Contrary to popular belief, not all foreign assets owned by U.S. taxpayers must be disclosed.

According to Treasury Regulation 31 C.F.R. § 1010.350, a “financial account” includes securities, brokerage, savings, demand, checking, deposit, time-deposit or other accounts maintained with a person engaged in banking. In 2011, the regulations expanded the term “other financial accounts” to clarify that it includes commodities, futures, or options accounts, insurance policies with cash value, and mutual funds or similar pooled funds that issue shares available to the general public and that have a regular net asset value determination and regular redemptions.
Courts have not decided whether a private vault located within a foreign financial institution is a financial account for FBAR purposes. Section 5312(a)(2) lists 26 different types of entities that may qualify as a “financial institution.” Based on the breadth of the definition, the fourth circuit court of appeals held that “the term ‘financial institution’ is to be given a broad definition.” United States v. Dela Espriella, 781 F.2d 1432, 1436 (9th Cir. 1986).
The reason why this is relevant is because if a private vault is not a financial account, then any assets stored inside it – i.e., gold or currency cash notes – need not be reported on an FBAR.
The fact that a private vault may qualify as a financial account does not automatically trigger a reporting requirement. Not only must the vault qualify as a financial account, but it must also be maintained by a foreign financial institution. Then and only then is a U.S. taxpayer required to file a FBAR. This entails an examination of the relationship between the vault itself and the company operating the vault.



Like a banking account, a taxpayer who owns assets held within a vault controls access to those assets, in the sense that he or she can deposit assets into the vault at will and can withdraw assets from the vault at will.
Assuming that the private vault is deemed a financial account, the next issue is whether it is maintained with a financial institution or other person engaged in the business of a financial institution. Here, there are two sub-issues. First, let’s assume that the assets just so happen to be stored in a vault located in a foreign financial institution, specifically a Swiss bank. Is the relationship between the taxpayer, as owner of the offshore assets in the vault, and the Swiss bank so dependent on each other that the account should be considered “maintained by a financial institution ?”
Even if the answer to the first sub-issue is “no,” that does not end the analysis. The government still has one more quiver left to prove that the account is maintained by a “foreign financial institution.” The second sub-issue has two parts. First, can the company that operates the vault be considered a financial institution or at least as a person engaged in the business of banking? If so, is the relationship between the taxpayer who owns the assets within the vault and the company that operates the vault so dependent on each other that the account should be considered “maintained by a financial institution or a person engaged in the business of banking?”
No circuit courts of appeal have yet answered the question of what constitutes “other financial account[s]” under 31 C.F.R. 103.24.
While the framework is unique to safe-deposit boxes, the fact that a vault shares many of the same qualities as a safe-deposit box means that the framework applies to vaults just as much as it does to safe-deposit boxes. Where the owner maintains exclusive control over the vault and does not give the foreign financial institution (or person engaged in the business of banking) access, reporting currency cash notes stored in such a vault is not required regardless of value. In that case, the vault would not be deemed a financial account maintained with a foreign financial institution (or a person engaged in business of banking). On the one hand, in order for the vault to be maintained by a foreign financial institution (or a person engaged in the business of banking), the institution (or person engaged in the business of banking) must be able to exercise control over its contents. In other words, it must have the authority to access and make deposits and/or withdrawals. In a case where unrestricted access is granted by the owner to the foreign financial institution (or person engaged in the business of banking), it would indicate that the vault is a financial account and an FBAR is required if the currency notes exceed the reporting threshold.
Since  the vault is leased exclusively to a private company for the benefit of its customers. As such, the space is fully segregated from the bank’s own assets. Therefore, the fact that the vault might physically be located inside a bank is meaningless.
Second, absolutely no co-mingling of assets occurs, as is the case with traditional banks. On the contrary, each client is the direct owner of his or her assets, which are fully identifiable – at all times – as being the exclusive property of the client. Moreover, it’s doubtful that the taxpayer will have relinquished control over their currency cash notes to the bank. Instead, he or she will continue to maintain exclusive control over them.
Third, seldom is it necessary to open up a bank account in order to conduct currency transactions with the assets in the vault.
Fourth, the taxpayer may still access the vault even in the event of a financial Armageddon – i.e., the Swiss banking system undergoes a financial crisis and must shut down. Finally, to the extent that the U.S. government gives deference to Swiss law, a bank’s vault activities are generally not deemed a “banking activity” under Swiss law.

Therefore, the relationship between the vault and the Swiss bank is so attenuated that it is all but impossible for the account to be considered maintained by a financial institution, Swiss or otherwise.

In support of the argument that the relationship is so attenuated that it is impossible for the account to be considered maintained by a person engaged in the business of banking is the following. The gold or currency cash notes are more than likely held together in a designated area of the vault. In addition, they are individually packaged and labeled so that they are readily identifiable as the taxpayer’s property. The taxpayer can personally view or take physical possession of the gold or cash notes at any time. Finally, the taxpayer has not relinquished control over his gold or currency cash notes to the vault-operating company. Instead, he continues to maintain exclusive control over them.
Therefore, a compelling argument can be made that the vault is not a financial account maintained with a financial institution or other person engaged in the business of banking. In that case, the taxpayer need not file an FBAR.
 http://taxconnections.com/taxblog/what-you-need-to-know-about-storing-gold-and-cash-notes-in-an-offshore-vault/#.U7qcsLGP2W4