Brandon Lee
Since 1970, the Bank Secrecy Act (BSA) has required US persons, including citizens and residents, to file a Report of Foreign Bank and Financial Accounts (FBAR) if they have a financial interest or authority over foreign accounts, such as bank accounts, and if the value of those foreign accounts exceeds $10,000 during the calendar year. This is because foreign financial institutions may not be subject to the same reporting requirements as US institutions. Certain US taxpayers may also need to file Form 8938, a Statement of Specified Foreign Financial Assets, in addition to the FBAR. With regards to Bangkok Bank specifically, there is some indication that they do report information about Americans' accounts to US tax authorities, as required by FATCA (Foreign Account Tax Compliance Act).
| Characteristics | Values |
|---|---|
| Reporting of foreign bank accounts by Bangkok Bank to IRS | FATCA (Foreign Account Tax Compliance Act) obligates banks to report all accounts where the owner has a connection to the US |
| FBAR reporting requirements | U.S. persons with foreign financial accounts exceeding $10,000 in aggregate value during the calendar year must file an FBAR by April 15 or October 15 (extended due date) |
| FBAR filing process | Individuals can electronically file their FBAR through the BSA E-Filing System without registering for a separate account |
| FBAR records | Must be maintained for five years from the due date of the FBAR, including documents such as bank statements or a copy of a filed FBAR |
| Non-compliance penalties | Civil and criminal penalties may apply for late or non-filing of FBARs, including monetary fines and potential criminal charges |
| Form 8938 requirements | Certain U.S. taxpayers must file Form 8938, Statement of Specified Foreign Financial Assets, in addition to or instead of the FBAR, depending on their situation |
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What You'll Learn
- FATCA obligates Thai banks to report accounts with American connections
- Foreign financial institutions may not meet US reporting requirements
- US citizens must report foreign accounts via FBAR
- US persons with foreign accounts may be circumventing US law
- Foreign courts can request Thailand execute judgements on assets
FATCA obligates Thai banks to report accounts with American connections
FATCA, or the Foreign Account Tax Compliance Act, was introduced by the United States to ensure that US citizens and residents comply with their tax obligations, even for overseas assets. Under FATCA, foreign financial institutions, including Thai banks, are required to report information about accounts held by US taxpayers to the Internal Revenue Service (IRS). This includes financial information and transactions of US accounts held by individual US citizens and US-owned foreign entities.
Thai banks, including major institutions like Kasikorn Bank, are actively working to ensure compliance with FATCA. They are doing so by requesting customers to provide additional information, such as completing and signing forms like the FATCA/CRS Individual Self-Certification, IRS Form W-9, and IRS Form W-8BEN. These forms are submitted to the Revenue Department, Ministry of Finance, in accordance with the Emergency Decree on Exchange of Information for Compliance with International Agreements on Taxation.
By implementing FATCA, Thailand has taken a significant step towards aligning its tax practices with international standards and ensuring that individuals meet their global tax obligations. FATCA is just one of the tools used by the US government to identify persons who may be using foreign financial accounts to circumvent US law. Another tool is the Report of Foreign Bank and Financial Accounts (FBAR), which requires US persons with foreign financial accounts to report these to the Treasury Department annually.
Similar to FATCA, FBAR aims to enhance transparency and deter tax evasion. US persons, including citizens, residents, corporations, partnerships, and trusts, must file an FBAR if they have a financial interest in or authority over at least one financial account located outside the United States, and if the aggregate value of those foreign accounts exceeds $10,000 during the calendar year. FBARs are due on April 15, with an automatic extension to October 15 if needed.
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Foreign financial institutions may not meet US reporting requirements
The FBAR is required when a US person has a financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and the aggregate value of those foreign accounts exceeds $10,000 at any time during the calendar year. This includes bank accounts, brokerage accounts, and mutual funds.
FBAR filers must report the greatest value of currency or non-monetary assets in their accounts during the calendar year. They can rely on their periodic account statements if they accurately reflect the greatest account value during the year. If the account value is not in US dollars, it must be converted using the Treasury Bureau of the Fiscal Service exchange rate on the last day of the calendar year.
Those who don't file an FBAR when required may be subject to significant civil and criminal penalties. Criminal violations can result in fines and/or five years in prison. However, the IRS will not penalize those who properly report a foreign financial account on a late-filed FBAR and have a reasonable cause for the delay.
