The US Department of Justice this week announced that a US resident faces three years in prison and fines after pleading guilty to hiding $2.4 million in offshore bank accounts.
US citizens and permanent legal residents are required to file a Report of Foreign Bank and Financial Accounts (FBAR) disclosing any account or financial interest worth more than $10,000.
The case announced this week involved Elie Waknine of Huntington Beach, California, who held assets from 1994 to 2011 in an Israeli bank. The Israeli bank, Bank Leumi — a subsidiary of Bank Leumi Le-Israel — admitted to helping US taxpayers file false tax returns for a decade by hiding funds in offshore accounts.
The admission by the Israeli bank of their criminal conduct resulted in a $270 million fine paid to the US government. As part of its agreement with US authorities, the Bank Leumi Group disclosed information about its cross border business, and provided testimony in other investigations.
US taxpayers need to understand that they can’t simply stash money or assets in offshore banks to hide the funds from the IRS. Of course, many people have a legitimate need to use a foreign bank account, such as when they have a business or property in a foreign country, but, in those cases, they need to make sure that they file the required FBAR reports to disclose the foreign bank account.
The US Department of Justice and the IRS are stepping up enforcement of US laws applicable to foreign bank accounts. Last month, an executive of a bank operating in Budapest, Hungary, Saint Vincent and the Grenadines pled guilty in the US federal court to conspiracy and failure to comply with the Foreign Account Tax Compliance Act (FATCA). FATCA is a federal law enacted in 2010 that requires foreign financial institutions to identify their US customers and report information on financial accounts held by US taxpayers either directly or through a foreign entity.
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