Which Accounts Are Reportable?

What counts as a financial account

The FBAR reports financial accounts. The regulations describe them functionally rather than by name: an account maintained with a person engaged in the business of banking, with a person in the business of accepting deposits as a financial agency, with a broker or dealer in securities or commodities, or with an entity performing services that a financial institution would perform.

Two consequences flow from that functional approach:

• The label on the product does not decide it. Whether the institution calls it a “savings plan”, a “deposit” or a “policy”, what matters is whether you hold an account with an institution performing financial services.
• An asset you hold directly is usually not an account. Shares in a foreign company held in certificate form, a flat in Lisbon or gold in your own safe are assets, not accounts, and are outside the FBAR — though several of them fall inside Form 8938.

What makes an account “foreign”

The test is geographic, not corporate. An account is foreign if it is maintained at a financial institution physically located outside the United States. The nationality of the bank is irrelevant.

Reportable account types

The following are reportable when held at an institution outside the United States.

Bank accounts

Checking accounts, savings accounts, current accounts, time deposits, fixed deposits, certificates of deposit and their local equivalents. This is the core case and rarely disputed.

Securities and brokerage accounts

Any account with a broker or dealer holding securities for you, whether or not it holds any at a given moment. A brokerage account that was fully in cash all year is still a reportable financial account.

Commodity futures and options accounts

Accounts with a foreign futures commission merchant or equivalent.

Insurance policies with a cash value

A foreign life insurance or endowment policy that has a cash surrender value is reportable, and the value reported is generally the cash surrender value, not the death benefit. Pure term life cover with no cash value is not reportable. Many European and Asian savings-linked policies fall squarely into the reportable category, and they are among the most frequently missed items on an FBAR.

Annuities with a cash value

Foreign annuity contracts with a cash value are reportable on the same basis.

Mutual funds and similar pooled funds

An account with a foreign mutual fund or similar pooled fund that issues shares available to the general public, has a regular net asset value determination and provides regular redemptions, is reportable. Non-public private equity and hedge fund interests occupy a greyer area — FinCEN has not extended the rule to them by regulation, but the point has been the subject of comment, and advice is worth taking.

Other accounts with a financial institution

The catch-all. Anything else maintained with a person in the business of providing financial services — including, for example, certain foreign savings schemes, building society accounts, and prepaid or stored-value arrangements held with a financial institution.

Assets that are not reportable

The FBAR is about accounts. These are not accounts and are generally outside the form — which does not mean they are outside every other reporting rule.

• Foreign real estate held directly. A house, flat or land owned in your own name. An account holding rental income from it, however, is reportable.
• Directly held shares, bonds or notes not held in an account — for example a share certificate in a safe.
• Precious metals, art, jewellery and collectibles held personally, including gold in a private vault you control rather than an account.
• Physical currency held personally.
• An interest in a foreign business held directly, as distinct from an account that business holds.
• Foreign social security equivalents — state pension entitlements under a foreign government scheme are generally not accounts.
• Accounts at a U.S. institution, however international the investments inside them.

Excepted accounts

Some genuinely foreign financial accounts are nevertheless excepted from reporting:

• Accounts of a U.S. governmental entity or of specified international financial institutions.
• Correspondent or nostro accounts used solely for bank-to-bank settlements.
• Accounts maintained at a U.S. military banking facility.
• Accounts held by a tax-qualified retirement plan under Internal Revenue Code sections 401(a), 403(a) or 403(b), as regards participants and beneficiaries.
• Foreign accounts held by an individual retirement arrangement, as regards its owner or beneficiary.
• Accounts reported on a consolidated FBAR by a majority owner, or by a trust, trustee or agent, as regards the person relieved.

Foreign pensions and retirement plans

This is the single most difficult area for individual filers, and it deserves a frank statement: there is no blanket answer. Whether a foreign pension is reportable depends on how the arrangement is structured.

• Where you hold an individual account in your own name with an identifiable balance you could in principle direct — many defined-contribution and personal pension arrangements — the account looks like a reportable financial account, and it is commonly reported.
• Where the arrangement is a government social-insurance scheme paying a statutory entitlement, there is generally no account to report.
• Where the arrangement is an employer-funded defined-benefit scheme in which you have only a right to future payments and no account of your own, the analysis is different again and often results in nothing to report on the FBAR — but the same facts may trigger Form 8938.
• The exceptions for tax-qualified plans and IRAs in the list above are defined by reference to U.S. Internal Revenue Code sections. A foreign plan is not covered simply because it is the local equivalent of a 401(k).

Treaty provisions, the terms of the specific scheme and the way the local law treats ownership all bear on the outcome. If a foreign pension is your main foreign holding, this is the point at which to pay for an opinion rather than rely on a website — including this one.

Digital assets and payment apps

Two related questions come up constantly.

Cryptocurrency held at a foreign exchange

FinCEN addressed this in a notice published at the end of 2020, stating that it intended to propose amending the regulations so that virtual currency would be a reportable account type. That signalled the direction of travel clearly. Until such an amendment is finalised, an account at a foreign exchange holding only virtual currency has generally not been treated as reportable — while an account that also holds reportable assets, such as fiat currency balances or securities, is reportable in the ordinary way.

Foreign payment platforms and e-money

A balance held with a foreign payment service, neobank or e-money institution generally looks like an account maintained with an entity performing financial services, and the prudent course is to treat it as reportable and include it in the aggregation. Balances that merely sit momentarily in transit inside a purchase are a different matter, but a standing balance you can withdraw is hard to distinguish from a deposit.

Grey areas worth professional advice

The following recur often enough to list, and each turns on specifics a general reference cannot resolve:

• Foreign pensions and employer retirement arrangements, as above.
• Interests in non-public funds, private equity and hedge fund vehicles.
• Foreign trusts where your beneficial entitlement is unclear or discretionary.
• Accounts held by a foreign entity you control, where attribution rules may apply to you personally.
• Custody arrangements where legal title and beneficial ownership are split.
• Escrow and client-money accounts held for third parties.

In each case the cost of an hour with a qualified adviser is small against the penalty exposure described on our penalties page.

Where to go next

• The $10,000 threshold — how to value the accounts you have identified.
• How to file — putting the account details on the form.
• FBAR vs. Form 8938 — the wider asset list you may also need to consider.
• Glossary — definitions of the terms used above.