Friday, May 15, 2015

Finter Bank Zurich AG Obtains NPA Under DOJ Swiss Bank Program (5/15/15)

DOJ Tax has announced here that Finter Bank Zurich AG has reached agreement under the DOJ Swiss Bank Program.  Here are the key excerpts:
According to the terms of the non-prosecution agreement signed today, Finter agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a $5.414 million penalty in return for the department’s agreement not to prosecute Finter for tax-related criminal offenses. 
Finter was founded in 1958 in Chiasso, Switzerland, and has a branch office in Lugano, Switzerland.  Since Aug. 1, 2008, Finter has maintained 283 U.S.-related accounts with an aggregate maximum balance of approximately $235 million.  
Since its establishment and continuing through at least October 2011, Finter, through its managers, employees and others, aided and assisted U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts from the Internal Revenue Service (IRS).  After August 2008, when Swiss bank UBS AG publicly announced that it was the target of a criminal investigation by U.S. tax authorities, Finter accepted accounts from U.S. persons exiting other Swiss banks.  
Finter provided services that allowed U.S. clients to eliminate the paper trail associated with the undeclared assets and income, including “hold mail” services and numbered and coded accounts.  In addition, Finter assisted clients in using sham entities as nominee beneficial owners of undeclared accounts, solicited Forms W-8BEN that falsely stated under penalties of perjury that the sham entities beneficially owned the assets in the undeclared accounts, and provided cash cards and credits cards linked to the undeclared accounts.  
In resolving its criminal liabilities under the program, Finter encouraged U.S. accountholders to come into tax compliance and participate in the IRS Offshore Voluntary Disclosure Program.  While Finter’s U.S. accountholders who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
The agreement may be downloaded here.

The list of banks now subject to the 50% penalty is here.  As of this writing, the list has not been updated to include Finter.

JAT Comments:

1. Finter Bank seems like a relatively small player among Swiss Bank U.S. tax evasion enablers.

2. U.S. taxpayers who were depositors in Finter Bank will now face the higher 50% penalty if they join OVDP after today and do  not opt out.  But, those who join OVDP and opt out (assuming they are nonwillful) are treated as before and can obtain a better result on opt out.  Moreover, if they are nonwillful, the Streamlined procedures are still available.


  1. ChiTownTaxAttorneyMay 18, 2015 at 9:56 AM

    When criminal tax cases start as civil examinations, I often find the Service employs civil techniques long after fraud is suspected and even long after a "fraud specialist" is consulted. Generally, the agent will run silent on you. An agent's consultation with a fraud specialist is not a bright-line denoting a cross-over from civil to criminal investigation, but it provides an objective starting point for assessing whether bounds were overstepped. Having that knowledge can provide some leverage with the AUSA if not a full blown, but unlikely, constitutional challenge.

    Particularly when discovery of the the client's criminal writing is on the wall, I generally (1) request to review the IRS examination file and (2) file a FOIA request after that file review or if the review is refused. If you can review the IRS examination file, it may provide a treasure trove of information. In one case, the Service gladly gave me full access and was almost stunned that they had put emails with the fraud specialist on top. I'm not sure if they thought I'd drop to my knees and confess for my client on the spot, or they were just that interested in showing me how smart they were?

    A refusal to allow a representative to review the exam file is a dead giveaway that something is amiss. The IRS general policy is to allow a taxpayer access to open exam files (see and arguably you don't need FOIA to force access to your own tax records even beyond what FOIA allows.

    Reviewing the FOIA production can be trickier. If you see large quantities of documents withheld under Exemption 7 - Law Enforcement you should be considering whether the civil exam went on for too long. For example, if you receive a banker's box and 2/3 of it is withheld under Exemption 7 after a two year "civil exam" leading to a referral and grand jury investigation, that's certainly enough for me to make this point to the AUSA: "I'm concerned about the length of the civil investigation as two-thirds of my FOIA request for the IRS file was withheld under Exemption 7."

    Nuanced and (polite) arguments ensue, where the AUSA will claim a civil exam falls into the category of law enforcement under Exemption 7, not just criminal investigations. Unfortunately, that's not generally accurate simply because the taxpayer generally has a right to review his or her examination file unless it is related to criminal law enforcement or falls under some type of attorney-client or work product privilege. In any event, large swaths of documents withheld under Exemption 7 can provide some leverage and may lead to a situation where the examiner and even a fraud specialist went too far.

