Will My Bank Still Need to Report My Financial Information to the IRS Under FATCA?
January 30, 2025
As a US citizen, you must report your financial information to the government wherever you go.
However, President Trump has indicated a move away from taxing people based on citizenship towards a taxation model based on where income is earned.
President Trump has not yet provided specific details on what he intends to do with regards to citizenship-based taxation, but he said during the campaign that he would end double taxation for Americans abroad.
One thing that’s unlikely to change too much is the Foreign Account Tax Compliance Act, better known as FATCA.
The days of being able to hide money in accounts in offshore jurisdictions and pretend no one is looking are well and truly over.
A raft of rules have come into being to thwart bad actors and criminals and prevent money laundering.
If you have foreign financial accounts or assets, it’s essential to understand these reporting requirements and stay compliant to avoid any potential penalties.
With more stringent reporting and due diligence rules ushering in a new era for banking, FATCA is intended to prevent money laundering and other financial crimes.
It requires foreign banks to report the financial holdings of US people, but it has made it more difficult for Americans abroad to open a bank account or invest in savings plans or pensions.
What is FATCA?
FATCA started in 2010 and requires all foreign financial institutions to report on the foreign assets held by US account holders.
It also requires individuals to report their foreign financial assets to the Internal Revenue Service (IRS) through Form 8938, which is filed with your annual tax return. See our Ultimate Guide to FATCA for a deeper dive.
FATCA was the revenue-raising portion of Obama’s 2010 Domestic Jobs Stimulus Bill.
According to the IRS, foreign financial institutions that agree with the IRS to report on account holders may be required to withhold 30% of certain payments to foreign payees if such payees do not comply with FATCA.
Foreign Banks Obligations Under FATCA
FATCA imposes onerous reporting requirements on foreign financial institutions. It is designed to prevent using offshore accounts and financial assets to evade US taxes.
These include the following:
- Foreign Financial Institutions (FFIs) must report financial information on accounts held by specified US individuals and entities
- They must also report certain non-financial foreign entities controlled by specified US persons
- FFIs must register with the IRS to obtain a Global Intermediary Identification Number.
If a foreign institution fails to report or chooses not to, it must pay a 30% withholding tax on certain income that would otherwise be exempt from US taxation. That strongly motivates all these banks to report US assets directly to the IRS.
FATCA applies to all US financial assets held at foreign institutions, such as banks, brokers, insurance companies and the like.
It includes cash balances and investments not held in an account, such as shares, bonds, insurance and annuity contracts. It also includes investments in hedge funds or private equity funds, foreign pensions and mutual funds outside the US.
It also includes foreign partnership interests and the ownership of a foreign entity like an overseas corporation.
Lastly, it includes any financial instrument or contract with a non-US person as the counterparty.
One thing that is not included is physical assets like your house or precious metals stored in physical vaults outside of the financial system.

Individual FATCA Reporting Requirements
FATCA requires all non-US foreign financial institutions to search their records for customers with indicia or indications of a connection to the US and report the assets and identities of such persons to the US Department of Treasury.
Such persons must report their non-US financial assets annually to the Internal Revenue Service (IRS) on Form 8938.
This is in addition to the requirement to report them annually to the Financial Crimes Enforcement Network (FinCEN) on Form 114, also known as FBAR.
FATCA applies to US citizens and Green card holders residing in other countries.
However, for people who are inside the US and those outside, the filing threshold is different.
If you’re a single filer (or married filing separately) inside the US, the threshold is US$50,000 at the end of the year or US$75,000 at any point during that year. If you’re an expat, it’s four times that amount.
So, if you are single (or Married filing separately), it’s US$200,000 at the end of the year or US$300,000 at any point during the year.
For married couples filing jointly living in the USA, the threshold is US$100,000 or US$150,000 at any point during the year.
And, if you’re a married expat filing jointly outside of the USA, it’s US$400,000 at the end of the year or US$600,000 at any point during the year.
One thing to note is that if you are a US person living overseas, you might not have had a filing requirement because the threshold is US$200,000.
However, if you moved back to the US, you could have a filing requirement because the threshold is much lower, at US$50,000.
The Report of Foreign Bank and Financial Accounts (FBAR)
FATCA and FBAR often get confused, but they serve different purposes and have different rules.
The FBAR is reported directly to the US Treasury Department. FATCA or Form 8938 is filed alongside your tax return and goes directly to the IRS.
The Foreign Bank Account Report is part of the Bank Secrecy Act and is meant to track US citizens with foreign financial accounts.
The FBAR is filed with FinCEN, the Financial Crimes Enforcement Network, not the IRS.
So, although both laws deal with foreign financial assets, they have distinct requirements that serve different purposes and are filed with other organisations.
One key difference between FATCA and FBAR is the filing thresholds, which refer to the minimum amount of foreign assets you must have before you’re required to report.
You need to file an FBAR if the aggregate value of your foreign financial accounts exceeds US$10,000 at any point during the year.
It doesn’t matter if you have one account with US$11,000 or five accounts totalling over US$10,000 – the combined value counts.
FBAR requires you to report all foreign financial accounts, which includes bank accounts, brokerage accounts, mutual funds, certain foreign pensions and retirement accounts, and any account where you have signatory authority, even if it’s not in your name.
Therefore, FBAR is more about accounts, bank accounts, checking accounts and savings accounts.
FATCA, on the other hand, covers a broader range of foreign financial assets.
