More On Legal & Compliancefrom The Advisor's Professional Library
- Whistleblowers A whistleblower is any individual providing the SEC with original information related to a possible violation of federal securities law. The Dodd-Frank Act established a whistleblower program that enables the SEC to reward individuals who voluntarily provide such information.
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
In a merciful move, the Treasury has again extended the FBAR filing deadline for persons with only signature authority over a foreign financial account to Nov. 1, 2011. [Notice 2011-54]. Two previous extensions had pushed the FBAR due date to June 30, 2011, but the Financial Crimes Enforcement Network (FinCEN) and the IRS recognized the difficulty signatories were having locating the information they needed to complete the form.
Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), must be filed annually by all U.S. citizens, residents, business entities, trusts, and estates with a financial interest in or signature authority over one or more foreign financial accounts (FFA) with an aggregate value greater than $10,000.
The latest version of the FBAR was released by FinCEN in conjunction with final FBAR regulations. The regulations were issued on Feb. 24, 2011, with an effective date of March 28. The new regulations apply to FBARs required to be filed by June 30, 2011, and FBARs required to be filed in successive calendar years.
This latest extension does not limit a more liberal filing extension provided by the regulations. Officers and employees of some U.S. regulated companies are granted a filing extension to June 30, 2012, if they have only signatory authority and no financial interest in an FFA of the entity or a controlled entity of the company. [31 CFR 1010.350(f)(2)(i)-(v)].
In addition to the filing extensions, there are a number of exceptions to the FBAR filing requirement, including exceptions for the following:
- Some accounts jointly owned by spouses;
- Persons who file a consolidated FBAR;
- Correspondent/nostro accounts;
- Government entities;
- International financial institutions;
- IRA owners and beneficiaries;
- Participants in and beneficiaries of tax-qualified retirement plans;
- Under certain circumstances, individuals who have signature authority over, but no financial interest in, an FFA;
- Trust beneficiaries; and
- Accounts at a United States military banking facility.
If you have clients who are signatories over foreign financial accounts, don’t count on another extension. Now is the time to gather the required information. Failure to submit an FBAR by the new deadline can result in civil penalties of up to $10,000. And anyone who willfully violates the reporting requirements can be subject to criminal penalties—including fines of up to $500,000, five to 10 years imprisonment, or both.
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See also The Law Professor's blog at AdvisorFYI.