As financial services companies struggle to adapt to meet the unprecedented challenges imposed upon them by the COVID-19 outbreak, they also must not lose sight of other pre-existing federal mandates, such as the upcoming benchmark survey requirement imposed upon all businesses with ownership interests in foreign enterprises. The consequences of a financial service company failing to satisfy this important reporting deadline could be significant.
The Bureau of Economic Analysis (BEA) is an agency in the Department of Commerce that collects and reports statistics about the performance of the U.S. economy and the role of the U.S. in the global economy. The International Investment and Trade in Services Survey Act authorizes the BEA to collect information about foreign investment in the U.S. and U.S. investment abroad. This information is collected through periodic surveys completed by U.S. persons, including through comprehensive benchmark surveys conducted every five years. Completion of these surveys, where applicable, is mandatory, and failure to report may subject persons to civil or criminal penalties.
May 29, 2020, is the filing deadline for the BEA’s benchmark survey of U.S. investment abroad. All U.S. persons – which includes all forms of business entities, as well as individuals, estates, and trusts – who have one or more foreign affiliates must file. An affiliate is defined as an enterprise “directly or indirectly owned or controlled by a person of another country to the extent of 10 percent or more of its voting stock for an incorporated business or an equivalent interest for an unincorporated business, including a branch.” The 10% threshold may also be met in circumstances where groups exercise their interests or are deemed to exercise their interests in concert, such as members of the same family, joint ventures, and groups of officers or directors of the same enterprise.
The filing is made by the “U.S. Reporter,” which is either the U.S. person with one or more foreign affiliates or, if part of a consolidated enterprise, that U.S. person’s ultimate U.S. parent. The U.S. Reporter is required to report detailed information about its operations or, if relevant, the operations of the consolidated enterprise of which it is a part. It is also required to report detailed information about the operations of each foreign affiliate. This reporting burden is not insignificant, as the forms are lengthy and require financial performance, operational, employee, and balance sheet data, along with other business details. Applicable law provides that this sensitive information will be kept confidential.
In recognition of the COVID-19 outbreak, the BEA has published special guidance, including that filing extensions may be granted “if needed” and that respondents may provide estimates if access to actual data is unavailable or limited at this time. However, given the approaching deadline, the higher than normal contact volume, and the likely impact of the outbreak on the BEA’s own operations, one should request any accommodations as soon as possible.