FBAR and FATCA for Expats in Latin America: What You Must File and When

This article is for informational purposes only and is not legal or tax advice. FBAR and FATCA compliance involves serious penalties for errors or omissions. Work with a CPA or attorney who specializes in US expat taxation for your specific situation.

Two of the most important — and most frequently overlooked — US filing obligations for American expats are FBAR and FATCA. These are separate reporting requirements for foreign financial accounts, and the penalties for non-compliance are severe enough that ignorance is not a defense you want to rely on. If you have a bank account in Colombia, Panama, Costa Rica, Mexico, or Ecuador, there is a reasonable chance one or both of these apply to you.

FBAR: Report of Foreign Bank and Financial Accounts

What It Is

FBAR stands for Foreign Bank Account Report. The formal name is FinCEN Form 114, filed with the Financial Crimes Enforcement Network (FinCEN), which is part of the US Treasury Department — not the IRS. This is an important distinction: the FBAR is not part of your tax return.

Who Must File

Any "US person" (US citizen, permanent resident, and certain others) who has a financial interest in or signature authority over foreign financial accounts with an aggregate value exceeding $10,000 at any point during the calendar year. Key points:

• The $10,000 threshold is aggregate across all foreign accounts — not per account. If you have $6,000 in a Colombian checking account and $5,000 in a Costa Rican savings account, the aggregate is $11,000, and you must file even though neither individual account exceeds the threshold.
• "At any point during the year" means the highest balance across all accounts at any single moment, not the balance at year end.
• Signature authority counts. If you have signing authority over a company's foreign bank account — even without personally owning any of the funds — you may need to file.
• Joint accounts must be reported even if you are a secondary account holder.

What Counts as a Foreign Account

Virtually any financial account held at a foreign (non-US) financial institution: checking accounts, savings accounts, investment accounts, brokerage accounts, pension/retirement accounts (in some circumstances), and accounts you have signature authority over through your employment or a company you control.

How to File

FBAR is filed electronically through the FinCEN BSA E-Filing System (bsaefiling.fincen.treas.gov). It is due April 15 of the year following the reportable year, with an automatic extension to October 15 — no extension request is needed. There is no filing fee.

Penalties for Non-Compliance

This is where FBAR gets serious:

• Non-willful violation: Up to $10,000 per violation per year. The IRS has historically interpreted "per violation" aggressively — potentially applying the penalty per account per year rather than per filing.
• Willful violation: Up to $100,000 or 50% of the account balance per violation, whichever is greater, per year. Willful violations can also result in criminal charges.
• Courts have generally sided with the IRS in applying per-account penalties, making the potential exposure for multi-year non-filers with multiple accounts very large.

FATCA: Form 8938

What It Is

FATCA (Foreign Account Tax Compliance Act) requires taxpayers to report certain foreign financial assets on Form 8938, which is filed with your annual income tax return (Form 1040). Unlike FBAR, Form 8938 goes to the IRS.

Who Must File

US taxpayers with specified foreign financial assets exceeding the following thresholds at year-end or at any time during the year:

• US residents: $50,000 at year-end or $75,000 at any point during the year (single); $100,000/$150,000 for married filing jointly
• US persons living abroad (the most relevant category for expats): $200,000 at year-end or $300,000 at any point (single); $400,000/$600,000 for married filing jointly

The higher thresholds for those living abroad mean that many Latin America expats with modest local bank accounts fall below the FATCA threshold even if they exceed the FBAR threshold.

FBAR vs FATCA: Key Differences

• FBAR: $10,000 aggregate threshold, filed with FinCEN separately from tax return, due April 15 (auto-extended to Oct 15)
• FATCA: $200,000+ threshold for expats, filed with IRS as part of tax return, same due date as tax return
• Both may be required for the same accounts — they are not mutually exclusive
• FBAR covers more account types (signature authority); FATCA covers a broader range of asset types (stocks, partnerships, certain foreign insurance)

Common Latin America Accounts That Trigger FBAR

• Colombian savings accounts (cuenta de ahorros) or checking accounts at Bancolombia, Davivienda, etc.
• Panamanian bank accounts at Banistmo, BAC Credomatic, or any private bank
• Costa Rican colón or dollar accounts at BAC, BCR, or other local banks
• Mexican peso or dollar accounts at Banorte, BBVA, Santander
• Ecuadorian accounts at Banco del Pichincha, Banco del Pacífico
• Investment or brokerage accounts at any foreign institution
• Foreign pension accounts or retirement funds

What to Do If You Are Behind on FBAR Filing

If you should have been filing FBAR but have not, do not panic — but do act. The IRS has established programs specifically for non-willful non-filers:

• FBAR Delinquency Procedures: For those who failed to file but had no unreported income. File delinquent FBAR reports with a statement explaining why you did not file previously. The IRS may waive penalties for reasonable cause.
• Streamlined Foreign Offshore Procedures (SFOP): For those living abroad who non-willfully failed to file both FBARs and tax returns. File 3 years of amended returns and 6 years of FBARs; pay a 5% penalty on the highest aggregate foreign account balance. No further FBAR penalties if you complete the streamlined procedure correctly.

Do not attempt to come into compliance on your own without professional help. A CPA or attorney specializing in US expat taxes and FBAR compliance can significantly reduce your penalty exposure and navigate the procedures correctly. The cost of professional help is almost always far less than the penalties you would face without it.

Practical Recommendations

• File FBAR every year if you have any foreign accounts with aggregate balances that reached $10,000 at any point — even briefly
• Keep records of monthly account statements for all foreign accounts
• Use a CPA who specializes in US expat taxation — not a generalist who handles it occasionally
• Do not try to hide foreign accounts from the IRS — FATCA requires foreign banks to report US account holders to the IRS directly, which means the IRS often knows about accounts before you file