    But don't look for just Exemption 7 withheld documents. Exemption 5 under FOIA allows the withholding of intra-agency and inter-agency documents. Generally, these are documents that would be privileged against disclosure under some statutory or common law rule in the civil litigation context. A landslide of Exemption 5 documents would be unlikely in most civil only examinations. Certainly there may be some technical legal advice that would be privileged, but huge swaths of Exemption 5 documents likely indicate it was used as a substitute for Exemption 7.

    Ultimately, timely and complete "civil" discovery by a taxpayer has few, if any, downsides and should be utilized in most cases, civil and criminal alike.

  2. Excellent discussion. If you ever want to write a guest blog (either with name or anonymously), please let me know.

    Jack Townsend

  3. As I have posted previously, and we are now getting written confirmation, Swiss banks have locked out US clients.

    Note #34 on page 6 of the NPA:

    34. In June 2013, Finter decided to terminate all relationships with U.S. clients.

    2013 was many years after the other Cat #2 banks, but at least this fact is starting to make it into official documents.

    It might be interesting to start documenting when banks stopped dealing with US clients. If it appears under mitigating factors in more NPAs, then I think it would be interesting to start tracking this data point.

  4. Vadian NPA also discloses that they stopped accepting US clients.

    Page 13 of 14:

    #34. (snip) Beginning in January 2012, Vadian stopped accepting U.S. clients as new customers.

  5. BSI's statement of facts page #7 of 9:

    #31 (snip) With few exceptions, BSI had successfully exited most of its
    undeclared U.S. client accounts by the end of 2012 and prohibited the acceptance of
    new U.S. client accounts in February of 2012

  6. The issue is not whether some non-U.S. banks do not accept U.S. taxpayers as depositors. The issue is whether they all do not accept U.S. depositors or enough of the significant banks do not do so so that it is a systemic problem. Mere anecdotes do not make the case that I assume you are trying to make. I would assume that all or most of the significant sized banks will be FATCA compliant and thus fully able to easily handle U.S. depositors without major disruptions, particularly because GATCA will require much of the same information on other country depositors.

  7. No, the FATCA bank account discussion is a separate discussion.

    I stated in the past, "All Swiss banks locked out US clients a long time ago". A statement you disagreed with because of lack of proof other than misc news articles and my real life (on the ground) experiences.

    We now have 3 out of 3 NPAs that clearly state that US clients have been locked out for a while.

    What was deemed "anecdotal" in the past will be a collection of 200+ NPAs all stating that they closed US accounts in 2009 for most and definitely by 2012 for the rest.

  8. It is reported that about 80 NPAs will be finally achieved. Keep in mind that those banks admit tax evasion, so it is not surprising that they would have scrambled at some point to mitigate the damage by, inter alia, refusing further U.S. depositors. But you still have not made the case you argue that all Swiss banks locked out U.S. depositors. The other less culpable banks (some of whom were not culpable at all) would have had no reason to lock out U.S. depositors and would have simply complied with the reporting requirements. I understand the fervor with which you believe the U.S. is the bad guy in this, but I suspect that more careful analysis will show that the Swiss banks were the bad guys, as well some percentage of their U.S. depositors who were intent on evading U.S. tax. But all Swiss banks and all U.S. depositors were not bad guys. And, to close the loophole, there were and are Swiss banks who will take U.S. depositors.

    Jack Townsend

  9. In Switzerland, I know of one bank that has allowed existing clients to remain (of course with proof that the account is declared.) There are a couple (UBS< CS< Vontobel and Pictet) which I believe still accept (accept does not equal eagerly welcome) accounts, typically with a $1 million minimum and fees of m1 to 1.5% minimum ($10-15K/year on $1 million balance.) US persons legally resident in Switzerland have a couple of more options, typically with low minimums, but often limited to a compte salaire or Salaerkonto, used to deposit wages and pay bills, but no investments (stocks, funds, etc) allowed.

    In two neighboring countries I know of one bank in each that accepts (not necessarily welcomes) US persons not resident in that country. Don't know about account minimums.
    No investments in US securities are allowed by one bank. In the other, no mutual funds from anywhere (but stocks including US are allowed.)

    The problem with proving this anecdotal evidence is that many banks not accepting US persons simply will not reply to emails from US persons inquiring about an account. One could call on the phone of course and be told no, but to "prove" that the bank does not want US clients would involve taping the call (email makes proving this easier.)

