10234 Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Rules and Regulations 

1On 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. 

2See 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. 

1201). The February-March 2010 

proposal called for a two-stage increase. 

The consumptive use rate was proposed 

to increase from $60 to $90 per million 

gallons, effective January 1, 2011, and 

from $90 to $120 per million gallons, 

effective January 1, 2012; and the nonconsumptive use rate was proposed to 

increase from $.60 to $.90 per million 

gallons, effective January 1, 2011, and 

from $.90 to $1.20 per million gallons, 

effective January 1, 2012. A public 

hearing on the proposed rate increases 

was held on April 13, 2010 and written 

comments were accepted through April 

16, 2010. 

On September 15, 2010, the 

Commission approved a single-stage 

increase of $20 per million gallons in 

the consumptive use rate and $.20 per 

million gallons in the non-consumptive 

use rate. Accordingly, effective January 

1, 2011, the Commission’s water 

charging rates are $80 per million 

gallons for consumptive use and $.80 

per million gallons for non-consumptive 

use. No change to the list of uses exempt 

from charges was proposed or adopted. 

The Commission also authorized the 

Executive Director to establish a Water 

Charges Advisory Committee and to 

identify and develop proposals for 

studies to address issues affecting water 

charges. A comment and response 

document setting forth the 

Commission’s responses in detail was 

approved by the Commission 

simultaneously with adoption of the 

final rule. 

Resolution No. 2010–9, the text of the 

final rule, and a copy of the comment 

and response document are available on 

the Commission’s Web site, drbc.net. 

List of Subjects in 18 CFR Part 420 

Incorporation by reference, Water 

resources, Water reservoirs, Water 

supply, Watersheds. 

For the reasons set forth in the 

preamble, the Delaware River Basin 

Commission amends 18 CFR part 420 as 

follows: 

PART 420—BASIN REGULATIONS— 

WATER SUPPLY CHARGES 

■ 1. The authority citation for part 420 

continues to read as follows: 

Authority: Delaware River Basin Compact, 

75 Stat. 688. 

■ 2. Amend § 420.41 by revising 

paragraphs (a) and (b) to read as follows: 

§ 420.41 Schedule of water charges. 

* * * * * 

(a) $80 per million gallons for 

consumptive use; and 

(b) $.80 per million gallons for 

nonconsumptive use. 

Dated: February 16, 2011. 

Pamela M. Bush, 

Commission Secretary and Assistant General 

Counsel. 

[FR Doc. 2011–3969 Filed 2–23–11; 8:45 am] 

BILLING CODE 6360–01–P 

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. 

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. 

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. 

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 


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Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Rules and Regulations 10235 

3See 75 FR 8844 (February 26, 2010). 

4 75 FR 8851 (February 26, 2010) (Emphasis 

added). 

5A 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. 

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. 

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

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 


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10236 Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Rules and Regulations 

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 


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6The 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. 

7 31 U.S.C. 5311. 

8FinCEN wishes to note that the final rule 

eliminates the proposed trust protector provision; 

see the discussion in the Section-by-Section 

Analysis. 

9A 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. 

10As 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. 

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 taxexempt 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. 

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

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 taxexempt 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

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. 

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 


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10238 Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Rules and Regulations 

11 75 FR 65806, Oct. 26, 2010. 

accounts maintained in calendar years 

beginning before 2010. 

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. 

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. 


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12A comma is added before the word ‘‘that’’. 

13FinCEN 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. 

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 whollyowned 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

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. 


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14This exception does not limit the operation of 

the International Organization Immunities Act of 

December 29, 1945 (22 U.S.C. 288). 

15See, 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). 

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

• 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. 

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. 


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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 antimoney 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 


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10242 Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Rules and Regulations 

16To make the application of the exception 

clearer in the context of the special rule for 

consolidated FBARs, the final rule revises the 

second sentence of the exception by deleting the 

words ‘‘such entity’’ and adding the words ‘‘a United 

States entity with a class of equity securities listed 

on a United States security exchange.’’ FinCEN 

believes that this change will clarify that the second 

sentence of the exception does not apply in the case 

of parent companies that are not U.S. entities. 

