FinCEN issues final rule on beneficial ownership information reporting requirements

Note: This blog provides important information on the Corporate Transparency Act (CTA) compliance; however, a more up-to-date analysis is available. For the latest updates and insights, please refer to our most recent blog.

For background information, the FBAR is formerly called the Report of Foreign Bank and Financial Accounts, and is also known as FinCEN Form 114. The foreign bank account report exists to combat tax evasion, specifically by having U.S. citizens report money and assets in non-U.S. banks. Foreign financial accounts include bank accounts, securities accounts, and certain foreign retirement arrangements.  Rather than filing with the IRS, you submit an FBAR to FinCEN, the U.S. Treasury Department’s Financial Crimes and Enforcement Network. Failing to file means facing heavy penalties, so it’s always in your best interest to stay up to date.

Specifically, a United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.

• Financial interest is determined based upon who is the owner of record or legal title.
• Signature authority means that you have some level of control over the disposition of assets through direct communication with the institution.

Recently, Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a final rule requiring certain entities to file reports with FinCEN that identify two categories of individuals — (1) beneficial owners of an entity and (2) individuals who have who have filed an application with specified governmental authorities to create the entity or register it to do business.

This new rule can increase the potential for FinCEN reporting and increased uncertainty whether a filing is required.  Please reach out to McGuire Sponsel’s Global Business Services to discuss any questions or client situations.

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