Understanding FBAR Filing: Should You Include Online Banks?

money in foreign online bank accounts

As a digitally savvy expat, you likely have some experience with money service providers and payment systems like Wise, PayPal, and others. And it’s all fun and games until it’s time to file your FBAR (Report of Foreign Bank and Financial Accounts), the annual disclosure of your foreign financial accounts held outside the US.

Generating worldwide income means you may have money in different currencies—potentially in several financial accounts held at foreign financial institutions. So, should you include them in your FBAR or not? Does it depend on the currency?

In this article, we resolve your doubts.

What is a foreign financial account?

A foreign financial account, as defined by the Financial Crimes Enforcement Network (FinCEN), under the Bank Secrecy Act (BSA), includes any financial account located outside the United States.

This definition includes various types of accounts, such as bank accounts, brokerage accounts, mutual funds, and certain types of retirement accounts, held at foreign financial institutions.

It also may include virtual wallets and similar accounts, such as PayPal, Payoneer, Wise, and more where you may hold or receive (a portion of) your foreign-sourced income.

What are key FBAR requirements?

The primary purpose of the FBAR requirement is to combat offshore tax evasion and money laundering. By requiring US taxpayers to report their foreign financial accounts, the US government aims to increase transparency and enhance its ability to identify offshore financial activities that may be serving illegal purposes.

FBAR filing provides the US government with valuable information about the foreign assets held by taxpayers, helping to ensure compliance with tax laws and detect potential instances of tax evasion or other financial crimes.

It’s crucial for taxpayers to understand which accounts they must include in their FBAR filings to avoid potential penalties for non-compliance. Failure to report foreign financial accounts that meet the filing threshold can result in significant fines and other consequences.

Threshold for FBAR filing

US citizens who meet the following criteria must file an FBAR:

  • If the total value of all foreign financial accounts exceeds $10,000 at any time during the calendar year, the individual must file an FBAR.
  • The total value includes the combined balances of all foreign financial accounts, calculated in US dollars using the US Treasury’s Financial Management Service exchange rate on the last day of the calendar year.

You should file the FBAR by the same deadline by April 15th each year, although you’re entitled to an automatic deadline extension that you don’t need to apply for until October 15th, if you fail to meet the original deadline.


The $10,000 threshold applies to the total value of all foreign financial accounts collectively, rather than to each account individually.

Penalties for non-compliance with FBAR requirements

If you fail to comply with FBAR filing requirements, you may face severe financial consequences, including the following:

  • Civil penalties: The IRS may impose civil penalties for non-willful violations of FBAR requirements, with fines of up to $10,000 per violation.
  • Willful violations: Willful failure to file an FBAR or willfully filing a false FBAR can lead to more significant penalties, including fines of up to the greater of $100,000 or 50% of the total balance of the undisclosed foreign accounts for each violation. In some cases, criminal penalties, including imprisonment, may also apply.

Should you include online banks and payment systems in your FBAR?

An online bank, also known as a virtual bank or internet bank, operates primarily or exclusively through online and digital channels. Unlike traditional brick-and-mortar banks, online banks typically do not have physical branches, and customers conduct most of their banking activities, such as account management, transactions, and customer service inquiries, through digital platforms, websites, or mobile applications.

Factors to consider when determining if an online bank account is reportable

When assessing whether an online bank account is reportable on the FBAR, individuals should consider several factors, including:

Location of the account holder

The FBAR filing requirement applies to US persons who have a financial interest in or signature authority over foreign financial accounts. If an individual holds an online bank account at a foreign financial institution and meets the FBAR filing threshold, they must report it, no matter where they are.

Location of the financial institution

The key determinant is whether the online bank is considered a foreign financial institution. If the online bank is located outside the United States and meets the definition of a foreign financial institution, any accounts held with that bank are typically subject to FBAR reporting requirements.

Jurisdictional considerations

Different countries may have varying regulations regarding the classification of online banks and the reporting obligations associated with accounts held at these institutions. It’s essential to consider the specific laws and regulations of both the United States and the jurisdiction where the online bank is located.

Here are two examples of online banks and their reporting requirements:

  • Revolut: Revolut is a UK-based digital banking platform that offers various financial services, including current accounts, currency exchange, and cryptocurrency trading. US citizens holding accounts with Revolut may need to report these accounts on the FBAR if they meet the filing threshold.
  • Wise: Wise is a UK-based online money transfer service that allows individuals to send and receive money internationally at lower fees than traditional banks. Wise accounts may be subject to FBAR reporting requirements if they meet the filing threshold, especially if they have a non-USD balance, as that money is being held at a non-US bank.

Pro tip:

Individuals should review the specific reporting requirements for accounts held at these online banks and consult with a tax professional if they have any questions or concerns about their FBAR obligations.

Considerations for other types of online banking and money transfers

Traditional online banks operate solely through digital platforms but are often affiliated with established financial institutions and may have physical branches in some cases.

Virtual banks, on the other hand, typically have no physical presence and offer banking services exclusively online. Regardless of their classification, accounts held with both traditional online banks and virtual banks may be subject to FBAR reporting if they meet the criteria outlined at the beginning of our article.

Peer-to-peer lending platforms connect borrowers with individual lenders, often bypassing traditional financial institutions. Accounts held with peer-to-peer lending platforms located outside the United States may qualify as foreign financial accounts subject to FBAR reporting if they meet the filing threshold.

However, the reporting requirements for these accounts may vary depending on the specific structure and nature of the platform.

Be on the safe side—speak to a tax professional

To accurately report online bank accounts on the FBAR, you should always keep detailed records and documentation, including account statements, transaction records, correspondence with the financial institution, and any other relevant documentation demonstrating ownership or control of the accounts.

Given the complexity of FBAR reporting requirements, especially regarding online banking and emerging financial technologies, individuals are strongly encouraged to seek guidance from a qualified tax professional. A tax professional can provide personalized advice based on the individual’s specific circumstances and help ensure compliance with FBAR reporting obligations.

How to File FBAR Online - A Guide for Expats

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