Amendment to the Bank Secrecy Act Regulations-Reports of Foreign Financial Accounts, 10234-10246 [2011-4048]

Agencies

• DEPARTMENT OF THE TREASURY
• Financial Crimes Enforcement Network

[Federal Register Volume 76, Number 37 (Thursday, February 24, 2011)]
[Rules and Regulations]
[Pages 10234-10246]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-4048]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010

RIN 1506-AB08


Amendment to the Bank Secrecy Act Regulations--Reports of Foreign 
Financial Accounts

AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.

ACTION: Final rule.

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SUMMARY: FinCEN is issuing this final rule to amend the Bank Secrecy 
Act (BSA) regulations regarding reports of foreign financial accounts. 
The rule addresses the scope of the persons that are required to file 
reports of foreign financial accounts. The rule further specifies the 
types of accounts that are reportable, and provides filing relief in 
the form of exemptions for certain persons with signature or other 
authority over foreign financial accounts. Finally, the rule adopts 
provisions intended to prevent persons subject to the rule from 
avoiding their reporting requirement.

DATES: Effective Date: This rule is effective March 28, 2011.
    Applicability Date: This rule applies to reports required to be 
filed by June 30, 2011 with respect to foreign financial accounts 
maintained in calendar year 2010 and for reports required to be filed 
with respect to all subsequent calendar years.

FOR FURTHER INFORMATION CONTACT: FinCEN, Regulatory Policy and Programs 
Division at (800) 949-2732 and select Option 1.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

    The BSA, Titles I and II of Public Law 91-508, as amended, codified 
at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314 and 
5316-5332, authorizes the Secretary of the Treasury (Secretary), among 
other things, to issue regulations requiring persons to keep records 
and file reports that are determined to have a high degree of 
usefulness in criminal, tax, regulatory, and counter-terrorism matters. 
The regulations implementing the BSA appear at 31 CFR part 103 (31 CFR 
Chapter X, effective March 1, 2011).\1\ The Secretary's authority to 
administer the BSA has been delegated to the Director of FinCEN.
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    \1\ On October 26, 2010, FinCEN issued a final rule (the Chapter 
X Final Rule), creating a new Chapter X in title 31 of the Code of 
Federal Regulations (CFR) for BSA regulations. (See 75 FR 65806 
(October 26, 2010) (Transfer and Reorganization of Bank Secrecy Act 
Regulations Final Rule)). As discussed in the Chapter X Final Rule, 
FinCEN reorganized its regulations that previously appeared at 31 
CFR part 103 in the new Chapter X. The Chapter X reorganization is 
effective as of March 1, 2011, and is not intended to have any 
substantive effect on the BSA regulations. The notice of proposed 
rulemaking (NRPM) that preceded today's final rule (amending the BSA 
regulations related to reports of foreign bank and financial 
accounts) was published prior to the effective date of the Chapter X 
reorganization. Accordingly, the NPRM used the 31 CFR part 103 
numbering system. References in today's final rule generally use the 
31 CFR part 103 numbering system. However, the text of the final 
rule itself is renumbered using the Chapter X numbering system.
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    Under 31 U.S.C. 5314 the Secretary ``shall require a resident or 
citizen of the United States or a person in, and doing business in, the 
United States, to * * * keep records and file reports, when the 
resident, citizen, or person makes a transaction or maintains a 
relation for any person with a foreign financial agency.'' For this 
purpose, foreign financial agency means ``a person acting for a person 
as a financial institution, bailee, depository trustee, or agent, or 
acting in a similar way related to money, credit, securities, gold, or 
a transaction in money, credit, securities, or gold.'' \2\ The 
Secretary is authorized to prescribe exemptions to the reporting 
requirement and to prescribe other matters the Secretary considers 
necessary to carry out section 5314.
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    \2\ See 31 U.S.C. 5312(a)(1) which excepts from the definition 
of financial agency a person acting for a country, a monetary or 
financial authority acting as a monetary or financial authority or 
an international financial institution of which the United States 
government is a member.
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    The regulations implementing 31 U.S.C. 5314 appear at 31 CFR 
103.24, 103.27, and 103.32. Section 103.24 generally requires each 
person subject to the jurisdiction of the United States having a 
financial interest in or signature or other authority over a bank, 
securities, or other financial account in a foreign country to ``report 
such relationship to the Commissioner of Internal Revenue for each year 
in which such relationship exists, and * * * provide such information 
as shall be specified in a reporting form prescribed by the Secretary 
to be filed by such persons.'' Section 103.27 requires the form to be 
filed with respect to foreign financial accounts exceeding $10,000. The 
form must be filed on or before June 30 of each calendar year for 
accounts maintained during the previous

[[Page 10235]]

calendar year. Section 103.32 requires records of accounts to be 
maintained for each person having a financial interest in or signature 
or other authority over such account. The records must be maintained 
for a period of five years.
    The form used to file the report required by section 103.24 is the 
Report of Foreign Bank and Financial Accounts--Form TD-F 90-22.1 
(FBAR). The instructions to the FBAR specify which persons must file as 
well as the types of accounts that must be reported.

II. Notice of Proposed Rulemaking

    On February 26, 2010, FinCEN published in the Federal Register a 
Notice of Proposed Rulemaking (NPRM) that proposed changes to the rules 
for the reporting of foreign financial accounts.\3\ Most significantly, 
the NPRM proposed to (1) Define the scope of individuals and entities 
required to file the FBAR, (2) delineate the types of reportable 
accounts, and (3) exempt certain persons and accounts from the 
reporting requirement and provide certain additional relief. The 
changes proposed in the NPRM were accompanied by proposed changes to 
the FBAR form instructions, a draft of which appeared in the Federal 
Register as an attachment to the NPRM.
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    \3\ See 75 FR 8844 (February 26, 2010).
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Comments on the NPRM--Overview and General Issues