17FinCEN also received comments requesting 

that we adopt a provision in the instructions to the 

2008 version of the FBAR that provided officers and 

employees of a foreign subsidiary with an exception 

to the signature authority obligation. In light of the 

broader set of changes made with respect to the 

signature authority provisions, FinCEN has decided 

not to adopt this recommendation. 

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 the SEC 

and its legal obligation to file the FBAR. 

In the case of a U.S. subsidiary with a 

foreign parent listed on a U.S. national 

securities exchange, the parent has no 

legal obligation to file the FBAR, and 

the subsidiary is not required to file the 

same reports with the SEC as the U.S. 

listed parent.16 For similar reasons, 

FinCEN has decided not to extend the 

exception to U.S. subsidiaries of foreign 

parents listed on foreign exchanges. 

Furthermore, because the FBAR rules 

apply only to United States persons, 

FinCEN will not permit voluntary filing 

by the foreign parent to satisfy the filing 

obligations of the officers and 

employees of U.S. subsidiaries.17

Finally, commenters asked that a U.S. 

subsidiary be permitted to rely on this 

exception if its U.S. listed parent does 

not file a consolidated FBAR. While the 

rules permit the parent to file a 

consolidated FBAR, if it chooses not to 

do so for its own reasons, FinCEN does 

not believe it necessary to provide a 

special treatment for such U.S. 

subsidiaries. 

FinCEN received two comments 

seeking an expansion of the exception 

when an employee of a U.S. parent also 

has signature authority over the foreign 

accounts of a U.S. parent’s subsidiary 

which have been included in the 

consolidated FBAR report. These 

commenters noted that under the 

proposed exception, officers or 

employees of the parent who have 

signature authority over the foreign 

accounts of the subsidiary would not 

benefit from the exception, which is 

limited to the accounts of the employer. 

The commenter further noted that in 

this situation, officers or employees of 

the subsidiary would benefit from the 

exception with respect to the 

subsidiary’s foreign accounts. Likewise, 

one of the commenters asked for similar 

treatment when the officers and 

employees of the subsidiary have 

signature authority over the accounts of 

the listed parent. 

FinCEN has considered these 

comments and has decided not to revise 

the exception as recommended. Given 

the revision in the final rule to the 

signature authority definition, the 

clarifications provided regarding the 

scope of the signature authority filing 

requirement and the recordkeeping 

rules, FinCEN does not believe that a 

further relaxation of the rule is 

appropriate. 

FinCEN also received a comment 

recommending that the exception be 

extended to employees with respect to 

the accounts of an employee benefit 

trust established by an entity listed 


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18Currently, these are corporations which have 

more than $10 million in assets and more than 500 

shareholders of record. See 15 U.S.C. 78l(g) (2006) 

and the regulations thereunder. 

19One commenter recommended that we provide 

for consolidated filing where the listed parent’s 

ownership in the subsidiary exceeds 20 percent so 

that a broader range of officers and employees may 

take advantage of the signature authority exception. 

We believe that 20 percent is too low of an 

ownership interest for purposes of the consolidated 

filing. 

upon a U.S. national securities 

exchange. The commenter argued that 

in this situation, the entity is required 

to report the assets and liabilities of its 

employee benefit plans on its own 

financial statements filed with the SEC, 

and the trust accounts are subject to 

oversight and examination by the 

Department of Labor. FinCEN has 

considered this comment and decided 

not to adopt the recommendation 

because an employee benefit trust itself 

is not a listed entity. Further, FinCEN 

believes that the clarifications 

previously discussed concerning the 

scope of foreign financial accounts that 

are reportable and the definitions of 

signature authority and financial 

interest should address some of the 

concerns regarding FBAR filing 

obligations. 

• 31 CFR 103.24(f)(2)(v)—An officer 

or employee of a United States 

corporation that has a class 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 corporation if he has 

no financial interest in the accounts. 

