Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations-Reports of Foreign Financial Accounts, 12613-12622 [2016-04880]

Agencies

• DEPARTMENT OF THE TREASURY
• Financial Crimes Enforcement Network

[Federal Register Volume 81, Number 47 (Thursday, March 10, 2016)]
[Proposed Rules]
[Pages 12613-12622]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04880]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010

RIN 1506-AB26


Financial Crimes Enforcement Network; Amendment to the Bank 
Secrecy Act Regulations--Reports of Foreign Financial Accounts

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

ACTION: Notice of proposed rulemaking (``NPRM'').

-----------------------------------------------------------------------

SUMMARY: FinCEN, a bureau of the Department of the Treasury 
(``Treasury''), is proposing to revise the regulations implementing the 
Bank Secrecy Act (``BSA'') regarding Reports of Foreign Bank and 
Financial Accounts

[[Page 12614]]

(``FBAR''). The proposed rule would expand and clarify the exemptions 
for certain U.S. persons with signature or other authority over foreign 
financial accounts. In addition, the proposed rule would remove the 
special rules permitting limited account information to be reported 
when a U.S. person has financial interest in or signature authority 
over 25 or more foreign financial accounts. The proposed rule would 
also make several other changes, including a change to the filing date 
for FBAR reports due in 2017 and a revision to reflect electronic 
filing of FBARs.

DATES: Written comments on the notice of proposed rulemaking may be 
submitted on or before May 9, 2016.

ADDRESSES: Comments may be submitted, identified by Regulatory 
Identification Number (``RIN'') 1506-AB26, by any of the following 
methods:
     Federal E-rulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. Include RIN 1506-AB26 
in the submission. Refer to Docket Number FINCEN-2014-0006.
     Mail: FinCEN, P.O. Box 39, Vienna, VA 22183. Include 1506-
AB26 in the body of the text. Please submit comments by one method 
only. All comments submitted in response to this NPRM will become a 
matter of public record. Therefore, you should submit only information 
that you wish to make publicly available.
     Inspection of comments: The public dockets for FinCEN can 
be found at Regulations.gov. Federal Register notices published by 
FinCEN are searchable by docket number, RIN, or document title, among 
other things, and the docket number, RIN, and title may be found at the 
beginning of the notice. FinCEN uses the electronic, Internet-
accessible dockets at Regulations.gov as their complete, official-
record docket; all hard copies of materials that should be in the 
docket, including public comments, are electronically scanned and 
placed in the docket. In general, FinCEN will make all comments 
publicly available by posting them on https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: FinCEN Resource Center at 1-800-767-
2825 or 1-703-905-3591 (not a toll free number) and select option 3 for 
regulatory questions. Email inquiries can be sent to FRC@fincen.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction

    The potential misuse of foreign financial accounts to evade 
domestic criminal, tax, and regulatory laws has been a long-held 
congressional concern. The House report on the bill leading to the 
enactment of the BSA described the use of undisclosed foreign financial 
accounts for a wide range of abuses.\1\ More than four decades after 
the BSA's enactment, foreign financial accounts can still be used for 
many of the abuses Congress catalogued when it passed the BSA, and 
transparency with respect to the foreign accounts of U.S. persons 
continues to aid law enforcement and deter illicit use.
---------------------------------------------------------------------------

    \1\ The House report states:
    Considerable testimony was received by the Committee from the 
Justice Department, the United States Attorney for the Southern 
District of New York, the Treasury Department, the Internal Revenue 
Service, the Securities and Exchange Commission, the Defense 
Department and the Agency for International Development about 
serious and widespread use of foreign financial facilities located 
in secrecy jurisdictions for the purpose of violating American law. 
H.R. Rep. No 975 91st Cong. 2d Sess. 12 (1970).
---------------------------------------------------------------------------

II. Background

A. 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 chapter X. The 
Secretary's authority to administer the BSA has been delegated to the 
Director of FinCEN.\2\
---------------------------------------------------------------------------

    \2\ Treasury Order 180-01 (Sept. 26, 2002).
---------------------------------------------------------------------------

    Under 31 U.S.C. 5314 the Secretary is authorized to require any 
``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.'' The term 
``foreign financial agency'' encompasses the activities found in the 
statutory definition of ``financial agency,'' \3\ which means, in 
pertinent part, ``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.'' \4\ The Secretary 
is also authorized to prescribe exemptions to the reporting requirement 
and to prescribe other matters the Secretary considers necessary to 
carry out section 5314.\5\
---------------------------------------------------------------------------

    \3\ 31 U.S.C. 5312(b)(2).
    \4\ See 31 U.S.C. 5312(a)(1), which exempts 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.
    \5\ FinCEN is proposing to replace the term exception, as was 
previously used in the FBAR regulation text, with the term exemption 
to reflect the language in 31 U.S.C. 5314 more accurately. For that 
reason, the preamble will refer to signature authority exemptions, 
as opposed to signature authority exceptions.
---------------------------------------------------------------------------

    The regulations implementing 31 U.S.C. 5314 appear at 31 CFR 
1010.350, 1010.306, and 1010.420. Section 1010.350 generally requires 
each U.S. person 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 under 31 U.S.C. 5314 to be filed by such persons. Section 
1010.306 requires the form to be filed with respect to foreign 
financial accounts exceeding $10,000 maintained during the previous 
calendar year. The form must be filed on or before June 30 of each 
calendar year for accounts maintained during the previous calendar 
year.\6\ The form used to file the report required by section 1010.350 
is the Report of Foreign Bank and Financial Accounts--FinCEN Form 114 
(``FBAR''), which, since July 1, 2013, must be filed electronically.\7\ 
Section 1010.420 requires records of foreign financial accounts to be 
maintained for each U.S. person having a financial interest in or 
signature or other authority over such accounts. The records must be 
maintained for a period of five years.\8\
---------------------------------------------------------------------------

    \6\ In accordance with section 2006(b)(11) of Public Law 114-41 
the filing due date for the report will be April 15 effective with 
the 2016 reporting year. Extensions to October 15 of the reporting 
year are available upon request.
    \7\ Formerly Form TD-F 90-22.1. FinCEN Form 114 can be completed 
by accessing FinCEN's BSA E-Filing System Web site--https://bsaefiling.fincen.treas.gov/main.html.
    \8\ The penalties addressed in the BSA apply to both the FBAR 
reporting and recordkeeping requirement.
---------------------------------------------------------------------------

    The authority to enforce the provisions of 31 U.S.C. 5314 and its 
implementing regulations has been re-delegated from FinCEN to the 
Commissioner of Internal Revenue by means of a Memorandum of Agreement 
between FinCEN and the Internal Revenue Service (``IRS'') dated April 
2, 2003.\9\ With this delegation, FinCEN conferred upon the IRS the 
authority to enforce the FBAR provisions of the BSA and its 
implementing regulations,

