The Bank Secrecy Act and its accompanying regulations require US persons to disclose interests in foreign financial accounts. The duty to disclose these accounts begins with the taxpayer’s income tax return which asks whether the taxpayer had, at any time during the year, a financial account located in a foreign country. The following provides more specific information regarding the duty to disclose.

Who is required to disclose the financial account?

All United States persons who have a financial interest in, or signature or other authority over, a financial account in a foreign country must disclose and report information about the account if the aggregate value of the account or accounts exceeds $10,000 at any time during the calendar year.

Who is a United States person for purposes of the requirement?

• US citizens (including children)
• US residents (including children)
• Entities created or organized under federal or state law, the laws of the District of Columbia, US territories and possessions, or Indian Tribes. Entities include corporations, partnerships, limited liability companies, trusts, estates and employee benefit plans.

What is a foreign financial account?

A foreign financial account is one that is located outside the United States defined as the fifty states, the District of Columbia, US territories and possessions and certain Indian lands. Financial accounts include all types of bank accounts, securities accounts, mutual funds, annuities and insurance policies with a cash value.

What is an “interest” in a foreign financial account?

A US person has an interest if they are the owner of record or the holder of legal title to the account. A US person has an interest if they have the authority, whether alone or in conjunction with someone else, to control the disposition of the funds, or assets held in the account by direct communication with the person or institution where the account is held or maintained. Direct communication can be through any means.

How does a US person satisfy the disclosure requirement?

In addition to answering the questions on the income tax return, a US person who is required to disclose their interest in a foreign financial account must file FinCen Report 114 which is more commonly referred to as the FBAR. The FBAR is not considered a tax return, but a report.

In addition to filing the FBAR, the following records need to be maintained for a period of years from April 15 of the year following the calendar year for which the report is made. For example, records for a financial account reported in calendar year 2026 must be maintained until April 15, 2032.

• Records containing the name in which the foreign financial account is maintained
• Account number or other identifier of the foreign financial account
• Name and address of the foreign financial institution where the account is maintained
• The type of account held
• The maximum account value for each account held during the reporting period
• Copy of the filed FBAR is recommended

When is the FBAR due?

The FBAR is due on April 15 of the year after the year for which the report is being made. For example, the FBAR for calendar year 2026 is due on April 15, 2027. There is an automatic six-month extension of time to file FBAR. Thus, the last due date for the FBAR is October 15. The FBAR must be filed electronically.

What happens if an FBAR is not filed?

The failure to file an FBAR can lead to the imposition of civil penalties. If reasonable cause is shown and the account information was disclosed on a late-filed FBAR, the penalty for a non-willful failure to file is $10,000, adjusted for inflation. If the failure to file is found to be willful, the penalty is not to exceed the greater of $100,000 or 50% of the balance of the account at the time of the violation if the violation involves the failure to report the account or the identifying information of the account.

The failure to file an FBAR can also lead to criminal penalties. If a filed FBAR is knowingly and willfully false, the penalty is a fine of up to $10,000 or five years in prison or both. Additionally, a penalty of up to $250,000 or five years in prison, or both, may be imposed for a criminal violation of failure to file an FBAR or retain required records.

Note that a taxpayer can be held both civilly and criminally liable for the same violation.