This exception as proposed would 

apply to officers and employees of U.S. 

corporations whose size in terms of 

assets and shareholders 18 requires them 

to register their stock with the SEC and 

makes them subject to reporting under 

the Securities Exchange Act. FinCEN 

received a comment requesting a similar 

exception for officers or employees of a 

mutual insurance company with assets 

of more than $10 million and more than 

500 policy holders. FinCEN has decided 

not to adopt such an exception because 

these companies are not subject to the 

SEC regulation that applies to 

companies covered by the exception. 

FinCEN also received comments 

seeking an amendment to the proposed 

exceptions contained in sections 

103.24(f)(2)(iv) and 103.24(f)(2)(v) to 

include listed American Depository 

Receipts (ADRs), unlisted ADRs that are 

traded over-the-counter if they are listed 

on the Designated Offshore Securities 

Market, ADRs with unlisted trading 

privileges on a national securities 

exchange, ADRs registered under 

section 12(g) or ADRs with unlisted 

trading privileges under section 12(f) of 

the Securities Exchange Act. After 

considering these comments, FinCEN 

believes that listed ADRs would be 

covered by the first sentence of the 

exception in section 103.24(f)(2)(iv). In 

addition, if a foreign issuer has 

registered under section 12(g) a class of 

equity securities underlying ADRs, 

FinCEN believes it should be covered by 

the exception under section 

103.24(f)(2)(v). The final rule makes 

appropriate changes to reflect this 

coverage. FinCEN does not believe that 

other ADRs are subject to the same 

requirements as listed entities on a U.S. 

national securities exchange or entities 

registered under section 12(g), and, 

therefore, we have not adopted the 

recommendations to include other types 

of ADRs. 

Accordingly, the final rule adopts 

these exceptions as revised. 

L. 103.24(g)—Special Rules 

The NPRM proposed the following 

special rules to simplify FBAR filings in 

certain cases. 

• 25 or more foreign financial 

accounts. 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, 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. 

Commenters raised concerns that the 

simplified reporting requirements for 

filers having signature authority over 25 

or more foreign financial accounts 

requires more information than the 

simplified reporting for persons having 

financial interest in 25 or more foreign 

financial accounts. In the case of 

simplified reporting for persons with a 

financial interest, filers are required to 

provide identifying information about 

themselves and indicate that they have 

a financial interest in 25 or more foreign 

financial accounts. Where persons have 

signature authority over 25 or more such 

accounts, filers are required to provide 

identifying information about 

themselves as well as those who have a 

financial interest in the accounts. 

FinCEN notes that where filers have 

only signature authority, the FBAR 

requires identifying information about 

the persons with a financial interest to 

ensure that law enforcement receives 

meaningful information about these 

accounts. 

• Consolidated reports. An entity that 

is a United States person and owns 

directly or indirectly more than a 50 

percent interest in an entity required to 

report under this section will be 

permitted to file a consolidated report 

on behalf of itself and such other 

entity.19

One commenter urged additional 

consolidated filing relief be available to 

funds organized by the same fund 

manager, specifically all foreign 

financial account information for all 

funds in the same fund family should be 

reportable in a single consolidated 

FBAR filing. FinCEN believes that this 

issue is better addressed in the form of 

specific guidance because the factual 

situations may vary. 

• Participants and beneficiaries in 

certain retirement plans. Participants 

and beneficiaries in retirement plans 

under sections 401(a), 403(a) or 403(b) 

of the Internal Revenue Code as well as 

owners and beneficiaries of individual 

retirement accounts under section 408 

of the Internal Revenue Code or Roth 

IRAs under section 408A of the Internal 

Revenue Code will not be required to 

file an FBAR with respect to a foreign 

financial account held by or on behalf 

of the retirement plan or IRA. 

FinCEN received one comment 

proposing an across-the-board 

exemption for all pension plan 

participants and beneficiaries. The 

commenter was concerned about the 

filing obligations of participants and 

beneficiaries of other types of plans not 

covered by the exemption. In proposing 

this exemption, FinCEN considered that 

participants and beneficiaries of these 

plans were less likely to be aware of the 

existence of foreign financial accounts 

because they were unlikely to exceed 

the 50 percent ownership threshold. 