    And then I have also been told by one bank that they would accept me and told no when I showed up at the appointment. Another wanted so much proof of compliance with US laws (tax returns and other paperwork) which would have been a nightmare to assemble AND even if I had done so they would have opened the account very reluctantly.

    I know you would like more than anecdotal evidence, Jack, but that is my experience.

  10. Out of curiosity, what would actually make a Swiss bank (or indeed, any bank in a similar tax friendly jurisdiction) less or not culpable with respect to US taxpayers who don't live there? From a technical legal perspective, if the Swiss banks had simply opened their doors on a don't ask/don't tell basis, refrained from the dodgier behaviour such as travelling to the US and marketing themselves as a haven for offshore tax evasion, numbered accounts, sham trusts, etc, would they be culpable? Is there some level of affirmative diligence they must do on tax compliance (similar to affirmative diligence with respect to money laundering)?

  11. Same old argument with you Jack and NO the ``Bad Guys`` are the US Homelanders who are the real tax cheats here....the Swiss banks were just the enablers just like the US enables tax evasion in Delaware,Nevada etc.

  12. I still remember your UBS case where a wife/widdow was left with an undeclared account from her dead tax cheating husband and you just couldn`t understand Swiss banking secrecy laws and how swiss bankers in this case just followed the laws of their country at the time.

  13. Your memory as to my case is not perfect. Suffice it to say, however, that we got a very favorable resolution of the case.

    Jack Townsend

  14. At least some of the Swiss banks did not adopt a don't ask/don't tell policy and, as Swiss law requires, they got to know their customers. When they determined U.S. citizenship or U.S. residence, filled out the appropriate paperwork and made whatever reporting was required.

    On the less culpabiility scale, some Swiss banks did not exploit UBS's exit from the tax enabler business by welcoming the flood of money thus unleashed. At least, if they did take some of the flood of money, they complied with all requirements rather than enabling the further hiding of the deposits.

    Jack Townsend

  15. I concur with your post.

    Without getting into too much detail of my occupation or why I did this...

    I can plainly state that I have visited all banking institutions in Luxembourg City, and in Geneva, Switzerland. When I say ALL, I mean all. If they were a registered bank, I visited them. It took a month or so in each location to fit them in while maintaining my work.

    There are 1 or 2 banks in each location that will accept US people. So, although "anecdotal", I know my facts are correct.

    When I said in the the BSI thread that they do not accept US people, regardless of deposit, they don't. Not in Luxembourg, not in Ticino, not anywhere. I know this because I was in their offices, had coffee with the vice-president of the bank, and he kindly declined my hefty deposit once he saw my place of birth. "Oh, sorry, there is nothing we can do".

    When I say that private banking offerings in Switzerland died after UBS. They did. When I state that Luxembourg is refusing all US citizens because of FATCA. They are.

  16. Here are some recent love letters from additional banks that I did not get a chance to visit in person.


    Cher Monsieur,

    étant né aux Etats Unis
    vous avez probablement la nationalité de ce pays. Dans ce cas l'ouverture d'un
    compte auprés de notre banque à Luxembourg ne va pas être possible.



    Thank you for your interest. Please be informed that we do not accept US citizens.


    SEB Wealth

    (The kiss of death:)

    Just an additional question: do you have a US passport ?

    Many thanks

    Société Générale Bank & Trust

    I thank you for the interest in our Bank.

    Given the complexity of the US-legislation, we must unfortunately confirm that we have taken the decision not to accept any client with us-indicia.

    We regret the impact of these decision and stay at your disposal should you have any other questions,

    Best regards,

    DELEN Private Bank
    Luxembourg S.A


  17. So, were you taking a survey of the banks? You do admit that 1 or 2 banks would take U.S. persons. Why did you need to go any further?

    Again, if there is 1 or 2 banks in the local markets who would take U.S. persons, they must have done very well with money flowing into the banks that was refused by the others that you claim would not accept the money.

    The logic of your narrative is not that persuasive to me. But maybe that is just me. But, if that were true, I suspect that there would be more people complaining both individually and through organizations such as the ACA. And with that type of groundswell, Congress will listen. Therefore .....

    Well, they must be getting their banking needs met by the banks you say do not exist.