[[Page 12615]]

investigate possible violations, and assess and collect civil penalties 
in connection therewith. The delegation also conferred upon the IRS the 
authority to: (1) Respond to public inquiries and requests for advice, 
(2) issue administrative rulings, and (3) provide related assistance to 
the public with respect to compliance with FBAR requirements. Finally, 
the delegation conferred upon the IRS the authority to revise the FBAR 
form and instructions, and to propose to FinCEN revisions of the 
applicable regulations for the purpose of enhancing FBAR compliance and 
enforcement.\10\
---------------------------------------------------------------------------

    \9\ See 31 CFR 1010.810(g).
    \10\ Beginning in March 2011, with the implementation of 
mandatory electronic filing, FinCEN has managed and instituted all 
changes to the FBAR and related line item and electronic 
instructions. FinCEN and the IRS collaborate on FBAR actions 
regardless of the nature of these actions.
---------------------------------------------------------------------------

B. Signature Authority Exemptions Provision

    Prior to 2011, FinCEN's FBAR regulation text referred filers to the 
FBAR form instructions for guidance as to the specific information to 
be reported on the FBAR. The detailed requirements for reporting were 
included in the FBAR form instructions previously issued by the IRS and 
FinCEN. A revised FBAR form, which modified several aspects of the 
instructions to the form, was issued in October 2008. In the ensuing 
months, a number of questions and comments were received from the 
public seeking guidance on compliance with the revised instructions. In 
response to these questions and comments, FinCEN, in consultation with 
the IRS, issued a Notice of Proposed Rulemaking revising the reporting 
rules.\11\ The proposal was finalized in 2011 (the ``2011 FBAR 
regulations'').\12\
---------------------------------------------------------------------------

    \11\ See 75 FR 8844 (February 26, 2010).
    \12\ See 76 FR 10234 (February 24, 2011).
---------------------------------------------------------------------------

    As part of the 2011 FBAR regulations, FinCEN included changes to 
exemptions, which previously appeared only in the instructions to the 
FBAR form, for certain U.S. persons with signature or other authority 
over the foreign financial accounts of certain types of federally 
regulated entities. These changes expanded the exemptions so that they 
applied to accounts held by more types of federally regulated entities.
    As a result, officers and employees of the federally regulated 
entities (``covered entities'') listed below, are currently exempt from 
FBAR reporting for their signature authority over the entities' foreign 
financial accounts if the officer or employee has no financial interest 
in the foreign account:
     A bank examined by a Federal banking agency;
     a financial institution registered with and examined by 
the Securities and Exchange Commission (``SEC'') or the Commodity 
Futures Trading Commission (``CFTC'');
     an Authorized Service Provider with signature authority 
over a foreign financial account owned or maintained by an investment 
company registered with the SEC; \13\
---------------------------------------------------------------------------

    \13\ ``Authorized Service Provider'' means an entity that is 
registered with and examined by the SEC and that provides services 
to an investment company registered under the Investment Company Act 
of 1940. See 31 CFR 1010.350(f)(2)(iii).
---------------------------------------------------------------------------

     an entity with a class of equity securities listed (or 
American depository receipts listed) on any U.S. national securities 
exchange (``listed corporation'') or a U.S. subsidiary if the 
subsidiary is included in the consolidated report the parent filed; 
\14\ or
---------------------------------------------------------------------------

    \14\ A U.S. entity that owns directly or indirectly more than a 
50-percent interest in one or more entities required to report is 
permitted to file a consolidated report on behalf of itself and such 
other entity. See 31 CFR 1010.350(g)(3).
---------------------------------------------------------------------------

     an entity that has a class of equity securities registered 
(or American depository receipts registered) under section 12(g) of the 
Securities Exchange Act (``section 12(g) corporation'').\15\
---------------------------------------------------------------------------

    \15\ Section 12(g) corporations must have more than $10 million 
in assets and a class of equity security held of record by either 
2,000 persons, or 500 persons who are not accredited investors (as 
defined by the SEC).
---------------------------------------------------------------------------

    Subsequent to the publication of the 2011 amendments to the FBAR 
regulation, FinCEN received several questions from industry with 
respect to the signature authority exemptions. In particular, many 
filers asked how the exemptions applied with respect to scenarios 
involving overlapping signature authority.\16\ Many filers were unsure 
of the breadth of the amended exemptions as they applied to scenarios 
involving over-lapping signature authority. ``Over-lapping'' signature 
authority occurs when an officer or employee of a parent entity also 
has signature authority over the foreign financial accounts of the 
parent's controlled subsidiary entity and vice versa. Under a literal 
reading of the regulation, the exemption only applies if the individual 
is actually ``an officer or employee of'' the particular corporate 
entity that holds the account, and not to situations in which the 
individual may have control over accounts held by affiliated corporate 
or other business entities that do not employ the individual.\17\
---------------------------------------------------------------------------

    \16\ FinCEN received letters from six large trade associations 
and 12 of the largest financial institutions, all raising similar 
concerns regarding the signature authority exemptions.
    \17\ As clarified at 31 CFR 1010.350(g)(3), an entity that is a 
United States person and which owns directly or indirectly more than 
a 50 percent interest in one or more other entities required to 
report under this section will be permitted to file a consolidated 
report on behalf of itself and such other entities. FinCEN considers 
all entities permitted to be reported together on a consolidated 
FBAR to be entities within the same corporate or other business 
structure.

---------------------------------------------------------------------------

[[Page 12616]]

    Some filers believed that the pre-2011 exemptions, outlined in the 
FBAR form instructions, were broader than they actually were, with many 
filers treating the pre-2011 signature authority exemptions as being 
applicable to all instances of an officer or employee's over-lapping 
signature authority within a corporate or other business structure.\18\ 
The 2011 FBAR regulations made it clear that the signature authority 
exemptions did not apply to all instances of over-lapping signature 
authority. Following the 2011 FBAR regulations, FinCEN received 
requests from industry to exempt officers or employees of covered 
entities and their controlled subsidiaries for instances in which the 
officers or employees have over-lapping signature authority with 
respect to foreign financial accounts owned by the employer, as well as 
foreign financial accounts of the employer's parent and 
subsidiaries.\19\
---------------------------------------------------------------------------