Participants and beneficiaries that are 

not covered by this exemption should 

look to the 50 percent ownership indicia 

to determine whether a filing obligation 

exists. 

• Certain trust beneficiaries. A 

beneficiary of a trust described in 

proposed paragraph (e)(2)(iv) is not 

required to report the trust’s foreign 

financial accounts if the trust, trustee of 

the trust, or agent of the trust is a United 

States person that files an FBAR 

disclosing the trust’s foreign financial 

accounts and provides any additional 

information as required by the report. 

This provision is intended to provide 

relief to beneficiaries of trusts if the 


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trust, trustee of the trust, or agent of the 

trust is a United States person and has 

filed the FBAR as required. FinCEN is 

adopting this provision without change. 

IV. Regulatory Flexibility Act 

Pursuant to the Regulatory Flexibility 

Act (RFA) (5 U.S.C. 601 et seq.), FinCEN 

certifies that this final rule will not have 

a significant economic impact on a 

substantial number of small entities. 

The final rule revises a rule in existence 

since 1972 that requires reports to be 

made to Treasury with respect to certain 

foreign financial accounts. Because this 

final rule addresses the scope of 

reportable accounts and financial 

interest, and revises the definition of 

signature authority and narrows the 

scope of individuals and entities subject 

to reporting and recordkeeping 

requirements, the final rule will reduce 

regulatory obligations overall. 

The final rule will not affect a 

substantial number of small entities. 

The final rule applies to United States 

persons, a term that includes entities of 

all sizes, 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 

have a broader base of business 

operations. 

In any event, the final rule will not 

have a significant economic impact on 

small entities. As explained above, the 

final rule revises an existing rule that 

requires reports to be made to Treasury 

with respect to certain foreign financial 

accounts. Filing the reports will require 

entities to transfer basic information 

that they will often have received on 

account statements from the foreign 

financial institution at which the 

account is opened and maintained. 

Those statements will provide the entity 

with the information about the account 

needed to file the FBAR. No special 

accounting or legal skills are 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. Furthermore, the 

final rule continues a simplified 

reporting method for persons with a 

financial interest in 25 or more foreign 

financial accounts and also provides a 

similar simplified reporting method to 

persons with signature or other 

authority over 25 or more foreign 

financial accounts. 

In the NPRM, FinCEN requested 

comments on the accuracy of the 

statement that the proposed rule would 

not have a significant economic impact 

on a substantial number of small 

entities. FinCEN received no comments 

that directly challenged the accuracy of 

that statement. 

V. Executive Order 12866 

It has been determined that the final 

rule is a ‘‘significant regulatory action’’ 

for purposes of Executive Order 12866 

(although not economically significant) 

and has been reviewed by the Office of 

Management and Budget. 

VI. Paperwork Reduction Act Notices 

The collection of information burden 

contained in this rule (31 CFR 1010.350) 

has been approved by the Office of 

Management and Budget (OMB) in 

accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)) (Paperwork Reduction Act) 

under control number (1506–0009). An 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless it 

displays a valid control number 

assigned by OMB. 

Estimate Number of Affected Filing 

Individuals and Entities: 400,000. 

Estimate Average Annual Burden 

Hours Per Affected Filer: The estimated 

average burden associated with the 

recordkeeping requirement in this rule 

will vary depending on the number of 

reportable accounts. We estimate that 

the recordkeeping burden will range 

from five minutes to sixty minutes, and 

that the average burden will be thirty 

minutes. The estimated average burden 

associated with the reporting 

requirement (FBAR form completion) 

will also vary depending on the number 

of reportable accounts and whether the 

filer will be able to take advantage of the 

exceptions provided in this rule. 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 TD–F 

90–22.1 (See OMB Control Number 

1506–0009/1545–2038). The burden 

associated with reporting a financial 

interest in or signature or other 

authority over a foreign financial 

account to the Commissioner of Internal 

Revenue is reflected in the burden for 

the appropriate income tax return or 

schedule. 

Estimated Total Annual Burden: 

500,000 hours. 