    Jack Townsend

  18. I know the narrative is not persuasive. Your opinions are formed and nothing will change those opinions. What I do understand is that there are other people who read this blog who have the potential to effect some policy change.

    Everyone who is a US citizen living outside the USA is merely waiting until they get "the" notice in the mail. I lost an account in December of last year. When I opened the envelope and it had US flags flowing on the letter, I knew the account was just closed. "Dear US citizen... we are closing your account".

    So when you ask, "Why do you keep looking". We all keep looking because we know that all of our accounts are on borrowed time. When you stop looking you will eventually not have new accounts to cover the accounts that are shutdown.

    When it gets to the point I can officially no longer find a bank account, I will have no option left but to renounce my citizenship. I will clearly stated on my renunciation as the reason, "I need a bank account".

  19. Ever wonder what tax lawyers do when they have insomnia?

  20. This is old news but unfortunately does not go down well with US tax lawyers and shows where Jack is very limited. Many readers here incl. myself have unsuccessfully tried to explain to Jack for years now the above ``anecdotal`` facts .

  21. ``The logic of your narrative is not that persuasive to me. But maybe that is just me``............ Yes Jack it is just you ! You have been given this :

    and many others like the one from Kyle D. Hegarty’s submission:
    “The bright side is that when I get an unsolicited sales call from firms wanting to manage my money, all I have to do is tell them I’m an American. It’s all it takes to end the call.”


  22. `` I Jack Townsend suspect that there would be more people complaining .....`` Jack, Aprils Fool day is behind us. Get real and check your statements. Jack you are entitled to your own opinion just like everybody else here but not your own facts !!!!

  23. Jack the reputation of tax lawyers are bad enough as it is but why do you have to pull a ``CLINTON`` here !?
    You lied to your readers here with regards to this UBS case which was of interest to maný readers.

  24. I think ``Guest`` memory to this case is pretty good. But what is not good is you teasing readers with cases that have interesting fact patterns that apply to some of us here and promising updates and fail to deliver.
    That is just pathetic.

  25. summary : tax cheating american TP dies and leaves an undeclared UBS account to an unsuspecting relative in Texas who enters OVDI and later opts-out. During the opt-out the IRS examiner wanted to assess 3X willfull FBAR penalties because the position at the time of the Service was that the relative/ wife was aware of the existence of the ``secret`` account. Jack goes for the undisclosed APPEAL process and this is where the trail ends.
    The questions at the time raised by readers which Jack promised to answer once the case was resolved :
    1. multiple SOL extensions yes or no during Opt-out and Appeal
    2. how did the Appeal process work and by whom
    3. from the $250,000 3y-willfull FBAR penalty assessed how much was actually in the end paid.
    4. what means very favorable when considering the costs involved fighting the IRS in Appeals.... what were the approx. costs for Opt-out and Appeal

  26. Just to be clear, I am not suggesting that the Swiss banks weren't culpable, as the evidence is fairly strong that they were engaged in clear facilitation of tax evasion and that they were making frequent trips to the US to do so. What I am genuinely wondering is how a practitioner would advise these banks on their obligations going forward in respect of US customers. Would it be something such "don't ask/don't tell but definitely don't facilitate" is adequate or would it be "you need to engage in enhanced due diligence, including getting confirmation from the client that he/she is meeting all relevant US tax obligations" or somewhere in the middle, such as "satisfy yourself that the client has a legitimate reason for using an offshore account." I am curious because I imagine these are types of policies the banks are formulating and it is these policies that are probably influencing their decisions on what type of risk is involved in taking on new US clients, even legitimate ones.

  27. Basically, all the Swiss banks and other banks around the world have to do is to comply with FATCA and know their customers (which their own local laws and regulations require in most developed countries anyway).

    Jack Townsend

  28. Swiss law prohibited(until recently) bankers from disclosing account information...plain and simple. In some respects it still does prohibit the disclosure of information. There is a little word called ``reciprocity`` which the US hates so much especially states like Delaware, Nevada but even Florida which facilitate tax evasion. I like to see them engage in some due diligence and this empty phrase of ``know your customer``and ask their international customers about a legitimate reason for using US offshore accounts and proof that they have been meeting all relevant local tax obligations.