    In response to the NPRM, FinCEN received a total of 42 timely filed 
comment letters from individuals, entities, and representatives of 
various groups and industries whose members are affected by FBAR 
requirements. The comments were generally supportive of the NPRM but 
sought broader exemptions than in the NPRM and often asked for 
clarification of the NPRM. In particular, commenters were uncertain 
about when an account was reportable under the FBAR and the scope of 
individuals covered by the signature authority definition. To this end, 
this final rulemaking document--
     Clarifies whether an account is foreign and therefore 
reportable as a foreign financial account and addresses the treatment 
of custodial accounts in this context;
     Revises the definition of signature or other authority to 
more clearly apply to individuals who have the authority to control the 
disposition of assets in the account by direct communication (whether 
in writing or otherwise) to the foreign financial institution;
     Clarifies that officers or employees who file an FBAR 
because of signature or other authority over the foreign financial 
account of their employers are not expected to personally maintain the 
records of the foreign financial accounts of their employers;
     Clarifies that filers may rely on provisions of this final 
rule in order to determine their filing obligation for FBARs in those 
cases where filing was properly deferred under prior Treasury guidance.
    FinCEN believes that these clarifications and changes should 
address many of the concerns expressed in the public comments regarding 
uncertainty about the scope of the NPRM and therefore should make it 
easier for filers to determine whether the FBAR must be filed.
A. Reportable Accounts
    FinCEN received a large number of comments requesting clarification 
as to when an account is deemed ``foreign'' for purposes of triggering 
the FBAR filing requirement. Commenters requested clarification on this 
issue with respect to holdings of securities accounts, pension fund 
accounts, and covered life insurance policies and annuities. FinCEN 
wishes to clarify that, as a general matter, an account is not a 
foreign account under the FBAR if it is maintained with a financial 
institution located in the United States. For example, individuals may 
purchase securities of a foreign company through a securities broker 
located in the United States as part of their investment portfolio. The 
mere fact that the account may contain holdings or assets of foreign 
entities does not render the account ``foreign'' for purposes of the 
FBAR. In this instance, the individual maintains the account with a 
financial institution in the United States.
    FinCEN received a number of comments asking for clarification 
regarding specific custodial arrangements. Commenters explained that in 
some cases a United States person may have an account with a financial 
institution located in the United States, such as a bank. According to 
the commenters, that U.S. bank may act as a global custodian and hold 
the person's assets outside the United States. In many cases, the 
custody bank creates pooled cash and securities accounts in the non-
U.S. market to hold the assets of multiple investors. These accounts, 
commonly called omnibus accounts, are in the name of the global 
custodian. Typically, the U.S. customer does not have any legal rights 
in the omnibus account and can only access their holdings outside of 
the United States through the U.S. global custodian bank. FinCEN wishes 
to clarify that in this situation, the U.S. customer would not have to 
file an FBAR with respect to assets held in the omnibus account and 
maintained by the global custodian. In this situation, the U.S. 
customer maintains an account with a financial institution located in 
the United States.
    However, if the specific custodial arrangement permits the United 
States person to directly access their foreign holdings maintained at 
the foreign institution, the United States person would have a foreign 
financial account.
B. Signature or Other Authority, Generally
    FinCEN received a large number of comments generally regarding the 
signature authority requirement. Some commenters sought further 
clarification of the definition, while other commenters recommended an 
elimination of the requirement. In the NPRM, FinCEN proposed to define 
``signature or other authority'' as the ``authority of an individual 
(alone or in conjunction with another) to control the disposition of 
money, funds or other assets held in a financial account by delivery of 
instructions (whether communicated in writing or otherwise) directly to 
the person with whom the financial account is maintained.'' \4\ To 
avoid confusion, FinCEN inserted the word ``directly'' into the 
definition proposed in the NPRM to place the filing requirement on an 
individual only if the individual has the authority to directly deliver 
instructions to the foreign financial institution.\5\
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    \4\ 75 FR 8851 (February 26, 2010) (Emphasis added).
    \5\ A revised FBAR form that modified several aspects of the 
form instructions was issued in October 2008. That revision 
eliminated the words ``direct communication'' from the definition of 
signature or other authority.
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    Nonetheless, commenters stated that they were unsure whether the 
proposed definition of signature authority would apply to an individual 
who merely participates in the decision to allocate assets or has the 
ability to instruct or supervise others with signature authority over a 
reportable account. In light of these comments, FinCEN has decided to 
revise the proposed definition of signature or other authority as 
follows:

    Signature or other authority means the authority of an 
individual (alone or in conjunction with another) to control the 
disposition of money, funds or other assets held in a financial 
account by direct communication (whether in writing or otherwise) to 
the person with whom the financial account is maintained.

    The test for determining whether an individual has signature or 
other

[[Page 10236]]

