FinCEN Adjusts E-file and FBAR Requirements

The Financial Crimes Enforcement Network is allowing some extensions and exemptions to its new requirements that all FineCEN reports be filed electronically starting July 1, 2012, while pushing back the requirement for mandatory e-filing of FBAR reports until June 30, 2013.

FinCEN, which is one of the Treasury Department’s lead agencies in combating money laundering and other financial criminal activities, said Friday that it is reaffirming the e-filing requirement while allowing some extensions and exemptions. Under the requirements, all financial institutions subject to the Bank Secrecy Act are supposed to begin using electronic filing for certain reports beginning no later than July 1, 2012.

While nearly all FinCEN reports fall within the e-filing mandate, Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) are by far the most commonly filed FinCEN reports and are the primary focus of this initiative, FinCEN noted. For practical reasons, the Currency and Monetary Instrument Report (CMIR), which is most often completed by individuals upon physically crossing the border into the United States, is not included in the mandate.

FinCEN Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, may also continue to be filed on paper.

FinCEN said it is encouraging individuals to electronically file Reports of Foreign Bank and Financial Accounts, commonly known as FBARs, and has made that option available. However, the deadline for mandatory FBAR e-filing has been postponed until June 30, 2013 to allow time for practical adaptation and notice. FinCEN noted that this temporary electronic filing exemption does not relieve any person of the obligation to file an FBAR and does not affect the required date by which any given FBAR must be received by the Treasury Department.

The IRS has made a priority of encouraging taxpayers with foreign bank accounts to come forward and report them to the Service through various Offshore Voluntary Disclosure Initiatives or face stiff penalties and back taxes.

"E-filing makes sense from every perspective,” said FinCEN director James H. Freis, Jr., in a statement. “Both the government and the filer will save time and money. We listened closely to the industry's concerns, balanced those concerns with the needs of law enforcement, and we are allowing some prudent exemptions. As part of FinCEN’s overall modernization of its IT systems, the time has come to move our reporting framework from paper to the electronic age.”

In conjunction with postponing the deadline for filing the FBAR, FinCEN issued a notice on its Web site detailing three categories for possible exemption. Some money services businesses, or small credit unions, may lack Internet access and file only a limited number of FinCEN reports, the agency noted. Some financial institutions that file a large number of Currency Transaction Reports may also need time to adapt their aggregation systems. There is also an "other extraordinary circumstances" category.

To qualify for an exemption, financial institutions must affirmatively request the exemption within 30 days and await FinCEN's response. To assist filers with the new requirements a recorded instructional presentation has been made available.

For more information about e-filing Bank Secrecy Act reports, visit the E-Filing Section of FinCEN's Web site. For e-filing technology-related questions specific, the BSA E-Filing Help desk can be reached at 1-(866) 346-9478, Option 1.