The United States government has convicted a former chief business officer and chief executive officer of an off-shore bank with locations in Budapest, Hungary, St. Vincent and the Grenadines for a failure to comply with the United States’ Foreign Account Tax Compliance Act (FATCA).
Government builds a case: Undercover agent poses as client
The government accused the banking official of failing to report accounts held by a United States citizen as required by the FATCA. The case began when an agent met with the accused to open offshore accounts. The agent allegedly stated he did not want his name tied to any of the accounts he would open with the accused, but that the agent would remain the owner of the accounts. The accused allegedly agreed and began to set up such accounts.
Conviction provides lessons: The FATCA has bite
The government arrested the accused based on his failure to report these accounts. The accused pled guilty to the allegations.
The case provides three main lessons:
- Extradition an option. Those accused of these crimes cannot avoid conviction by residing in another country. The United States government was able to extradite the accused from Hungary to move forward with the case.
- Conviction is possible. This is the first case that has led to a conviction based on a violation of the FATCA. This shows the law has teeth and that those who are accused of failure to comply should take the allegations seriously.
- Penalties include prison time. The convicted individual faces up to five years prison time for the offense.
This case will likely encourage foreign banks to comply with the FATCA. This should serve as further incentive for those who have yet to come into full compliance with tax obligations. You have options. An attorney can review your situation and discuss the risks and benefits of these options.