authority over an account is whether the foreign financial institution 
will act upon a direct communication from that individual regarding the 
disposition of assets in that account. The phrase ``in conjunction with 
another'' is intended to address situations in which a foreign 
financial institution requires a direct communication from more than 
one individual regarding the disposition of assets in the account.
    Some commenters requested that FinCEN eliminate the requirement to 
report signature or other authority over a foreign financial account. 
Commenters expressed concern about perceived duplication of reporting 
as well as a perceived lack of utility to law enforcement when both 
individuals with signature authority and those with a financial 
interest file FBARs with respect to the same account. Some commenters 
suggested that investigators could obtain the relevant information if 
FinCEN were to modify the FBAR form to enable the person with a 
financial interest in a reportable account to list all of the 
individuals with signature or other authority over the account. Another 
commenter suggested that FinCEN provide an exemption for all employees 
who have signature authority over but no financial interest in their 
employer's foreign financial accounts if the employer provides notice 
to the employees that the employer has filed an FBAR for its accounts.
    Although FinCEN has considered the concerns raised by these 
commenters, FinCEN has decided not to eliminate the signature authority 
reporting requirement or revise the obligations as suggested by these 
commenters. Law enforcement agencies have indicated to FinCEN that 
FBARs filed by individuals with only signature authority are valuable 
tools in investigations. Law enforcement representatives disagreed with 
commenters that the signature authority requirement results in 
duplication of information. Although FinCEN may receive more than one 
FBAR with respect to the same foreign financial account, the reports 
contain information about different individuals with access to the 
account (either through financial interest or signature authority). 
Moreover, if FinCEN were to adopt a modified reporting system which 
relies upon the person with financial interest to report those 
individuals having signature authority over the account, there would be 
an increased opportunity to evade reporting because the signature 
authority requirement also acts as an independent check on FBAR 
reporting. For example, a person with financial interest may not report 
the FBAR at all, or may not identify all individuals with signature 
authority over the account. In such a case, law enforcement and other 
agencies would be deprived of valuable information regarding the full 
range of individuals with access to the account. Likewise, if FinCEN 
were to adopt an exemption for employees who receive notice from their 
employers regarding the filing of the FBAR, and the employer falsely 
provides the notice, law enforcement again would be deprived of 
valuable information. By adopting an independent reporting requirement 
for individuals with signature authority, the final rule maintains the 
check and balance that has existed since 1972, making it more difficult 
for the account and the individuals having access to that account to 
escape detection. The signature authority filing requirement is a 
necessary component of an effective FBAR regulatory regime. Thus, in 
this final rule, FinCEN continues to require reporting by individuals 
with signature or other authority.
    Finally, FinCEN received one comment that pointed to a discrepancy 
between the NPRM definition of signature authority and the definition 
contained in the draft form instructions, which accompanied the NPRM. 
This comment noted that the draft form instructions slightly varied 
from the regulatory definition leaving the commenter unclear whether 
the definition of signature authority was intended to apply more 
broadly than just to individuals. FinCEN wishes to clarify that the 
signature authority definition contained in this final rule only 
applies to individuals. The instructions to the FBAR form have been 
revised to reflect the language in the final rule.
C. Recordkeeping and Truncated Filing Related to Signature or Other 
Authority
    Commenters sought relief from the recordkeeping provisions of 31 
CFR 103.32 for individuals with signature authority over their 
employer's accounts. These commenters argued that the recordkeeping 
rules present challenges in such cases, because these individuals do 
not own the records of the employing firm. Further, these commenters 
argued that they should not be expected to personally maintain the 
records of that employer for five years. FinCEN wishes to clarify that 
in the case of officers or employees who file an FBAR because of 
signature or other authority over the foreign financial accounts of 
their employer, we do not expect such officers or employees to 
personally maintain the records of the foreign financial accounts of 
their employers.
    The preamble of the NPRM noted that a modified form of reporting 
would be available in the case of United States persons who are 
employed in a foreign country and who have signature or other authority 
over foreign financial accounts owned or maintained by their employer. 
FinCEN received two comments recommending that this modified form of 
reporting be available to United States persons employed in the United 
States with respect to foreign financial accounts over which they have 
signature authority. One of these commenters cited the difficulties in 
complying with the recordkeeping obligation, while the other commenter 
did not believe that United States persons should be treated 
differently based on the location of their employment. As noted above, 
FinCEN has clarified the recordkeeping obligations of officers and 
employees with only signature authority over the foreign financial 
accounts of their employers. FinCEN also wishes to note that in 
providing the modified reporting for United States persons who are 
employed overseas, FinCEN was attempting to balance the need for 
information contained in the FBAR with a recognition that United States 
persons working overseas are subject to both U.S. law and foreign law. 
FinCEN has not provided United States persons employed in the United 
States by a foreign employer with the modified form of reporting. In 
such cases, FinCEN believes that the foreign employer should expect 
that U.S. law will apply to these U.S. employees.
    Finally, FinCEN received a comment asking that the modified 
reporting be explicitly available to ``officers'' employed overseas. 
The form instructions have been amended to reflect this change. The 
commenter also asked that FinCEN incorporate the modified reporting 
into the text of the final rule. FinCEN does not believe that it is 
necessary to include this form of relief in the text of the final rule 
itself.
D. General Exemptions
    The NPRM proposed exemptions from the reporting requirements for 
certain types of persons and accounts. FinCEN received a number of 
comments asking for broader exemptions. One commenter requested that 
FinCEN exempt from the reporting requirement accounts located in 
jurisdictions that are not considered to be ``tax havens'' or that have 
highly functional bank regulation and information exchange with the 
United States. FinCEN also received comments from individuals living 
abroad who objected to the FBAR filing requirement. Some of these 
commenters were married

[[Page 10237]]

