report is e-filed through the BSA e-Filing portal and is not attached to your income tax return.

Penalties and late filings. Civil penalties for non-willful violations can apply when a filing obligation exists but was missed; after recent case law, these are generally calculated on a per-report basis. Willful violations can trigger far higher civil penalties (including percentages of the undisclosed account balances) and, in serious cases, criminal exposure. Facts and intent matter greatly. If prior years were missed, corrective options may be available, but you should seek coordinated advice before contacting the IRS or FinCEN.

FBAR vs. FATCA Form 8938. FBAR (FinCEN Form 114) and FATCA reporting (IRS Form 8938) are distinct regimes with different thresholds, asset scopes, and legal authority (Title 31 vs. Title 26). Many taxpayers must file both. For example, Form 8938 can reach certain foreign financial assets that are not “accounts,” while FBAR focuses on financial accounts at foreign institutions.

Recordkeeping and practicalities. Keep account records sufficient to establish maximum values, account numbers, ownership, and institution details for at least five years after the FBAR due date. Special attention is warranted for employer-related signature authority, foreign pension or insurance arrangements with cash value, and custody or pooled accounts. As policy evolves (for example, around digital-asset platforms), confirm each year whether new guidance affects your obligations.

How we can help. We coordinate FBAR analysis with your overall U.S. tax position and, where applicable, FATCA reporting—reducing duplicate effort and minimizing errors. For professional support, see our service page above or contact us.