When referring to signatory authority in the context of FBARs people are generally referring to mere signatory authority. This type of Signatory authority is a more limited concept than you would assume based upon the name, but it is nonetheless an important concept that can have a very significant impact on your FBAR filing obligations. You could reasonably assume that signatory authority describes your interest in any account that you have the ability to direct or withdraw the funds utilizing your signature as the authority for the withdrawal, but in terms of FBAR filings, it is a far more limited concept, and instead only applies to the accounts for which you have signatory authority but no financial interest. Despite some of the broad definitions that you will find if you review the FBAR instructions, for purposes of FBAR filings we need to distinguish financial interest from signatory authority. For example, when you purchase lunch with your personal debit card and sign the receipt, because these are your funds, you are not utilizing signatory authority as it is defined for FBAR purposes. If instead you are paying for that meal with a company card furnished to you by your employer but bearing your name, when you sign that receipt you are exercising your signatory authority. This means you have signatory authority when you can use your signature to direct the use of funds for which you do not have a financial interest.
There are a number of different circumstances that create signatory authority. When analyzing your relationship with a particular account it is important to scrutinize whether your interest in that account is joint or merely signatory. In many countries this is a distinction that is spelled out when the account is established with the financial institution, but in many countries the financial institutions do not thoroughly record and manage these types of details.
There are many countries wherein it is customary for parents and other relatives to open accounts for their children. The fact that a parent opened the account in your name does not make the account signatory, if instead the account is in your parent’s name and you have been added as a secondary to the account, possibly to facilitate the transfer of the account assets in the event of the parent’s death or to provide you with the ability to handle the parent’s financial affairs to utilize their funds to care for them in the event of their incapacity, then the account is signatory.
The primary questions when analyzing whether or not you have signatory authority for any given account are: what is your interest in these funds? Are you able to withdraw and utilize these funds for your own purposes? If you have a direct interest and can use these funds for your own purposes, you don’t have signatory authority, you have a financial interest. The simplest description of this type of account is - funds that aren’t yours but funds that you have the actual capacity to direct/transfer/etc.
A common example of signatory authority is a power of attorney for a relative that extends to their foreign accounts. Under this set of circumstances, you would have a disclosable signatory authority over those accounts.
Accounts over which you have mere signatory authority must be disclosed on part IV of your FBAR annually. These accounts do not need to be disclosed on Form 8938 and any of the growth and earnings within these accounts does not need to be disclosed on your tax return. It is also important to note that even if you don’t have a financial interest in any foreign accounts, your signatory authority can still give rise to an FBAR requirement.