individuals who raised concerns that their non-U.S. spouses did not 
want information regarding joint financial accounts to be reported to 
U.S. government authorities. Another commenter requested that FinCEN 
exempt regulated financial institutions, such as those that qualify for 
exempt recipient status for purposes of filing an IRS 1099 series form, 
to report interest income and dividends.
    Finally, FinCEN received several comments requesting a broad 
exemption for pension plans and welfare benefit plans, or at least for 
large ERISA plans. These commenters argued that pension plans and 
welfare benefit plans already are subject to comprehensive regulation 
and believed that the FBAR filing obligations would be unduly 
burdensome and duplicative in light of existing reporting requirements, 
particularly Form 5500, Annual Return/Report of Employee Benefit Plan. 
Commenters also pointed to the tax-exempt status of certain ERISA plan 
trusts, and a provision in the customer identification program (CIP) 
rules which exempts from the CIP rules an account established for the 
purpose of participating in an ERISA plan as indicating that an 
exemption from the FBAR rules would be appropriate in the case of ERISA 
pension and welfare benefit plans.\6\ Alternatively, these commenters 
stated that many of their concerns would be addressed if FinCEN were to 
clarify the scope of a number of definitions in the NPRM such as 
signature authority and reportable accounts.
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    \6\ The CIP rules require certain financial institutions to 
collect identifying information about a customer at account opening 
and implement procedures for verifying the customer's identity that 
are sufficient to enable the financial institution to form a 
reasonable belief that it knows the true identity of the customer. 
See, e.g., 31 CFR 103.121.
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    Section 5314 of the BSA mandates that the Secretary require each 
``resident or citizen of the United States or a person in, and doing 
business in, the United States'' to keep records and file reports that 
disclose information regarding their foreign financial accounts. 
Section 5314 authorizes the Secretary to ``prescribe a reasonable 
classification of persons subject to or exempt from'' the reporting 
requirements.
    FinCEN does not believe it appropriate to expand the exemptions as 
recommended by the commenters. Although the commenters noted that 
certain countries may have a robust set of anti-money laundering laws, 
the FBAR places the obligation of reporting on the United States 
person, and individuals and businesses can commit financial abuses and 
other crimes using financial institutions in those countries. By 
requiring United States persons to identify foreign financial accounts, 
the FBAR creates a financial trail that assists law enforcement and 
other agencies to identify accounts outside of the United States.
    With respect to the comments raised by United States persons living 
abroad, FinCEN does not believe that an exemption is appropriate simply 
because a United States person chooses to live outside of the United 
States. With respect to commenters who recommended exempting certain 
regulated entities, such as those that qualify for exempt recipient 
status for purposes of reporting on IRS Form 1099, FinCEN has carefully 
considered the comments and has decided not to adopt them. While these 
entities may be entitled to some measure of special treatment under the 
Federal tax rules, FinCEN wishes to note that the purpose of the FBAR 
is broader than tax administration.\7\
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    \7\ 31 U.S.C. 5311.
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    Finally, FinCEN has considered the concerns raised by commenters 
regarding the treatment of pension and welfare benefit plans. FinCEN 
has not adopted the recommendation for a broad exemption for such 
plans. Because the purpose of the FBAR is broader than tax 
administration, FinCEN does not believe that it is appropriate to 
exempt entities from the FBAR requirement based on their tax-exempt 
status. In addition, while the CIP rule exempts accounts of certain 
entities, FinCEN does not believe that those CIP provisions which apply 
in the case of accounts established or maintained at a financial 
institution located in the United States, are determinative in the case 
of accounts maintained with a foreign financial institution. However, 
in response to these commenters' request for greater clarification of 
the NPRM, the final rule has provided a number of clarifications that 
address their concerns regarding the scope of foreign financial 
accounts that are reportable, and the definitions of signature 
authority and financial interest.\8\
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    \8\ FinCEN wishes to note that the final rule eliminates the 
proposed trust protector provision; see the discussion in the 
Section-by-Section Analysis.
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E. Other Issues
    Commenters raised a number of issues related to the process of 
filing the FBAR. Specifically, they requested the option to file the 
form electronically.\9\ As noted in the NPRM, the FBAR form currently 
available on both the FinCEN and IRS Web sites allows users to complete 
the form electronically and print a PDF document that can be mailed to 
the address on the form. FinCEN is in the process of modernizing its IT 
system and has plans to include the ability to file FBARs 
electronically.
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    \9\ A few commenters raised other issues concerning the filing 
of the FBAR such as increasing the filing threshold and changing the 
due date of the FBAR. The threshold and the due date are established 
under a regulation section, 31 CFR 103.27 that was not proposed to 
be amended by the NPRM. Thus, changes suggested by those comments 
are not addressed in this final rulemaking.
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    Commenters requested clarification of the draft instructions 
regarding how to determine the value of an account. The draft 
instructions to the FBAR form which accompanied the NPRM provide that 
periodic account statements may be relied on to determine the maximum 
value of the account provided that the statements fairly reflect the 
maximum account value during the calendar year. The commenters were 
uncertain whether it is possible to rely on periodic statements that 
provide the value in the account at the end of the statement period. 
Where bona fide statements are prepared in the ordinary course of 
business, FinCEN believes that such periodic account statements may be 
relied on for this purpose.
F. Applicability Date
    The final rules contained in this document apply to FBARs required 
to be filed by June 30, 2011 with respect to foreign financial accounts 
maintained in calendar year 2010 and for reports required to be filed 
with respect to all subsequent calendar years.
    FinCEN received several comments regarding the applicability date 
for the final rule. These commenters specifically asked whether filers 
would be permitted to rely on favorable provisions of the final rule 
with respect to foreign financial accounts maintained in calendar years 
beginning before 2010. We recognize that in certain instances, United 
States persons might have deferred filing the FBAR for prior reporting 
years in accordance with guidance issued by Treasury.\10\ Although this 
final rule is not retroactive, filers who properly deferred filing 
obligations pursuant to IRS Notice 2010-23 may, if they wish, apply the 
provisions of this final rule in determining their FBAR filing 
requirements for reports due June 30, 2011, with respect to foreign 
financial

[[Page 10238]]

accounts maintained in calendar years beginning before 2010.
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    \10\ As a result of changes that were made to the FBAR form 
instructions in October 2008, the IRS extended the FBAR filing 
deadline for certain filers. See IRS Notice 2009-62 and IRS Notice 
2010-23.
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G. Coordination With Chapter X
    On October 26, 2010, FinCEN finalized a reorganization of all the 
BSA regulations appearing in part 103 of Title 31 of the Code of 
Federal Regulations, effective March 1, 2011.\11\ As discussed in the 
preamble of that final rule, BSA regulations that previously appeared 
in part 103 of Title 31 now appear in new Chapter X of Title 31. The 
reorganization is not intended to have any substantive effect on the 
BSA regulations.
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    \11\ 75 FR 65806, Oct. 26, 2010.
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    Because the NRPM was published prior to the effective date of the 
Chapter X reorganization, the NPRM used the 31 CFR part 103 numbering 
system. For consistency with the NPRM, references in this final rule 
generally continue to use the 31 CFR part 103 numbering system. 
However, because the effective date of this final rule is March 28, 
2011, the text of the regulations finalized today must use the Chapter 
X numbering system. Thus, instead of being numbered 31 CFR 103.24, 
today's final rule is numbered 31 CFR 1010.350.

III. Section-by-Section Analysis

    The NPRM set forth general requirements for filing the FBAR and 
specific definitions applicable to such reporting. The final rule 
continues these general requirements and includes definitions of United 
States person, and bank, securities, and other financial accounts in a 
foreign country. These definitions delineate both the scope of 
individuals and entities that would be required to file the FBAR and 
the types of accounts for which such reports should be made. In 
addition, the final rule exempts certain persons with signature or 
other authority from filing the FBAR. Finally, the final rule includes 
provisions intended to prevent United States persons required to file 
the FBAR from avoiding this reporting requirement.

A. Section 103.24(a)--In General

    FinCEN received no comments on proposed paragraph (a) of section 
103.24 of the NPRM. Accordingly, the final rule adopts this paragraph 
without change.

