In a joint comment letter yesterday, ABA and the Securities Industry and Financial Markets Association offered feedback on the Financial Crimes Enforcement Network’s proposal to clarify who is exempt from filing Reports of Foreign Bank and Financial Accounts, or FBAR, under the Bank Secrecy Act. The associations cautioned that some of the proposed changes could substantially increase the regulatory burden on member institutions.
Under the proposal, FinCEN would replace the current FBAR filing exemptions for financial institution officers and employees who have signature authority but no financial interest in foreign accounts with a single, new exemption that applies to officers and employees of any entity, as long as the entity files a FBAR on the foreign account. U.S. employers — including banks — whose employees wish to take advantage of the new exemption would be required to maintain lists of all officers and employees with signature authority and provide them to FinCEN under request.
However, the associations pointed out that because not all accounts that a financial institution maintains are required to be reported, this change to the exemption could result in many employees having to report on thousands of accounts for which they are currently exempt or have received a deferral. Furthermore, maintaining accurate lists of numerous employees with signature authority would be extremely challenging, the groups added.
The associations urged FinCEN to retain the existing signature authority exemption, expand the proposed additional exemption to accommodate employees of other entities and permanently waive the reporting obligation for employees who have received a deferral. They further recommended that FinCEN maintain the simplified reporting requirements for those filing FBARs for 25 or more accounts and clarify certain other expectations and reporting requirements.