    \18\ FinCEN was made aware that many large companies may have 
one ``treasury group,'' which may be either at the parent 
corporation level or the controlled subsidiary level where employees 
have signature authority over the foreign financial accounts of both 
the parent corporation and its controlled subsidiaries, domestic and 
foreign.
    \19\ In response to ongoing questions regarding the scope of the 
signature authority exemptions, and in order for FinCEN to assess 
the full extent of the impact of the revised signature authority 
exemptions, FinCEN, in close coordination with the IRS, issued 
FinCEN Notices 2011-1 and 2011-2 (collectively, the ``2011 
Notices'') on May 31 and June 17, 2011, respectively, to extend to 
June 30, 2012 the FBAR filing due date for certain individuals 
affected by the signature authority exemptions. On February 14, 
2012, FinCEN further extended the FBAR due date to June 30, 2013 via 
FinCEN Notice 2012-1, for filers that met the requirements of the 
original 2011 Notices. On December 26, 2012, FinCEN again extended 
the FBAR due date to June 30, 2014 via FinCEN Notice 2012-2, for 
those same filers. Again on December 20, 2013, FinCEN extended the 
FBAR due date to June 30, 2015 via FinCEN Notice 2013-1, for those 
same filers. Once more on December 10, 2014, FinCEN extended the 
FBAR due date to June 30, 2016 via FinCEN Notice 2014-1, for those 
same filers. Due to the strong possibility of a regulatory change to 
the signature authority exemptions, the complexity of this issue, 
along with the need to coordinate with the IRS, FinCEN further 
extended the FBAR due date to April 15, 2017 via FinCEN Notice 2015-
1, dated December 8, 2015, for filers that met the requirements of 
the previous Notices. See FinCEN Notice 2015-1. https://www.fincen.gov/whatsnew/pdf/20151208.pdf. Note that the FBAR is a 
calendar year report ending December 31 of the reportable year. 
Beginning with the 2016 tax year, the due date for FBAR reporting is 
April 15 of the year following the December 31 report ending date as 
changed by section 2006(b)(11) of Public Law 114-41. If requested, 
this change also provided for a six-month extension of time to file 
the form (for tax years beginning after 2015).
---------------------------------------------------------------------------

    FinCEN believes that the exemptions, in practice, may impose 
greater obligations on filers than necessary given the nature of the 
reporting.\20\ As a result, FinCEN, in consultation with the IRS, has 
made a policy decision to provide a simplified and expanded 
exemption.\21\ Additionally, FinCEN proposes to use the term ``agent'' 
to incorporate entities and individuals, such as authorized service 
providers and their employees, within the scope of the proposed 
exemption.\22\ The proposed exemption would eliminate the requirement 
for officers, employees, and agents of U.S. entities to report on 
accounts owned by the entity over which the officer, employee, or agent 
has signature authority solely due to their employment when those 
accounts are already required to be reported by their employer, or any 
other U.S. entity within the same corporate or other business structure 
as their U.S. employer. This proposed exemption is intended to address 
instances in which employees have over-lapping signature authority with 
respect to U.S. parent and subsidiary accounts within the same 
corporate or other business structure. However, the exemption for 
employees to report their signature authority over the foreign 
financial accounts of their employer would not extend to U.S. persons 
in instances in which no entity within their employer's corporate or 
other business structure has an obligation to report to FinCEN its 
financial interest in such accounts. For example, in instances in which 
a U.S. person is employed by a non-U.S. entity with no obligation to 
report its foreign financial accounts, and the foreign entity is not 
included as a subsidiary of a U.S. entity that is filing, the U.S. 
person would have an obligation to report his or her signature 
authority over the non-U.S. entity's foreign financial accounts.\23\ In 
this regard the scope of the reporting obligation remains unchanged.
---------------------------------------------------------------------------

    \20\ FinCEN has learned that up to 100 employees may have 
signature authority over one foreign financial account during a 
calendar year in order to perform their jobs. In such a scenario 
under the present rule, FinCEN would receive over 100 FBARs 
regarding the same foreign financial account information.
    \21\ This proposed amendment is consistent with Executive Order 
13563, ``Improving Regulation and Regulatory Review,'' issued by the 
President on January 18, 2011. Section 6 of Executive Order 13563 
emphasizes the importance of retrospective analysis of rules to 
determine whether any such regulations should be modified, expanded, 
streamlined, or repealed so as to make the agency's regulatory 
program more effective or less burdensome in achieving the 
regulatory objectives.
    \22\ Note that the exemption would only apply to ``agents'' who 
are not owners of record or holders of legal title, as described in 
31 CFR 1010.350(e)(1), and that have no financial interest in the 
foreign financial account over which they have signature authority.
    \23\ See Item Instructions-Part IV of the BSA Electronic Filing 
Requirements For Report of Foreign Bank and Financial Accounts 
(FinCEN Form 114) for certain instances of truncated filing as it 
relates to signature authority over the foreign financial accounts 
of a foreign located employer. The instructions specifically note 
the following: ``a United States person who (1) resides outside of 
the United States, (2) is an officer or employee of an employer who 
is physically located outside of the United States, and (3) has 
signature authority over a foreign financial account that is owned 
or maintained by the individual's employer should only complete Part 
I and Items 34-43 of Part IV.'' Such U.S. persons are excluded from 
reporting items 15-23 regarding account information, including the 
account number, the name of the foreign financial institution that 
holds the account, the address of the foreign financial institution, 
the maximum value of the account during the calendar year, and the 
type of account. https://www.fincen.gov/forms/files/FBAR%20Line%20Item%20Filing%20Instructions.pdf.
---------------------------------------------------------------------------

    In the past, FinCEN saw value in having these individuals report on 
the same foreign financial accounts as their employers as a check to 
ensure that the employers themselves had reported their financial 
interest in these accounts. It should be noted that in accordance with 
the 2011 FBAR regulations this dual reporting did not absolve either 
party from filing an FBAR as required under the regulation, except in 
those instances in which an officer or employee qualified for the 
signature authority exemptions. However, FinCEN now believes that such 
a check on a non-filing employer may be of limited practical value 
because FinCEN was made aware, particularly during the first required 
FBAR e-filing season, due by June 30, 2014, that employers often file 
FBARs on behalf of their employees with signature authority because the 
employers maintain the account information.\24\ This is in keeping with

[[Page 12617]]

the report's instructions prior to the 2011 FBAR regulations with 
respect to officers and employees of U.S. entities who had signature 
authority over, but no financial interest in, foreign financial 
accounts owned by the U.S. employer, which stated that if an employer 
notified the employee, in writing, that the required FBAR had been 
filed, the employee was relieved of filing on his or her own behalf.
---------------------------------------------------------------------------