B. Section 103.24(b)--United States Person

    The NPRM defined a United States person as a citizen or resident of 
the United States, or an entity, including but not limited to a 
corporation, partnership, trust or limited liability company, created, 
organized, or formed under the laws of the United States, any State, 
the District of Columbia, the Territories, and Insular Possessions of 
the United States or the Indian Tribes. The NPRM provided that the 
determination of whether an individual is a resident of the United 
States would be made under the rules of the Internal Revenue Code, 
specifically, 26 U.S.C. 7701(b) and the regulations thereunder, except 
that the definition of the term United States provided in 31 CFR 
103.11(nn) will be used instead of the definition of United States in 
the rules under the Internal Revenue Code.
    FinCEN received a number of comments about the proposed definition 
of United States person. Commenters raised questions about the part of 
the definition of United States person concerning trusts. They also 
raised questions about the application of the provisions of the 
Internal Revenue Code with respect to the term ``resident.''
    Commenters generally objected to the inclusion of trust in the 
definition. They argued that trusts should not have a separate filing 
obligation in light of the fact that a U.S. trustee would also have an 
obligation to file an FBAR with respect to the trust. Commenters also 
believed that the NPRM is unclear about whether a trust that is treated 
as wholly owned by another person under the Internal Revenue Code would 
be required to file an FBAR. Finally, commenters believed that the 
final rule should define trust with reference to the rules of the 
Internal Revenue Code, specifically section 7701(a)(30), rather than 
considering whether a trust has been ``created, organized, or formed 
under the laws of the United States * * *''.
    FinCEN acknowledges that in the case of trusts, a U.S. trustee must 
file the FBAR for the trust. However, FinCEN has decided to retain 
trust under the definition of United States person in the same manner 
that it has retained other entities such as corporations and limited 
liability companies.
    FinCEN does not believe it appropriate to define trust under 
section 7701(a)(30) of the Internal Revenue Code because that 
definition might allow trusts formed under the law of a State to be 
excluded from the scope of FBAR obligations. For example, if a trust is 
formed under New York law and has one trustee who is a United States 
person and two trustees who are not United States persons, under 
section 7701(a)(30) the trust would not be considered a U.S. trust if 
all substantial trust decisions were not controlled by its U.S. 
trustee.
    Commenters also raised questions with respect to the term 
``resident'' in the definition of United States person. These 
commenters sought clarification on the treatment of individuals who 
make certain elections under section 7701(b) of the Internal Revenue 
Code. FinCEN believes that individuals who elect to be treated as 
residents for tax purposes under section 7701(b) should file FBARs only 
with respect to foreign accounts held during the period covered by the 
election. A legal permanent resident who elects under a tax treaty to 
be treated as a non-resident for tax purposes must still file the FBAR. 
Commenters also sought clarification about the interaction of elections 
under section 6013(g) and (h) of the Internal Revenue Code and the 
definition of resident. FinCEN wishes to clarify that the determination 
of whether an individual is a United States resident should be made 
without regard to elections under section 6013(g) or 6013(h) of the 
Internal Revenue Code. In the same vein, a commenter asked whether 
foreign corporations holding a U.S. real property interest and electing 
to be treated as a U.S. corporation for U.S. income tax purposes under 
section 897(i) of the Internal Revenue Code are required to file FBARs. 
FinCEN wishes to reiterate that, for purposes of FBAR reporting, a 
corporation is a United States person only if it is created, organized, 
or formed under the laws of the United States, any State, the District 
of Columbia, the Territories and Insular Possessions of the United 
States, or the Indian Tribes.

C. Section 103.24(c)--Types of Reportable Accounts

    FinCEN proposed to amend 31 CFR 103.24 by adding definitions of the 
accounts subject to reporting. FinCEN has chosen to define the terms 
bank account, securities account, and other financial account with 
reference to the kinds of financial services for which a person 
maintains an account.

D. Section 103.24(c)(1)--Bank Account

    The NPRM defined ``bank account'' as a savings deposit, demand 
deposit, checking, or any other account maintained with a person 
engaged in the business of banking. The proposed definition would 
include time deposits such as certificates of deposit accounts that 
allow individuals to deposit funds with a banking institution and 
redeem the initial amount along with interest earned after a prescribed 
period of time. FinCEN received no comments on the proposed definition 
and, therefore, is adopting this definition without change.

[[Page 10239]]

E. Section 103.24(c)(2)--Securities Account

    The NPRM defined ``securities account'' as an account maintained 
with a person in the business of buying, selling, holding, or trading 
stock or other securities. FinCEN received no comments on the proposed 
definition and, therefore, is adopting this definition without change.

F. Section 103.24(c)(3)--Other Financial Account

    The term ``other financial account'' appears in current section 
103.24. In order to enhance compliance, the NPRM proposed certain types 
of accounts that would fall within the meaning of this term. 
Specifically, the NPRM defined ``other financial account'' to mean
     An account with a person that is in the business of 
accepting deposits as a financial agency;
     An account that is an insurance policy with a cash value 
or an annuity policy;
     An account with a person that acts as a broker or dealer 
for futures or options transactions in any commodity on or subject to 
the rules of a commodity exchange or association; or
     An account with a mutual fund or similar pooled fund which 
issues shares available to the general public that have a regular net 
asset value determination and regular redemptions.
    FinCEN received comments on the parts of the proposed definition 
addressing life insurance and annuity policies and mutual funds. With 
respect to life insurance and annuity policies, one commenter was 
concerned that the treatment of life insurance policies as accounts 
under the FBAR rule would cause these policies to be treated as 
accounts under other BSA regulations. The final rule clarifies that 
this definition is limited to the FBAR requirement.
    The commenter also asked FinCEN to revise the definition with 
respect to life insurance and annuity policies so that the FBAR 
reporting requirement would apply only to such policies with a cash 
value or only at the time of the payment of an income stream to the 
policy holder. FinCEN has considered this comment. We are amending the 
definition with respect to life insurance and annuities to clearly 
reflect that only those life insurance or annuity policies with a cash 
value are covered under this definition. However, we do not believe it 
appropriate to limit the FBAR requirement to situations in which there 
is payment of an income stream. As with other types of reportable 
accounts, such as bank accounts, which are included in this final rule, 
the reporting of the FBAR is not limited to situations in which there 
is payment from the account. FinCEN also received a comment seeking 
clarification as to whether the obligation to file the FBAR in the case 
of life insurance rests with the policy holder or the beneficiary. 
FinCEN would like to clarify that the obligation in such a case rests 
with the policy holder.
    With respect to mutual funds, FinCEN received a number of comments 
seeking clarification of the definition. Commenters noted that the term 
``mutual fund'' may have a different meaning outside of the United 
States and might potentially cover hedge funds and private equity funds 
that have periodic redemptions. FinCEN wishes to reiterate that the 
definition of mutual fund includes a requirement that the shares be 
available to the general public in addition to having a regular net 
asset value determination and regular redemption feature. FinCEN 
believes that some of the concerns of commenters arose because the 
draft instructions to the form published with the proposed rule did not 
include the words ``which issues shares available to the general 
public.'' The instructions have been revised to reflect the language of 
the definition contained in the final rule. As such, FinCEN does not 
believe it necessary to amend the proposed definition with respect to 
mutual funds. Accordingly, FinCEN is retaining this part of the 
definition as proposed. Furthermore, FinCEN notes that the NPRM 
specifically reserved the treatment of investment companies other than 
mutual funds or similar pooled funds, and the final rule continues to 
do so.

