The U.S. Department of Commerce's Bureau of Economic Analysis (BEA) recently issued its mandatory five-year benchmark survey to obtain data on financial services transactions between U.S. financial services providers and foreign persons and companies. The survey, known as the BE-180, must be filed by U.S. persons or businesses (referred to as "U.S. Reporters") that i) meet the definition of a "financial services provider" and ii) had covered financial services transactions with foreign persons during its 2019 fiscal year. "Financial services providers" is broadly defined and includes businesses not commonly understood as financial services providers, including but not limited to businesses primarily acting as principals in buying or selling of financial contracts (such as venture capital companies), businesses primarily engaged in managing portfolio assets (such as private equity funding management), and potentially fintech companies. A qualifying U.S. Reporter is required to file a BE-180 survey, whether or not contacted by BEA, and U.S. businesses that fail to file may be subject to civil or criminal penalties including fines up to $50,000.

Completed surveys are due to BEA no later than October 30, 2020 and must be submitted via BEA's eFile system. Extensions are available, and extension requests must be submitted to BEA electronically via eFile. BEA uses the BE-180 surveys to produce statistics on the scale and effects of financial services transactions on the U.S. economy and to inform U.S. commercial policy on trade in financial services.

A. Who Qualifies as a U.S. Reporter—a Financial Services Provider?

For the BE-180, a U.S. Reporter is defined as a U.S. person (which includes both individuals and business entities resident in or subject to the jurisdiction of the United States) that falls within Sector 52 (Finance and Insurance) of the 2012 North American Industry Classification System (NAICS),¹ including holding companies that own or participate in the management decisions of such entities.² Sector 52 is comprised of businesses primarily engaged in transactions involving the creation, liquidation, or change in ownership of financial assets and/or facilitating financial transactions, and has dozens of subcategories. Section I.B of the BE-180 instructions includes a detailed list of examples of industries regarded as "financial services providers," and most are straightforward (e.g., depository credit intermediation, brokerage services, securities and commodity exchanges, etc.) but as stated above, NAICS Sector 52 covers some business functions that may not be commonly understood as "financial services providers." For instance, NAICS Code 523910 (Miscellaneous Intermediation), which comprises businesses primary engaged in acting as principals in buying or selling of financial contracts, cites venture capital companies as an illustrative example. Further, NAICS Code 523920 (Portfolio Management), which comprises businesses primarily engaged in managing portfolio assets, cites private equity funding management. Thus, it is important to verify whether your business qualifies as a "financial services provider" as defined by the BE-180 as filing is mandatory, irrespective of whether BEA has contacted the company.

B. What Transactions Must Be Reported?

Qualifying U.S. Reporters have a BE-180 reporting obligation if they had financial services transactions (either or both of sales and purchases) of $500 or more with foreign persons in certain covered categories during the 2019 fiscal year. For BEA reporting purposes, a foreign person is defined broadly as an individual, business entity, or government agency resident outside the United States or subject to the jurisdiction of a country other than the United States. The categories of financial services transactions are:³

1. Brokerage services related to equity transactions;
2. Other brokerage services;
3. Underwriting and private placement services related to equity transactions;
4. Underwriting and private placement services related to debt transactions;
5. Financial management services;
6. Credit-related services, except credit card services;
7. Credit card services;
8. Financial advisory and custody services;
9. Securities lending services;
10. Electronic funds transfer services; and
11. Other financial services (a miscellaneous category which includes asset pricing services, security exchange listing fees, demand deposit fees, securities rating services, and various other specific financial services transactions).

Both sales to and purchases from a foreign person are covered transactions that trigger a reporting requirement, and the $500 threshold applies separately (i.e., a U.S. financial services provider with $300 in sales of financial services to a foreign person and $300 in purchases of financial services from a foreign person does not have a reporting obligation). It is possible for a U.S. Reporter to have a BE-180 reporting requirement for sales of financial services but not purchases of financial services, and vice-versa. In that event, the U.S. Reporter is permitted to omit certain portions of the BE-180 report relating to either the sales or purchase of financial services, as applicable.

C. Next Steps for Qualifying U.S. Reporters

A U.S. Reporter should create an account on BEA's eFile system as soon as it has determined that it has a reporting obligation and assign a BE-180 survey to the U.S. business that will file as the U.S. Reporter. Once the account is created and the survey is assigned, filers can download an interactive PDF version of the BE-180 and complete the required portions. The form permits filers to save and submit their data to BEA directly from the form. Filers can also export their data and upload it via the eFile portal. U.S. Reporters can request an extension of the reporting deadline by email to be-180extension@bea.gov or by fax to (301) 279-9508. Extension requests must be received by the October 30, 2020 filing deadline.

D. Penalties

BEA may impose civil and/or criminal penalties for failure to submit the BE-180 survey. Civil penalties may include fines up to $50,000, and criminal penalties for willful failure to file include fines up to $10,000 and imprisonment up to one year for individuals who knowingly participate in a violation. While BEA historically has not imposed penalties, BEA may become more aggressive in penalizing companies for not filing, as these reports recently appear to be of more interest to the U.S. government.

[1] The NAICS codes are a taxonomy of business establishments developed by the U.S. Office of Management and Budget and adopted in 1997 to enable federal statistical agencies to collect, analyze, and publish data related to the U.S. economy.

[2] Such a holding company would fall within Sector 55 of NAICS.

[3] See p. 21-24 of the BE-180 instructions for detailed descriptions and examples of the activities that fall within each category of financial service transaction.