The problem with FATCA, according to so many foreign financial institutions (FFIs), is that they bear all the costs and none of the benefits of FATCA. This is perhaps untrue. According to the IRS website, informants are entitled to a cut on the proceeds of civil and criminal fines under the Bank Secrecy Act (FBAR):
4.26.7.8 (11-17-2006)
Rewards for Informants
- An individual who provides original information that leads to recovery of a criminal fine, civil penalty, or forfeiture that exceeds $50,000 for a violation of the Bank Secrecy Act may be eligible for a reward, 31 USC 5323 and 31 CFR 103.62.
- The reward may not exceed the lesser of $150,000 or 25% of the net amount collected. Generally officers and employees of the United States, state, or local governments are not eligible to collect the reward.
Thus, if the FFI provides information ratting out their US citizen clients to the IRS, they should be able to claim a portion of any fines that the IRS is able to collect.
Undoubtedly, the IRS will claim that the information was not “original” but required by FATCA. Nevertheless, FFIs should pursue the “legal” possibility of getting a piece of the action.
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