Imposing FBAR Civil Penalties on Foreign Financial Institutions

An anonymous poster alerted me to Lynnley Browning's article, Overseas Banks Could Face Novel Penalty From U.S. (New York Times 4/12/11). The poster suggested that I do a blog on the topic of the article -- whether the U.S. could assert the FBAR penalties against the foreign financial institutions ("FFI") in addition to or in lieu, perhaps, of the U.S. taxpayer having foreign financial accounts. I address that issue today, but caution readers that my answer is based on only limited research -- the statute and some additional research in the types of criminal liability that enablers can draw in the context of tax evasion. I plan to have an article on the latter issue in the near future, but that research informs the discussion I present here.

First, I start with the statute. The penalties are found in 31 USC 5321(a)(5)(A) which provides:

(5) Foreign financial agency transaction violation.
(A) Penalty authorized. The Secretary of the Treasury may impose a civil money penalty on any person who violates, or causes any violation of, any provision of section 5314 [31 USCS § 5314].

Read more »

More on the Simon Conviction

I previously report on United States v. Simon involving convictions for four tax perjury counts (§ 7206(1)), three FBAR counts (31 U.S.C. §§ 5314, 5322), eight mail fraud counts (§ 1341), and four financial aid fraud counts (20 U.S.C. § 1097). (For my blogs on Simon, see here.)  Because of the facts and the other counts of conviction, Simon is outside the mainstream of the criminal cases being brought in the Government's current civil and criminal juggernaut against offshore account holders.

I had not previously reported the actual sentence in Simon. The sentence is 6 years. I picked up the sentence from a recent decision denying bail pending appeal. United States v. Simon, ___ F. Supp. 2d ___, 2011 U.S. Dist. LEXIS 37001 (N.D. IN 2011). This decision did not report the various sentencing factors, hence my spreadsheet (downloadable to the right) is incomplete.

I review here the decision on bail.
Read more »

HSBC Targeted in Offshore Banking Juggernaut - John Doe Order Granted!!! (4/7/11)

The IRS has issued a "John Doe" Summons with the U.S. District Court in SF, according to a DOJ news release here.  Readers will remember that this was an opening salvo in the spat with UBS that led to a deferred prosecution agreement, $780 million  payment to the U.S., and the turn over of a bunch -- 4,500 -- names.  It is uglier and likely to get uglier for HSBC.  And how about the other banks?

Just curious because I was thinking about it today.  Why doesn't DOJ just get a John Doe grand jury subpoena and cut to the quick?

Update 4/8/11:  The order allowing the John Doe Summons was granted (see here).  (Editorial comment: I hope none of my readers are surprised.)
Read more »