    \24\ Due to a number of requests from employers to e-file FBARs 
on behalf of their employees, on March 28, 2014, FinCEN revised the 
FBAR E-filing FAQs to clarify the following: FBAR E-Filing FAQs 6--
Can an employer submit an FBAR via the BSA E-Filing System on behalf 
of its employee, who has an obligation to file an FBAR due to their 
signature authority over the employer's account(s)?
    Yes. An employer may assist its employees in the preparation of 
electronic FBAR forms for BSA E-Filing. Consistent with FinCEN's 
instructions that provide for approved third-party filing of the 
FBAR, if an employer has been provided documented authority (Form 
114a) by the legally obligated filers (employees with signature 
authority over the employer's foreign financial account(s)) to sign 
and submit FBARs on their behalf through the BSA E-Filing System, 
that employer can do so through a single BSA E-Filing institutional 
account established on the BSA E-File System for the employer. Form 
114a (https://www.fincen.gov/forms/files/FBARE-FileAuth114aRecordSP.pdf) should be completed designating the 
employer as the filer/preparer of the employee's FBAR. A copy of the 
Form 114a should be retained by the filer/employer and not sent to 
FinCEN. Employers can establish their institution accounts by 
accessing the BSA E-Filing System enrollment page (https://bsaefiling.fincen.treas.gov/Enroll.html), selecting the Institution 
option, and following the steps to enroll. If the employee does not 
provide its employer with the Form 114a the filings must be signed 
and submitted by the employee. An employee signing and submitting 
his or her own FBAR may use the BSA E-Filing System by accessing the 
No Registration FBAR page (https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html). If such authority is not provided, the filings 
must be signed and submitted by the employee. In this case, the 
employee would be filing as an individual (See FAQ 1 above). https://bsaefiling.fincen.treas.gov/docs/FBAR_EFILING_FAQ.pdf.
---------------------------------------------------------------------------

    To maintain transparency with respect to U.S. persons eligible for 
the exemption for officers, employees, or agents of U.S. entities, 
employers would be required to maintain information identifying all 
officers, employees, or agents with signature authority over, but no 
financial interest in, those same accounts. FinCEN proposes to require 
that this information be made available to FinCEN upon request and that 
such records be maintained for a period of 5 years. In instances in 
which a U.S. parent entity is filing a consolidated FBAR on behalf of 
itself and its controlled (i.e., greater than 50-percent owned) 
subsidiaries required to file an FBAR, the U.S. parent entity would be 
responsible for maintaining information identifying all of its 
employees and its subsidiaries' employees with signature authority over 
such foreign financial accounts. In instances in which the U.S. parent 
entity and its controlled subsidiaries choose to file separate FBARs 
regarding their respective financial interest in foreign financial 
accounts, each such entity would be responsible for maintaining 
information identifying all employees with signature authority over 
such accounts, regardless of whether the employees are their own 
employees or are employed by another entity within the same corporate 
structure.

C. Special Rules Provisions--25 or More Foreign Financial Accounts

    While assessing options to address concerns raised by industry 
regarding the signature authority exemptions, FinCEN determined that 
the provisions limiting information reported with respect to situations 
where a filer has 25 or more foreign financial accounts also should be 
reevaluated. Under the ``special rules'' provisions at 31 CFR 
1010.350(g)(1)-(2), when a person or entity has a financial interest 
in, or signature authority over, 25 or more foreign financial accounts, 
the filer is required to report the number of accounts and the filer's 
identifying information (name, address, taxpayer identification number, 
and for individual filers date of birth).\25\ However, these filers are 
exempted from providing detailed account information on each of their 
foreign financial accounts. For instance, filers submitting FBARs 
covered by the special rules are not required to provide the account 
number, the name of the foreign financial institution that holds the 
account, the address of the foreign financial institution, the maximum 
value of the account during the calendar year, or the type of account.
---------------------------------------------------------------------------

    \25\ U.S. persons reporting signature authority over 25 or more 
foreign financial accounts are also required to report the name, 
address, and taxpayer identification number of the account owner.
---------------------------------------------------------------------------

    In 2013, approximately 10,800 FBARs were filed by individuals or 
entities with financial interest in 25 or more foreign financial 
accounts. Those individuals or entities had a combined total of 
approximately 5,366,000 foreign financial accounts, which represents 
approximately 56% of the total number of all foreign financial accounts 
reported in 2013.\26\ As a result, FinCEN and law enforcement did not 
have detailed account information on any of these accounts because of 
the exemption for FBAR filers with 25 or more foreign financial 
accounts.
---------------------------------------------------------------------------

    \26\ In 2013, approximately 4,167,000 foreign financial accounts 
were reported by filers with less than 25 foreign financial 
accounts.
---------------------------------------------------------------------------

    The FBAR regulations, originally issued in April 1972, 37 FR 6913, 
and amended in December 1977, 42 FR 63774, previously provided:

Each person subject to the jurisdiction of the United States (except a 
foreign subsidiary of a U.S. person) having a financial interest in, or 
signature or other authority over, a bank, securities or other 
financial account in a foreign country shall report such relationship 
to the Secretary for each year in which such relationship exists, and 
shall provide such information as shall be specified in a reporting 
form prescribed by the Secretary to be filed by such persons. Persons 
having a financial interest in 25 or more foreign financial accounts 
need only note that fact on the form. Such persons will be required to 
provide detailed information concerning each account when so requested 
by the Secretary or his delegate.

The preamble amending the FBAR regulation in 1977 noted the following:

[P]ersons having a financial interest in 25 or more foreign accounts 
will be required to provide detailed information concerning each 
account only when so requested by the Secretary or his delegate. This 
modification in filing procedure is designed to minimize the practical 
difficulties of reporting a large number of accounts by taxpayers 
having extensive international interests.

    Since the implementation of this provision of the FBAR regulations 
over 35 years ago, the ease with which individuals can establish 
overseas accounts has increased and foreign accounts remain vulnerable 
to exploitation by those seeking to launder money, finance terrorist 
acts, or engage in other financial crimes. In addition, the 
implementation of BSA E-filing has made the technological limitations 
and practical difficulties of reporting the required information less 
burdensome to industry and individuals.
    The provisions limiting information reported with respect to 
situations where a filer has 25 or more foreign financial accounts has 
created a significant gap in FinCEN's and law enforcement's ability to 
analyze a comprehensive set of data on all otherwise reportable foreign 
financial accounts. A lack of account numbers limits the applicability 
and efficacy of link analysis that can be done to expand investigations 
of potential criminal and civil violations of law. Moreover, the 
enhancement of FinCEN's analytical tools allows it to analyze larger 
amounts of data more effectively, therefore making account information 
reported on FBARs that much more accessible. These are just a few 
examples resulting from the information gap.
    For these reasons, FinCEN is proposing to remove the provisions 
that limit the information reported with respect to situations when a 
filer has financial interest in, or signature authority over, 25 or 
more foreign financial accounts. Instead, all U.S. persons will be 
required to report detailed account information on all foreign 
financial accounts for which they have a financial interest or 
signature authority in those instances in which a signature authority 
exemption does not apply. This will enable FinCEN and law enforcement 
to receive detailed account information on all foreign financial 
accounts in which a U.S. person has financial interest for the first 
time since 1977.