G. Section 103.24(c)(4)--Exceptions for Certain Accounts

    Section 103.24(c)(4) of the NPRM proposed exceptions for certain 
accounts for which reporting will not be required by persons with a 
financial interest in or signature or other authority over the 
accounts. The following accounts were proposed to be excepted from 
reporting:
     An account of a department or agency of the United States, 
an Indian Tribe, or any State or any political subdivision of a State, 
or a wholly-owned entity, agency, or instrumentality of any of the 
foregoing is not required to be reported. In addition, reporting is not 
required with respect to an account of an entity established under the 
laws of the United States, of an Indian Tribe, of any State, or of any 
political subdivision of any State, or under an intergovernmental 
compact between two or more States or Indian Tribes[,] that exercises 
governmental authority on behalf of the United States, an Indian Tribe, 
or any such State or political subdivision. For this purpose, an entity 
generally exercises governmental authority on behalf of the United 
States, an Indian Tribe, a State, or a political subdivision only if 
its authorities include one or more of the powers to tax, to exercise 
the power of eminent domain, or to exercise police powers with respect 
to matters within its jurisdiction.
    A few commenters sought clarification as to the meaning of proposed 
section 103.24(c)(4)(i). In particular, the commenters asked FinCEN to 
clarify whether the last sentence of the paragraph concerning the 
exercise of governmental authority applied to the entire paragraph or 
only the second sentence of the paragraph. In response, FinCEN 
clarifies that the last sentence should be read in conjunction with the 
second sentence of the paragraph, which contains a specific requirement 
concerning the exercise of governmental authority. FinCEN is also 
making a minor editorial change to the second sentence so that it will 
be clearer that the exercise of governmental authority requirement 
applies to the entire second sentence.\12\
---------------------------------------------------------------------------

    \12\ A comma is added before the word ``that''.
---------------------------------------------------------------------------

    Commenters recommended that the final rule provide an exception for 
the accounts of foreign insurance companies that elect under section 
953(d) of the Internal Revenue Code to be treated as U.S. companies. 
Their recommendation appears to be based, in part, on a reading of the 
second sentence of proposed section 103.24(c)(4)(i) as providing an 
exception for the accounts of any entity organized in the United 
States. As explained above, the second sentence of proposed section 
103.24(c)(4)(i) would only exempt the accounts of certain entities 
organized under the laws of the United States (or the law of other 
levels of government, such as State and local governments) if the 
entities exercise governmental authority. The commenters also indicate 
that by making a section 953(d) election, these companies are agreeing 
to comply with U.S. tax law. FinCEN wishes to clarify that making such 
an election does not render the entity a United States person for 
purposes of the FBAR.\13\ Accordingly, the final rule does not adopt 
this recommendation.
---------------------------------------------------------------------------

    \13\ FinCEN reaffirms that the FBAR requirement addressed in 
this document is a requirement under title 31 of the United States 
Code rather than under the Internal Revenue Code.

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[[Page 10240]]

    The last three exceptions contained in proposed 31 CFR 103.24(c)(4) 
were as follows:
     An account of an international financial institution of 
which the United States government is a member is not required to be 
reported.\14\
---------------------------------------------------------------------------

    \14\ This exception does not limit the operation of the 
International Organization Immunities Act of December 29, 1945 (22 
U.S.C. 288).
---------------------------------------------------------------------------

     An account in an institution known as ``United States 
military banking facility'' (or ``United States military finance 
facility'') operated by a United States financial institution 
designated by the United States Government to serve United States 
government installations abroad is not required to be reported even 
though the United States military banking facility is located in a 
foreign country.
     Correspondent or nostro accounts that are maintained by 
banks and used solely for bank-to-bank settlements are not required to 
be reported.

FinCEN received no comments on these proposed exceptions and, 
therefore, is adopting these exceptions without change.

H. Section 103.24(d)--Foreign Country

    The term foreign country includes all geographical areas located 
outside of the United States as defined in 31 CFR 103.11(nn). FinCEN 
received no comments on the proposed definition and, therefore, is 
adopting this definition without change.

I. Section 103.24(e)--Financial Interest

    The NPRM proposed a definition of financial interest. The proposed 
definition covered situations in which the United States person is the 
owner of record or holder of legal title, as well as situations in 
which the United States person's ownership or control over the owner of 
record or holder of legal title rises to such a level that the person 
should be deemed to have a financial interest in the account.
    Section 103.24(e)(1) proposed the following:
     A United States person has a financial interest in each 
bank, securities, or other financial account in a foreign country for 
which he is the owner of record or has legal title regardless of 
whether the account is maintained for his own benefit or for the 
benefit of others. If an account is maintained in the name of more than 
one person, each United States person in whose name the account is 
maintained has a financial interest in that account.
    Section 103.24(e)(2) proposed that a United States person also has 
a financial interest in each bank, securities, or other financial 
account in a foreign country for which the owner of record or holder of 
legal title is one of the following:
     A person acting on behalf of that United States person 
such as an attorney, agent, or nominee with respect to the account. 
(Section 103.24(e)(2)(i)).
     A corporation in which the United States person owns 
directly or indirectly more than 50 percent of the voting power or the 
total value of the shares, a partnership in which the United States 
person owns directly or indirectly more than 50 percent of the interest 
in profits or capital, or any other entity (other than a trust) in 
which the United States person owns directly or indirectly more than 50 
percent of the voting power, total value of the equity interest or 
assets, or interest in profits. (Section 103.24(e)(2)(ii)).
     A trust, if the United States person is the trust settlor 
and has an ownership interest in the account for United States Federal 
tax purposes. See 26 U.S.C. 671-679 to determine if a settlor has an 
ownership interest in a trust's financial account for a year. (Section 
103.24(e)(2)(iii)).
     A trust in which the United States person either has a 
beneficial interest in more than 50 percent of the assets or from which 
such person receives more than 50 percent of the income. (Section 
103.24(e)(2)(iv)).
     A trust that was established by the United States person 
and for which the United States person has appointed a trust protector 
that is subject to such person's direct or indirect instruction. 
(Section 103.24(e)(2)(v)).
    FinCEN received one comment seeking clarification on the scope of 
proposed section 103.24(e)(2)(iii). The commenter noted that although 
FinCEN incorporates the provisions of 26 U.S.C. 671-679 for determining 
ownership interest, section 103.24(e)(2)(iii) references the interests 
of the trust ``settlor,'' while the provisions of 26 U.S.C. 671-679 
refer to ``grantor''. The commenter noted that FinCEN did not define 
the term ``settlor.'' FinCEN agrees with the commenter and has revised 
section 103.24(e)(2)(iii) to replace the word ``settlor'' with the word 
``grantor''. In addition, the NPRM inadvertently used the word 
``account'' instead of ``trust'' in section 103.24(e)(2)(iii). The 
final rule revises the section by using the word ``trust.''
    FinCEN received a few comments related to the application of the 
definition of financial interest in the context of trusts, including 
trusts for pension plans. With respect to trusts generally, commenters 
raised concerns about determining whether a person has more than a 50 
percent beneficial interest in the trust, when the trust is a 
discretionary trust. FinCEN recognizes that in the case of trusts, 
determinations regarding beneficial interest for purposes of filing the 
FBAR may be difficult if the person is a beneficiary of a discretionary 
trust or has a remainder interest in a trust. After considering this 
comment, FinCEN has revised section 103.24(e)(2)(iv) to change the term 
``beneficial interest'' to ``present beneficial interest.'' FinCEN does 
not intend for a beneficiary of a discretionary trust to have a 
financial interest in a foreign account simply because of his status as 
a discretionary beneficiary. Further, FinCEN does not intend to include 
a remainder interest within the scope of the term ``present beneficial 
interest'' for purposes of filing an FBAR. Finally, the final rule adds 
the word ``current'' before the word ``income'' which was inadvertently 
omitted from the text of the NPRM.
    FinCEN also received comments regarding the trust protector 
provision in section 103.24(e)(2)(v). Commenters were concerned that 
the trust protector provision could be read in an overly broad manner, 
particularly in the case of pension plans, and another commenter 
believed that the trust protector provision would not adequately 
address situations in which the grantor has retained control over the 
trust. Although FinCEN has considered these comments and is removing 
the trust protector provision from the final rule, FinCEN remains 
concerned with the potential for abuse when a trust protector is 
appointed.\15\ FinCEN believes that instances of abuse or arrangements 
designed to obfuscate ownership in the context of trusts, including the 
use of a trust protector to evade an FBAR reporting obligation, are 
sufficiently captured through the anti-avoidance provision discussed 
below.
---------------------------------------------------------------------------