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US citizens must report foreign accounts via FBAR
US citizens must report their foreign accounts via the Report of Foreign Bank and Financial Accounts (FBAR) because foreign financial institutions may not be subject to the same reporting requirements as domestic institutions. The FBAR is also a tool used by the US government to identify persons who may be using foreign financial accounts to circumvent US law. The government can use FBAR information to identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
Since 1970, the Bank Secrecy Act (BSA) has required US citizens to file an FBAR if they have a financial interest in, signature authority, or other authority over one or more accounts in a foreign country, such as bank accounts, brokerage accounts, and mutual funds. This also applies to US residents, corporations, partnerships, limited liability companies, trusts, and estates. The aggregate value of all foreign financial accounts must have exceeded $10,000 at any time during the calendar year reported.
The FBAR is due on April 15, but if this date is missed, it must be filed by October 15, the automatically extended due date. It should be filed electronically using the Financial Crimes Enforcement Network's BSA E-Filing System. If someone is unable to e-file their FBAR, they must call the Financial Crimes Enforcement Network's Regulatory Helpline at 800-949-2732 to request an exemption from e-filing. Those calling from outside the United States can contact the helpline at 703-905-3975.
If filing late, the FBAR should be filed as soon as possible to keep potential penalties to a minimum. If the IRS hasn't contacted you about a late FBAR and you're not under civil or criminal investigation by the IRS, you should follow the instructions for explaining your reason for filing late. If you're using a compliance option, such as the Streamlined filing compliance procedures, follow the instructions for the specific compliance option.
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US persons with foreign accounts may be circumventing US law
The FBAR is a tool used by the US government to identify persons who may be using foreign financial accounts to circumvent US law. The government can use FBAR information to identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad. US persons must report their overseas financial accounts because foreign financial institutions may not be subject to the same reporting requirements as domestic institutions.
The FBAR filing requirements apply to US citizens, residents, corporations, partnerships, limited liability companies, trusts, and estates. The reporting threshold is when the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year. There are certain exceptions to the FBAR filing requirements, such as for accounts maintained on a US military banking facility or held in an individual retirement account (IRA) of which the filer is an owner or beneficiary. Additionally, spouses do not need to file separate FBARs if they complete and sign Form 114a, and the filing spouse reports all accounts jointly owned with the non-filing spouse on a timely filed FBAR.
Those who do not file an FBAR when required may be subject to significant civil and criminal penalties, including fines and/or prison time. To avoid penalties, those who have not filed an FBAR for a previous year should electronically file the late FBAR as soon as possible and provide a reason for the late filing.
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Foreign courts can request Thailand execute judgements on assets
Foreign courts can request Thailand to execute judgements on assets, but there is no legislation in Thailand that specifically deals with the enforcement of foreign judgements. To enforce a foreign judgement in a Thai court, the requesting party must commence fresh litigation proceedings, in which the foreign judgement may be accepted as evidence.
The Thai legal system adopts a dual-court approach to determine whether a court has jurisdiction over a dispute, resulting in separate courts of competent jurisdictions. Courts of Justice have jurisdiction over the recognition and enforcement of arbitral awards where the underlying dispute pertains to civil and commercial relationships, as well as those adjudicated under an international investment agreement. Administrative Courts, on the other hand, have jurisdiction when the underlying dispute relates to an administrative contract.
For a foreign court judgement to be admissible in Thai judicial proceedings, it must satisfy three criteria:
- The judgement must be final and binding upon the parties.
- It must be issued by a court with subject-matter jurisdiction.
- The foreign judgement must not contravene the public order or moral standards of Thai people.
Even when these conditions are met, a Thai court will only consider the foreign judgement as one element of evidence within the case. An exception exists under specific legislation, such as the Act on Civil Liability for Oil Pollution Damage B.E. 2560, which permits the enforcement of final foreign court judgements related to oil pollution from contracting states of the International Convention on Civil Liability for Oil Pollution.
Furthermore, in the case of arbitral awards made in a foreign country, the award shall be enforced by the competent court only if it is subject to an international convention, treaty, or agreement to which Thailand is a party. Thailand is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) ("New York Convention"), and its domestic legislation, the Thai Arbitration Act, closely follows the UNCITRAL Model Law on International Commercial Arbitration (1985).
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Frequently asked questions
Yes, Bangkok Bank reports to the USA IRS. Banks worldwide are obligated to report financial information to home tax authorities.
FBAR stands for Report of Foreign Bank and Financial Accounts. It is a tool used by the US government to identify persons who may be using foreign financial accounts to circumvent US law.
A US person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR if they have a financial interest in or authority over at least one financial account outside the US if the aggregate value of those foreign accounts exceeded $10,000 at any time during the calendar year.
The FBAR is due on April 15. If the filer doesn't meet the deadline, it is automatically extended to October 15.
Filing an FBAR late or not at all may subject you to civil and criminal penalties.
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