FinCEN 114 (FBAR): Report of Foreign Bank and Financial Accounts
Required filing for U.S. persons with a financial interest in or signature authority over foreign financial accounts with an aggregate value exceeding $10,000 at any time during the year.
Overview
FinCEN Form 114, commonly known as the FBAR (Report of Foreign Bank and Financial Accounts), is a disclosure filing required under the Bank Secrecy Act (BSA), 31 U.S.C. § 5314. Unlike most tax filings, the FBAR is not filed with the IRS — it is submitted electronically through the Financial Crimes Enforcement Network (FinCEN) BSA E-Filing System. Its purpose is to give the U.S. government visibility into offshore financial accounts held by U.S. persons, a key tool in detecting tax evasion, money laundering, and other financial crimes.
The FBAR requirement is triggered when a U.S. person has a financial interest in, or signature authority over, one or more foreign financial accounts whose aggregate maximum value exceeded $10,000 at any point during the calendar year. This is not a tax form in the traditional sense — no tax is computed or paid on the FBAR itself — but failing to file can result in severe civil and criminal penalties that dwarf those associated with most other information return failures. The $10,000 threshold is measured in aggregate across all foreign accounts, not per account, which catches many filers who hold modest balances in multiple countries.
The FBAR operates alongside, but is legally distinct from, IRS Form 8938 (Statement of Specified Foreign Financial Assets), which is filed under IRC § 6038D as part of the income tax return. The two forms overlap in scope but differ in thresholds, definitions, and legal authority. U.S. persons may be required to file both, and most CPA firms advise treating them as separate compliance obligations with separate checklists. Understanding the FBAR's BSA origins — rather than treating it as just another tax form — is essential to appreciating both its filing mechanics and its penalty regime.
Who Files This Form?
A U.S. person must file the FBAR if they had a financial interest in, or signature authority over, at least one foreign financial account and the aggregate maximum value of all such accounts exceeded $10,000 at any time during the calendar year. "U.S. person" includes U.S. citizens, U.S. residents (including green card holders and individuals meeting the substantial presence test), and domestic entities such as corporations, partnerships, LLCs, trusts, and estates.
Financial interest covers situations where the U.S. person is the owner of record or has a beneficial interest in the account — including accounts held in the name of a nominee, agent, or foreign entity in which the U.S. person owns more than 50% directly or indirectly. Signature authority means the person can control the disposition of assets in the account through direct communication with the financial institution, even if they have no ownership interest.
Foreign financial accounts subject to reporting include bank accounts, brokerage accounts, mutual fund accounts, and certain other accounts maintained at a financial institution located outside the United States. Foreign real estate held directly is not reportable, but a foreign account holding real estate-related investments may be. Interests in foreign pension plans and foreign life insurance policies with a cash surrender value may also trigger FBAR obligations depending on structure.
Key exceptions include accounts held at a U.S. military banking facility, accounts of certain international financial institutions, and correspondent or nostro accounts. Employees and officers who have signature authority over employer-owned foreign accounts but no financial interest may qualify for a deferred filing deadline in certain circumstances. Consolidated FBAR filings are permitted for entities whose accounts are consolidated on a parent company's financial statements, subject to specific conditions.
Key Fields
Part I: Filer Information (Name, TIN, Address)
Identifies the U.S. person filing the report. The Taxpayer Identification Number (TIN) should match the filer's tax return — SSN for individuals, EIN for entities. Mismatches between the FBAR TIN and the income tax return are a common audit trigger, so consistency across filings matters.
Part II / Part III: Type of Filer
Indicates whether the filer has a financial interest in the account (Part II) or only signature authority (Part III). This distinction is critical because it determines the legal basis for reporting and affects how penalties are calculated in an examination. Some filers must complete both parts if they have accounts of each type.
Foreign Bank or Financial Institution Name
The full legal name of the institution holding the account, as it appears on account statements. Abbreviated or colloquial names can create matching issues if FinCEN follows up; use the name exactly as shown on official correspondence from the foreign institution.
Account Number
The account number or other identifier assigned by the foreign financial institution. If the account does not have a traditional account number, the filer should use whatever unique identifier the institution provides (e.g., IBAN, policy number). Do not leave this blank or substitute a placeholder.
Maximum Account Value During the Year
The highest balance or value in the account at any point during the calendar year, converted to U.S. dollars using the Treasury's year-end exchange rate (published annually by FinCEN). This is not the year-end balance — it is the peak balance. Using year-end rates to convert mid-year peaks is correct; using other exchange rates is not.
Type of Account
Select from the available categories: bank account, securities account, or other. 'Other' should be described — common examples include foreign life insurance with cash value, foreign pension accounts, or commingled funds. Selecting the wrong type is a minor error but worth correcting to avoid questions during review.
Country of Account
The country where the foreign financial institution is located — not the country of incorporation of the account holder or the currency of the account. Use the two-letter country code or the country name as prompted in the BSA E-Filing System. Offshore branches of U.S. banks in foreign countries are still reportable.