III. Section-by-Section Analysis

    In an effort to strike the balance of providing FinCEN and law 
enforcement with the foreign financial account information useful to 
their investigations, while taking into consideration the burdens upon 
industry associated with employee-related signature authority 
reporting, FinCEN is proposing to:

[[Page 12618]]

     Amend the FBAR regulations by eliminating the requirement 
for officers, employees, and agents of U.S. entities to report 
signature authority over entity-owned foreign financial accounts for 
which they have no financial interest, if those accounts are already 
required to be reported by their employer or any other entity within 
the same corporate or other business structure as their employer.\27\ 
Instead, entities/employers would be required to maintain information 
identifying all officers, employees, or agents with signature authority 
over those same accounts; this information would be maintained for a 
period of 5 years and made available to FinCEN upon request.
---------------------------------------------------------------------------

    \27\ See supra note 17.
---------------------------------------------------------------------------

     Remove the provisions that limit the information required 
to be reported with respect to situations when a filer has 25 or more 
foreign financial accounts. As a result, U.S. persons with 25 or more 
foreign financial accounts would be required to provide the detailed 
account information that is already being provided by those U.S. 
persons with fewer than 25 foreign financial accounts.
     Make several other changes including a change to the 
filing date for FBARs to be filed in 2017 and a revision to reflect the 
electronic filing of FBARs.

A. Signature Authority Exemption Provision

    FinCEN proposes to amend 31 CFR 1010.350(f)(2) by removing the 
current signature authority exemptions and adding a single, broader 
signature authority exemption. The current signature authority 
exemptions at 31 CFR 1010.350(f)(2) apply to the following persons:
     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.
     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.
     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 that provides services to 
an investment company registered under the Investment Company Act of 
1940.
     An officer or employee of an entity with a class of equity 
securities listed (or American depository receipts 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 a 
United States entity with a class of equity securities listed on a 
United States national securities exchange 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 included in a consolidated 
report of the parent filed under this section.
     An officer or employee of an entity that has a class of 
equity securities registered (or American depository receipts in 
respect of equity securities registered) under section 12(g) of the 
Securities Exchange Act need not report that he has signature or other 
authority over the foreign financial accounts of such entity or if he 
has no financial interest in the accounts.
    Under the proposed signature authority exemption an officer, 
employee, or agent of an entity need not submit a report to FinCEN 
regarding signature or other authority over a foreign financial account 
in which such entity, or a subsidiary, parent entity, or other entity 
within the same corporate or other business structure of such entity 
has a financial interest, if the officer, employee, or agent has no 
financial interest in the account and the account is required to be 
reported under 31 CFR 1010.350 by the entity or any other entity within 
the same corporate or other business structure.\28\ An entity will be 
required to maintain information identifying all officers, employees, 
and agents with signature or other authority over a foreign financial 
account in which it has financial interest and to provide this 
information when so requested by the Financial Crimes Enforcement 
Network. Such information regarding officers, employees, and agents 
shall be identified, and maintained by the entity, and shall be deemed 
to have been filed with FinCEN Form 114. Such records shall be retained 
for a period of 5 years.
---------------------------------------------------------------------------

    \28\ See supra note 17.
---------------------------------------------------------------------------

    This exemption would be available to all U.S. persons that 
currently have a reporting obligation solely due to their signature or 
other authority over the foreign financial accounts of their employers 
or any other entities within the same corporate or other business 
structure as their employers, except in those instances in which the 
entity that has a financial interest in the foreign financial account 
over which the officer, employee, or agent has signature authority does 
not have an obligation to report to FinCEN its financial interest in 
such accounts. This may be the case in instances in which a U.S. person 
is employed by a foreign entity and has signature authority over the 
foreign financial accounts of the foreign entity in which case the 
foreign entity/employer has no obligation to report its financial 
interest to FinCEN under the FBAR regulations. If the officer, 
employee, or agent is eligible for this signature authority exemption, 
the employer that is required to report the account details of the 
foreign financial account on an FBAR due to its financial interest in 
the account would be required to maintain information identifying those 
officers, employees, or agents with signature or other authority over 
such account, which would be made available to FinCEN upon request. 
Such records would be required to be retained for a period of 5 
years.\29\
---------------------------------------------------------------------------

    \29\ FinCEN understands that, as part of a final rule, it would 
need to determine the effect of the provisions of this proposed rule 
on earlier FBAR deferrals pursuant to FinCEN Notices 2011-1; 2011-2; 
2012-1; 2012-2; 2013-1; 2014-1; and 2015-1. See IV. Questions for 
Public Comment.
---------------------------------------------------------------------------

B. Special Rules Provisions--25 or More Foreign Financial Accounts

    FinCEN proposes to remove 31 CFR 1010.350(g)(1) and (2). Under 
those existing provisions, a United States person having a financial 
interest in 25 or more foreign financial accounts need only provide the 
number of financial accounts and certain other basic information on the 
report, but will be required to provide detailed information concerning 
each account when so requested by the Secretary or his delegate. 
Similarly, under those existing

[[Page 12619]]

provisions, a United States person having signature or other authority 
over 25 or more foreign financial accounts need only provide the number 
of financial accounts and certain other basic information on the 
report, but will be required to provide detailed information concerning 
each account when so requested by the Secretary or his delegate.
    Under the proposal, detailed account information on all foreign 
financial accounts in which a U.S. person has financial interest would 
be reported for the first time, due to the removal of the special 
rules.\30\ As noted above, in 2013, approximately 10,800 FBARs were 
filed by individuals or entities with financial interest in 25 or more 
foreign financial accounts. Those individuals or entities had a 
financial interest in a combined total of approximately 5,366,000 
foreign financial accounts. U.S. persons are already required to 
maintain and make available upon request detailed account information 
on all foreign financial accounts in which they have financial interest 
or signature authority, which may assist in filing the FBARs that the 
proposed rule would require of U.S. persons with 25 or more foreign 
financial accounts.\31\
---------------------------------------------------------------------------

    \30\ As discussed above, detailed account information includes: 
the account number, the name of the foreign financial institution 
that holds the account, the address of the foreign financial 
institution, the maximum value of the account during the calendar 
year, and the type of account.
    \31\ See 31 CFR 1010.420.
---------------------------------------------------------------------------