    \15\ See, the Senate Permanent Subcommittee on Investigations 
(PSI), Committee on Homeland Security and Governmental Affairs 2006 
report titled, Tax Haven Abuses: the Enablers, the Tools and 
Secrecy, Senate Hearing 109-797, 109th Cong., 2d Sess. (August 1, 
2006).
---------------------------------------------------------------------------

    Finally, the NPRM provided that a United States person that causes 
an entity to be created for a purpose of evading the FBAR reporting 
requirement would have a financial interest in any bank, securities, or 
other financial account in a foreign country for which the entity is 
the owner of record or holder of legal title. The term ``evading'' as 
used in the anti-avoidance rule is not intended to apply to persons who 
make a good faith effort to comply with the final rule.

[[Page 10241]]

    FinCEN received one comment on the proposed anti-avoidance 
provision, which recommended that the provision specifically 
incorporate rules found in 26 CFR 1.671-2(e)(4), relating to the 
treatment of transfer companies used to disguise the fact that a trust 
had a United States grantor. FinCEN believes that the anti-avoidance 
rule is sufficiently broad as to make it unnecessary to specifically 
incorporate 26 CFR 1.671-2(e)(4) because the rule captures all 
situations in which entities, including trusts, are used to evade an 
FBAR reporting obligation.

J. Section 103.24(f)--Signature or Other Authority

    Current section 103.24 requires reporting by United States persons 
with signature or other authority over bank, securities, or other 
financial accounts in a foreign country. The NPRM proposed to continue 
this requirement and to define signature or other authority. As 
discussed in Section II.B above, the final rule revises the definition 
and continues the signature authority filing requirement.

