Your U.S. Financial Crimes Enforcement Network: hard at work Enforcing Crime

By any reasonable estimate, there’s millions of U.S. persons living overseas, while only 400,000 FBARs get filed per year — but in 2011, the Financial Crimes Enforcement Network (FinCEN) had the audacity to pretend they were getting nearly 100% compliance. The surprisingly-humourous Federal Register has the full story: “Amendment to the Bank Secrecy Act Regulations — Reports of Foreign Financial Accounts”. 36 Federal Register 37: 10234–10246, 24 February 2011. Relevant section begins at page ten thousand, two hundred and forty-four:

Estimate Number of Affected Filing Individuals and Entities: 400,000.

Estimate Average Annual Burden Hours Per Affected Filer: The estimated average burden associated with the recordkeeping requirement in this rule will vary depending on the number of reportable accounts. We estimate that the recordkeeping burden will range from five minutes to sixty minutes, and that the average burden will be thirty minutes. The estimated average burden associated with the reporting requirement (FBAR form completion) will also vary depending on the number of reportable accounts and whether the filer will be able to take advantage of the exceptions provided in this rule. We estimate that the average reporting burden will range from approximately twenty minutes to one hour and that the average reporting burden will be approximately 45 minutes. The reporting burden is reflected in the burden listed for completing TD-F 90-22.1 (See OMB Control Number 1506-0009/1545-2038). The burden associated with reporting a financial interest in or signature or other authority over a foreign financial account to the Commissioner of Internal Revenue is reflected in the burden for the appropriate income tax return or schedule.

Estimated Total Annual Burden: 500,000 hours.

FinCEN received one comment on the estimated number of filers. The commenter believed that the number of filers should be higher. The commenter stated that estimates of Americans living abroad may be as high as 5 million, and that approximately 2 million of those Americans might be affected by the FBAR rules. The commenter did not provide a verifiable source or methodology for arriving at those estimates. As stated above, the rule contained in this document addresses the FBAR rules that have been in existence since 1972. FinCEN’s estimate of the number of affected filing individuals and entities (400,000) is based on the number of FBARs annually filed in recent previous years.

In otherwords, they think everyone who is supposed to be filing an FBAR is already doing so. Also, in case you ever wondered how they make those “Paperwork Reduction Act” time estimates, here’s the kind of offal that goes into the sausage:

One commenter noted that several of its clients had spent considerably more time than the NPRM [ed: Notice of Proposed Rulemaking] estimated for complying with the FBAR requirement. FinCEN believes that changes made by the NPRM and incorporated in this document, such as addressing the scope of persons that are required to file reports of foreign financial accounts, specifying the types of reportable accounts, and providing relief in the form of exemptions for certain persons with signature or other authority over foreign financial accounts from filing reports, will assist filers in complying with the rule. Further, clarifications in this document regarding the scope of terms in the NPRM, such as reportable accounts and financial interest, as well as revisions to the definition of signature authority and the provision of truncated filing, will assist filers in complying with the rule. Accordingly, FinCEN has not increased the average estimated burden.

Of course, recognising the existence of any filing gap would also require the “Financial Crimes Enforcement Network” to admit that they have done literally nothing to educate any of the obvious classes of potential FBAR filers about their “obligations”. That might lead to questions of whether their pet paperwork project has the slightest relation whatsever to their alleged mission.

FinCEN’s full name got me to thinking: what exactly does the mission of “crime enforcement” mean anyway? A quick trip to the thesaurus gave me some possible answers: synonyms of “enforce” include “carry out”, “demand”, “implement”, and “insist on”, whereas antonyms include “hinder”, “impede”, and “obstruct”. So there we have it, straight from the dictionary: FinCEN is a network which insists on carrying out financial crimes, like stealing billions of dollars from expats with the FBAR scam. And if you hinder, impede, or obstruct a financial crime, then clearly you are an enemy of FinCEN.


5 thoughts on “Your U.S. Financial Crimes Enforcement Network: hard at work Enforcing Crime

  1. Amusing indeed!

    I always love these estimates of time required to fill out a form. They totally ignore the time required to read their sometimes unfathomable instruction booklets to find the exceptions that are supposed to reduce the filing requirement time to an average of 45 minutes or some such unbelievable number.

    Also, they totally neglect or under estimate the time required to gather the information in the formate that is necessary from financial institutions who operate on different fiscal years than the IRS. I always have to email my bank representative several times and argue with them about providing the information in a format and time frame from a special query they have to run to get it. They say, “they can’t do it.” and then I have to produce the last years report, and say, “yes you can,” and finally they do. I am sure that time never gets added to the form filing estimates.

    Finally, I am sure they under estimate the time required to calculate a high aggregate amount in an account based upon a falling dollar. That means a high aggregate in FX terms may not be a high aggregate in USD terms but never mind. This is all a little “form nation” bureaucratic charade that they knowingly play, “wink wink, nod, nod,” and we all go our way ignoring their nonsense assertions in the first place. It is all make believe “form filing theatre”.

  2. What would you expect? “Form Nation” is preoccupied with, well, forms, forms and more forms.

    It is absolutely pathetic. While the rest of the world is attempting to be productive, the U.S. is “forming” itself into being a third world country.

    Americans may be poor. They may not have health care. They lag the rest of the world in math skills. Some of them live in vans. But, by God, they have their forms.

    “In Forms We Trust”

  3. Brian Knowlton’s article quotes the figure for the number of FBARs filed in 2011: 618,138. FinCEN’s garbage estimates about the number of potential FBAR filers turned out to be entirely wrong. Maybe we should hit them with an accuracy-related penalty for understatement. How about $10,000 per FBAR filer?

  4. @Eric,
    I saw that too. So what do you figure (back of napkin) estimate is of the FBAR compliance rate, before and after all these compliance initiatives? You have to start with an well founded estimate of how many should be filing. Wonder if the IRS even has one. That is how I would be judging success, if I were running a program. Based upon my estimates, I think I would be very discouraged with my hammer approach.

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