Financial Interest vs. Signature Authority Indicator
For each account, the filer must indicate whether they have a financial interest, signature authority only, or both. This field drives the legal analysis underlying the filing. Accounts with only signature authority where the filer has no ownership stake are reported separately and may have different examination exposure.
Filer's Relationship to Account (for jointly held or entity accounts)
When an account is jointly held, each U.S. co-owner must generally file their own FBAR — there is no joint filing option for individuals (unlike income tax returns). Spouses may use a special spousal filing option under certain conditions, in which case both spouses' information must be included and the non-filing spouse must sign a consent.
Filing Deadlines
April 15 (automatic extension to October 15)
Non-willful penalties up to $12,500 per violation; willful penalties up to the greater of $100,000 or 50% of account balance.
Step-by-Step Instructions
- 1
Gather all foreign financial account statements for the calendar year, identifying the institution name, account number, country, account type, and the highest balance at any point during the year for each account.
- 2
Convert all maximum account values to U.S. dollars using the official Treasury/FinCEN exchange rates published for December 31 of the reporting year. Sum the converted values to confirm the aggregate exceeds $10,000 and that filing is required.
- 3
Determine the correct filer type for each account — financial interest, signature authority, or both — and note any accounts that may qualify for exceptions (e.g., accounts of certain international institutions, consolidated filing eligibility).
- 4
Create or log into an account on the FinCEN BSA E-Filing System (bsaefiling.fincen.treas.gov). The FBAR is filed exclusively through this portal; it cannot be mailed or attached to a tax return.
- 5
Complete FinCEN Form 114 electronically, entering filer identification information (name, TIN, address, date of birth for individuals) and then populating a separate account entry for each reportable foreign account.
- 6
If filing on behalf of a client as a third-party preparer, use the BSA E-Filing System's 'Filing on Behalf of' functionality and retain a signed FinCEN Form 114a (Record of Authorization to Electronically File FBARs) in your files — this is the equivalent of a Form 8879 for FBAR purposes and should be kept for at least five years.
- 7
Submit the FBAR electronically by April 15. The system automatically grants an extension to October 15; no separate extension request is required. Note the confirmation number provided upon successful submission and retain it as proof of filing.
- 8
Cross-reference the FBAR with Schedule B (Form 1040), Part III, where individuals must answer yes/no questions about foreign accounts, and with Form 8938 if the client's foreign financial assets exceed the applicable 8938 thresholds. Inconsistencies across these three filings are a known examination trigger.
- 9
Document all decisions made — which accounts were included, which were excluded and why, exchange rates used, and any exception rationale — in the client file. In the event of an audit or penalty assessment, this contemporaneous documentation is the first line of defense.
Common Mistakes to Avoid
Using year-end account balances instead of maximum account values during the year.
Review all account statements month by month (or obtain an annual statement showing the high-water mark) to identify the peak balance, then convert using the December 31 Treasury exchange rate. Many foreign institutions can provide a 'highest balance' figure on request.
Failing to aggregate balances across all foreign accounts before applying the $10,000 threshold.
Add together the converted maximum values of every foreign financial account — bank, brokerage, pension, insurance — before determining whether filing is required. A client with five accounts each peaking at $3,000 still exceeds the threshold and must file.
Omitting accounts where the client has only signature authority (e.g., a business account the client controls as an officer or authorized signer).
Specifically ask clients about any foreign accounts over which they can direct funds even if they don't own them. Signature authority accounts are reportable and are a frequent source of missed filings, particularly for executives of multinational companies.
Filing the FBAR as an attachment to the income tax return or through tax preparation software's e-file channel instead of through the FinCEN BSA E-Filing System.
The FBAR must be filed exclusively on the FinCEN BSA E-Filing portal. Some tax software packages offer an integrated workflow that routes the filing to FinCEN behind the scenes, but the practitioner should confirm the submission receipt from FinCEN, not just the software.
Assuming that because a foreign account is already reported on Form 8938, the FBAR is not also required.
Form 8938 and the FBAR are separate legal obligations with different authorities, thresholds, and definitions. Filing one does not satisfy the other. Most clients who must file Form 8938 must also file the FBAR, though the reverse is not always true.
Missing the October 15 extended deadline and assuming a late filing with a reasonable cause statement is straightforward.
While FinCEN does consider reasonable cause when evaluating late FBAR penalties, the penalty regime is severe and discretionary. If a filing is late, prepare a detailed reasonable cause statement and consider the Streamlined Filing Compliance Procedures if the client has non-willful non-compliance across multiple years.
Frequently Asked Questions
The FBAR (FinCEN Form 114) is a report that U.S. persons must file when they have a financial interest in or signature authority over foreign financial accounts with an aggregate maximum value exceeding $10,000 at any time during the calendar year. 'U.S. person' includes citizens, residents, and domestic entities such as corporations, partnerships, and trusts. The form is filed with FinCEN under the Bank Secrecy Act, not with the IRS as part of a tax return.
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