K. Signature Authority Exceptions

    The NPRM proposed to grant relief from the obligation to report 
signature or other authority over a foreign financial account to the 
officers and employees of five categories of entities subject to 
specific types of Federal regulation. These exceptions would apply, 
however, only where the officers or employees have no financial 
interest in the reportable account. These entities would still be 
obligated to report their financial interest in these reportable 
accounts. Officers and employees would be able to avail themselves of 
these exceptions without receiving notice that the entities had filed 
an FBAR with respect to these accounts.
    FinCEN received a number of comments on the signature authority 
exceptions. Some commenters sought additional relief in the form of new 
exceptions. FinCEN received comments requesting relief from the 
signature authority filing requirement for the officers and employees 
of entities located in countries that FinCEN would designate as ``low-
risk,'' of entities listed on a foreign securities exchange, of 
foreign-located banks that have entered into a Qualified Intermediary 
agreement with the IRS, and of 501(c)(3) private colleges and 
universities. FinCEN wishes to reiterate that although certain 
countries may have a robust set of anti-money laundering laws, the FBAR 
places the obligation of reporting on the United States person, and the 
purpose of the FBAR is to create a financial trail of foreign accounts. 
Likewise, the fact that a foreign bank may have entered into a 
Qualified Intermediary agreement with the IRS for tax purposes or that 
an entity is exempt from tax under the Internal Revenue Code does not 
eliminate the need for law enforcement and other agencies to have 
information about the existence of foreign financial accounts of United 
States persons.
    Commenters also submitted specific comments on the proposed 
exceptions. We are addressing these concerns below in connection with 
the specific provisions of the NPRM.
    The NPRM provided the following exceptions:
     31 CFR 103.24(f)(2)(i). An officer or employee of a bank 
that is examined by the Office of the Comptroller of the Currency, the 
Board of Governors of the Federal Reserve System, the Federal Deposit 
Insurance Corporation, the Office of Thrift Supervision, or the 
National Credit Union Administration need not report that he has 
signature or other authority over a foreign financial account owned or 
maintained by the bank if the officer or employee has no financial 
interest in the account.
    This exception would be available to officers or employees of banks 
examined by the Federal banking agencies. Several commenters asked that 
the exemption be expanded to cover officers and employees of trust 
companies and credit unions that lack a Federal functional regulator. 
We proposed this exception for officers and employees of entities that 
are subject to functional regulation by Federal agencies that also 
examine them for compliance with the BSA. Limiting the exemption as 
proposed provides for a degree of uniformity in functional regulation 
and BSA examination and compliance that may not necessarily exist on 
the part of State or even other Federal agencies with little or no 
involvement in BSA compliance.
     31 CFR 103.24(f)(2)(ii). An officer or employee of a 
financial institution that is registered with and examined by the 
Securities and Exchange Commission or Commodity Futures Trading 
Commission need not report that he has signature or other authority 
over a foreign financial account owned or maintained by such financial 
institution if the officer or employee has no financial interest in the 
account.
    This exception would be available to officers or employees of 
financial institutions which are registered with, and examined by, the 
SEC or CFTC. As with the first exception, this is available to officers 
and employees of entities that are subject to functional regulation by 
Federal agencies that also examine such entities for compliance with 
the BSA. Commenters sought clarification on whether this exception 
would apply to SEC registered investment advisers when they are 
providing advisory services to clients that are not registered 
investment companies. FinCEN wishes to clarify that this exception does 
not apply in this situation. The exception applies to officers and 
employees of ``financial institutions,'' which is a defined term under 
31 CFR 103.11(n). Investment advisers are not included in that 
definition of financial institution.
     31 CFR 103.24(f)(2)(iii). An officer or employee of an 
Authorized Service Provider need not report that he has signature or 
other authority over a foreign financial account owned or maintained by 
an investment company that is registered with the Securities and 
Exchange Commission if the officer or employee has no financial 
interest in the account. ``Authorized Service Provider'' means an 
entity that is registered with and examined by the Securities and 
Exchange Commission and provides services to an investment company 
registered under the Investment Company Act of 1940.
    The NPRM included this exception to address the fact that mutual 
funds do not have employees of their own. Instead, the day-to-day 
operations of such a fund are performed by individuals who are employed 
by fund service providers, such as investment advisors. This exception 
would be available to officers or employees of an Authorized Service 
Provider that is registered with and examined by the SEC, provided that 
the fund serviced by the Authorized Service Provider is also registered 
with the SEC.
    Commenters sought clarification on the scope of this exception and 
specifically asked how this exception relates to the exception provided 
in the NPRM under section 103.24(f)(2)(ii). FinCEN wishes to reiterate 
that the exception in 103.24(f)(2)(ii) applies to officers and 
employees of financial institutions as defined in 31 CFR 103.11(n) that 
are registered with and examined by the SEC or CFTC. Thus, section 
103.24(f)(2)(ii) does not apply to officers and employees of investment 
advisers. These commenters also sought clarification as to the scope of 
accounts covered by the exception contained in section 
103.24(f)(2)(iii). FinCEN wishes to clarify that officers and employees 
of an Authorized Service Provider may avail themselves of this 
exception only with respect to the reportable accounts of those clients 
which are investment companies registered under the Investment Company 
Act of 1940 and are managed by the Authorized Service

[[Page 10242]]

Provider. If FinCEN were to expand the exception as requested beyond 
clients that are registered investment companies, the exception would 
apply even in situations where the officer and employee is providing 
service to individuals. FinCEN does not believe that such a change is 
appropriate.
    Likewise, commenters asked that FinCEN consider expanding the scope 
of the proposed exception to cover service providers to registered 
investment companies even when the service providers are not registered 
with the SEC. These commenters noted that the preamble to the anti-
money laundering rules for mutual funds permits the fund contractually 
to delegate the implementation and operation of their AML program to a 
service provider that is not registered with the SEC. FinCEN has 
considered this comment but declined to expand the exception as 
requested by these commenters. First, FinCEN believes that this 
exception is appropriate not only because the service provider and the 
fund are registered with the SEC, but also because the investment 
companies registered under the 1940 Act have obligations under the BSA. 
Further, we note that under the AML rules, the mutual fund remains 
responsible for AML compliance. Under this exception, however, officers 
and employees of the Authorized Service Provider would be relieved of 
the reporting obligations of this rule.
     31 CFR 103.24(f)(2)(iv). An officer or employee of an 
entity with a class of equity securities listed on any United States 
national securities exchange need not report that he has signature or 
other authority over a foreign financial account of such entity if the 
officer or employee has no financial interest in the account. An 
officer or employee of a United States subsidiary of such entity need 
not file a report concerning signature or other authority over a 
foreign financial account of the subsidiary if he has no financial 
interest in the account and the United States subsidiary is named in a 
consolidated FBAR report of the parent filed under proposed paragraph 
(g)(3) of 31 CFR103.24.
    This exception would be available to officers and employees of 
entities with a class of equity securities listed upon a U.S. national 
securities exchange, regardless of whether the entity is domestic or 
foreign. Officers and employees of a U.S subsidiary of such listed U.S. 
entities are also covered by this exception if the U.S subsidiary is 
named in a consolidated FBAR report of the parent.
    FinCEN received a number of comments on this exception. Most of 
these comments addressed the interaction between the exception for 
officers and employees of corporations listed on a United States 
national securities exchange and the special rule for consolidated 
FBARs. Some commenters questioned whether the exception contained in 
section 103.24(f)(2)(iv), which discusses consolidated FBARs filed by a 
parent, enables a foreign listed parent to file a consolidated report 
on behalf of its United States subsidiaries. FinCEN notes that by its 
terms the special rule for consolidated FBAR reporting only applies to 
United States persons.
    FinCEN received a number of comments regarding the treatment of 
U.S. subsidiaries of foreign parents. Some commenters noted that a 
foreign listed parent cannot file a consolidated FBAR report, and, 
therefore, the officers and employees of its U.S. subsidiaries cannot 
avail themselves of the signature authority exceptions. Commenters 
recommended that in the case of foreign entities listed on a U.S. 
national securities exchange, the U.S. subsidiary of that foreign 
entity be permitted to file a consolidated report for other U.S. 
subsidiaries. Other commenters recommended that the exception be 
revised to apply to the officers and employees of U.S. subsidiaries 
whose foreign parent is listed on a foreign exchange, provided that 
FinCEN determined that the foreign exchange was subject to suitable 
regulation. Some of these commenters suggested that FinCEN allow the 
foreign parent to voluntarily file a consolidated FBAR on behalf of its 
U.S. subsidiaries.
    FinCEN has considered these comments but has decided to retain the 
exception as originally proposed. In the NPRM, FinCEN considered it 
appropriate to provide an exception for officers and employees of a 
U.S. subsidiary when the U.S. parent files a consolidated FBAR in light 
of both the listed parent's regulation by