When should an individual or business file a SAR with FinCen?

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In the United States, both Individuals and Businesses are required to file a Suspicious Activity Report (SAR) with FinCen when:

  • Individuals who transport more than $10,000 into or out of the United States1

  • Shippers and receivers involved in the transfer of $10,000 into or out of the United States.

  • Businesses that receive more than $10,000 in a transaction or in related transactions1

  • People who have control over more than $10,000 in financial accounts outside of the U.S. during a calendar year

Question

  1. How could these rules be interpreted when dealing with Bitcoin? (please contrast conservative and non-conservative viewpoints)

  2. Since Bitcoin's value varies, does that mean that a declaration is required when the price exceeds a certain amount?

  3. What is considered as "transporting" into and out of the United States?

  4. Is simply running a Bitcoin QT client considered a "money services business" and is subject to FinCEN requirements? If my wallet is hosted, does that mean they are responsible?

goodguys_activate

Posted 2013-03-07T01:08:06.153

Reputation: 11 898

1just an FYI, if you have greater than $10,000 USD or equivalent in a foreign bank account then you need to file a FBAR with the Treasury. Not sure about the FinCEN requirements, but hope that helps – CQM – 2013-03-07T03:17:37.380

Thank you @Cqm I wasn't aware of that. Any additional filing requirements would be helpful – goodguys_activate – 2013-03-07T03:47:07.423

Could this simply be some confusion about some wikipedia inaccuracy? SARs are for reporting that a clients' account is used in a suspicious way. It does not make sense for an individual to report his (!) own account usage looks suspicious. Your verbatim wikipedia quote mentions OTHER forms for these cases and links to a webpage including forms for FBARs, SARs, and others. – pyramids – 2013-11-22T05:45:55.487

Answers

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While bitcoin may seem to be useful as an offshore bank account, it likely won't be subject to the FBAR reporting requirements.

Now if you have fiat (e.g., USD) funds at an exchange that is not in your own country (e.g., Mt. Gox) and those funds exceed $10,000 worth then possibly that could be something where an FBAR filing might be required.

So having $10K or more at an exchange might be reportable but having $10K worth of bitcoins may or may not.

An excerpt from someone who studies this topic:

The critical issue is whether a wallet constitutes a financial account and if a wallet constitutes a financial account then what constitutes signature authority?

Stephen Gornick

Posted 2013-03-07T01:08:06.153

Reputation: 26 118

You are taking a big risk if you aren't going to report a Mt. Gox account. In fact, I would say that such an account falls squarely within the regulations.

It is always better to err on the side of being more conservative. I even report the money on my subway card. – zkilnbqi – 2013-11-22T17:21:03.070

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The bullet points you give are out of context if you read the Wikipedia article you referenced. The bullets refer to other activities that may require a form to be filed, but not the SAR.

Transporting $10,000 in or out of the U.S. does not generate a SAR, but it has to be reported. This refers to electronic or physical currency, but it has to be dollars, and it doesn't apply to Bitcoin. Same for the next two bullet points.

The last bullet point generates a Foreign Bank Account Report with the U.S. Treasury. If you have money outside the U.S., you need to declare it.

The IRS and the U.S. Treasury are working on defining what is required. At present, since the regs aren't finalized, you would not have to declare Bitcoin holdings on an FBAR, but you would have to declare cash balances at a brokerage such as Mt. Gox.

My advice is to declare your Bitcoin holdings on an FBAR form, and form 8938 if you live outside the U.S., even if the form doesn't anticipate it. You need to declare the maximum value of the account during the year.

FBAR reporting can be done online, and there are severe penalties if you don't do it. Err on the side of caution and report everything. Report it and keep it, or don't report it and they will seize it. You decide.

To answer your questions 3 and 4:

What is considered as "transporting" into and out of the United States?

An electronic or physical movement of the U.S. dollar across the border.

Is simply running a Bitcoin QT client considered a "money services
business" and is subject to FinCEN requirements?

No.

If my wallet is hosted, does that mean they are responsible?

Responsible for what? You will have to file an FBAR, and they will have to comply with their regulations, which are still being hashed out.

zkilnbqi

Posted 2013-03-07T01:08:06.153

Reputation: 335

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SUSPICIOUS ACTIVITY REPORT ("SAR") FILING REQUIREMENTS http://www.fincen.gov/forms/files/FinCEN%20SAR%20ElectronicFilingInstructions-%20Stand%20Alone%20doc.pdf page 80

MONEY SERVICE BUSINESS DEFINITION http://www.fincen.gov/financial_institutions/msb/definitions/msb.html

I hope the above helps answer your questions.

Tom

Posted 2013-03-07T01:08:06.153

Reputation: 1

Asked: 2013-03-07T01:08:06.153

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Active: 2018-05-10T16:55:00.490