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With effect from March 28, 2011, the United States of America specified the scope of persons who must report their foreign bank and financial accounts on the FBAR (Report on Foreign Financial and Bank Accounts) form. While the objective of this specification is basically to obtain information about and levying taxes on income held in foreign accounts by American private persons, the registration obligation has also been extended to any Limited Liability Company (LLC) and corporation, which was registered in the United States, but not owned by American private persons. The gazette containing the text of the amendment can be downloaded from here: http://edocket.access.gpo.gov/2011/pdf/2011-4048.pdf

Who are considered to be US persons according to the FBAR?

• citizens of the USA
• individuals possessing US residence permit (resident aliens)
• companies set up in the USA or under the laws of the USA, including corporations and LLC-s

In which cases should American persons file an FBAR report?

• if in the given calendar year they held a bank or financial securities account outside the US, i.e. they had a financial interest or signatory rights in respect of at least one such account AND
• the aggregate balance of all foreign accounts exceeded 10.000 USD at any time during that year.

What will be the consequences of non-compliance with the registration obligation?

Failure to comply with the registration obligation is liable to a fine up to USD 10.000. Deliberate failure to submit or erroneous completion of the form is punishable by a fine up to USD 500,000 and 5 years imprisonment.

How do they need to comply with the registration obligation?

In respect of the a calendar year, companies must submit the FBAR form to the US Internal Revenue Service (IRS) by June 30 the following year. You can find the form and the guideline for completion here:

• Report of Foreign Bank and Financial Accounts with Instructions

The company's Manager must apply for the EIN and do the FBAR registration on behalf of the company.

If the company's Manager is assigned by the Crystal Group, the FBAR registration will be prepared and submitted by the Manager. In this case, it is absolutely necessary to have a written declaration from the Attorney. This declaration is required even if the company is not obliged to submit a FBAR registration, i.e. the company does not have bank or financial accounts outside the US, or the aggregated total balance of those did not reach 10.000 USD in 2011.

If management services at your company are provided by Crystal, please forward the completed and signed original copy of the declaration required for the FBAR registration to any Crystal office. If you have any queries about the statement, please get in touch with your regular Crystal contact person.

• Declaration

If the Manager is unable to comply with the registration obligation due to missing this deadline, the Crystal group will not be able to take the risk of non-compliance with the registration obligation. Therefore in respect of clients, who do not return the signed statement by May 15, 2012, Crystal Group shall appoint the Attorney as Manager of the negligent company.