C. Other Proposed Revisions

    The revisions to the signature authority exemption provision and 
the special rules provisions require certain other revisions to the 
regulation text for the purpose of consistency and order throughout 
Sec. Sec.  1010.350, 1010.306, and 1010.420.
Revise Sec.  1010.350(a); Sec.  1010.306(c) and (e); and Sec.  1010.420
    Paragraph (a) of Sec.  1010.350 is being revised to strike the last 
sentence of the paragraph which makes reference to the current special 
rules regarding persons with 25 or more foreign financial accounts.
    Paragraph (a) of Sec.  1010.350 is also being revised to reflect 
the change in the name of the FBAR form from TD-F 90-22.1 to FinCEN 
Form 114 and to reflect the reporting, electronically through BSA E-
Filing, of the FBAR form to FinCEN as well as the reporting, on a 
return, to the Commissioner of Internal Revenue. This technical change 
will also be reflected in Sec. Sec.  1010.306(c) and (e) and 1010.420. 
Section 1010.306(c) is being revised to reflect the new FBAR filing due 
date of April 15, effective with the 2016 reporting year, in accordance 
with section 2006(b)(11) of Public Law 114-41. In addition, Sec.  
1010.306(c) is being revised to reflect that extensions to October 15 
of the reporting year are available upon request, also in accordance 
with section 2006(b)(11) of Public Law 114-41. Section 1010.420 is also 
being revised to include a few other minor changes.
Re-Designate Paragraphs (g)(3) Through (5) of Sec.  1010.350 as 
Paragraphs (g)(1) Through (3)
    Because Sec.  1010.350(g)(1) and (2) special rules regarding 
reporting on 25 or more foreign financial accounts are being removed, 
the remainder of the special rules designated as paragraph (g)(3) 
Consolidated reports; paragraph (g)(4) Participants and beneficiaries 
in certain retirement plans; and paragraphs (g)(5) Certain trust 
beneficiaries are being re-designated as paragraphs (g)(1) through (3).

D. Revisions to FinCEN Form 114

    If the proposed rule is finalized, consistent with the proposed 
removal of special rules provisions regarding 25 or more foreign 
financial accounts, FinCEN would remove FinCEN Form 114 data field 14a 
(Does the filer have a financial interest in 25 or more financial 
accounts?); and data field 14b (Does the filer have signature authority 
over, but no financial interest in, 25 or more foreign financial 
accounts?). No other FinCEN Form 114 data fields would need to be 
amended as a result of the proposed revisions to the FBAR regulations. 
While no other data fields will be changed, several existing data 
fields in each section will be designated as ``critical'' requiring 
completion for the FBAR to be accepted by BSA E-Filing. The batch 
filing electronic filing specifications will also require updating to 
the same standard. Upon finalizing the revisions to the FBAR as 
proposed in this NPRM, FinCEN would also amend the FinCEN Form 114 
instructions consistent with the revisions to the FBAR regulations.\32\
---------------------------------------------------------------------------

    \32\ FinCEN Form 114 instructions--https://www.fincen.gov/forms/files/FBAR%20Line%20Item%20Filing%20Instructions.pdf.
---------------------------------------------------------------------------

IV. Questions for Public Comment

    A. FinCEN requests comment on whether expanding the signature 
authority exemption provision as proposed will reduce burden, and if 
so, by how much.
    B. FinCEN requests comment on whether it should allow entities and 
individuals to rely upon the provisions of this proposed rule, if 
finalized, with regard to FBAR filings properly deferred pursuant to 
FinCEN Notices 2011-1; 2011-2; 2012-1; 2012-2; 2013-1; 2014-1; and 
2015-1.
    C. FinCEN requests comment on whether removing the special rules 
provisions regarding reporting on 25 or more foreign financial accounts 
will increase burden on impacted entities and individuals, and if so, 
by how much. Specifically, will technological costs be incurred to 
implement systems to transfer account information to the BSA E-filing 
system for FBAR reporting?
    D. If technological modifications are necessary to report 25 or 
more foreign financial accounts, FinCEN requests comment on the 
estimated timeframe to implement those modifications.
    E. FinCEN requests comment on whether the amendments in this 
proposed rule regarding broadening signature authority exemptions 
combined with the removal of the special rules regarding 25 or more 
foreign financial accounts will increase or decrease burden on those 
entities and individuals impacted by both amendments to the FBAR 
regulation, and if so, by how much.

V. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), 
FinCEN certifies that these proposed regulation revisions will not have 
a significant economic impact on a substantial number of small 
entities. The proposed rule applies to U.S. persons, a term which 
includes entities of all sizes and individuals, if they have reportable 
accounts under this rule. However, we expect that small entities will 
be less likely to have reportable foreign financial accounts or to have 
many such accounts, unlike larger entities, which likely have a broader 
base of business operations. In addition, we expect a reduction in 
burden for individuals, because FinCEN is exempting all individuals 
that currently have a reporting obligation solely due to their 
signature authority over the foreign financial accounts of their 
employers or any other entities within the same corporate or other 
business structure as their employers, except in those instances in 
which no such entity has an obligation to report to FinCEN its 
financial interest in such accounts.
    With regard to the proposed amendment to remove the provisions that 
limit the information required to be reported with respect to 
situations when a filer has 25 or more foreign financial accounts, 
FinCEN expects that most U.S. persons reporting on 25 or more foreign 
financial accounts will be large

[[Page 12620]]

entities. U.S. persons with 25 or more foreign financial accounts 
reportable on the FBAR will be required to provide the same account 
information currently required to be provided by U.S. persons with less 
than 25 foreign financial accounts. The information required to be 
reported on the FBAR is basic information U.S. persons will have 
received on account statements from the foreign financial institutions 
at which the accounts are opened and maintained. Those statements will 
provide a U.S. person with the information about an account needed to 
file the FBAR. No special accounting or legal skills would be necessary 
to transfer the basic information required to be reported, such as the 
name of the foreign financial institution, the type of account, and the 
account number, to the FBAR. FinCEN requests comment on the accuracy of 
the statement that the regulations in this document will not have a 
significant economic impact on a substantial number of small entities.

VI. Executive Order 13563 and 12866

    Executive Orders 13563 and 12866 direct agencies to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has been designated a ``significant regulatory action'' 
although not economically significant, under section 3(f) of Executive 
Order 12866. Accordingly, the rule has been reviewed by the Office of 
Management and Budget.

VII. Paperwork Reduction Act (``PRA'') Notices

    The reporting requirements contained in this proposed rule (31 CFR 
1010.350) are being submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments concerning the estimated burden and other 
questions should be sent to the Desk Officer for the Department of the 
Treasury, Office of Information and Regulatory Affairs, Office of 
Management and Budget, Paperwork Reduction Project (1506), Washington, 
DC 20503 with a copy to FinCEN by mail, or comments may be submitted by 
email to oira_submission@omb.eop.gov. Please submit comments by one 
method only. Comments are welcome and must be received by May 9, 2016. 
In accordance with requirements of the Paperwork Reduction Act of 1995, 
44 U.S.C. 3506(c)(2)(A), and its implementing regulations, 5 CFR part 
1320, the following information concerning the collection of 
information of the Amendment to the Bank Secrecy Act Regulations--
Reports of Foreign Financial Accounts is presented to assist those 
persons wishing to comment on the information collection.

