What is FinCEN?

FinCEN. It sounds like something out of a Hollywood plot line about a secret government agency running clandestine missions that are kept out of the purview of the general public.

Is the truth that far from reality? FinCEN is not an unknown entity. United States taxpayers with foreign accounts are likely familiar with FinCEN as the agency responsible for Foreign Bank and Financial Accounts (FBAR) filings.

Although this federal agency is not a secret, many taxpayers are not aware of the extent of operations that fall within FinCEN’s purview.

What exactly is FinCEN? The Financial Crimes Enforcement Network (FinCEN) is part of the United States Treasury Department.

As explained in a recent speech by FinCEN Deputy Director Jamal El-Hindi at the Parliamentary Intelligence Security Forum, the agency serves two main purposes: to serve as a financial intelligence unit (FIU) and to regulate money laundering and financing of terrorism.

What does FinCEN do? As a FIU, FinCEN collects and analyzes financial information. It collects suspicious transaction reports with a focus on identifying “emerging threats to the global financial system by piecing together the money laundering and terrorist financing methods” and networks.

Essentially, FinCEN achieves this goal by following the money.

Why is FinCEN in charge of the FBAR and not the IRS? It is common to associate most of taxpayer’s financial obligations with the Internal Revenue Service (IRS), but the IRS is not the only agency that comes into play when foreign accounts are at issue.

The Bank Secrecy Act resulted in the requirement that a “United States person” with financial interests in foreign accounts with an aggregate value over $10,000 must report these accounts to the Treasury Department, thus expanding the obligations of FinCEN.

This is just one example of the complex legal issues that can accompany foreign accounts. As such, those with financial interests abroad are wise to seek legal counsel to ensure that all reporting is done properly.