Definitions and Examples of Assets Reportable on the FBAR and 8938
First, for the FBAR, the definitions of “Financial Account” and “Financial Interest” are important:
- Financial Account
The following are considered reportable financial accounts:
- Bank account, such as a savings deposit, demand deposit, checking, time deposit (CD), or any other account maintained with a financial institution or other person engaged in the business of banking.
- Securities account, securities derivatives account, or other financial instruments account held with a person engaged in the business of buying, selling, holding or trading stock or other securities.
- “Other Financial Account,” defined by the regulations to include:
- An account with a person in the business of accepting deposits as a financial agency.
- An insurance or annuity policy that has a cash value.
The following are not considered financial accounts:
- Stocks, bonds, or similar financial instruments held directly by the person.
- Real estate or an account holding solely real estate (e.g., Mexican “fideicomiso”).
- A safety deposit box.
- Precious metals, precious stones, or jewels held directly by the person.
- Financial Interest
Financial interest means a direct interest.
A U.S. person has a financial interest in each account for which such person is the owner of record or has legal title, whether the account is maintained for his own benefit or for the benefit of others including non-U.S. persons.
Now that we understand what “financial account” and “financial interest” mean for the FBAR, let’s walk through the definition of a “specified foreign financial asset” for the Form 8938.
Specified Foreign Financial Assets are defined in CFR § 1.6038D-3 as follows (NOTE: I removed several sections that were not pertinent to this discussion):
(a) Financial accounts –
(1) In general. Except as otherwise provided in this section, a specified foreign financial asset includes any financial account maintained by a foreign financial institution.
(b) Other specified foreign financial assets –
(1) In general. Except as otherwise provided in this section, a specified foreign financial asset includes any of the following assets that are not financial accounts and that are held for investment and not held in an account maintained by a financial institution –
(i) Stock or securities issued by a person other than a United States person (including stock or securities issued by a person organized under the laws of a U.S. possession);
(ii) A financial instrument or contract that has an issuer or counterparty which is other than a United States person (including a financial instrument or contract issued by a person organized under the laws of a U.S. possession); and
(iii) An interest in a foreign entity.
(d) Examples. Examples of assets other than financial accounts that may be considered other specified foreign financial assets include, but are not limited to –
(1) Stock issued by a foreign corporation;
(2) A capital or profits interest in a foreign partnership;
(3) A note, bond, debenture, or other form of indebtedness issued by a foreign person;
(4) An interest in a foreign trust;
(5) An interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap, or similar agreement with a foreign counterparty; and
(6) Any option or other derivative instrument with respect to any of the items listed as examples in this paragraph or with respect to any currency or commodity that is entered into with a foreign counterparty or issuer.
(e) Effective/applicability dates. This section applies to taxable years ending after December 19, 2011. Taxpayers may elect to apply the rules of this section to taxable years ending prior to December 19, 2011.
Now that we understand what needs to be reported on the FBAR and 8938, we can get to the heart of the matter for CVCs and international informational reporting.
 The preamble to the regulations clarifies that there need be no current payment of an income stream to trigger reporting. The cash value of the policy is considered the account value. An account with a person that acts as a broker or dealer for futures or options transactions in any commodity on or subject to the rules of a commodity exchange or association. A mutual fund or similar pooled fund defined as “a fund which issues shares available to the general public that have a regular net asset value determination and regular redemptions.”
 A reportable account may exist where the financial institution providing the safety deposit box has access to the contents and can dispose of the contents upon instruction from, or prearrangement with, the person.
 31 USC 5314 defines “foreign financial agency” as “a person acting for a person as a financial institution, bailee, depository trustee, or agent, or acting in a similar way related to money, credit, securities, gold, or a transaction in money, credit, securities, or gold.” Therefore, a reportable account relationship may exist where a foreign agency holds precious metals on deposit or provides insurance or other services as an agent of the person owning the precious metals.