So, in addition to the accounts reportable under FBAR, FATCA also requires you to report foreign stocks, foreign securities not held in a financial account, foreign partnership interests, foreign hedge funds and private equity funds, and any other foreign financial instruments or contracts with non-US persons.
Another key difference is where you file these reports. FBARs are filed with FinCEN, not the IRS. They’re done electronically through FinCEN’s e-filing system, separate from your tax return.

Penalties for Non-Compliance
The penalties for failing to comply with FATCA and FBAR are severe but differ in their amounts and enforcement.
If you fail to disclose the accounts, you can be penalised US$10,000, and there is an additional US$10,000 penalty for every 30 days of non-filing after the IRS contacts you about these accounts. The maximum potential penalty is US$60,000, and potential criminal penalties may apply.
Remember, the IRS is getting this information directly from your foreign bank. The government knows you have these accounts, so you’re not filing the FATCA form – you must start now.
Being up-to-date on FATCA and FBAR eliminates penalties for late filing and failure to file.
For non-willful violations, you could be fined up to US$10,000 per violation. For willful violations, the penalties can be far more harsh.
Willful Failure to File FBAR Penalties
When the IRS determines that someone knowingly failed to file an FBAR, the penalties can be substantial. The IRS considers several factors when determining willfulness, including patterns of non-reporting, attempts to conceal accounts, and the taxpayer’s background and sophistication in financial matters.
The penalties for willful violations include a maximum penalty of US$100,000 or 50% of the account balance at the time of the violation, whichever is greater.
There are also potential criminal penalties, including:
- Up to US$250,000 in FBAR fines
- Up to five years imprisonment
- Both monetary penalties and imprisonment in severe cases.
If you continue not to file after the IRS requests the information, the penalty can increase by US$10,000 for each additional 30-day period of non-compliance, up to a maximum of US$50,000 in fines.
Both the FATCA and FBAR penalties are no joke.
Reporting of Financial Information under FATCA: FAQs
FATCA requires all foreign financial institutions to report on the foreign assets held by their US account holders, and individuals must report their foreign financial assets to the RS.
FATCA aims to prevent global tax evasion and improve tax compliance by preventing US Persons from using non-US financial institutions to avoid US taxation on their income and assets.
FATCA is used by US government personnel to detect US persons and their assets and to enable cross-checking where assets have been self-reported by individuals to the IRS or the Financial Crimes Enforcement Network (FinCEN).
FATCA is a tax information reporting regime that requires financial institutions to identify their US accounts through enhanced due diligence reviews and report them periodically to the IRS.
In addition to financial accounts, FATCA requires reporting a broader range of assets, such as foreign stocks and securities, foreign partnerships, and sometimes foreign real estate holdings. At the same time, FBAR is more focused on traditional bank accounts.
While FATCA and FBAR require reporting foreign financial assets, they have different reporting thresholds and requirements. FBAR, or FinCEN Form 114, focuses specifically on foreign bank accounts and requires filing if the aggregate value exceeds US$10,000 during the year.
Given the nature of the IRS and FATCA regulations and the serious consequences associated with non-compliance, it is highly recommended that you seek professional guidance.
Is FATCA Set to Change Under President Trump?
FATCA has been criticised for its impact on overseas Americans and implicated in record-breaking numbers of US citizenship renunciations throughout the 2010s and 2020s.
It was created as a mechanism to force banks around the world to report information about their US customers to the IRS.
Because FATCA required a bank to enforce its own FATCA provisions, banks either opted out and got rid of US customers or shifted the bureaucratic burden to their customers.
Bills to repeal FATCA have been introduced in the US Senate and House of Representatives before on the grounds of privacy concerns.
However, according to analysis, asset sheltering results in US$36 billion in lost tax revenue annually. It’s also a critical measure in fighting financial crime.
In short, there’s a very slim chance of a significant change to FATCA.
We’re waiting to see what a Trump administration will mean for Americans living abroad. If anything, he could try to lure US persons and entities and their wealth back to the country.
What’s more certain is that Trump’s approach to America First will impact international businesses in terms of where companies can employ people.
Potentially, changes could make it more difficult for employers to employ who they want, where they want, and move people around their organisations globally.
Renouncing US Citizenship and FATCA
US citizens must file taxes in the US, no matter where they reside or where they source their money globally.
Renouncing US citizenship can drastically reduce your tax burden, allowing you to escape the US’s worldwide tax net.
This means you won’t qualify to be taxed under the US’s worldwide universal tax system.
You will still have to pay tax on businesses that remain inside the US, but once you become an expatriate and resolve any pending tax charges with the IRS, you become an alien and are no longer required to file and pay taxes as a US citizen.
Moving and changing your citizenship is advised if you want to avoid overly high taxes and a complicated system that even experts struggle to understand.
It is, however, important to understand that those who renounced their US citizenship for tax avoidance may be deemed inadmissible to the United States of America.
Aside from reducing the monetary burden of taxation, renouncing will also reduce the filing burden that all US citizens face.
You will likely no longer have to file a US tax return, fill out Form 5471 for foreign companies or report your foreign bank accounts and assets.
If you plan to renounce, you need to ensure that you are fully tax-compliant before you leave. If possible, you should also take measures to avoid becoming a covered expatriate.
This can be complicated and will likely require the help of a team with experience with the forms, the process and the potential tax consequences.
At Nomad Capitalist, we do this for high-net-worth individuals like you. If you want help, please reach out.
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