Signature Authority Exemption Provision

    The proposed rulemaking seeks to expand and clarify the exemption 
to the signature authority reporting requirement. By making the 
signature authority exemption broader and clearer there is potential 
for a reduction in signature authority reporting by individuals with 
signature authority over, but no financial interest in, foreign 
financial accounts.
    The proposed rulemaking also seeks to clarify that entities/
employers would be required to maintain information identifying all 
officers and employees with signature authority over the foreign 
financial accounts in which the entities/employers have financial 
interest; this information would be retained for a period of 5 years 
and be made available to FinCEN upon request. FinCEN expects there will 
be little to no effect on burden as a result of this recordkeeping 
requirement since these entities/employers, in all likelihood, maintain 
this information in the normal course of business.
    Description of Affected Filers: Individuals/agents with signature 
authority over, but no financial interest in, foreign financial 
accounts reportable by the individual/agent under 31 CFR 1010.350 
solely due to their employment.
    Estimate Number of Affected Filing Individuals: 5,660. 
Approximately 11,600 FBARs were filed by U.S. persons in 2013 solely 
due to reporting on signature authority, but no financial interest. Of 
those FBARs, approximately 280 were filed by a U.S. person who was 
reporting signature authority over the foreign financial account of an 
account owner with a foreign address. As a result of questions raised 
by industry, we estimate that at least 50 percent of the remaining 
FBARs (11,600-280 = 11,320) were filed by individuals with signature 
authority over, but no financial interest in, a foreign financial 
account, solely due to their employment.\33\
---------------------------------------------------------------------------

    \33\ FinCEN is excluding FBARs filed by a U.S. person who was 
reporting signature authority over the foreign financial account of 
an account owner with a foreign address because such scenarios 
likely include individuals reporting signature authority solely due 
to their employment with a foreign parent corporation. In such a 
scenario, the proposed signature authority exemption would not apply 
because a foreign parent corporation does not have a requirement to 
report its financial interest in a foreign financial account on the 
FBAR.
---------------------------------------------------------------------------

    Estimate Average Annual Burden Hours Reduction Per Affected Filer: 
The estimated average burden reduction associated with the reporting 
requirement in this rule will vary depending on the number of 
reportable accounts. Based on past filings, we estimate that the 
average reporting burden will range from approximately twenty minutes 
to one hour and that the average reporting burden will be approximately 
45 minutes. The reporting burden is reflected in the burden listed for 
completing FinCEN Form 114 (See OMB Control Number 1506-0009).
    Estimated Total Annual Burden Reduction: 4,245 hours.\34\
---------------------------------------------------------------------------

    \34\ 5,660 filers multiplied by 45 minutes and converted to 
hours is 4,245 hours.
---------------------------------------------------------------------------

Removal of Special Rules Provisions--25 or More Foreign Financial 
Accounts

    The proposed rulemaking also seeks to remove the special rules 
permitting limited account information to be reported on the FBAR when 
a person has financial interest in or signature authority over 25 or 
more foreign financial accounts. There should not be a net increase in 
the number of FBARs filed, although there will be a net increase in the 
time it takes to file an FBAR when reporting 25 or more accounts. 
However, individuals are already required to maintain records regarding 
account information for such foreign financial accounts under the rule, 
therefore there will be no impact on the recordkeeping requirement, and 
these records can be leveraged to obtain the information necessary to 
report.
    Description of Affected Filers: Individuals and entities that 
maintain 25 or more foreign financial accounts reportable under 31 CFR 
1010.350.
    Estimate Number of Affected Filing Individuals and Entities: 
12,580.\35\
---------------------------------------------------------------------------

    \35\ This figure represents the actual number of FBARs filed in 
calendar year 2013 when 25 or more foreign financial accounts were 
reported. 10,800 FBARs were filed by U.S. persons reporting 
financial interest in 25 or more foreign financial accounts. 8,900 
FBARs were filed by U.S. persons reporting signature authority over 
25 or more foreign financial accounts. FinCEN estimates that at 
least 80 percent of these FBARs were filed by individuals with 
signature authority over, but no financial interest in, a foreign 
financial account, solely due to their employment. Based on 
questions raised by industry following the issuance of the 2011 FBAR 
final rule, FinCEN believes that most FBAR reporting on signature 
authority over 25 or more foreign financial accounts is by 
individuals who are reporting solely due to their signature 
authority over their employers' foreign financial accounts. Because 
FinCEN is proposing to exempt all of those FBAR filers due to such 
scenarios, so long as those accounts are already required to be 
reported by their employer or another entity with the same corporate 
structure as their employer, we have factored that into our estimate 
of the number of FBARs we expect to be filed by U.S. persons with 25 
or more foreign financial accounts due to signature authority. 
(8,900 FBARs x 0.2 = 1,780). The estimated total FBARs to be 
reported with 25 or more foreign financial accounts due to financial 
interest and signature authority is 12,580 (10,800 + 1,780).

---------------------------------------------------------------------------

[[Page 12621]]

    Estimate Average Annual Burden Hours Per Affected Filer: The 
estimated average burden associated with the reporting requirement 
(FBAR form completion) will vary depending on the number of reportable 
accounts. FinCEN estimates that the average increase in the reporting 
burden will be approximately 2 minutes per foreign financial account 
reported on the FBAR. In 2013, approximately 10,800 FBARs were filed by 
individuals or entities with financial interest in 25 or more foreign 
financial accounts. Those entities had a combined total of 
approximately 5,366,000 foreign financial accounts. The average number 
of foreign financial accounts reported per FBAR filed was 497. This 
translates to approximately 16.6 burden hours per affected filer.\36\ 
The reporting burden is reflected in the burden listed for completing 
FinCEN Form 114 (See OMB Control Number 1506-0009).
---------------------------------------------------------------------------

    \36\ 497 accounts multiplied by 2 minutes per account and 
converted to hours is 16.6 hours.
---------------------------------------------------------------------------

    Estimated Total Annual Burden: 208,828 hours (12,580 FBARs x 16.6 
hours per FBAR filer).
    Summary Total of Estimated Annual Burden: 204,583 hours (208,828-
4,245).

Questions for Comment

    FinCEN specifically invites comment on the accuracy of FinCEN's 
estimate of the burden on respondents and any other aspects of our PRA 
estimates. Comments are specifically requested concerning: (a) Whether 
the proposed collection of information is necessary for the proper 
performance of the functions of FinCEN, including whether the 
information will have practical utility; (b) the accuracy of the 
estimated burden associated with the proposed collection of 
information; (c) how the quality, utility, and clarity of the 
information to be collected may be enhanced; and (d) how the burden of 
complying with the proposed collection of information may be minimized, 
including through the application of automated collection techniques or 
other forms of information technology.

