Foreign Accounts and FBAR Requirements

Question:

We are a small community bank. We have 72 individuals who are non-resident aliens. They regularly wire funds to other countries and also receive funds into their accounts at the bank. These accounts are for students at the local university. The money is used for tuition, housing and miscellaneous expenses. If I am correct since they are not US Citizens FBAR would not be a concern. New Reporting Requirements by U.S. Taxpayers Holding Foreign Financial Assets (Form 8938) Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. The new Form 8938 filing requirement does not replace or otherwise affect a taxpayer's requirement to file FBAR. A chart providing a comparison of Form 8938 and FBAR requirements, and other information to help taxpayers determine if they are required to file Form 8938, may be accessed from the IRS Foreign Account Tax Compliance Act Web page. Also, we (the bank) have no foreign accounts and only transfer funds to other countries via wire using OFAC guidelines for our customers. Is there anything I need to be aware of for the Report of Foreign Bank and Financial Accounts (FBAR)?

Answer:

Your post already contains more information about the FBAR requirements for individuals than I would expect most banks in your situation to know. As you state, the filing requirement simply does not apply to non U.S. persons. If your customers are documented as such, there is no need to analyze this particular issue on their behalf. As your bank maintains no foreign accounts, it is not part of your compliance regimen either.

First published on BankersOnline.com 12/17/12