FinCEN received one comment on the 

estimated number of filers. The 

commenter believed that the number of 

filers should be higher. The commenter 

stated that estimates of Americans living 

abroad may be as high as 5 million, and 

that approximately 2 million of those 

Americans might be affected by the 

FBAR rules. The commenter did not 

provide a verifiable source or 

methodology for arriving at those 

estimates. As stated above, the rule 

contained in this document addresses 

the FBAR rules that have been in 

existence since 1972. FinCEN’s estimate 

of the number of affected filing 

individuals and entities (400,000) is 

based on the number of FBARs annually 

filed in recent previous years. 

One commenter noted that several of 

its clients had spent considerably more 

time than the NPRM estimated for 

complying with the FBAR requirement. 

FinCEN believes that changes made by 

the NPRM and incorporated in this 

document, such as addressing the scope 

of persons that are required to file 

reports of foreign financial accounts, 

specifying the types of reportable 

accounts, and providing relief in the 

form of exemptions for certain persons 

with signature or other authority over 

foreign financial accounts from filing 

reports, will assist filers in complying 

with the rule. Further, clarifications in 

this document regarding the scope of 

terms in the NPRM, such as reportable 

accounts and financial interest, as well 

as revisions to the definition of 

signature authority and the provision of 

truncated filing, will assist filers in 

complying with the rule. Accordingly, 

FinCEN has not increased the average 

estimated burden. 

Finally, several commenters 

recommended that filers be allowed to 

file the FBAR electronically. As noted 

earlier in this document, FinCEN is in 

the process of modernizing its IT system 

and has plans to include the ability to 

file FBARs electronically. 

VII. 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 


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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. 

Amendment 

For the reasons set forth above in the 

preamble, 31 CFR part 1010, published 

October 26, 2010 (75 FR 65812), is 

amended as follows: 

PART 1010—GENERAL PROVISIONS 

■ 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. 

■ 2. Section 1010.350 is revised to read 

as follows: 

§ 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 for each year in 

which such relationship exists and shall 

provide 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 (TD–F 

90–22.1), or any successor form. See 

paragraphs (g)(1) and (g)(2) of this 

section for a special rule for persons 

with a financial interest in 25 or more 

accounts, or signature or other authority 

over 25 or more accounts. 

(b) United States person. For purposes 

of this section, the term ‘‘United States 

person’’ means— 

(1) A citizen of the United States; 

(2) A resident of the United States. A 

resident of the United States is an 

individual who is a resident alien under 

26 U.S.C. 7701(b) and the regulations 

thereunder but using the definition of 

‘‘United States’’ provided in 31 CFR 

1010.100(hhh) rather than the definition 

of ‘‘United States’’ in 26 CFR 

301.7701(b)–1(c)(2)(ii); and 

(3) 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. 

(c) Types of reportable accounts. For 

purposes of this section— 

(1) Bank account. The term ‘‘bank 

account’’ means a savings deposit, 

demand deposit, checking, or any other 

account maintained with a person 

engaged in the business of banking. 

(2) Securities account. The term 

‘‘securities account’’ means an account 

with a person engaged in the business 

of buying, selling, holding or trading 

stock or other securities. 

(3) Other financial account. The term 

‘‘other financial account’’ means— 

(i) An account with a person that is 

in the business of accepting deposits as 

a financial agency; 

(ii) An account that is an insurance or 

annuity policy with a cash value; 

(iii) 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 

(iv) An account with— 

(A) Mutual fund or similar pooled 

fund. 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; or 

(B) Other investment fund. [Reserved] 

(4) Exceptions for certain accounts. 

(i) 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 whollyowned 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. 

(ii) An account of an international 

financial institution of which the United 

States government is a member is not 

required to be reported. 

(iii) An account in an institution 

known as a ‘‘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. 

(iv) Correspondent or nostro accounts 

that are maintained by banks and used 

solely for bank-to-bank settlements are 

not required to be reported. 

(d) Foreign country. A foreign country 

includes all geographical areas located 

outside of the United States as defined 

in 31 CFR 1010(hhh). 

