What signature authority means
Signature authority is the authority of an individual, alone or in conjunction with another, to control the disposition of money, funds or other assets held in a financial account by direct communication — written or otherwise — to the person with whom the account is maintained.
Unpacking that definition:
- No ownership is required. You can have signature authority over an account in which you have no financial interest whatsoever. These accounts are reported in Part IV of Form 114.
- Joint authority counts. If two signatures are needed to move money and yours is one of them, you have signature authority.
- Use is irrelevant. The authority exists whether or not you ever exercise it. An unused power is still a power.
- The communication must be direct. Someone who can only instruct a colleague, who then instructs the bank, generally does not have signature authority — the authority has to run to the institution itself.
- Advisory influence is not authority. Being able to recommend, request or approve an action that someone else must transmit to the bank is not the same as being able to direct the bank.
An account over which you have signature authority is included in your aggregate at its full value when you apply the $10,000 threshold — even though none of the money is yours.
Employees and company accounts
The commonest signature-authority situation is an employee who can move an employer’s money. The regulations provide exceptions for certain employees and officers, but they are narrower than most people assume. In broad terms, relief is directed at officers and employees of:
- banks examined by a federal banking agency;
- financial institutions registered with and examined by the Securities and Exchange Commission or the Commodity Futures Trading Commission;
- authorised service providers in respect of accounts of registered investment companies;
- entities with a class of equity securities listed on a U.S. national securities exchange, and certain U.S. subsidiaries included in a listed parent’s consolidated FBAR; and
- large U.S. entities meeting specified size tests — broadly, entities with a substantial number of shareholders of record and significant assets.
Every one of these exceptions is conditional, and the conditions typically include that the employer itself files an FBAR reporting the account and that the individual has no financial interest in it.
The practical upshot for small companies
If you can sign on the foreign account of a small, privately held U.S. business, you will usually not fall within any of these exceptions — they are built around large, regulated and publicly traded employers. The employee generally reports the account in Part IV, and the company files its own FBAR separately. Check the current instructions, because the size tests and conditions are specific.
What the exception does not do
Even where an exception relieves an individual of reporting signature authority accounts, it does nothing about accounts in which that individual has a financial interest. A bank officer with a personal account in Zurich still reports the personal account.
Joint accounts
Each United States person who is an owner of record of a joint account has a financial interest in the whole account. That produces three rules:
- Each U.S. co-owner files their own FBAR (subject to the spousal rule below).
- The account is reported at its full maximum value by each of them. There is no splitting by ownership percentage.
- The full value counts in each co-owner’s aggregate when testing the $10,000 threshold.
A joint account with a non-U.S. person — a foreign spouse, parent or business partner — is reported by the U.S. person in the ordinary way, with the co-owner’s details given in Part III. The non-U.S. co-owner has no filing obligation of their own.
Worked example
Two U.S. sisters jointly hold an account in Seoul that peaked at $30,000. Each sister reports the account at $30,000 — not $15,000 — on her own FBAR, and each names the other as co-owner. The government receives two reports showing the same account, which is the intended result.
When spouses can file one FBAR
There is no general “married filing jointly” FBAR. A single report may cover both spouses only where all of the following conditions are met:
- Every account that the non-filing spouse would have to report is jointly owned with the filing spouse;
- the filing spouse reports those jointly owned accounts on a timely filed FBAR and signs it electronically; and
- both spouses complete and sign Form 114a authorising the arrangement.
Miss any one of those and both spouses must file separate reports.
The condition that catches people
A single separately held account in the non-filing spouse’s name destroys the concession entirely — not just for that account, but for the whole arrangement. One small dormant account in one spouse’s sole name means two FBARs, each reporting all the relevant accounts.
Two common married-couple scenarios
| Facts | Result |
|---|---|
| Both spouses are U.S. persons; all three foreign accounts are held jointly; combined maximum $42,000. | One FBAR may cover both, if it is filed on time and Form 114a is signed by both. Otherwise, two reports. |
| Both spouses are U.S. persons; two accounts joint, plus one account in the wife’s sole name. | Two separate FBARs. The concession is unavailable because the wife has a separately owned reportable account. |
| U.S. citizen married to a non-resident alien; one joint account abroad, maximum $25,000. | The U.S. spouse files, reporting the account at its full $25,000 and naming the co-owner. The non-resident spouse has no obligation. |
Form 114a authorisation
FinCEN Form 114a, Record of Authorization to Electronically File FBARs, is the document by which an account owner authorises someone else to file on their behalf. Its key features:
- It is required whenever a spouse, preparer or any third party submits the report for you.
- It is not filed with FinCEN. It is signed and kept by both the owner and the filer.
- It must be produced on request to FinCEN or the IRS.
- It should be retained for the same five-year period as the other FBAR records — see recordkeeping.
A common oversight in couples who file one report is signing the FBAR but never completing the 114a. The authorisation is the only evidence that the non-signing spouse agreed to the arrangement.
Powers of attorney and agents
Holding a power of attorney over someone’s foreign account will usually give you signature authority, because a power of attorney typically lets you direct the institution. Situations to watch:
- Caring for an elderly relative abroad. A power of attorney over a parent’s account, or being added as a signatory for convenience, creates a reportable interest for you even though you regard the money as entirely theirs.
- Acting as an executor or administrator. Authority over a deceased person’s foreign accounts may be reportable, and a final report may be required for the estate.
- Acting as trustee. A trustee ordinarily has both authority and, depending on the arrangement, potentially a reportable interest. See trusts and estates.
- Holding a dormant authority. A signatory role from a former job or a closed venture is still an authority while it exists. Formally removing yourself from accounts you no longer need access to is good hygiene.
Common scenarios
The treasurer of a small charity
A U.S. person who is treasurer of a U.S. non-profit with a £40,000 account in London can direct the bank, so has signature authority. The employee exceptions are aimed at large and regulated employers and will not usually help. The treasurer reports in Part IV; the organisation files its own FBAR.
The adult child on a parent’s account
A U.S. citizen added to their mother’s account in Manila so bills can be paid is an owner of record or, at minimum, has signature authority. The account goes into the aggregate at full value. If it peaked above $10,000, an FBAR is due — a result that regularly surprises people who have never spent a peso of the money.
The business partner with no signing rights
A U.S. person who owns 30 per cent of a foreign company, cannot sign on its accounts and has no other foreign accounts has neither signature authority nor, at 30 per cent, an attributed financial interest under the more-than-50-per-cent test. No FBAR arises from that holding — though other reporting forms, such as Form 5471, may apply, and the analysis changes above 50 per cent.
Where to go next
- Financial interest — the other route to an obligation.
- How to file — completing Parts III and IV.
- Recordkeeping — retaining Form 114a and the account records.
- Frequently asked questions — more specific situations.
Reminder. The signature-authority exceptions are technical, conditional and summarised loosely above. Whether one applies to you depends on your employer’s regulatory status and size and on the terms of the current regulations. This page is general educational information, not tax or legal advice — verify against the official instructions and take professional advice where an exception matters to you.