VIII. Unfunded Mandates Act of 1995 Statement

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded 
Mandates Act''), Public Law 104-4 (March 22, 1995), requires that an 
agency prepare a budgetary impact statement before promulgating a rule 
that may result in expenditure by state, local, and tribal governments, 
in the aggregate, or by the private sector, of $100 million or more in 
any one year. If a budgetary impact statement is required, section 202 
of the Unfunded Mandates Act also requires an agency to identify and 
consider a reasonable number of regulatory alternatives before 
promulgating a rule. FinCEN has determined that it is not required to 
prepare a written statement under section 202 and has concluded that on 
balance the proposals in the Notice of Proposed Rulemaking provide the 
most cost-effective and least burdensome alternative to achieve the 
objectives of the rule.

List of Subjects in 31 CFR Part 1010

    Administrative practice and procedure, Banks, Banking, Brokers, 
Currency, Foreign banking, Foreign currencies, Gambling, 
Investigations, Penalties, Reporting and recordkeeping requirements, 
Securities, Terrorism.

Proposed Amendments to the Regulations

    For the reasons set forth above in the preamble, 31 CFR part 1010 
is proposed to be amended as follows:

PART 1010--GENERAL PROVISIONS

0
1. The authority citation for part 1010 continues to read as follows:

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 
and 5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307; 
sec. 2006, Pub. L. 114-41, 129 Stat. 457.

0
2. Amend Sec.  1010.306 by revising paragraphs (c) and (e) to read as 
follows:


Sec.  1010.306  Filing of reports.

* * * * *
    (c) Reports required by Sec.  1010.350 are to be filed 
electronically through BSA E-File with the Financial Crimes Enforcement 
Network and shall be filed on or before April 15 of each calendar year 
with respect to foreign financial accounts that had an aggregate value 
in excess of $10,000 at any time during the previous calendar year. 
Extensions to October 15 of the reporting year are available upon 
request.
* * * * *
    (e) Forms to be used in making the reports required by Sec.  
1010.311, Sec.  1010.313, Sec.  1010.350, Sec.  1020.315, Sec.  
1021.311, or Sec.  1021.313 of this chapter may be obtained from the 
Financial Crimes Enforcement Network BSA E-Filing system. Forms to be 
used in making the reports required by Sec.  1010.340 may be obtained 
from the U.S. Customs and Border Protection or the Financial Crimes 
Enforcement Network.
0
3. Amend Sec.  1010.350 as follows:
0
a. Revise paragraphs (a) and (f)(2);
0
b. Remove paragraphs (g)(1) and (2); and
0
c. Redesignate paragraphs (g)(3) through (5) as paragraphs (g)(1) 
through (3).
    The revisions read as follows:


Sec.  1010.350  Reports of foreign financial accounts.

    (a) In general. Each United States person having a financial 
interest in, or signature or other authority over, a bank, securities, 
or other financial account in a foreign country shall report such 
relationship to the Commissioner of Internal Revenue on a return for 
each year in which such relationship exists and shall provide the 
Financial Crimes Enforcement Network, through BSA E-Filing, with such 
information as shall be specified in a reporting form prescribed under 
31 U.S.C. 5314 to be filed by such persons. The form prescribed under 
section 5314 is the Report of Foreign Bank and Financial Accounts 
(FinCEN Form 114).
* * * * *
    (f) * * *
    (2) Exemption. An officer, employee, or agent of an entity need not 
submit a report to the Financial Crimes Enforcement Network regarding 
signature or other authority over a foreign financial account in which 
such entity, or a subsidiary, parent, or another entity within the same 
corporate or other business structure of such entity has a financial 
interest, if the officer, employee, or agent has no financial interest 
in the account and the account is required to be reported under 31 CFR 
1010.350 by the entity or any other entity within the same corporate or 
other business structure. An entity will be required to maintain 
information identifying all officers, employees, and agents with 
signature or other authority over a foreign financial account in which 
it has financial interest and to provide this information when so 
requested by the Financial Crimes Enforcement Network. Such information

[[Page 12622]]

regarding officers, employees, and agents shall be identified, and 
maintained by the entity, and shall be deemed to have been filed with 
FinCEN Form 114. Such records shall be retained for a period of 5 
years.
* * * * *
0
4. Revise Sec.  1010.420 to read as follows:


Sec.  1010.420  Records to be made and retained by persons having 
financial interests in foreign financial accounts.

    Records of accounts required by Sec.  1010.350 to be reported to 
the Financial Crimes Enforcement Network and the Commissioner of 
Internal Revenue shall be retained by each person having a financial 
interest in or signature or other authority over any such account. Such 
records shall contain the name in which each such account is 
maintained, the number or other designation of such account, the name 
and address of the foreign financial institution, or other foreign 
person engaged in the business of a financial institution, with whom 
such account is maintained, the type of such account, and the maximum 
value of each such account during the reporting period. Such records 
shall be retained for a period of 5 years and shall be kept at all 
times available for inspection as authorized by law. In the computation 
of the period of 5 years, there shall be disregarded any period 
beginning with a date on which the taxpayer is indicted or information 
instituted on account of a willful attempt to evade or defeat Federal 
income tax, the filing of a false or fraudulent Federal income tax 
return, or failing to file a Federal income tax return, and ending with 
the date on which final disposition is made of the criminal proceeding.

Jennifer Shasky Calvery,
Director, Financial Crimes Enforcement Network.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix

    The following changes to the current Report of Foreign Bank and 
Financial Account(s) (FBAR), FinCEN 114, report are required in 
order to implement the proposed changes outlined in the above Notice 
of Proposed Rule Making (NPRM). Comments to the proposed changes are 
welcome. Please identify them separately from comments regarding the 
NPRM.

    Part I. a. Filer Information; Add item 2g Primary Federal 
Regulator (this will be a dropdown box containing a list of primary 
Federal Regulators). This item is required when item 2e ``Fiduciary 
or other--Enter type'' is completed.
    b. Remove items 14a and 14a. These items are no longer required.
    Part II. No changes are required.
    Part III. a. Change current item 26 to reflect two checkboxes to 
indicate ``Individual'' or ``Entity'' that applies to the 
information entered in item 26a.
    b. Rename the current item 26 to 26a ``Last name or organization 
name of principal joint owner.
    Part IV. a. Change current item 34 to reflect two checkboxes to 
indicate ``Individual'' or ``Entity'' that applies to the 
information entered in item 26a.
    b. Rename the current item 34 to 34a ``Last name or organization 
name of account owner.
    Part V. No changes are required.

[FR Doc. 2016-04880 Filed 3-9-16; 8:45 am]
 BILLING CODE 4810-02-P