  29. 1. Gave two extensions in opt out. One to allow time for the internal IRS Appeal. The second was after the case was settled in principal in order to have time to implement the settlement.
    2. Appeal was handled by local Houston Appeals Officer. He made clear, however, that the decisions were made elsewhere. It is frustrating to deal with hidden persons. So I prepared detailed Appeals Office submissions directed to those unknown persons.
    3. I did have an Appeals conference. But, as noted, I was not speaking to the ultimate decision maker.
    4. Ultimately, no willful penalty was assessed. Three years of nonwillful penalties were assessed.
    5. I made a combination of fact and legal based arguments. I can't get into the facts, other than to say the facts clearly showed the client was not willful. Like I have said before, it was the best opt out case I have ever had. All my other opt outs just sailed through. But the best one met the resistance of an IRS agent and her manager who I thought were unreasonable.
    6. I don't recall the costs of the Appeal. However, I already knew the case and the law backwards and forwards by the time the Appeal was taken. I had to prepare a protest to get the Appeal. That took some time because even though I walked in knowledgeable about the facts and law, I still had to write a protest that I thought was persuasive and fully addressed the many, many errors in the agent's report. I then traveled to the Appeals Office once to look through the Examination files to make sure I knew everything they knew. I then had a substantive conference with the Appeals officer that lasted perhaps one hour even though by then I knew that he was not the decision maker and would be merely passing on the information. I did make another submission on the legal issues (many of which I have developed in the blog) as to willfuless, deliberate ignorance and burden of proof. I did make clear, however, that if we could not reach a settlement, I would have the case in a local federal district court with a jury demand within a couple of weeks of an FBAR assessment. And, my client was credible. At the end of the day it is about credibility. And we would win that case and, as I postured, hopefully create some good, taxpayer favorably law in the meantime (in terms of the jury instructions, etc .).

    Jack Townsend

  30. Could you be more explicit about wherein you think I "lied?"

    Jack Townsend

  31. All I know is that organizations such as the Americans for Citizens Abroad which has broad membership and feedback from US citizens abroad does not make the claims that some readers have made on their comments. To be sure, there is some lock out, but it is not universal and apparently while significant, not systemic. Thus, for example, the ACA says "Because of this legislation, some foreign banks have refused to do business with Americans." The ACA chooses its words very carefully. Thus, it does not say that all foreign banks have refused or even most foreign banks have refused or even many foreign banks have refused. It says "some" foreign banks have refused. The problem with the hyperbole asserted by readers is that hyperbole is not very persuasive in terms of the arguments you want to make. If you could provide some truly representative data -- rather than anecdotes and hyperbole -- you might make a persuasive case. In my mind, you just haven't done that yet.

    The ACA site is here:

    Jack Townsend

  32. Correct , hyperbole is not very persuasive in terms of the arguments you want to make. The problem with this statement coming from a tax lawyer is that for the last 5 years this profession has outdone itself left and right with hyperbole, fear mongering and FBAR ambulance chasers.

  33. You make some very good points and I agree with your narrative . All I can say is that Jack filters his responses through his world view. We all do that except in his case they could be more nuanced and he gets a bit stubborn in the face of defeat.

  34. Yes that was a success from $250,000 down to approx. $30,000 plus your fees. Unfortunately I was hoping it would have come to a trial - to create some good, taxpayer favorably law because this was a good case with good facts .

  35. Is the legal position that the FBAR penalty for the original account holder is extinguished upon death? I thought there was some confusion/uncertainty around that. Without speaking about the particulars of this case, wonder why the IRS wouldn't pursue that angle.

  36. I cannot confirm the amounts you set forth, but the result was somewhat better than indicated. The fees were not what I would call substantial. The SDCP offshore penalty would likely have been less than $25,000, but the factors that caused the IRS to assert the willful penalty -- although ultimately shown wrong -- would likely have resulted in an audit in SDCP (had it been available) but, with a reasonable agent, probably nothing would have come from the audit.

    Again, I caution readers of this trail of comments that the facts as recounted herein by others than me are not the real facts but only representative to illustrate the shape of the claims and the resolution.

    Jack Townsend

  37. The other spouse had been deceased for almost 20 years, so no FBAR penalty could be imposed upon that spouse. The spouse I represented was very much alive.

    Now, as I recall, there is an issue not yet resolved as to whether the FBAR penalty might be extinguished upon death. I doubt that it is, but I am not aware of definitive authority one way or the other.

