Pursuant to the Bank Secrecy Act of the United States of America (“U.S.”) and the regulations issued by the Financial Crimes Enforcement Network (“FinCEN”), a division of the U.S. Department of the Treasury responsible for combating money laundering, U.S. citizens (wherever they reside), other individuals considered U.S. tax residents (including green card holders), and entities organized under U.S. law (collectively, “U.S. Persons”) that hold, directly or indirectly, a financial interest in, or signature authority over, one or more bank or financial accounts located outside the U.S. whose aggregate value exceeded US$10,000.00 (ten thousand U.S. dollars) at any time during calendar year 2025 must file with the U.S. Department of the Treasury the Report of Foreign Bank and Financial Accounts, commonly known as the “FBAR.”
As has been the case in recent years, the original April filing deadline has been automatically extended by six months, to October 15, 2026.
The report must be filed exclusively by electronic means, through the FinCEN BSA E-Filing System.
It is important to emphasize that a U.S. Person is required to file the report if, at any time during 2025, it directly or indirectly held a financial interest in, or signature authority over, one or more bank or financial accounts located outside the U.S. with an aggregate value exceeding US$10,000.00 (ten thousand U.S. dollars).
We note that the FBAR filing obligation extends to every type of entity organized in the U.S., including all Limited Liability Companies (“LLCs”), even where they are treated as disregarded entities (single-member LLCs) for U.S. federal tax purposes.
The FBAR obligation also covers bank or financial accounts located outside the U.S. that are held by corporations (including non-U.S. corporations) in which a U.S. Person owns more than 50% of the share capital (or, in certain cases, of the voting shares or of the rights to profits). Accounts located outside the U.S. held by a trust in which a U.S. Person is a beneficiary entitled to more than 50% of its assets or income are likewise covered.
The concept of accounts or financial accounts includes: (i) bank accounts of any kind; (ii) securities accounts, as well as commodity futures and options accounts; and (iii) financial accounts and investments in general, including certain investment funds and insurance policies.
We emphasize that, to file the report, an entity filer must have an Employer Identification Number (“EIN”). If the entity does not have one, it must apply for it in advance so that the report can be filed, or contact us to discuss possible alternatives.
It is also worth noting that the FBAR filing obligation does not depend on whether the accounts generate income or on whether U.S. tax is due, and that records of the reported accounts must be retained for five (5) years.
Penalties for failure to file, or for inaccurate reporting, vary depending on the nature of the violation. Non-willful violations are subject to a penalty of up to US$16,536.00 per report not filed, unless reasonable cause exists. Willful violations may result in a penalty of up to US$165,353.00 per unreported account, or 50% of the account balance at the time of the violation, whichever is greater, without prejudice to any potential criminal consequences. Penalties are not imposed automatically, and specific procedures exist for regularizing late filings, which may be assessed on a case-by-case basis.
Finally, since the enactment of the Foreign Account Tax Compliance Act (“FATCA”), the U.S. Treasury has had an important mechanism for cross-checking information and identifying accounts and financial assets held with foreign financial institutions, as those institutions are required to report them to U.S. authorities. As a result, the likelihood of identifying U.S. Persons who fail to comply with this reporting obligation has increased.
