FBAR filing

The U.S. government requires its citizens and residents to report certain foreign financial relationships under the Bank Secrecy ActFederal law requiring financial institutions to assist U.S. government agencies in detecting and preventing money laundering.. If you are a U.S. person who conducts transactions with or maintains accounts at foreign financial institutions, you must file an annual report with the Treasury Department. This report, officially called FinCEN Form 114, is commonly known as an "FBAR." You must file this form electronically for each year you maintain qualifying foreign accounts.

The Treasury Department published the current FBAR requirements in the Code of Federal Regulations in February 2011. These regulations establish a clear reporting obligation for U.S. personsIndividuals or entities subject to U.S. jurisdiction for securities law purposes, including U.S. citizens, residents, and entities organized under U.S. law.. Specifically, you must file a report with the government if you have either a financial interest in or signature authority over bank accounts, securities accounts, or other financial accounts located in foreign countries.

The FBAR reporting system has three essential elements that must all be present: First, only "United States persons" are subject to these requirements. Second, these individuals must have either a financial interest in or signature authority over qualifying accounts. Third, the accounts must be located in foreign countries and meet certain criteria for reporting.

Understanding who qualifies as a "United States person" is crucial for FBAR compliance. This term includes any individual who is either a U.S. citizen or a U.S. resident. It also covers entities organized under U.S. laws, including corporations, partnerships, and limited liability companies formed in any U.S. state or possession. Even entities that are disregarded for tax purposes (like single-member LLCs) count as U.S. persons for FBAR reporting.

A "financial interest" exists when you own a foreign financial account or hold legal title to it. However, the rules extend beyond direct ownership. If someone closely related to you owns or holds legal title to an account, you may still be treated as having a financial interest in that account depending on the specific relationship and circumstances.

You have signature authority over an account when you can control money going into or out of that account. This control can exist whether you act alone or work together with other people to make these decisions. The Treasury regulations specify exactly which types of bank accounts, securities accounts, and other financial accounts trigger FBAR reporting requirements when you have this level of control.

The FBAR filing requirement only applies when your foreign accounts reach a certain value threshold. According to the instructions for FinCEN FinCEN FinCEN (Financial Crimes Enforcement Network) is a bureau within the U.S. Department of the Treasury responsible for collecting, analyzing, and disseminating financial intelligence to combat money laundering, terrorist financing, and other financial crimes, with evolving authority over hedge funds and investment advisers. Form 114, you must file if the combined value of all your foreign accounts exceeds $10,000 at any point during the calendar year. This means you need to monitor the total value throughout the year, not just at year-end. If your accounts hit $10,001 even for one day, you meet the filing threshold for that entire year.

You must submit your FinCEN Form 114 by April 15 of the year following the calendar year being reported. For example, if you're reporting foreign accounts you held during 2024, the form is due by April 15, 2025. If you need additional time, you can request a six-month extension, which moves your deadline to October 15.

The government imposes substantial penalties for failing to file required FBARs, and these penalties vary depending on whether your violation was intentional. For non-willful violationsRegulatory violations that occur due to lack of knowledge about requirements or honest mistakes, typically subject to lower penalties than intentional violations.—meaning you didn't know about the requirement or made an honest mistake—civil penaltiesFinancial penalties imposed by regulatory agencies for violations of laws and regulations, which can accrue daily until corrected. cannot exceed $10,000 per violation. Due to annual inflation adjustments, this amount has increased to $16,536 as of 2025.

Willful violationsIntentional or knowing violations of regulatory requirements, typically subject to enhanced penalties. carry much harsher consequences. If the government determines you intentionally failed to comply, civil penalties can reach the greater of $100,000 (adjusted to $165,353 as of 2025) or 50% of the total amount in your foreign accounts. Additionally, criminal sanctionsLegal penalties that may include imprisonment, fines, or other punitive measures for criminal violations. for willful violations can include fines up to $250,000, imprisonment for up to five years, or both. The government can impose civil and criminal penalties simultaneously.

The definition of reportable "financial accounts" includes mutual funds and similar pooled investment funds that issue shares to the general public, maintain regular net asset valueThe total value of a fund's assets minus its liabilities, divided by the number of outstanding shares or units. calculations, and offer regular redemption opportunities. However, this definition creates an important distinction for hedge fund investors.

Non-U.S. hedge funds and private equity funds that do not offer investments to the general public currently do not qualify as reportable financial accounts under FBAR rules. This means that if you own interests in such private funds, or if you have signature authority over these interests, you typically do not need to report them on your FBAR.

While interests in non-U.S. hedge funds themselves may not require FBAR reporting, the underlying accounts maintained by these funds often do. FBAR reporting is required for foreign financial accounts that a hedge fund maintains—such as when a domestic fund holds money in a foreign bank or brokerage accountsInvestment accounts held at brokerage firms that allow investors to buy, sell, and hold securities such as stocks, bonds, and other financial instruments.—but only for specific individuals.

Two categories of people must report these hedge fund-related foreign accounts: First, any U.S. individual who has signature authority over the fund's foreign accounts must file. Second, any U.S. person who owns more than 50% of the fund, either directly or indirectly, must report the fund's foreign accounts. The Treasury Department has indicated it will continue evaluating how FBAR rules should apply to private funds, suggesting potential future changes to these requirements.

Recognizing the complexity of institutional investment management, the Treasury Department has repeatedly extended filing deadlines for certain investment professionals. Employees and officers of investment advisers registered with the Securities and Exchange Commission who have only signature authority over foreign financial accounts have received multiple deadline extensions.

The most recent extension allows these individuals to delay their FBAR filings until April 15, 2026. This extension reflects ongoing government consideration of whether to create permanent exemptions for signature authority in institutional investment contexts, where individuals control accounts as part of their professional duties rather than for personal investment purposes.