FinCEN 2018 – Financial Crimes Enforcement Network (Forms Summary)
Trying to juggle all the different international tax acronyms such as FinCEN, FBAR, Form 8300, can be confusing.
Oftentimes, when a person learns about FinCEN (Financial Crimes Enforcement Network), it is because they are blindsided with the realization that they are out-of-compliance involving the filing, reporting and disclosure of foreign money, accounts and assets.
- 1 Common Buzzkill FinCEN scenarios
- 2 FinCEN — What is it?
- 3 Typical questions about FinCEN include:
- 4 What are the Common FinCEN Forms
- 5 What is FinCEN Form 114 (aka FBAR)?
- 6 What is FinCEN Form 105?
- 7 Other Common FinCEN Forms
- 8 FinCEN Form 8300
- 9 What if you never Reported the Transaction(s)
- 10 We Specialize in Safely Disclosing Foreign Money
- 11 Golding & Golding, A PLC
Common Buzzkill FinCEN scenarios
Example 1: Your Day is Ruined
David is originally from Taiwan. He’s out with friends after a long week and blowing off some steam when one of his friends ask him whether he filed an FBAR.
David has no idea what his friend is talking about. After the friend explains what FinCEN is, and what the reporting requirements are (and kills David’s Buzz) David’s brain won’t shut off.
Sadly, he leaves the bar early to begin a very long research trek (not before stopping off to pick up a bottle of wine, of course).
Example 2: Michelle Meets Her New CPA
Michelle normally does her tax returns herself. While she is a high-income earner, her taxes are relatively simple – or so she thought. She goes to meet her new CPA for the first time, when he asks her about whether or not she has been filing reporting her foreign accounts, income, assets and investments to the IRS.
Michelle stares at him blankly, and after he describes the situation and potential penalties she faces, Michelle also stops off at the local bodega (just missing David on the way out), picks up her own bottle of wine and also settles into the computer for the evening.
FinCEN — What is it?
FinCEN is the Financial Crimes Enforcement Network. In all reality, the name is much more ominous than it needs to be. For most people, all the term FinCEN refers to is the reporting foreign accounts or cash transactions to the U.S. government.
There are various different types of FinCEN forms, depending on whether you are an individual or business, and whether or not you are reporting foreign accounts or reporting cash transactions.
As provided on the FinCEN website:
The mission of the Financial Crimes Enforcement Network is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.”
Typical questions about FinCEN include:
- What is FinCEN Form 114?
- What is an FBAR?
- What is FinCEN Form 105?
- What is Form 8300?
- What is a Currency Transaction Report (FinCEN Report 112)
- What is a Designation of Exempt Person (FinCEN Report 110)
- What is a FinCEN Suspicious Activity Report (FinCEN Report 111)
- What is a FinCEN Registration of Money Services Business (FinCEN Report 107)
- What is a Report of Foreign Bank and Financial Accounts (FinCEN Report 114)
- What is a Report of Cash Payments Over $10,000 Received in a Trade or Business (FinCEN Form 8300)
What are the Common FinCEN Forms
These are the two (2) most common forms
What is FinCEN Form 114 (aka FBAR)?
FinCEN Form 114 is the notorious FBAR Form (Foreign Bank Account Reporting aka Report of Foreign Bank and Financial Account Form). We have written tens, if not hundreds of articles involving the FBAR, including cases, penalties, convictions, filing, etc.
What is an FBAR Statement?
An FBAR statement is a Report of Foreign Bank and Financial Accounts form. It is electronically filed annually with the Department of the Treasury online and is due at the same time your tax returns are due (including extensions) and some restrictions may apply.
Is it more than $10,000 per account, or in Total?
An FBAR is required to be filed when a person or business (explained below) has an annual aggregate total of foreign accounts that exceeds $10,000. It does not matter if all that money is in one account or if a person had 11 accounts with $1000.00 in each account (you get the picture, right?). Once your overseas foreign accounts exceed $10,000, it is now time to report all of the foreign accounts.
Who or What is a U.S. Taxpayer?
This question can get more and more complex depending on who you speak to and what the context of the question is. To that end, if you are either a US citizen, Legal Permanent Resident, or Foreign National Subject to US tax such as a visa holder (if you meet the Substantial Presence Test), then you should most likely file the annual FBAR form.
*If you are unsure whether you should file the form or not, you should speak with an experienced by lawyer to evaluate your particular situation.
I did Not have to File a Tax Return?
