Us Disclosure Rules May Affect Uk Client Money Accounts

As part of its on-going war against terrorism, the U.S. Treasury Department requires U.S. citizens, foreign nationals with U.S. Green Cards and every U.S. legal entity to provide information about any bank, securities/brokerage or other financial accounts located outside of the U.S. in which they have a financial interest. This is because the accounts are directly or indirectly controlled or are owned personally and/or jointly or for which U.S. citizens or foreign nationals with U.S. Green Cards have any type of signature authority.

It is not unusual for a U.S. expatriate working in the UK to have signature authority over one or more foreign accounts owned by his/her employer. The U.S. rules require the U.S. expatriate to provide information about the foreign accounts for which the U.S. expatriate has any type of signature authority unless an exception applies. It is also not unusual for a U.S. expatriate to have signature authority over one or more foreign accounts owned by a non-US individual, such as a spouse or a child. The signature authority over these accounts also has to be reported.

UK employers need to be aware that U.S. expatriate employees who have signing authority over the employers’ bank accounts (or over client money accounts in professional firms) are required to meet the U.S. FBAR filing requirements. FBAR requirements include the account number and the maximum value of the account during the reporting period. Employee compliance with U.S. requirements may therefore conflict with, or at the very least raise tensions in respect of, the UK Data Protection Act and the employer’s own client confidentiality rules. For example, U.S. expatriates with signing authority over the client money accounts of a law firm regulated by the Solicitors Regulation Authority could find themselves in a very difficult position.

If a US expatriate has signature authority over more than 25 foreign accounts, the individual can file the FBAR form without having to list the ‘signature authority accounts’. Accounts for calendar year 2010 in which a U.S. expatriate or U.S. legal entity has any type of financial interest have to be reported to the U.S. Treasury Department by 30 June 2011.
Now, for the one small piece of good news. U.S. expatriates who only have signature authority over a bank, securities/brokerage or other financial account now have until 1 November 2011 to report the accounts for which they have only signature authority.

By: Brendan Wilde

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Brendan Wilde writes about a number of accounting, Tax and financial issues. For more information please visit Public Sector Accountants