Overview
Title
Agency Information Collection Activities; Submission for OMB Review; Comment Request; Report of Foreign Bank and Financial Accounts
Agencies
ELI5 AI
The Treasury Department wants to know what people think about a form they have to fill out if they have a lot of money in banks outside the U.S. This form helps the government track illegal activities.
Summary AI
The Department of the Treasury is seeking public comments on their information collection requests, which will be reviewed by the Office of Management and Budget (OMB). These requests relate to the reporting and recordkeeping requirements under the Bank Secrecy Act (BSA) for U.S. persons with foreign financial accounts. The BSA helps combat money laundering and terrorism by requiring financial institutions to keep records and file reports helpful in various matters. The key form related to this is the FinCEN Report 114, also known as the FBAR, which must be filed annually if foreign accounts exceed $10,000 in the previous calendar year. The deadline for public feedback is February 25, 2021.
Abstract
The Department of the Treasury will submit the following information collection requests to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. The public is invited to submit comments on these requests.
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Sources
AnalysisAI
The document is a notice from the Department of the Treasury published in the Federal Register inviting public comments on their proposed information collection activities. Specifically, it involves requirements under the Bank Secrecy Act (BSA) for U.S. persons who have financial interests in foreign financial accounts. The document outlines the need for such reporting to assist in criminal, tax, regulatory, and counter-terrorism efforts.
General Summary
The Department of the Treasury is poised to submit information collection requests concerning foreign financial accounts to the Office of Management and Budget (OMB) for review. The process is conducted according to the Paperwork Reduction Act of 1995. The document outlines that U.S. persons with financial interests in foreign accounts exceeding $10,000 are required to file the FinCEN Report 114, also known as the Report of Foreign Bank and Financial Accounts (FBAR). It highlights that feedback from the public on these reporting requirements is being solicited until February 25, 2021.
Significant Issues or Concerns
There are several notable issues within this document:
Lack of Cost Analysis: The document does not address potential costs or budgetary implications linked to these information collection activities. This omission may hinder the public's ability to determine if there is potential wasteful spending involved.
Time Estimate Clarification: With the estimated time for completing the FinCEN Report 114 set at one hour, the document lacks a detailed explanation or justification for this figure. Without insights into how this estimate was determined, it's left unclear whether it accurately reflects the time required.
Complex Terminology: The language and terminologies used, particularly regarding financial regulations and legal references, may create obstacles for individuals unfamiliar with such jargon. This complexity could lead to misunderstandings or even non-compliance by the public.
Comment Submission Process: The instructions provided for public comment submission are minimal, listing only a web address. This could lead to confusion about the correct way to provide feedback.
Legal Authority Explanation: The references to legal authority, such as U.S. Code sections, are not sufficiently explained, making it challenging for some readers to grasp the legal foundation of these activities.
Broad Public Impact
The requirements spelled out in this notice have broad implications for U.S. citizens and residents with foreign financial accounts. By mandating reporting for accounts exceeding $10,000, the Treasury fosters transparency and aids in regulatory compliance, but possibly adds a layer of complexity for those affected. Individuals unfamiliar with the technicalities of financial reporting might find the process burdensome or intimidating.
Impact on Specific Stakeholders
For individuals and businesses with foreign financial interests, the primary impact is compliance-related. They need to ensure meticulous record-keeping and awareness of reporting deadlines. While it may be cumbersome, compliance can protect stakeholders from legal risk and penalty.
Financial institutions and advisors may benefit from increased business as individuals seek assistance in navigating these requirements. However, they also bear the responsibility of ensuring clients are well-informed and compliant.
In summary, while the document aims to address crucial aspects of financial transparency and regulation, the lack of detailed guidance and the use of complex regulatory language could hinder its effectiveness. Moreover, without a cost analysis or specific instructions on public involvement, stakeholders might find it challenging to engage meaningfully with the proposal.
Financial Assessment
The Federal Register document focuses on the collection of information related to foreign financial accounts, specifically regarding the filing of the FinCEN Report 114, also known as the Report of Foreign Bank and Financial Accounts (FBAR). According to the document, individuals and businesses with foreign financial accounts exceeding $10,000 at any time during the previous calendar year are required to file this report electronically.
The requirement to file the FBAR is based on the need for financial transparency, as the data collected is useful in criminal, tax, and regulatory matters. It also aids in the conduct of intelligence or counter-intelligence activities intended to protect against international terrorism. This requirement is authorized under the Bank Secrecy Act (BSA), and the authority to enforce it has been delegated to the Director of the Financial Crimes Enforcement Network (FinCEN).
Even though the document specifies that the report applies to foreign financial accounts exceeding $10,000, it does not address any direct spending, appropriations, or financial allocations related to this information collection activity. There are no details on potential costs for respondents or the administration of this program by the Treasury Department. This omission may obscure the understanding of any potential financial impact on individuals or institutions required to comply with the reporting requirements.
One of the issues highlighted is the lack of a detailed explanation or justification for the estimated time of 1 hour per response when completing the FinCEN Report 114. This consideration is important as it relates to the potential labor or operational costs incurred by those required to file the FBAR. Without clarification, there may be uncertainty about whether the time estimate truly reflects the complexity and time commitment of the task.
The document specifies that no FBAR is necessary for accounts maintaining an aggregate value below $10,000 in the previous calendar year. This threshold is crucial as it sets a baseline for compliance, ensuring that individuals or entities with limited foreign financial holdings are not unduly burdened by this reporting requirement.
In conclusion, while the document outlines the requirement for reporting foreign financial accounts exceeding $10,000, it does not provide detailed information on the financial implications or justifications for the reporting timeline. This lack of financial details could potentially lead to misunderstandings or unanticipated compliance costs for those required to submit the FBAR.
Issues
• The document does not specify any potential costs or budgetary implications associated with the information collection activities, making it difficult to assess potential wasteful spending.
• There is no detailed explanation or justification provided for the estimated time of 1 hour per response, leaving ambiguity about whether this estimate accurately reflects the true time required for completing the FinCEN Report 114.
• The language used to describe financial terms and regulatory requirements may be complex for individuals not familiar with financial regulations, leading to potential misunderstandings or non-compliance.
• The process through which the public can submit comments is not detailed beyond providing the web address, which might lead to confusion about how to properly submit feedback.
• The authority referenced, such as 44 U.S.C. 3501 et seq. and various parts of the U.S. Code, is not adequately explained, making it difficult for the reader to understand the legal basis for the activities.