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Signature authority over an account

The U.S. Treasury regulation defines signature or other authority by a person's ability to direct what happens to funds in a financial account. The term appears chiefly in the FBAR rules for foreign financial accounts.

Meaning of the term

The U.S. Treasury regulation defines signature or other authority as an individual's power, alone or with another person, to direct the disposition of money or other assets in an account by communicating directly with the institution that maintains it.[3]

The definition focuses on control through direct communication, whether written or otherwise. It is distinct from a financial interest, which the regulation treats as a separate relationship to a foreign account.[3]

Where it appears in reporting rules

The regulation connects signature or other authority over a foreign bank, securities, or other financial account to reporting under the FBAR rules. FinCEN describes the filing threshold as an aggregate foreign-account value above $10,000 at any time during the calendar year for a U.S. person with signature authority or a financial interest.[2][3]

Signature or other authority is one of two relationships that can bring a person within the FBAR filing rule. The other is financial interest, and the stated value condition applies to the foreign accounts in aggregate.[2]

The rules also set out a special reporting procedure for a U.S. person with signature or other authority over 25 or more foreign financial accounts. That person provides the account count and specified basic information, with detailed account information due if requested by the Secretary or delegate.[3]

The regulation lists exceptions for certain officers and employees who have authority over accounts maintained by their institution or employer, provided they have no financial interest in those accounts. Listed categories include employees of specified regulated banks and financial institutions, and some employees of publicly listed entities.[3]

A U.S. subsidiary employee has a stated exception for an account of the subsidiary when the employee has no financial interest and the subsidiary is included in the parent's consolidated report. The regulation separately states that some trust beneficiaries need not report trust accounts when a U.S. trust, trustee, or agent files a report disclosing those accounts.[3]

Form 8938 reporting covers specified foreign financial assets in which a person has an interest, a separate concept from signature authority to direct account funds.[1]

Questions and answers

What does signature authority mean under the FBAR regulation?

It means an individual's authority, alone or with another person, to control the disposition of funds or other assets in a financial account. The control occurs through direct communication with the institution maintaining the account.[3]

Does signature authority require ownership of the account?

The regulation treats financial interest and signature or other authority as separate relationships. Either relationship can bring a U.S. person within the FBAR filing rule when the aggregate foreign account value exceeds $10,000.[2]

What account value threshold does FinCEN state?

FinCEN states that the aggregate value of foreign financial accounts must exceed $10,000 at any time during the calendar year. The threshold applies to a U.S. person with a financial interest in or signature authority over such accounts.[2]

What if a person has authority over 25 or more foreign accounts?

The regulation provides for reporting the number of accounts and certain basic information. Detailed information for each account is required when requested by the Secretary or delegate.[3]

Are there exceptions for employees with account authority?

The regulation lists exceptions for specified officers and employees with no financial interest in the relevant account. Some categories concern accounts owned or maintained by the employer, and a subsidiary rule includes a consolidated-report condition.[3]

How does this term relate to Form 8938?

Form 8938 covers specified foreign financial assets in which a person has an interest. The signature-authority definition in the FBAR regulation concerns direct control over disposition of account funds, so these are distinct reporting concepts.[1]

  • FBAR: FinCEN describes the FBAR filing rule for U.S. persons with foreign accounts. It covers the $10,000 aggregate threshold, account interests and exceptions.
  • Financial interest in an account: FBAR rules define financial interest through account ownership or relationships to the legal title holder. A U.S. person named on an account has an interest.
  • FATCA: FATCA requires certain U.S. taxpayers to report foreign assets and financial institutions to report accounts to the IRS. Form 8938 may apply at thresholds.

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Sources and data notes
  1. Internal Revenue Service, Instructions for Form 8938. https://www.irs.gov/instructions/i8938. Retrieved .
  2. FinCEN, Report foreign bank and financial accounts. https://www.fincen.gov/report-foreign-bank-and-financial-accounts. Retrieved .
  3. U.S. Government, 31 CFR 1010.350. https://ecfr.io/Title-31/Section-1010.350. Retrieved .
  4. Internal Revenue Service, FATCA summary. https://www.irs.gov/businesses/corporations/summary-of-key-fatca-provisions. Retrieved .
  5. U.S. Department of the Treasury, FATCA: agreements by jurisdiction. https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act. Retrieved .
  6. Internal Revenue Service, 26 CFR 1.1471-4. https://www.irs.gov/instructions/iw9. Retrieved .

Dates in this block record when each source was read for this page.