United States authorities have prosecuted around three dozen foreign bankers and have arrested more financial professionals for helping U.S. citizens evade their income tax obligations. One of the individuals who was arrested was the former head of UBS’s wealth management for the Americas.

In 2010, the US Congress passed a law attempting to address the problem of US residents being encouraged to move money offshore to avoid tax obligations. Foreign investment companies and foreign banks were profiting from this activity.  The solution is called the Foreign Account Tax Compliance Act (FATCA), and it went into effect in July of 2014.

The Internal Revenue Service has always aimed to fight tax evasion in order to maximize revenue for the United States government. The US and many other developed countries are experiencing ongoing budgetary problems due to the effects of the 2008 crash and following global recession.

The Department of Justice and the Internal Revenue Service have joined forces to track down tax payers who are not fulfilling their reporting requirements. Taxpayers with money invested offshore must report the accounts each year and complete a form called the Report of Foreign Bank and Financial Accounts (FBAR).

Investors with offshore or foreign accounts have an obligation to file the Report of Foreign Bank and Financial Accounts (FBAR) with their income taxes each year. A failure to file the FBAR can result in penalties based on a percentage of the money kept offshore as well as the number of years of non-reporting, with some violators assessed penalties that exceed the total value of money kept in their offshore accounts.