    Jack Townsend

  38. Actually Jack, many of the category 2 banks are simply Swiss Cantonal Banks. Kinda like good, solid, state owned credit unions. They wanted to be up and up, so in about '99 they singed on as QI (Qualified Intermediaries) and made their known US customers sign W9 forms and disclosures as per the QI agreement with the IRS. These Cantonal banks were not recruiting in the US or setting up trusts, but there was no way for them to know which existing customers were US persons who had not been keeping up with the ever changing US tax "obligations".

    Despite having fully complied with the terms of the QI agreement, these banks went on to sign the category 2 agreement with the IRS to avoid the risk of the wrath of the unfettered IRS.

    This is in no way a guilty plea or a confession if tax "sin" by the category 2 Cantonal banks.

  39. Deparado Rogue,

    The behavior you describe is not criminal under U.S. law. Our law requires intentional misconduct (or deliberate ignorance rising to the level of intentionality). Hence, there was no reason for those banks to join Category 2. The program describes a Category 2 bank as being a bnk:

    that has reason to believe it may have committed tax-related offenses under Titles 18 or 26, United States Code, or monetary transactions offenses under §§ 5314 or 5322, Title 31, United States Code, in connection with undeclared U.S. Related Accounts held by the Swiss Bank during the Applicable Period,

    So, I don't think those banks would have joined the Category 2 program unless they felt that they violated the law intentionally. They were not bullied. If they were as described they would be in Categories 3 or 4.

    Of course, I can't speak to whether those banks lied to the US DOJ about their having violated the law, so that they could pay penalties that they did not have to pay. If that happened (and I have no information one way or the other), then it certainly seems strange and counterintuitive.

    Jack Townsend

  40. One other thing. There are Swiss Cantonalbanks among those being criminally investigated now. My sense is that, based on what DOJ knew when program was established, they were the worst of the bad Swiss banks. I would infer that there were institutional pressures in at least some cantonalbanks to misbehave for profit.

    Jack Townsend

  41. Jack,
    Regarding the last paragraph of your previous post about Swiss bankers having lied about violating the law, I'd like to make the following point. Swiss bankers are extremely conservative and risk adverse not withstanding a few notable exceptions mostly in the category 1 group. The criteria for misconduct is somewhat vague and subjective. At what point does willful ignorance rise to the level of intentionality? Every banker in Switzerland(and the world) probably suspects that at least one of their clients is engaged in some sort of criminal activity(tax evasion, drug dealing, etc.) They don't know which client but they know there as to be at least one and probably more. Being conservative and risk adverse they think it is "safer" to join category 2. They would rather pay a few million than risk being shut down as in the case of Wegelin. For them it is an existential threat. They can't afford to pay hundreds of millions in fines and years worth of legal fees. Plus the US legal system is something they have no experience with which creates a lot of uncertainty.

    The biggest banks in the world can afford to pay large fines and can afford to pay the legal fees for multi year investigations. For them that is the cost of doing business and doesn't appear to significantly affect their bottom line. These are not just Swiss banks but banks from America and other parts of the world as well. In my opinion, Credit Suisse and UBS are not really Swiss banks but rather Wall Street banks. They have the same strategy and "mind set" as all of the other big banks all around the world who have been punished for many different transgressions. Some of the smaller and cantonal banks in Switzerland tried to play with the big boys and now they are getting burned. Maybe some of them felt they had a degree of immunity because they were state run or had no branches outside of Switzerland. It appears they were mistaken.

    As for most of the rest of the category 2 banks, I think they fall into the group described in the first paragraph of this post. We will see as the details of more NPAs are released. I find it frustrating that so many of the category 2 banks are willing to take a fine and NPA when they would never be found guilty if the case went to trial. I keep hearing rumors that many will try to switch to category 3 but I think they need the DOJ to approve the category change. Otherwise, they would have to drop out of the program entirely. Given that they have already spent lots of money complying with the program, their shareholders would probably not be impressed if they dropped out. Hopefully, the DOJ will display a sense of justice and allow non-culpable category 2 banks to transition to category 3. Unfortunately, I think the DOJ is more interested in collecting fines and getting headlines than they are in justice or doing the right thing.

  42. Andre,

    Thanks for your comments. Very thoughtful.

    I too would hope that DOJ Tax would not insist on fines and NPA where the facts do not support them. We will have to see, however. I am sure that all of us will be quite interested in the statements of the basis for the fines and NPA that are described in the publicly available documents as they come out.