(e) Financial interest. A financial 

interest in a bank, securities or other 

financial account in a foreign country 

means an interest described in this 

paragraph (e): 

(1) Owner of record or holder of legal 

title. 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 

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. 

(2) Other financial interest. A United 

States person 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— 

(i) A person acting as an agent, 

nominee, attorney or in some other 

capacity on behalf of the United States 

person with respect to the account; 

(ii) 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 an entity in paragraphs (e)(2)(iii) 

through (iv) of this section) 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; 

(iii) A trust, if the United States 

person is the trust grantor and has an 

ownership interest in the trust for 

United States Federal tax purposes. See 

26 U.S.C. 671–679 and the regulations 

thereunder to determine if a grantor has 

an ownership interest in the trust for the 

year; or 

(iv) A trust in which the United States 

person either has a present beneficial 

interest in more than 50 percent of the 


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assets or from which such person 

receives more than 50 percent of the 

current income. 

(3) Anti-avoidance rule. A United 

States person that causes an entity, 

including but not limited to a 

corporation, partnership, or trust, to be 

created for a purpose of evading this 

section shall 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. 

(f) Signature or other authority—(1) In 

general. 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. 

(2) Exceptions—(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. 

(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. 

(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 that 

provides services to an investment 

company registered under the 

Investment Company Act of 1940. 

(iv) 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. 

(v) 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. 

(g) Special rules—(1) Financial 

interest in 25 or more foreign financial 

accounts. 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. 

(2) Signature or other authority over 

25 or more foreign financial accounts. 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. 

(3) Consolidated reports. 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. 

(4) Participants and beneficiaries in 

certain retirement plans. Participants 

and beneficiaries in retirement plans 

under sections 401(a), 403(a) or 403(b) 

of the Internal Revenue Code as well as 

owners and beneficiaries of individual 

retirement accounts under section 408 

of the Internal Revenue Code or Roth 

IRAs under section 408A of the Internal 

Revenue Code are not required to file an 

FBAR with respect to a foreign financial 

account held by or on behalf of the 

retirement plan or IRA. 

(5) Certain trust beneficiaries. A 

beneficiary of a trust described in 

paragraph (e)(2)(iv) of this section is not 

required to report the trust’s foreign 

financial accounts if the trust, trustee of 

the trust, or agent of the trust is a United 

States person that files a report under 

this section disclosing the trust’s foreign 

financial accounts. 

Dated: February 16, 2011. 

James H. Freis, Jr., 

Director, Financial Crimes Enforcement 

Network. 

[FR Doc. 2011–4048 Filed 2–23–11; 8:45 am] 

BILLING CODE 4810–02–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Parts 17 and 59 

RIN 2900–AN57 

Updating Fire Safety Standards 

AGENCY: Department of Veterans Affairs. 

ACTION: Final rule with request for 

comments. 

SUMMARY: This document adopts as a 

final rule, with changes, the proposed 

rule to amend the Department of 

Veterans Affairs (VA) regulations 

concerning community residential care 

facilities, contract facilities for certain 

outpatient and residential services, and 

State home facilities. The final rule will 

clarify current regulations and update 

the standards for VA approval of such 

facilities, including standards for fire 

safety and heating and cooling systems. 

The final rule will help ensure the 

safety of veterans in the affected 

facilities. This document also 

implements and seeks comments 

regarding a new interim final sprinkler 

system requirement for certain facilities. 

DATES: Effective Date: This final rule is 

effective March 28, 2011. 

Comment Date: Comments on the 

interim final amendments to 38 CFR 

59.130 only must be received on or 

before April 25, 2011. 

The Director of the Federal Register 

approved the incorporation by reference 

of certain publications listed in this rule 

as of March 28, 2011. 

ADDRESSES: Written comments may be 

submitted through http:// 

www.regulations.gov; by mail or handdelivery to the Director, Regulations 

Management (02REG), Department of 

Veterans Affairs, 810 Vermont Avenue, 

NW., Room 1068, Washington, DC 

20420; or by fax to (202) 273–9026. 

Comments should indicate that they are 

submitted in response to ‘‘RIN 2900– 

AN57—Updating Fire Safety 


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