Alert June 07, 2011

FinCEN Notice 2011-1 (Revised) Extending Filing Date Related to Exceptions for Certain Individuals with Signature or Other Authority over a Foreign Financial Account

On June 2, 2011, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued FinCEN Notice 2011-1 (Revised) (the “Notice”), extending until June 30, 2012 the date for filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (“FBAR”), by certain individuals with signature or other authority only over certain foreign financial accounts. 

The Notice relates to certain exceptions provided in the Final Rule issued by FinCEN that went into effect on March 28, 2011.  (The Final Rule was discussed in the March 1, 2011 Alert.)  In particular, the Final Rule provides filing relief in the form of exceptions for certain officers and employees with signature or other authority over, but no financial interest in, a foreign financial account owned or maintained by an entity described in 31 CFR §§1010.350(f)(2)(i)-(v) of the Final Rule.  For example, §1010.350(f)(2)(iv) provides an exception for an officer or employee of an entity with a class of equity securities (or American depository receipts) listed on any United States national securities exchange, and for an officer or employee of a United States subsidiary of such a listed entity if the parent entity is a United States entity and the subsidiary is named in a consolidated FBAR filed by the parent.  Those exceptions apply only with respect to accounts maintained by the entity that is the employer of the respective officer or employee, however.  As discussed in our March 1, 2011 Alert, FinCEN had considered and rejected comments that this exception also should apply with respect to officers and employees of a United States listed parent entity who have signature authority over, but no financial interest in, a foreign financial account of a United States subsidiary of the parent, or vice versa, as well as with respect to officers or employees of a United States subsidiary of a foreign entity.  In addition, the Final Rule did not retain an exception that had been available under the prior FBAR instructions for officers and employees with signature or other authority only over a foreign financial account of a foreign subsidiary of a United States listed parent entity that was included in an FBAR filed by the parent.

In response to comments on the Final Rule, the Notice extends the FBAR filing date to June 30, 2012 for individuals described in the following two categories:

(1)   an employee or officer of an entity under §1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of a “controlled person” of the entity; or

(2)   an employee or officer of a “controlled person” of an entity under §1010.350(f)(2)(i)‑(v) who has who has signature or other authority over and no financial interest in a foreign financial account of the entity, the “controlled person,” or another “controlled person” of the entity.

For this purpose, a “controlled person” means a United States or foreign person more than 50 percent owned (directly or indirectly) by an entity under §1010.350(f)(2)(i)-(v).  Thus, the extension would apply to situations like those mentioned above that FinCEN had decided not to cover in the Final Rule. 

The Notice states that, in light of questions it had received concerning the application of the exceptions in §1010.350(f)(2)(i)-(v), FinCEN is granting this extension “to allow these individuals additional time to file FBARs based on their signature or other authority in situations (1) through (2) described above.”  Thus, it does not appear at this time that FinCEN intends to broaden the exceptions in §1010.350(f)(2)(i)-(v), but only to allow additional time for individuals described in the Notice to comply.  Furthermore, for all other United States persons with an FBAR filing obligation, the filing deadline remains unchanged.