    Jack Townsend

  43. It seems that banks are doing the same analysis of those entering OVDI. People who have a reasonable chance of a nonwillful penalty are afraid of a 300% max willful penalty plus a ton of legal fees, and agree to pay 27.5% because they're scared. Just as OVDI benefits those who were clearly willful (27.5% is far less than the 300% they deserve, not to mention criminal prosecution) it seems to me that the same situation applies to the banks.

    As to cantonal banks, the ones I have dealt with typically have no special accomodation to attract multilingual Americans (English language brochures or staff chosen for speaking English.) True, many Swiss have studied English and speak it well but I saw no special focus on Americans.

    I know you dislike anecdotal evidence, but consider the source. I am not claiming that the banks enticed me into opening an account and shifting the blame on them.

  44. I would be careful with this 300% (6X50) hypothetical max. willful concept.
    This is not reality.... not even close.

  45. I disagree respectfully with the notion that a willful tax evader or homelander deserves a 300% FBAR penalty

  46. Jack, here is what the American Citizens Abroad site says:

    ... they have lost access to banking services essential for daily living
    in their country of residence. They are simply unable to live normal lives abroad. Even Americans abroad who are in full compliance with U.S. taxes are extremely bitter about their treatment under the unique citizenship-based taxation system of the United States. Bank accounts are being closed due to FATCA, access to overseas jobs is restricted due to required FBAR reporting, investment in local non-U.S. mutual funds is impossible due to the PFIC reporting requirements, efficient saving for retirement is not possible due to U.S. tax treatment of contributions to foreign pensions

    Source: bottom of page 3 and top of page 4 of letter at

  47. anon, it may not be reality in the end, but Jack mentioned a case, the one with the best facts of all his opt outs, where initially the agent asserted a willful penalty of between 220 and 250%. Ultimately a nonwillful penalty was negotiated, but there were legal costs involved and most likely a lot of worry and anxiety on the client's part.

  48. Jack, you are truly amazing. RCD provides testimony that there are tax compliant Americans abroad who are "simply unable to live normal lives".

    What does this mean? It means that the IRS is destroying the lives of "many" Americans who are compliant. What does Jack do? He decides to split hairs about the meaning of "many". This is worse than Clinton's definition of "is" because as the ACA admits, the IRS and its tax attorney mercenaries are knowingly destroying the lives of innocent Americans. Yes, lets talk about "willfullness".

  49. that was not 6years X 50% but 3 years and legal costs are the bread and butter of the tax bermuda triangle in which tax lawyers are the profiteurs.

  50. Unfortunately Jack for someone like you who has spend so far most of his life living and working in the US only there are certain limitations when it comes to understanding what expats have been gone through over the last 5 years.

  51. Nigel Green: “presidential candidates need to set out their stance on FATCA”. I really wish that CBT and FATCA would be debated by the Presidential
    candidates in an open and frank manner. I don’t see that happening. The
    only way out of this is through a legal challenge unless and until the
    Republicans get the White House and keep control of the Congress then
    perhaps there is a realistic chance of fixing this mess.

  52. Ok, so ACA says "many" not "most." Does ACA have any proof that would stand up in court or is it just as anecdotal as mine?
    To "prove" my point I would need "proof" that banks do not answer my emails. I would need independent witnesses monitoring the incoming inbox. If I paid such witnesses, their credibility might be suspect. And proving my point would be time consuming and costly with nothing in it for me.
    Should you care to, you are free to contact banks directly and see what they say or don't say.

  53. RCD,

    I could contact some banks, but at the end of the day my dataset would be limited and not sufficient to extrapolate general conclusions from. ACA does have that dataset and, as I undertand its membership and mission, would be well-situated to come forward with some good data from which reasonable extrapolations could be made. Yet, all ACA can state is "many" and not "most" or "all."

    I don't know why ACA won't develop that data from its members. But, since it would be in ACA's and its members' interest to present the data indicating systemic problems (which would be necessary to get Congress' interest), I have to assume that it is not available or is not being presented because it does not support systemic abuse.

    I don't doubt the sincerity of the claims you present here or your personal experiences you encounter. I am just trying to encourage you and those like you to get the large dataset to shows systemic issues. If you do that, I will be please to become a cheerleader. More importantly, since I am not important, Congress (as dysfunctional as it is) could at least have the op[ortunity to address the issue. But with no evidence of systemic issues, I just don't think Congress will be interested.

    Jack Townsend


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