Chapter 3

The Company Account He Can Move Money From

Signature authority over a company account he doesn't own a majority of, and why control is its own trigger

Hipster seated at a laptop showing an online banking page, with his two business partners standing behind him and looking at the screen.

Hipster didn't start the company alone. He co-founded it with two local partners and owns 20 percent. They do strategy; he does operations, which means he's the one who can log into the company bank account and move money: vendors, subscriptions, payroll. The account never held more than the equivalent of $30,000, and none of it ever felt like his.

That instinct is right about ownership and wrong about the FBAR. Ownership and control are separate triggers, and Hipster has one of them.

Ownership. Under 31 CFR § 1010.350(e)(2)(ii), a US person has a financial interest in an entity's account through ownership only by owning, directly or indirectly, more than 50 percent of a corporation's voting power or total value (or of a partnership's profits or capital). At 20 percent, no.

Control. Signature or other authority (31 CFR § 1010.350(f)(1)) is the authority, alone or together with another, to control the disposition of money or other assets in the account by direct communication with the bank. If Hipster can wire money out, he has it, whether or not a dollar is his.

There's an exemption in § 1010.350(f)(2) for certain officers and employees of banks and other regulated entities. It's built for a bank's own staff, not a startup's operations lead. Sorry, Hipster.

The Law, Actually

31 CFR § 1010.350(f)(1) -- signature or other authority is the authority of an individual (alone or in conjunction with another) to control the disposition of money, funds or other assets in a financial account by direct communication.
31 CFR § 1010.350(e)(2)(ii) -- financial interest through an entity requires direct or indirect ownership of more than 50 percent of a corporation's voting power or total value, or of a partnership's profits or capital.
31 CFR § 1010.350(f)(2) -- a narrow exemption for officers and employees of certain regulated financial institutions with no financial interest in the account; it does not cover a co-founder of an ordinary operating company.

Bottom Line

Moving money out of an account is its own FBAR trigger, separate from owning any of it. Hipster's 20 percent gives him no ownership-based interest, but his signature authority is enough. The account goes on his FBAR as signature-authority-only, and its value counts toward the $10,000 test.