How FATCA and FinCEN Reporting Rules Affect U.S. Companies with Global Operations

Key topics covered in this article:

• FATCA and FinCEN Compliance: U.S. companies with global operations must navigate complex reporting requirements, including FATCA forms for foreign assets and FinCEN filings for foreign accounts exceeding $10,000.
• Penalties and Deadlines: Non-compliance with FATCA and FBAR deadlines can result in steep penalties, including $10,000 per form and up to $16,536 per FBAR violation.
• Operational Improvements: Companies can turn compliance into an advantage by centralizing data, automating workflows, and integrating FATCA information into tax processes.

Last year’s rollout of the One Big Beautiful Bill Act, or OBBBA, is prompting U.S. companies with an international footprint to take a closer look at how the new provisions may affect the way they track and report their tax obligations. The revisions to calculation methods and reporting requirements are driving internal conversations around the need for more accurate, real-time financial data to support better business decisions.  

This new legislation also comes at a time when there’s been an ongoing push for increased global tax transparency. Reporting requirements under the Foreign Account Tax Compliance Act (FATCA) and the Financial Crimes Enforcement Network (FinCEN) are increasingly becoming a larger operational concern for many multinational companies.   

As compliance standards grow more complex year over year, fortunately companies can also leverage these challenges to their advantage. Strengthening processes, data governance, and internal controls have moved to the top of agendas, not only to meet compliance expectations but also to anchor companies in financial integrity and stakeholder trust as uncertainty in the marketplace remains high.  

 Overview of FATCA and FinCEN 

 FATCA was enacted in 2010 in an effort to combat tax evasion and requires companies to comply with certain reporting and documentation obligations, including: 

•  W-8 documentation to classify foreign vendors or organizations, and 
• GIIN verification when payments are made to foreign financial institutions (FFIs). 

 FinCEN is a separate part of the Treasury Department, not related to taxes. Qualifying taxpayers are required to file FinCEN Form 114 (FBAR) each year by April 15 to report their foreign bank and financial accounts.

Reporting beneficial ownership information (BOI) was also on—and then off—the table, following a period of regulatory back and forth under the Corporate Transparency Act. As it stands, reporting is required for entities formed under foreign law that register to do business in the US.

Who Needs to File? 

Not all who file under FATCA will have to file under FinCEN and vice versa. There are different thresholds and reporting triggers for each regime. 

FATCA requires both U.S. taxpayers (companies and individuals) and certain foreign entities (foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs)) to report foreign financial activity and, in some cases, withhold on payments. It creates accountability by requiring reporting on both sides of the transaction. 

Companies and individuals that hold foreign assets above their respective thresholds are required to report these assets at their highest value on Form 8938. In addition, some passive, closely held domestic entities may also be subject to Form 8938 reporting if they qualify as “specified domestic entities” and exceed the applicable asset thresholds ($50,000 at year-end or $75,000 at any point during the year). 

FFIs and NFFEs that make payments to U.S. taxpayers must both report and withhold taxes under this regime.  

Under FinCEN, filing obligations kick in when the company: 

•  Holds foreign bank or financial accounts exceeding the $10,000 aggregate FBAR threshold, or 
• Is a foreign entity doing business in the U.S. and required to submit BOI filings 

Much of what FinCEN focuses on is determining ownership, control, and signatory authority, which can become more complex for companies with tiered structures or multiple foreign subsidiaries. 

What Must Be Reported? 

 FATCA hones in on what a company owns abroad. This could be the value of foreign subsidiaries, interests in foreign partnerships, or other assets ties to its overseas operations. Form 8938 gets even more specific and requires companies to report the value of those assets.  

On the other hand, FinCEN is more concerned with where a company keeps its money, not what it owns. Meaning, a qualifying company is obligated to report on the total value of everyday operating accounts, long-standing investment accounts, and even accounts where the company only has signing authority, even if it doesn’t legally own the funds.

The IRS provides a helpful comparison table to distinguish between the two regimes, making it easier to see where the rules overlap and where they don’t.  

What are the Deadlines and Penalties for Non-Compliance? 

Penalties can be steep if deadlines and compliance requirements are not met. FATCA-related forms should be filed with the company’s federal income tax return. But if those are late or incomplete, the delay can put the FATCA forms at risk as well, triggering a $10,000 penalty per form.
Another area to watch out for is missing or outdated W-8 or GIIN documentation. While  

In a separate filing, the FBAR (FinCEN Form 114) is due April 15 every year, with an automatic extension of October 15. It gets filed directly with FinCEN. Be careful not to overlook any changes that happen throughout the year because if regulators catch the inconsistencies, it could trigger an audit. Not to mention, FBAR penalties can be upward of $16,536 per violation (adjusted for inflation), with much higher penalties if deemed intentional. 

Most of the time, issues stem from internal coordination gaps rather than intent, so here’s what you need to keep on your radar:  

• Foreign accounts opened midyear (without being flagged for FBAR) 
• Changes in signing authority that are not communicated or tracked 
• Outdated or missing forms 
• New subsidiaries added without clear ownership or reporting tracking 
• Inconsistent data across tax, treasury, and legal teams 

If a slip-up does occur, companies can request relief, provided that strong documentation and consistent internal processes are in place. 

Turning Compliance into an Operational Advantage 

Reporting is the easy part. It’s the work behind that data that’s the hard part. Companies need disciplined, buttoned-up systems that feed FATCA, FBAR, and BOI filings so those reporting frameworks can become inputs for better data, better decisions, and better control over their international operations.  

 Here are a few steps companies can take to move from reactive compliance to a more predictable and transparent operating model: 

• Create a central hub for foreign ownership and account data: Oftentimes, data can live across various departments in fragmented spreadsheets and can cause breakdowns that lead to penalties, incorrect reporting, or late filings. We recommend centralizing this data into a shared, single source of truth to keep things consistent and controlled for future growth. 

• Automate FATCA and vendor documentation workflows: To avoid tedious and error-prone manual data entry, companies need automation built into vendor onboarding, accounts payable, and treasury systems. When a payment to a nonresident alien (NRA) or foreign entity is initiated, automated workflows can flag whether withholding is required, trigger reminders to remit withheld taxes, and prompt the preparation and filings of Forms 1042 and 1042-S.
  Put simply, with the amount of foreign vendor payments, GIIN checks, and ongoing W-8 refresh cycles, manual processes just can’t keep up. Automation keeps documents up to date, avoids spreadsheet bottlenecks, and prevents last–minute scrambles by giving AP, procurement, and tax a shared workflow.
• Integrate FATCA information into the tax lifecycle: Tax authorities can tie data together faster than companies can fix inconsistencies, so it’s important to integrate data early. To avoid mismatched information, incorporate FATCA data into core tax processes, such as foreign tax credit, entity-level reporting, and international schedules to keep everyone working from the same facts, which will help avoid any problems down the road.
• Implement ongoing audit-readiness practices: Compliance is a day-to-day responsibility, Regulators expect companies to demonstrate control. Ongoing periodic reconciliations, documentation refresh cycles, validation of signatory authorities, and cross-team data checks help reduce the risk of noncompliance and penalties. 

The Silver Lining in Heightened Regulation 

An ever-changing tax code, along with more demands for global financial transparency in recent years, have complicated compliance and put a strain on internal operations. With this, however, comes an opportunity to focus on process improvements. Bridging disconnected data and integrating new technology can turn regulatory requirements into drivers of better performance.

For more information on how to advance your global operations, contact Mary Toms, CPA, Tax Manager on Co-Leader of the PBMares’ International Tax team