Money Laundering and Foreign Bank Accounts

Under the Bank Secrecy Act, U.S. residents or a person in and doing business in the United States must file a report with the U.S. Treasury if he or she has a financial account in a foreign country with a value exceeding $10,000 at any time during the calendar year. Taxpayers comply with this law by noting the account on their tax return and by filing Form 90-22.1, the Foreign Bank and Financial Account Report (FBAR). Willfully failing to file an FBAR report can be punished under both civil and criminal law.

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IRS Criminal Investigation

IRS Criminal Investigation (CI) is comprised of approximately 4,400 employees worldwide, approximately 2,600 of which are special agents whose investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. While other federal agencies also have investigative jurisdiction for money laundering and some bank secrecy act violations, IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code.

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Who Gets Audited by IRS

The total number of audits of individual returns increased in 2010. Those who earned less than $200,000 had about a 1 percent chance of being audited. Those with incomes of $200,000 and more had about a 3 percent chance of being audited.

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IRS Aggressively Pursuing Offshore Accounts

IRS will step up its efforts to find Americans utilizing tax haven banks. Since September 11 the U. S. Financial Crimes Enforcement Network has developed a coordinated program to find money laundering, foreign banking activity, and tax evasion. In most white collar crime cases the Justice Department offers plea bargains to individuals like Birkenfeld in return for cooperation in charging others involved in illegal activity. Therefore with increased resources being allocated to seeking out foreign bank activities by Americans we can anticipate will the first of many bankers who cooperate to reduce their potential jail time.

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