Treasury no longer allowing banks to file paper Suspicious Activity Reports and Currency Transaction Reports, mandatory e-filing to apply to FBARs by June 30, 2013

As of July 1, 2012, the U.S. Treasury’s Financial Crimes Enforcement Network (“FinCen”) is requiring financial institutions and individuals to e-file all Suspicious Activity Reports (“SARs”) and Currency Transaction Reports (“CTRs”).  Although cost savings is a major motivation for e-filing, FinCen pointed out that receiving such data in electronic form will improve its ability to engage in data-mining as a means to detect possible criminal activity, including tax evasion.  According to FinCen, institutions and individuals filed more than 17 million separate reports with FinCEN last year alone, and more than 2 million of those were on paper.

FinCen’s requirement of electronic filing is especially important for taxpayers who own or control foreign financial accounts.  For now, FinCEN “strongly encourages” e-filing of Reports of Foreign Bank and Financial Accounts (FBARs).  On June 30, 2013, however, such taxpayers will face mandatory e-filing of FBARs.