This can also get confusing, but it is important to remember that the FBAR is not filed with your tax return. Rather, while your tax return is filed directly with the Internal Revenue Service (by mail or online), your FBAR is filed online electronically directly with the Department of Treasury. Even if you do not meet the threshold requirements for filing a tax return, it does not mean you do not have to file an FBAR. If your annual foreign account balances exceed $10,000, you should file the FBAR.
What is FinCEN Form 105?
FinCEN Form 105 is used when people transfer money on their own person.
For example, you are traveling home to the U.S. from Taiwan, and your sweet grandma gives you a suitcase with $500,000 in it. She tells you not to ask where she got it, other than the fact that you should enjoy the money.
You are skeptical (your grandma was always a bit sheisty). She also tells you not to deposit the money, but rather travel with it (she doesn’t trust the banks).
Unfortunately, as smart as your grandma is, she was unaware of Fincen 105.
As provided by FinCEN:
1) Each person who physically transports, mails, or ships, or causes to be physically transported, mailed, or shipped currency or other monetary instruments in an aggregate amount exceeding $10,000 at one time from the United States to any place outside the United States or into the United States from any place outside the United States, and
(2) Each person who receives in the United States currency or other monetary instruments In an aggregate amount exceeding $10,000 at one time which have been transported, mailed, or shipped to the person from any place outside the United States.
*A transfer of funds through normal banking procedures, which does not involve the physical transportation of currency or monetary instruments, is not required to be reported.
Other Common FinCEN Forms
We have reproduced the following more common forms for your review
FinCEN Form 8300
Form 8300 refers to the deposit of the cash transactions. The idea is that when businesses receive cash deposits, they may be allured into not reporting the transactions or the income. Therefore, the IRS wants to know about these cash deposits.
As provided by FinCEN/IRS:
Each person engaged in a trade or business who, in the course of that trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions, must file Form 8300. Any transactions conducted between a payer (or its agent) and the recipient in a 24-hour period are related transactions. Transactions are considered related even if they occur over a period of more than 24 hours if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions.
FinCEN Currency Transaction Report (FinCEN Report 112)
A bank must electronically file a Currency Transaction Report (CTR) for each transaction in currency82 (deposit, withdrawal, exchange, or other payment or transfer) of more than $10,000 by, through, or to the bank. Certain types of currency transactions need not be reported, such as those involving “exempt persons,” a group which can include retail or commercial customers meeting specific criteria for exemption.
Multiple currency transactions totaling more than $10,000 during any one business day are treated as a single transaction if the bank has knowledge that they are by or on behalf of the same person. Transactions throughout the bank should be aggregated when determining multiple transactions.
FinCEN Suspicious Activity Report (FinCEN Report 111)
Suspicious activity reporting forms the cornerstone of the BSA reporting system. It is critical to the United States’ ability to utilize financial information to combat terrorism, terrorist financing, money laundering, and other financial crimes. Examiners and banks should recognize that the quality of SAR content is critical to the adequacy and effectiveness of the suspicious activity reporting system.
Within this system, FinCEN and the federal banking agencies recognize that, as a practical matter, it is not possible for a bank to detect and report all potentially illicit transactions that flow through the bank. Examiners should focus on evaluating a bank’s policies, procedures, and processes to identify, evaluate, and report suspicious activity. However, as part of the examination process, examiners should review individual SAR filing decisions to determine the effectiveness of the bank’s suspicious activity identification, evaluation, and reporting process. Banks, bank holding companies, and their subsidiaries are required by federal regulations53 to file a SAR with respect to:
- Criminal violations involving insider abuse in any amount.
- Criminal violations aggregating $5,000 or more when a suspect can be identified.
- Criminal violations aggregating $25,000 or more regardless of a potential suspect.
- Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more…
A transaction includes a deposit; a withdrawal; a transfer between accounts; an exchange of currency; an extension of credit; a purchase or sale of any stock, bond, certificate of deposit, or other monetary instrument or investment security; or any other payment, transfer, or delivery by, through, or to a bank.
What if you never Reported the Transaction(s)
If you never reported (or underreported) the money, you may consider entering into one of the approved IRS Voluntary Disclosure Programs.
We Specialize in Safely Disclosing Foreign Money
We have successfully handled a diverse range of IRS Voluntary Disclosure and International Tax Investigation/Examination cases involving FBAR, FATCA, and high-stakes matters for clients around the globe.
Golding & Golding, A PLC
We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.