Bank Secrecy Act FBAR Civil Penalty Regulations — Obsolete Text Removal

Mechanism

The Bank Secrecy Act (BSA) requires US persons with financial interests in or signature authority over foreign financial accounts above a threshold to file annual FBARs (31 CFR § 1010.350). Civil penalties for non-compliance were historically encoded in both the governing statute (31 U.S.C. § 5321) and in the BSA's implementing regulations.

The American Jobs Creation Act of 2004 (Pub. L. 108-357) materially revised the FBAR civil penalty structure — most notably raising the maximum penalty for willful violations to the greater of $100,000 or 50% of the account balance at the time of the violation, versus the lower cap that pre-existing regulations reflected. After 2004, the regulatory text in 31 CFR Part 1010 relating to civil penalties was therefore inconsistent with the higher statutory ceiling and no longer reflected current law.

This December 2021 final rule removes that obsolete regulatory penalty language entirely. The statutory penalty structure under 31 U.S.C. § 5321 governs directly; the regulation no longer carries competing (and lower) penalty language that could create confusion for regulated parties or enforcement staff.

Downstream implications

• Purely administrative: no change to substantive compliance obligations for FBAR filers.
• Eliminates a potential interpretive ambiguity where regulated parties might have

argued the lower regulatory ceiling caps enforcement.

• Cleans the regulatory record ahead of FinCEN's broader BSA regulatory modernisation

programme (see the 2022 and 2023 BSA CMP inflation-adjustment rules in this register).

Open questions

• Whether FinCEN will proceed to further codify the post-AJCA penalty structure

explicitly in regulation (e.g., enumerating the tiered willful/non-willful distinction in CFR text) rather than relying solely on the statutory reference.